If Intel's future chief executives continue rising through its ranks, then the real news isn't that Intel named Brian Krzanich its sixth CEO. It's that Intel software chief Renee James may be in line to succeed him.

It's hard to escape a back-to-the-future feeling with the Krzanich announcement, which basically represents the company's continued focus on making chips smaller, cheaper and, now, less power-hungry — Intel's traditional secret sauce. Like outgoing CEO Paul Otellini, Krzanich served as chief operating officer and previously held several manufacturing positions across the company since he joined Intel in 1989. 

Intel CEOs generally emerge from the president's office or that of the COO — Krzanich's old job, and one that Intel hasn't filled yet. Intel historically has swapped CEOs when they've turned 60; Krzanich, 52, will have eight more years before a successor takes over.

Last November, when Otellini unexpectedly declared his intention to step down later this month, chairman Andy Bryant took the unusual step of naming what some saw as four possibilities to replace him: Krzanich, James, Dadi Perlmutter, the head of Intel's chip business; and Arvind Sodhani, head of the company's internal VC unit, Intel Capital.

The Rise Of Intel Software

Of the four, only James represents something strikingly new for Intel. In a company traditionally dominated by old, balding white engineers, James has been the face of Intel's software business since joining the company via its acquisition of Bell Technologies in 1988.

Although she holds business degrees from the University of Oregon, that's not necessarily a black mark; Otellini himself was an economics major. But James also served as chief of staff for former chief executive Andy Grove, giving her the stamp of legitimacy. James even carries a red pen — a notorious Grove trademark — as a reminder of her roots.

James was instrumental in three major acquisitions: Intel's 2007 acquisition of physics middleware developer Havok for an undisclosed amount, the 2009 acquisition of embedded software company Wind River for about $884 million; and Intel's $7.68 billion purchase of security giant McAfee in 2011. Intel contributes to the Linux kernel, developed its own Hadoop implementation, co-developed the Tizen mobile OS with Samsung, and writes its own software compilers for its microprocessors.

"I can see a day where a future Intel CEO could have extensive software experience," Patrick Moorhead, a former executive of Intel rival AMD and now an independent analyst, said. About 70 percent of a smartphone's research and development costs now derive from software, Moorhead said.

Wait A Second. Software? Intel? Really?

Can software really mean that much to Intel? After all, this is a company that owns over 80 percent of both the PC microprocessor market, about as much in the server market, and is busy trying to make inroads into phones, tablets, and low-power convertible Windows tablets. 

Sure. Moorhead, for instance, argues that Intel's strategy is to combine chips and software in a way that make each indispensable to the other. Rolling your own software and fabricating your own silicon can allow a company to optimize their combined performance in ways that other manufacturers can't match. In a business sense, selling the software and silicon together also allows customers to save money and simplify their own development efforts.

Put that way, Krzanich's appointment as chief executive, with James just below him on the executive ladder, makes sense. Intel's not about to try a RIM/BlackBerry-styled double chief executive, but for a number of years, Intel operated out of a two-in-the-box strategy, where responsibilities for certain divisions were shared not by one, but by two executives.

For Now, Krzanich Minds The Store

Manufacturing prowess remains key to Intel. When the company ships its next-generation "Haswell" processor this June, the chip's smallest features will be just 22 nanometers wide, putting it a full generation ahead of AMD's expected "Piledriver" chip. Smaller chips with finer "linewidths" are traditionally more powerful; now that the focus has turned to mobile, Intel can reduce the power those chips consume instead.

Which isn't to say Intel doesn't have a lot of catching up to do. It has fallen badly behind in producing processors for smartphones and tablets, in an eerie repeat of the way it was initially late to the notebook PC market. 

Krzanich's job will be to turn that around. Ideally, Intel needs to design the best chips it can, shrink them down as small as possible, and then them them with optimized software to maximize their potential.

James' appointment is as much reward as recognition of her strategic role. In 2009, soon after the Wind River acquisition, the notoriously grouchy Grove was asked to characterize Intel's history in software. “The results have been very consistent,” Grove, then 73 and retired, told The Oregonian. “They amounted to nothing.” Now, they're everything.

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.

Image courtesy of Shutterstock.

Guest author Kevin Prendeville is a global managing director with Accenture’s Product Lifecycle Services practice.

The tables have turned on many large high-tech companies - market leaders have become followers while followers have become leaders. What’s behind the seismic shift? The ability of those former followers to leverage investments in product development processes to deliver more innovative and successful products. These processes, known as Product Lifecycle Management (PLM), extend from idea gener¬ation through product launch to product retirement.

An analysis by Accenture has found that large high-tech companies can spend $1 billion or more per year on Product Lifecycle Management in hopes of substantially boosting revenues and cutting costs. But Accenture also found that many C-suite executives view PLM as the engineering department’s black box - a critical enterprise business process poorly understood, measured or managed.

Today’s competitive business environment requires that top management see PLM as a strategic corporate asset, a cross-functional, enterprise-wide business discipline that augments innovation, helps drive revenue growth, and reduces costs of everything from engineering rework to regulatory compliance.

What Is Product Lifecycle Management (PLM)?

PLM integrates a multitude of critical cross-functional activities, such as:

• product strategy
• portfolio management
• product management
• idea and requirements gathering
• product design
• product engineering
• product validation and compliance
• product costing
• product quality
• direct material sourcing
• manufacturing
• after-market services product retirement

PLM capabilities support PLM activities to drive activities, decisions and data within the end-to-end PLM process. Examples include

• intellectual property management
• product structure and reuse
• engineering changes
• stage-gate approvals
• ideas and requirements
• software configuration
• quality tests and defects
• product costs
• development project status

For global enterprises to maximize the business impact of PLM, they need to examine two dimensions: effectiveness and efficiency.

Large high-tech companies are making substantial investments - often 5% to 25% or more of revenue - in PLM. But according to Accenture’s analysis, nearly half of PLM ends up wasted on products that do not meet market needs or timing. High-tech enterprises have thousands of highly skilled and well-paid designers, scientists and engineers working inside global PLM processes across hundreds of current and future products. But due to lack of central coordination, prioritization and integration of processes, systems and data, they’re often working on essentially useless or redundant tasks. That means there’s a huge opportunity for improvement.

Technology can help improve PLM – if it’s implemented with an integrated plan focused on a distinct business process. Most global companies have deeply fragmented PLM systems comprising 20 or more applications. PLM software vendors provide powerful and field-tested applications – but not the kind of end-to-end business process coverage available in leading customer relationship management (CRM) and enterprise resource planning (ERP) applications. Most high-tech companies use three or more PLM vendors to span the various PLM capability areas.

Four Ways To Improve PLM

True enterprise PLM requires building an end-to-end framework that spans multiple solutions and accom¬modates business processes and data from marketing, design, product portfolio management and more. A one-size-fits-all answer does not exist, but Accenture has identified four best practices to get the most out PLM:

Step 1. Create an enterprise-wide framework to define PLM capabilities. Define what is and is not PLM, then formally break down and re-evaluate current PLM capabilities. Review all processes, applications, metrics, organization and data that underpin product development process flow from initial concept to product retirement. Then examine the performance and maturity of each as objectively as possible. High-performance businesses structure PLM as a hierarchy of capabilities that span the process, represent various organizations and competencies, and connect all corners of the PLM landscape with each another. Most companies that go through this exercise are surprised by how disjointed and fragmented their overall PLM approaches are and by how many gaps and redundancies they uncover. And they are often alarmed to find how few metrics and how little docu¬mentation supports their PLM activities.

Step 2. Link the PLM framework’s capabilities to key corporate and product priorities. Settle on five-to-ten business metrics that track the effectiveness and efficiency of innovation and product development outputs, transcending any one department or function. They might relate to pipeline throughput, cost of engineering, reuse of platforms or components or resource use. For instance, if plans call for more new products to be developed in lower-cost countries, the PLM framework would link that objective to the corresponding capabilities and metrics.

Step 3. Use the prioritized PLM framework As An investment planning tool. It is relatively straightforward to turn the results of these exercises into a powerful tool for ongoing planning activities. The organization’s varied constituents can more easily analyze trade-offs, guide investments in product development improvement projects, and measure the impact of those projects over time. For example, one high-technology company used this framework to concentrate its future PLM focus and investment to improve software product development processes rather than mechanical design. Basically, the firm chose to improve the productivity of its thousands of software designers instead of its hundreds of mechanical designers.

Step 4. Establish a group to own and update the PLM framework and corporate roadmap. As with CRM, ERP and supply chain management, there has to be a single, formal organization to advance and support PLM. That organization should have visible, unambiguous sponsorship from a senior executive. This helps ensure PLM becomes part of the company’s innovation fabric rather than a one-time project.

Three PLM Success Stories

Using these best practices, several high-tech companies have made significant progress with their PLM strategies:

1. One version of the truth. A provider of servers and storage equipment re-designed its business processes to better leverage PLM technologies. The firm created “one version of the truth” for a single engineering change process for all its hardware products including several from large acquisitions.

2. Integrating hardware and software. A provider of electronic gaming equipment developed new processes, data models and a central application to manage the relationship between its hardware designs and corresponding software designs, as they evolved through development and change processes.

3. Increasing re-use. A global consumer electronics company implemented a streamlined portal and graphic user interface - providing a fast and visual way for designers and engineers to search, find and re-use components, solutions and information stored in its PLM databases.

The good news is there are many cross-industry cases proving the merits of improving PLM. The better news is that many industries have already blazed PLM trails, providing proven strategies, lessons learned and methodologies for high-tech companies to leverage.

Image courtesy of Shutterstock.

Guest author Don Marti is a technical marketing manager at Perforce, and a Git user since 2007.

Key parts of the America Invents Act (AIA), which passed in 2011, came into effect on March 16, 2013. These changes in U.S. patent law can help all companies that use software to protect themselves from patent trolls — those annoying boiler-room operations that shake down software developers and users for software patent licenses without actually producing anything with the patents they own.

(See also A Patent Troll By Any Other Name Still Stinks.)

Fortunately, many of the best practices for tracking new versions of software and other digital assets can also help protect you against patent trolls. It’s a good time to talk to your lawyer about a defensive strategy, and to connect that strategy to your version control and deployment systems to make sure you’re collecting and retaining all of the information that could help you under this new law.

Understanding Prior Art

The AIA has a lot of changes, starting with the expansion of what counts as prior art. Prior art is any public information that shows the patented invention was not original. Patent examiners were always supposed to take prior into account when granting a patent in the first place. However, especially in the software field, the understaffed and overworked patent office misses a lot of details.

Sometimes the patent system’s definition of an invention does not match our own idea of what’s new or inventive. Take for instance the System and method for providing reservations for restroom use. In this case, the U.S. Patent database granted a patent for queuing up for the restroom on airplanes. For every silly patent that makes headlines there are many others that could threaten your business.

Track Your Work

Patents also cover the use of components in combination. You will need to document not just what you wrote and when, but what combination was ultimately deployed. And since you can’t tell what will get a patent, you need to keep a good version history of everything — code, deployment data and the text and media assets that go with it.

Fortunately, creating prior art ties in with many typical work tasks, such as participating in open source projects, running a development blog and publishing online documentation. How you track software releases and fix bugs can also be a low-pain way to publish prior art.

Implement Litigation Alternatives

What happens when the patent office misses some prior art and issues a patent anyway? That’s where a second change in the law comes in. Post-grant challenges are, according to attorney Michael Bednarek, “a quick, low-cost alternative to litigation.”

If a bogus patent in your field is issued, you’ll be able to challenge it at the Patent Office directly with a simpler process than would be required in court. Although it might seem like a lot of work, industry organizations such as the Linux Foundation could play a major role by tracking patents as they are issued and in organizing efforts to challenge patents that threaten their members. Nobody wants to take on this time-consuming cleanup work alone.

(See also How Patent Trolls Use Economies Of Scale To Force Settlements.)

Prove A Prior-User Defense

The AIA gives you one last defense. Under the old law, a new patent could potentially take away your right to do something that you had already been doing, if you didn’t file for your own patent or otherwise made it public. Now, if a troll comes after you for something you made “commercial use” of before a patent was issued, you may be protected by the new prior-user defense, which lets you rely on your own non-public uses. If you have a solid history that shows not only the innovation process but the production date, it can help significantly. The prior-user defense is harder than using public prior art, though, so it’s still better to make things public when you can.

Still More To Do

There’s still more work to be done on the software patent problem. The proposed SHIELD Act is a good example of another way to deter trolls by making them pay legal fees if they lose. Supporters believe this would reduce the incentive to bring nuisance patent lawsuits. In the meantime, software developers get quite a bit of help from the new AIA law — especially if they keep histories of all their work and when it was used, publish it defensively when possible, and work together to challenge anyone who seeks bogus patents.

(See also Why The New SHIELD Bill Can't Stop Patent Abuse.)

Since 2002, when Microsoft launched its Trustworthy Computing initiative, security in the company's products have improved each year. But while the company has increasingly battened down Windows, Office and its other programs, the number of vulnerabilities in harder-to-patch third-party applications has grown dramatically, making overall security on the PC worse than ever.

More Risk In Third-Party Apps

Rather than go through the expense of battling Microsoft directly, many hackers now focus on low-hanging fruit, such as the Java and Adobe Flash browser plug-ins, which are often left un-patched even by users who conscientiously update Windows and Office. This trend was highlighted in a new study by Secunia.

The security vendor found Microsoft's highly effective automatic security updates now address only 8.5% of the vulnerabilities in a PC. The rest have to be patched through updates from various software developers, each with their own unique process. The complexity leads users who are not security savvy to forgo updates, vastly increasing their risk of infection.

"There is, to date, no one fix-it-all solution," warned Morten Stengaard, director of product management and quality assurance at Secunia, in the company's blog.

Theoretically, Microsoft could overhaul Windows to place each third-party application in its own container, making it more difficult for hackers to load malware in the operating system. However, such a massive change would require Windows software vendors to rebuild their own products, which would have a ripple affect on every corporate and consumer customer.

"Microsoft, to some extent, is hamstrung by legacy code and what they've done in the past," Jack Gold, analyst for J. Gold Associates, said. "They can't just rip everything up and start all over again very easily."

Fewer Flaws In Microsoft Apps

Ironically, the third-party threat is blossoming even as Microsoft continues to get its own house in order. In 2012, out of all the known vulnerabilities in the top-50 PC programs, Microsoft products accounted for only 14% of them, the study found. The rest were in other software. And the share of vulnerabilities on a Windows PC coming from third-party applications has been growing. In 2007, they accounted for 57% of the security flaws, compared to 86% last year, Secunia says.

"It's well known that they [Microsoft] have put great efforts into improving security of the operating system and the applications that they provide," Stengaard said in an interview. "What we're seeing is the long-term involvement and dedication is now paying off."

Windows, Office, Silverlight and other Microsoft products are not ironclad, of course. Given enough time, knowledgeable hackers can find their way in through these channels. But in the world of cybercrime, most hackers are not interested in a challenge. Instead, they look for the easiest way to break into as many PCs as possible, to enslave the machines into the many armies of remotely controlled botnets, or to steal credit-card numbers, social-security numbers and corporate intellectual property that will fetch a good price on the underground.

Including both Microsoft and third-party applications, the number of PC vulnerabilities has dropped by 5% since 2011, and by 10% among the top 50 applications. Since 2007, though, overall vulnerabilities are up 15%, Secunia found, and that jumps to a whopping 98% increase among the top 50 applications.

Where The Danger Lies

Applications most likely to provide an easy path into Windows machines include Java, Flash, Adobe Reader and Apple iTunes, according to Secunia. If these applications are not kept up to date, hackers can exploit known vulnerabilities that enable them to load their malware via the PC's system memory.

In addition, all these applications have very large user bases, which makes it easier for hackers to find targets.

Why PCs have so much outdated software varies. Sometimes it's because the update process is too cumbersome, so they don't bother. Other times, the vendor is slow in fixing flaws that hackers are already targeting. Updating Java, an open platform for running software on any operating, system has been a pain for a long time. However, Java steward Oracle is working to improve the process and is getting updates out quicker, most experts agree.

In 2012, Adobe had the worst record for updating applications, according to Secunia. The software maker released patches at a rate 80% slower than in 2011, based on the time it took the vendor to release updates of vulnerabilities reported by Secunia.

Overall, though, patch speed for third-party apps is increasing, Secunia said:

In fact, in 2012, 84% of vulnerabilities had patches available on the day of disclosure. In 2011, the number was only 72%. The most likely explanation for this improvement in ‘time-to-patch’ is that more researchers coordinate their vulnerability reports with vendors.

Patching Is Critical

The vendor based its study on 6 million PCs, mostly in the U.S. and Europe, running its freeware called Personal Software Inspector, which checks for application vulnerabilities. Microsoft products accounted for 35% of the programs on the PCs.

If you take Secunia's study seriously, then the takeaway is clear. Even if patching all your software is getting more complicated,  making sure everything is always up to date is more important than ever.

Image by Fredric Paul.

In 2010, Cisco Chief Executive John Chambers told reporters at the company's reseller conference in San Francisco, "We don't focus on other companies. We focus on market transitions."

The statement was a half-truth. Chambers should have said companies other than Microsoft.

On Monday, the eve of Microsoft's first Lync User Conference, Rowan Trollope, general manager of Cisco's Collaboration Technology Group, posted a blog that that explained why Lync was inferior to Cisco's platform for unified communications and collaboration.

"I'm quite sure some of it will generate controversy but that's OK - it's a conversation worth having in our opinion," Trollope writes.

But as sometimes happens when brands or political campaigns "go negative," the whole thing is blowing up in Cisco's face, as analysts point out the weaknesses in Cisco's arguments.

The real takeaway, in fact, is that Cisco seems to be scared of what Microsoft is selling.

Cisco's Claims

Trollope's post isn't super nasty, at least not by Apple-v-Android standards. But he takes some shots at Microsoft Lync, calling it "a solution that's primarily been developed for a desktop PC user experience" and thus "less able to meet these wider post-PC requirements than one that has been designed and optimized for them from the outset."

An example of the latter, Trollope says, would be Cisco's UC&C, which is a set of integrated products, such as messaging, Internet telephony, video conferencing and data sharing. All the products are accessed through a single user interface.

Another of Trollope's criticism is that with Microsoft, customers need to go out and buy all sorts of different devices instead of getting everything from a single vendor. "And, in our opinion, that could lead to increased complexity, cost and risk, not to mention the hours spent trying to figure out `who's on first' when troubleshooting an issue."

And finally this:

"There are other important topics that we think should also be discussed. Does your collaboration vendor have any conflict of interest with other BYOD device vendors? Can you move from an in-house deployment to a cloud-based service and get the same functionality? We would encourage you to explore these points with us and any other vendors you are considering."

This is all pretty garden-variety competitive marketing, and certainly far less aggressive than what Microsoft does with its anti-Google "Scroogled" campaigns.

Nevertheless, analysts were quick to cry foul and to point out flaws in Cisco's arguments.

Cisco's Hypocrisy

A large part of what Trollope called a "frank and direct conversation" was a "little far fetched and hypocritical," Gartner analyst Steve Blood says.

Cisco claims Microsoft's Surface tablet represented a conflict of interest, since Lync would also support competing tablets from Apple and Google. Cisco seems to have forgotten its own entry into the tablet market with Cius, which failed miserably and was pulled last year. "It wasn't worried about a conflict of interest then," Blood says.

Cisco also has other conflicts when it comes to hardware. While its UC&C products work on other vendor's systems, they run best on Cisco's Unified Computing System. And when it comes to partners offering Cisco UC&C in the cloud, its UCS server is the only hardware option, Blood says.

Trollope claims Lync is more complex and expensive because customers need to get phones, video equipment, voice and video gateways and networking gear through hardware partners since Microsoft doesn't make those products, while Cisco sells its own integrated hardware and software.

Art Schoeller, analyst for Forrester Research, isn't buying Trollope's argument. "Each account is different in what they have, what they want, and what capabilities are important to them and what model appeals to them more," he says.

While Cisco arguably has a stronger hosted platform than Microsoft, Cisco's biggest resellers are also selling hosted Lync and Office 365, which is "a recognition by Cisco's partners that in some instances, the Microsoft solution is something they would want to propose in place of Cisco," Blood says.

The biggest problem Microsoft has in offering Lync in the cloud is with voice communications. In many countries, as soon as voice hits the cloud, it becomes a regulated service, much like that of a carrier. Microsoft and Cisco are solving the problem by partnering with carriers. "Currently, Microsoft promotes Lync on premise, if a customer wants deeper voice capabilities like conferencing," Schoeller says.

Cisco Feels The Competition

Cisco is going on the offensive because Microsoft is becoming a serious competitor, which is good for companies in the market for unified communications products. However, Cisco would do better to focus on customers, rather than spend time attacking the competition with "ill-prepared, and weak arguments such as this," Blood says.

In a recent interview with AllThingsD, Chambers said, "We love to compete, and we try to always compete with class."

If Chambers believes Trollope's blog is class, then he needs to look up the definition.

Oracle Chief Executive Larry Ellison seldom shies away from a fight, so it's no surprise his company came out swinging over an unfavorable Forrester Research report.

Forrester certainly struck a nerve when it released a survey on Wednesday that found a majority of customers using Oracle's e-Business Suite, PeopleSoft and Siebel business applications had no interest in switching to the company's next-generation Fusion Applications. Those laggards are complicating Oracle's efforts to reverse a slowdown in application revenue, Forrester said.

Oracle's Response

In a three-page counterattack, Oracle tore into the market-research firm. "This is a speculative note based on misconceptions and wrong hypotheses," the company thundered.

(See also "Why Oracle Fusion Doesn't Excite Customers")

Despite Oracle's ostensible outrage, its counterattack is unconvincing. The company claims Forrester did not talk to enough of its customers to back its claims, as if the firm was doing a random survey of all of Oracle's customers.

Forrester never said it was doing that kind of survey. Instead, the respondents came from 180 of the firm's contacts that were responsible for choosing IT products and had knowledge of Oracle applications. "While nonrandom, the survey is still a valuable tool for understanding where users are today and where the industry is headed," the report says.

Commonsense would tell you that there are more reasons for Oracle customers to stay with the applications they have than to move to Fusion, which has a different code base. Such an undertaking is expensive, takes a long time and draws IT staff away from other pressing projects. With the older applications still being upgraded and working just fine, why would anyone want to make a major change?

(See the full text of its rebuttal below.)

The most damaging part of the survey was Forrester's finding that 65% of customers using the older business applications had no plans to switch to Fusion. Another 24% were on the fence.

Oracle complained that the survey only covered U.S. and European customers. Likewise, it noted that more than 40% of the respondents were in manufacturing, government, education and healthcare – industries it claims aren't representative of Oracle's overall customer base. For instance, Oracle cited an IDC report noting that Fusion doesn't yet fully support manufacturing operations, implying that manufacturers might reasonably be less than interested in making the switch to immature applications.

Ellison and company also moaned that many questions were phrased in a "negative way," as if that somehow disqualified the responses. Such questions included "What do you dislike most about your firm's most important Oracle applications?" and "Why doesn't your firm plan to use Oracle Fusion Applications?"

Who Do You Believe?

The report also claimed that Oracle has no clear strategy for migrating customers to Fusion. The company disagreed, saying it has always told customers they could adopt pieces of the product portfolio at their own pace and that everything – old and new – would work together.

Forrester also said that customers staying with the older applications were missing out on innovation. Again Oracle cried foul, saying that at Oracle OpenWorld last year, the company discussed future releases for E-Business Suite and PeopleSoft, as well as roadmaps for all its applications. Examples of innovation include iPad certification in PeopleSoft and new mobile capabilities in Siebel, Oracle said.

Despite Oracle's protestations, Forrester is not budging. "We stand by the report," spokesman Phil LeClare said. So, readers will have to decide whom they believe. Personally, given Oracle's recent lack of truth in advertising and its tendency to pretend to have cloud technology when it doesn't, I'll lean toward Forrester.

Here's the full Oracle rebuttal:

Image courtesy of drserg/Shutterstock.

You have a brilliant software idea. Now you need to design a good-looking prototype. You look around. You search high and low. Chances are you will dig up a sum total of three usable tools.

That’s right, three.

Rapid Prototyping Is A Wasteland

Welcome to the largely ignored world of rapid prototyping.

If you design on the PC, you can choose from three tools:

1. Axure RP ($290)
2. Mockup Builder (free)
3. Serena Prototype Composer 3 (free/$300)

If you prototype on the Mac, your three choices are:

1. Axure RP
2. Balsamic Mockups ($79)
3. Sencha Architect ($400)

Balsamiq Mockups is a cross-platform rapid software prototyping tool that allows a UX designer to quickly create a mockup of software screens. This is a prototype I created for a next-generation CRM program. One major quibble: no ready-made icons for folders or documents.

If you develop mobile apps or websites, there are more choices, including Protoshare ($29/mo.), a Web-based (SaaS) software solution and Tiggzi ($40/mo.). If you like to design apps entirely on the iPad, there’s AppCooker ($40), AppSketcher (free), Blueprint Lite (free), Interface HD ($10), iMockups for iPad ($7) and Mockop (free), plus many others.

According to an educated guess, there are some 12 million programmers worldwide. That’s equal to the population of metropolitan Los Angeles.

Now imagine you are one of those 12 million LA inhabitants, and you have only three, maybe four, auto repair shops to choose from. What’s wrong with that picture? The size of the global information technology industry was estimated at $3.8 trillion in 2012, according to Gartner.

The same CRM mockup created in Azure RP, another cross-platform prototyping tool, that creates more buttoned-up designs. Tools that address various software design work styles are much needed.

Here’s a another cogent example. I searched the Home Depot site for cordless drills and found 348 search results. Try it yourself. And that’s for a global power tool market that will reach only $27 billion by 2015.

The Disconnect Opportunity

Notice a disconnect here? In a previous post, I wrote about the need to create 1,000 user-experience (UX) design studios in the U.S. alone. These studios would require a healthy infrastructure of innovative rapid prototyping and coding tools. Yet it's clear that when it comes to creating software, designers lack much choice.

What type of prototyping tools are needed? For one, they should be collaborative. I know this because I found a sparse factoid on the design activities of programmers that suggests that unlike the relatively solitary activity of coding and testing, designing interfaces requires much collaborative work.

Finding the above statistic buried in a Microsoft site full of articles about finding bugs was a worrisome sign all in itself. You would think that, given a $4 trillion information technology economy, there would be a lot more research about software-design habits.

Please plug this innovation gap, entrepreneurs and venture capitalists! We need a lot more help to make software work the way it was intended. And do contribute to my crowdsourced ideation engine and suggest more ideas on what type of software is needed to help create a next-generation software economy.

Lead image courtesy of Shutterstock.

Guest author Mike McDerment is co-founder and CEO of cloud-based small business accounting provider FreshBooks.

Late last year Google Apps for Business eliminated its free version (see Google Dares Businesses To Switch To Microsoft Office). You might think this is a bad thing for small business owners. Everything free is good, right?

Wrong.

There are big downsides to getting things for free that are poorly understood and rarely considered, and upsides to paying for the things that really matter — especially for small businesses.

First, let’s look at some downsides to free:

1. Free things are never really free. When we don’t fork over dollars for products or services, we think of them as free. But we always give up something. When it comes to online services, that something is usually personal data or content you’ve created — think Facebook and Instagram, whose privacy policies obscure the line between what you own vs. what they own. For consumers, that might be an acceptable bargain. But for small businesses that trade may be unacceptable.

2. Free services don’t serve you. Free services can't provide great customer service. You know this to be true if you’ve ever sent an email to a free service to get help. Imagine relying on one of those free services to run your business!. What happens when you need help, and you need it now?

3. Free services for small businesses don’t last. Free services for small businesses come and go. Google Apps used to be free, now it isn’t. Free services don’t last for the small businesses because the market is so challenging to reach and serve. My guess is that understanding the market challenges is the key to why Google Apps for Business going paid is a good thing for small businesses.

Why Serving Small Businesses Is So Hard

According to the census bureau, there are 30 million small businesses in the U.S. That sounds like a massive market, but it’s less than a tenth of the U.S. population of 311 million. If you’re going to try to reach small businesses with mass advertising, fewer than 1 in 10 audience members will likely be a small business owner, making the process woefully inefficient.

Worse, unlike enterprise customers, small business owners are incredibly hard to find — literally. With the rise of telecommuting and home-based businesses, a growing percentage of small businesses have no “front door” for salespeople to find. So it costs even more to reach them.

Third, when you do find them, small business owners are demanding. They are busy doing real work, so they expect their “stuff to work” too. They also tend to have heavier usage patterns than consumers and when they need help, they need it right away.

Finally. compared to enterprises, small businesses are much more likely go out of business.

Why Paid Is Good = Innovation & Service

But why should small businesses care about their vendors' problems? Why is it a good thing for them that Google Apps For Business went paid? How are small businesses going to benefit by paying for something they used to get for free?

The answer: innovation and the arrival of services tailored to meet their needs. Just think of how many things small business owners run on Word and Excel and you get a sense of how under-served this market really is.

Reaching the small business market is an expensive and risky proposition. As we’ve just seen with Google, "free" just doesn’t work in a market full of clients who use your service heavily while demanding great customer support. Great service people cost money. Need proof? Google now provides 24/7 phone support for its paying business customers.

Google Apps for Business going paid makes serving the small business market more attractive - for everyone. As long as all Google Apps were free, smart entrepreneurs and competitors were inclined to avoid investing in innovation for small businesses for fear Google could step in and wipe them out with a free service.

How "Free" Stifles Competition

In the dot com era, companies were terrified to do anything that Microsoft might be interested in, and venture capitalists would stop a hundred businesses before they could start with one simple question: “Why won’t Microsoft do this?”

Similarly Google has scared people out of doing things, because thanks to the significant advantage created by its search business, the company can afford to lose money on other activities, starving the competition and limiting innovation.

Fact is, Google can always return to the free model, but it’s a good signal that it has started to charge for things. Wall Street will be happy, and small business owners should be too. That's because I expect Google’s paid model to give entrepreneurs the confidence to step in and start innovating more for the small-business market.

This innovation will encourage services tailored for the long-underserved small businesses of the world. Sure, those services won’t be free, but they will be affordable, just as Google Apps remains affordable at $50/year.

Just as important, these new services won't come with all the downsides of "free." In exchange for services they need, businesses will trade dollars, not their data or their content.

I'm hoping this signals the start of a new era, one where for the first time ever, competition, innovation and choice are healthy in the small business market.

The good news is that it won’t just be businesses that benefit. We will all benefit because small businesses are the engine that drives the U.S. economy - when we give them the tools they need to succeed, we fuel that engine to take us all into a brighter, richer future.

Image courtesy of Shutterstock.

Having slogged through so much bad news of late, last week Hewlett-Packard marketers were quick to run to their laptops to make hay out of a closely watched market report showing that HP remained the word's top-selling PC maker. But in their rush to shine a positive light on their struggling employer, the PR folks left out the most important point: HP is fighting to stay king of an eroding hill.

For HP, Flat Is The New Up

International Data Corp. (IDC) found that HP's fourth quarter PC shipments last year remained roughly flat from the year before. But that was enough to keep it at the top with almost 17% of the market. Soon after the scrap of good news hit the Web, HP public relations went to work. "We believe HP's position as the market share leader demonstrates out ongoing commitment to deliver superior PC products and experiences across customer segments," the press release said.

Woo-hoo!

Ironically, in tooting its own horn, HP highlighted its biggest problem, which is its need to cling to dwindling markets. The IDC report found that global PC shipments fell more than 6% in the quarter and more than 3% for the year. It was the first time in more than five years the PC industry had recorded a year-on-year drop during the holiday season, according to IDC.

The reasons behind the decline are well known. People increasingly favor smartphones and tablets, both fast-growing markets where HP remains a non-player. Heck, even Microsoft, which helped to usher in the PC era, sees its demise and is pushing tablets and smartphones as the future of computing.

But for HP, staying flat in PCs was so exciting it had to churn out a press release. That's not a good sign. But given what else is going on at the company, the temptation is understandable.

Due to management bungling over the last few years, HP has fallen ever farther behind its rivals in taking advantage of game-changing trends in the consumer and enterprise markets. The company paid a total of $24 billion for Autonomy and EDS to become a player in big data software and IT services, respectively, only to see both deals go down in flames through huge write offs.

HP Battles Workers

Meanwhile, HP is chasing distractions when its focus should be on innovation. In Texas, HP is in a tussle with customer General Motors, which is in the process of giving HP services the boot. Eighteen employees quit HP at the same time and without notice to join GM's efforts to take its IT work in-house.

HP is asking the state court for permission to depose two of the workers; a move GM has called "retaliatory" and a "fishing expedition," according to Bloomberg. It seems HP can't understand why anyone would want to flee a company that has promised Wall Street that it will fire 29,000 employees this year and next.

Bright Spots

HP's current state is not all dark. Last week the company launched a services center for in-memory computing, an emerging technology that significantly boosts application performance by keeping all data in system memory rather than on disks. The announcement came the same day SAP said it was making all its business applications available on its in-memory database called HANA. HP plans to throw its support behind HANA and is also working on its own in-memory platform, codenamed Project Kraken," according to InfoWorld.

Kraken-like initiatives are what HP's PR team should be crowing about, rather than the company's managing not to shrink in the cratering PC market. Chasing hot new markets - not scrambling to be the last PC vendor to avoid extinction - is the only way to change HP's image as a dinosaur.

Dinosaur image courtesy of Shutterstock.

When Microsoft gave its first public preview of Windows 8 in 2011, the now-President of Windows Julie Larson-Green sent shockwaves through the Windows development world with just four words: "our new development platform." The reason? That platform was based on HTML5 and Javascript.

To casual observers, that makes sense. HTML5 is roaring to the forefront of development far faster than industry predictions. We even saw some commercial proof of the platform's "Write Once, Run Anywhere" promise in 2012. To seasoned Windows developers, though – particularly those building enterprise apps in dedicated Microsoft shops – it crushed their world. After spending decades learning to use different languages and development environments – most recently Microsoft's proprietary but feature-rich WPF and Silverlight – the thought of jumping ship for HTML5 was devastating.

Microsoft has backpedaled in a number of forums since then, assuring developers that while HTML5 is the new standard for cross-platform apps, other tools will continue to work for Windows-only development. But the writing is on the wall. HTML5 is the future, so if you develop enterprise Windows applications, should you bite the bullet and make the move?

Will HTML5 Save Enterprises Money?

The cost argument will rage for some time. One camp holds that HTML / Javascript developers are cheap and plentiful, so HTML5 is necessarily cheaper. The other side believes that instability of the HTML5 spec (only recently finalized and not scheduled for Recommendation status until 2014) compared to the more mature development environments available for "traditional" Windows development means developers can build complex applications faster, without worrying about tweaking things down the road.

The CTO of one small software vendor saw value in both views: "For our simpler apps, I can hire kids with good Javascript skills and let them learn the Windows specifics on the job. For really complex applications with tens of thousands of lines of code or more, It would be dumb to break what already works." He added that his more experienced Windows developers are mentoring the generally younger HTML developers to cross-pollinate knowledge. "Ultimately, each tool will have a use, for at least the next several years, and I want all of my devs to be able to pick the one that makes sense."

"Serious Coders" vs. "Script Kiddies"

His biggest problem so far is a reluctance to embrace change. "I have a couple 28-year-olds who act like grumpy old men, afraid that the 'script kiddies' without any real computer science knowledge are moving in on their turf. To them, HTML5 cheapens the application, dumbs down their resumes, and opens the door to a whole lot of bad coding from people who know how to make Web pages, but don't have any formal experience with structured coding."

The last point is probably the most valid. Knowing HTML and some Javascript isn't a particularly high bar, so enterprises need to be diligent about hiring and mentoring. If you pull developers off of Craigslist for $15 an hour, you're not going to get quality enterprise work. Even well-established Web developers coming from a LAMP background may not have the right experience. A mentoring program using Agile or another pair-programming methodology – can be a great way to ease Web developers into a more formal programing environment.

What Do Developers Want?

One long-time C++ and (more recently) C# developer wasn't excited about the rise of HTMLt5: "Eh. I get what they're doing. It's all about the portability of UI. They've been on that path for a long time, but whatever. The thing is, developers don't want to learn a new markup when Microsoft has already forced them to learn one recently. WPF / Silverlight is crap, but so was Winforms. If they'd skipped WPF, they'd probably have more success trying to get people to shift to HTML5... I'll go where the money is, though."

That last point is telling. Developers will follow the work, they really don't have a choice. And that it won't be long before everyone will be doing at least some work in HTML5. Smart enterprises will be begin mixing in some of that work now makes sense, but there's not yet good reasons for a complete shift.

Two rays of light have pierced a so far gloomy winter for Microsoft: the company signed big software deals with both Chicago and the Pentagon, two wins neither Google nor the Federal Trade Commission can dampen.

Chicago Buys Office 365, The Department of Defense Gets That And More

On Thursday, the Windy City announced that it had signed a four-year deal with Microsoft for Office 365, shifting the company's three email systems, documents and spreadsheets over to Microsoft's cloud-based platform. Days earlier, the Department of Defense announced an even more sweeping deal, consolidating on Windows 8, Office 2013 and SharePoint 2013 in a three-year deal worth $617 million.

For Microsoft, which had to sit by and endure what was essentially a slap on the wrist to rival Google by the FTC, the two announcements represented a reprieve of sorts. It's still unclear how Microsoft's holiday sales fared, but the conventional wisdom appears to be that the Windows 8 launch was disappointing, and that the complementary Windows Phone 8 launch, while appealing, still hasn't caught fire with consumers, who still clearly prefer iOS and Android devices.

The Business Division Remains Microsoft's Profit Engine

Year in and year out, however, Microsoft's Business Division remains the keystone upon which Microsoft supports its other businesses. For Microsoft's first fiscal quarter ending in October, the division was both the most profitable ($3.6 billion) and generated the most revenue ($5.5 billion). For all the talk about the Windows operating system, that was only Microsoft's third-most profitable division, and also generated the third-most revenue out of Microsoft's five business units.

It's little wonder, then, that Google has taken aim at Microsoft, with its Google Apps for Business, which only recently ceased offering its free services, essentially daring customers to switch to Microsoft. Check the Google Enterprise blog on any given day and you'll find a list of recent design wins: K-pop sensation PSY's label, YG Entertainment; Banshee Wines; First Team Real Estate and so on. 

Pricing Pressure From Google?

Microsoft is still getting wins, too, though Google's pricing pressure has undoubtedly had an effect. The DOD's deal, led by the Army Contracting Command in collaboration with the Defense Information Systems Agency, the Army and the Air Force, "demonstrates the best pricing DOD has received to date for Microsoft desktop and server software licenses", officials said, and representing a $70 million per-year savings. That means that, for whatever reason, some of Microsoft's traditional revenue stream has dried up.

The question, of course, is why the DOD received preferential pricing: military reluctance to use Windows 8? Pricing pressure from Google Apps? And since the package has been customized to meet the specialized needs of the Defense Department, does the DOD's package use the Windows 8 interface and Start screen? It's rather hard to believe that military personnel would be swiping in from the sides of the Windows 8 screens, sharing battle plans and other sensitive documents via the Windows 8 charms.

Meanwhile, the City of Chicago did not publicly disclose how much money it spent on the contract with Microsoft, and the contract is not (yet) on the city's website. The City of Chicago claimed that it saved $400,000 per year for its 30,000 government users. 

“This strategy is an innovative solution for the City, making our operations more effective and secure and saving taxpayer money,” said Chicago Mayor Rahm Emanuel, in a statement. “We are leveraging new technologies to streamline and modernize the way we do business in order to provide the residents of Chicago with the best service at the best price.”

Cloud... And No Cloud

The contracts also reveal some hidden gotchas for customers, too. The City of Chicago said that all of its email and desktop application users would migrate to the cloud "by the end of 2013," meaning that the city will require a full year to make its transition. And at the end of the contract, what then? Will Chicago switch back to a locally hosted email system? Of course not - the cost would be prohibitive. From now until eternity, Chicago will be stuck in the cloud, with really only Google and Microsoft to choose from as hosted email.

But while Chicago has bought itself a cloud solution, the DOD has not. Microsoft may be charging less for Office 365 in an attempt to convince users to switch, but the DOD appears willing to pay more for both security and flexibility.

Hewlett-Packard has made if official. The Justice Department is indeed investigating HP's allegations that Autonomy execs tricked the troubled technology giant into paying way too much for the British software maker. In disclosing the probe in its annual regulatory filing with the Securities and Exchange Commission, HP has started the next chapter in its ongoing feud with Autonomy founder Mike Lynch - who denies duping HP.

Probe Expected

The probe was expected, given that HP announced last month it had proof that it had been conned in last year's $10.3 billion acquisition-turned-fiasco. At the time, HP said it had turned over the evidence to the Justice Department, the SEC and the U.K. Serious Fraud Office. "On November 21, 2012, representatives of the U.S. Department of Justice advised HP that they had opened an investigation relating to Autonomy," the company reported to the SEC Thursday.

HP claims Autonomy executives inflated the company's value by reporting some revenue prematurely or improperly. The alleged bogus reporting accounts for almost 60%  of the $8.8 billion write down HP booked last month on the Autonomy deal.

Ex-Autonomy Chief Executive Lynch responded to the investigation Friday by continuing to deny any wrongdoing. On a website Lynch set up to counter HP's allegations, he reiterated his complaint that HP has yet to release any details of the alleged scam. "Simply put, these allegations are false, and in the absence of further detail we cannot understand what HP believes to be the basis for them," Lynch wrote.

Details Still Hidden

HP is still keeping the details of the allegations confidential among itself, prosecutors and regulators. Thursday's filing did not provide any new details. Nevertheless, Lynch is ready to tell his side of the story. "We will co-operate with any investigation and look forward to the opportunity to explain our position," he wrote.

Throughout the claims and counterclaims, HP stock continues to get hammered. From the beginning of 2012 to Thursday, the price has fallen 45%.

Officially, the Federal Bureau of Investigation won't discuss whether or not it is involved in the case. However, an unidentified source told Bloomberg that the agency is assisting the SEC in its investigation.

While Autonomy execs are under the investigatory microscope, shareholders are blaming HP for the deal that ended up wasting billions of dollars. In the SEC filing, HP lists 10 lawsuits, including four class-action suits.

Apotheker Still Blamed

HP CEO Leo Apotheker, who was fired in September 2011, led the Autonomy deal as part of a plan to get HP deeper into the high-margin enterprise software business, while reducing its dependence on selling low-margin PCs. Autonomy software searches, organizes and manages data within large companies.

Apotheker sealed the end of his short career with HP when he announced he was considering the sale of its PC business. Because he had no buyer, Apotheker's disclosure sent Wall Street analysts into a tizzy. To them, Apotheker appeared to lack a clear vision or roadmap for saving HP from its years of bad deals, management turmoil and strategic blunders.

Current HP CEO Meg Whitman was on the company's board when it signed off on the Autonomy deal. Nevertheless, she has distanced herself and other board members from the debacle by laying the blame on Apotheker and then mergers and acquisitions head Shane Robinson, who also left the company in 2011.

History aside, now that federal prosecutors are officially involved, the repetitive claims and counterclaims being tossed back and forth between HP and Lynch won't matter much. The companies, their customers and shareholders now have to hope for clarity in the courts, especially if charges are filed.

Image courtesy of drserg / Shutterstock.

When the Web was still text links and tables, Adobe Flash brought us rollovers, interactive games and kitten videos. But a hard stand by Apple was the begining of the end for the groundbreaking technology, and guess what? We'll be OK without it.

The Backstory

The early years of the Web were pretty barren, multimedia-wise. Browser inconsistencies, bandwidth disparities, perpetually evolving standards and the cowboy coding needed to hack everything together made interactivity beyond text forms a mess.

Quality online multimedia experiences were a joke. To fill the holes, ambitious developers released a slew of plug-in applications users could install to augment their experience. Some of these were specific enhancements, like allowing a browser to display a new image format, while others were entirely new environments that ran inside a browser. Over time, the best plug-ins tended to work their way into the browsers or updated HTML specifications, while lesser ones died on the vine as they became irrelevant.

The biggest exception to this rule was Macromedia Flash, a graphics and animation client plugin with its own design environment. Flash, which began as a Mac and Windows application called FutureSplash Animator, made it simple for designers to bring shrinkwrap-quality, graphically rich interactive media to Web users for the first time.

Over the next decade, Flash's powerful, simple authoring environment attracted legions of developers and designers and its user base exploded. Ad agencies and ambitious businesses jumped on the additional interactivity it added to vanilla HTML, and by 2000, Flash was unavoidable, showing up in interactive ads, pop-up menus and online video players. In some cases, it even replaced entire websites. Adobe's 2005 purchase of Macromedia further consolidated the design tool industry and gave Flash even more support.

While pop-ups and online games were the most noticeable example of the platform's dominance, Flash started creeping into traditional business applications, as well. The broad developer base and cross-platform appeal gave rise to Rich Internet Applications (RIA) like Balsamiq Mockups, a prototyping tool of which I'm both a fan and a paid user. RIAs require installation of a client framework (in Adobe's case, the Adobe Integrated Runtime environment), but developers can push out a single application in a very short time that runs on any compatible client, which is also a big plus for mobile workers.

The Problem

In a word: Apple.

Flash's problems run deeper than any one competitor, but Apple brought down the house. When Apple released the iPhone and iPad without support for Flash, it ended a long history of cooperation between the two companies (Apple actually owned a fifth of Adobe early on) and called into question the validity of Flash's cross-platform claims. Sure, Android supported Flash, as did Windows, Linux and Apple's own Mac OS, but iOS was a glaring hole.

There were a host of other problems with Flash, from serious security flaws to performance problems (many of which Steve Jobs called out in his now-famous 2010 post), but in the end, the lack of an iOS client spelled the doom of mobile Flash.

With iOS off the table, Adobe ceded the Android market, as well. That leaves mobile developers with the task of developing redundant native apps or – as Apple and others have long recommended – apps built in HTML 5.

And there's the issue. By giving up the mobile Web, Adobe has effectively abandoned the rest of the Web, too. Why bother writing a desktop-based browser app in Flash when you can just reuse (or at least tweak and repurpose) the code you've written for mobile platforms? It took 10 years longer than usual, but Apple's refusal to support Flash exposed a truth. Technology has caught up, and we no longer need Adobe's plugin–or at least we're close. Microsoft announced a limited role for Flash in Windows 8's Metro browser. It's an acknowledgement that we're not quite Flash-free yet, but the writing is on the wall.

The Prognosis

With tablets and smartphones outselling PCs, the mobile Web is the Web, so Flash isn't an option. Developers can bridge UI differences between devices (e.g., designing for both mouse-driven and touchscreen interfaces) within HTML 5, so Flash in the browser will all but disappear.

Can This Technology Be Saved?

Flash will never return to the prominence it once had, but it will linger on the desktop for as long as there are skilled developers willing to do the work. Adobe offers solid tools that appeal to a lot of non-traditional developers, and the development environment could continue to serve those users as they build apps for other platforms. However, compared to the juggernaut of an ecosystem Flash used to be, that's a niche market, so Adobe could easily decide to bow out or sell off the product.

Previous Technology Deathwatches

In-House Datacenters: No change

Point-and-Shoot Cameras: No change

Video Game Consoles: The utility of bundles apps like Netflix and Vudu seems to be slipping. An NPD Study showed that one in five consumers who view streaming video on their TVs do so without a peripheral device.

Blu-Ray: The same NPD study reveals that "online video is maturing” as users migrate to watching streaming media on their TVs.

QR Codes: It's been a mixed bag. While Bank of America is testing QR codes for mobile payments (good news for the technology), a security researcher demonstrated how a malicious QR code could be used to wipe a Samsung smartphone.

Company Deathwatches

For an update on our baker's dozen of company Deathwatches, check out our updated ReadWriteWeb DeathWatch Update: The Unlucky 13.

Steve Jobs image by Matthew Yohe.

The common perception of how big data is used centers around giant multi-national enterprises spending millions trying to fine tune their business strategies to eke out every last penny from their customers. But in reality, big data is worming its way into businesses large and small, often as a service instead of on-premises software.

The Evolution Of The Comment Card

Visit a bustling diner in a small town and you may see them tucked in among the bottles of ketchup and sugar packets on the linoleum counter: 3 X 5 comment cards. How was your meal? How was your service? Fill it out and tuck it in the little wooden box by the cash register, please.

Regulars might make their concerns known directly to the staff, but diners such as this - like nearly every other business in the world - need to attract and keep new customers in order to grow. That's the point behind comment cards: get as much feedback as you can so you to improve what needs fixing and keep doing what's working well.

Moving the comment card into the 21st Century is essentially what big data is all about.

The most common form of big data in busines today was created as a technological response to tracking all of the data that was generated by commercial websites. Once marketers and other business execs saw that they could monitor an online customer's responses all the way down to the mouse click, software engineers started figuring out a way to keep that data and mine it for ever more useful information.

The combination of speed and volume needed to catch all of this information is what makes big data tools and technology really necessary. But for the vast majority of businesses that do not have big ecommerce sites, is big data even worth the attempt?

It turns out, yes.

Big Data Tools Work For Small Data, Too

One of the easier ways smaller businesses are taking on big data is seeing the general value of data analytics no matter how big or small the data set is. That message is practically a non-brainer: business owners are scanning the headlines every day and getting excited about applying data to their decision-making process.

Social media is one quick way to implement big data within a smaller business. Used and analyzed properly, the information from social media can give any business instant feedback that's far more robust and immediate than those old-fashioned comment cards.

"Every time we perform a search, tweet, send an email, post a blog, comment on one, use a cell phone, shop online, update our profile on a social networking site, use a credit card, or even go to the gym, we leave behind a mountain of data, a digital footprint, that provides a treasure trove of information about our lifestyles, financial activities, health habits, social interactions, and much more," wrote former Tivoli CEO Frank Moss in his 2011 book The Sorcerers and Their Apprentices.

Big-Data-as-a-Service (BDaaS)

Using big data can go beyond mining social media as a juiced-up form of the comment card. Big data can also be integrated with existing business practices to improve and expand day-to-day operations.

It's becoming pretty well-known that big data and fast data analysis are being used by large hotels and chains to improve their yield management processes. This kind of infrastructure is typically beyond the reach of smaller hotels, inns and bed and breakfasts. It's probably overkill anyway: while a big hotel near Orlando, Fla., area might see 75 room pricing changes per day, a small independent lodging in a less-volatile market might only see a couple of price moves daily.

But that doesn't make the need for a smaller inn to adjust to local market changes any less important, says Erik Hovanec, CEO of LeisureLink, which specializes in providing yield-management as a service to smaller hospitality locations.

One of LeisureLink's clients is a 120-room property outside Myrtle Beach, SC, that "is great at hospitality, not necessarily at IT." Hovanec described. Using his company's service, the property is able to tap into information about local Myrtle Beach hotels and see real-time pricing information on other properties and make adjustments accordingly.

This is exactly what the larger hotels and chains have been doing for a while. But now this service is available to smaller, mid-market establishments. Typically, a large hotel or chain might invest $30-$40 million just to increase their yield management from 90% to 95%. Hovanec boasts that since LeisureLink's service is often the first real step into automated yield management for smaller hotels, their efficiency in yield management can rocket from 20% to 80%.

Can Big Data Work For Every Business?

At some point, any company considering a big-data approach needs to consider the one basic question: is there information out there that will help improve the business? If there's a yes in there, then a search for a big data solution might be worth the effort.

It's not that we really need another another "as-a-Service" acronym, but thanks to the use of Internet-based Big-Data-as-a-Service (BDaaS), you don't have to be a giant enteprise to play any more. These days, there's a good chance that someone out there will have the information you need or can help you find it.

Image Courtesy of Shutterstock

Businesses are subscribing to software, storage and computing power delivered over the Internet at a jaw-dropping pace, Over the next five years, global spending on cloud-computing services will increase at a pace five times greater than the growth of the information technology (IT) industry as a whole. To survive in this new landscape, technology makers will have to completely redefine their products, business models and cultures

Instead of selling direct to the corporations that actually use computing services, hardware, software and infrastructure vendors will all need to pivot to serve the new cloud services new market. That’s the lesson from the latest forecasts by market researcher IDC.

The difference is stark. IDC estimates companies will spend $100 billion on IT cloud services by 2016. That compares to $40 billion companies are expected to spend this year and represents a five-year, compound annual growth rate of more than 26%.

Software Disruption

Huge disruption is expected in the software market. Salesforce.com, launched in 2000, perfected the Software-as-a-Service market for businesses, and its success has led to big-name companies like Oracle, SAP and Microsoft introducing SaaS versions of their own business software. “You have to be a strong player in SaaS now, if you’re going to survive as a software vendor,” said Frank Gens, IDC analyst and co-authorof the forecast. Delivering software over the Internet will account for almost 60% of the public IT cloud in 2016.

Heading into to the cloud means redesigning products and making major business model changes for software makers. The lump-sum software sales prices and annual maintenance fees software makers get today will have to be converted into monthly subscription fees. It’s not at all clear whether those fees will match the totals of the sales and maintenance charges they replace. And they money will come in at a very different pace - distributed over time rather than with the majority up front.

In addition, customers will pay only for the software and service they actually use, rather than licensing the whole package. “That is hugely disruptive for the market,” Gens said. “Traditional vendors are all looking at a financial abyss that they’re trying to vault over.”

The only way to make the numbers work, vendors and observers agree, is for software vendors to dramatically in increase the number of customers they serve. The days when large vendors could build a robust business selling to just the Fortune 5000 are nearing an end. Instead, most software makers will have to sell to everyone, since success will be measured in volume.

“If you just stay with the Global 5000, it’s going to be very hard to be a successful large scale IT vendor anymore,” Gens said. “You have to reach out to and you have to love small businesses, even the smallest ones.”

Hardware Vendors Have Their Own Problems

Hardware vendors will also suffer stress in the transition. To a large extent, heading to the cloud represents a continuation of the trend toward virtualization that has dominated IT for the last 10 years. Before companies could run multiple operating systems on virtual machines, servers were often used at 20% to 30% of capacity. With the cloud, on-premise hardware will share computing power with an infrastructure service provider, which will result in companies doubling the amount of capacity they get with their hardware. Assuming equal demand, that’s likely to suppress the need for new servers and associated equipment.

To make up the difference in selling less hardware to enterprises, vendors will have to focus on those companies delivering cloud services, whether its SaaS companies or Infrastructure-as-a-Service (IaaS) vendors like Amazon and Rackspace. Demand from such companies will increase as more businesses of all sizes rent more server capacity in the cloud. Will it be enough to make up the difference?

“The market will absorb as much capacity as the industry can throw out there, if it’s cheap enough and easy enough to access,” Gens said.

Corporate IT Shops Get Hit, Too

The disruption won’t be confined to hardware and software vendors. Corporate IT shops will also have to deal with dramatic change. Their tasks will shift from managing silos of their own technology resources to working with cloud vendors to get the services they need, properly integrated, at the best possible price.

Traditionally, IT shops have been divided into groups with separate organizations taking care of servers, databases, storage or sets of applications. Under the cloud model, the vendors take much more responsibility for managing and maintaining the software and hardware components.

Many jobs that focused on individual areas of in-house software will become obsolete. Instead, IT staff will be managing cloud service providers to set service levels and make sure those levels are met. “If that cloud service fails, you’re in deep trouble,” Gens warned. “Suddenly, you don’t control it. It’s your vendor controlling your IT operation.”

That’s a big deal for IT departments, since CEOs will still hold them responsible for they the company’s technology strategy and execution, even if much of the actual work gets “outsourced.” On the plus side, they should be able to save money - on up-front capital costs if nothing else - and take advantage of the latest technology and trends without having to make huge investments themselves.

As the cloud brings significant risks and benefits hardware and software vendors as well as their customers, everyone will have to work together to successfully navigate the technology evolution. But among the many choices for all the parties, opting out won’t be one of them.

Image courtesy of Shutterstock.

As cloud computing and Software-as-a-Service continue to take hold, Microsoft’s flagship Office productivity suite now appears less a standalone product than a hierarchy of services, each with different levels of functionality for different markets. The big question: Will your version of Office do everything you need it to?

On Wednesday, sources told the Verge that Microsoft plans a “preview” version of Office for the basic Windows RT version of the Surface tablet. That version of Office will lose support for Visual Basic, macros and third-party add-ons, specifically to optimize the Surface’s battery life. The preview version will apparently be dubbed “Microsoft Office Home & Student 2013 RT Preview,” the Verge reported.

If that’s true, Office functionality will essentially be spread across three tiers: Office Web Apps for the most basic consumer use, Office RT for basic tablet use and the full-fledged Office boxed software product, also available in an Office 365 subscription model. There’s also a fourth tier that Microsoft hasn’t really talked about: Office for Mac, which will remain on the “legacy” model of the existing Office platform.

Microsoft’s official line is that nothing’s done until it’s done. “We have not finalized packaging for the next release of Office,” a Microsoft spokeswoman said via email.

Still, we can draw some basic conclusions. First, Office users will get different levels of functionality depending upon the device they’re working on. Second, the “premium” experience will still come with Microsoft’s Office/Office 365 for Windows 8 machines. And third, all Office users will benefit from working within a connected environment.

The notion of an Office hierarchy really isn’t new; Microsoft packages different versions of Office 2010 for “Home and Students” and for “professionals,” But those packages have typically been differentiated by which applications a particular version of the Office suite includes, not so much the functionality of the included apps.

The Guiding Forces of Office

According to Rob Helm, an analyst for Directions on Microsoft, Office’s evolution is being shaped by two forces:

“Microsoft is trying to extend Office through the Web and on portable devices, and that’s forced it to rethink how it extends Office, so that it has a solution that extends to all these different places that Office runs,” Helm said. “But that means saying goodbye to a lot of old buddies for a lot of Office users.”

Those “buddies” represent the legacy of macros and Visual Basic helper applications, which corporations have used to customize Office for their own use. Directions on Microsoft, for example, has traditionally used a VBA (Visual Basic for Applications) module to assist its analysts in creating and displaying Microsoft’s org [organization] charts, Helm said.

If Surface users want to run VBA code, however, they will need to have the more expensive Surface Pro, which will run the full-fledged Windows 8 operating system as well as the standard Office suite.

“It’s pretty clear that the technology that Microsoft has been promoting for applications, Visual Basic, has been left behind by technical trends: the Web and tablets,” Helm said. “Microsoft is trying to get to a new generation of technology and cutting out the old technology in Windows RT is the first sign that the old technology is going away, and the new Web-based Office development is coming in.”

And what is an Office app? “Essentially a Web page integrated into Office as custom content, very similar to how iFrames integrate with other pages on the Web,” Rolando Jimenez, a program manager for Microsoft, wrote in a blog post this week. Specifically, the app is a Web page, most often with a Javascript pointer to the Office Javascript library, plus a lightweight XML description of how the app interacts with Office. Apps will work offline, Microsoft said.

Office Store Open for Business

In other Office developments, Microsoft opened the Office Store this week, where users can download a Merriam-Webster dictionary plugin for Word, for example, or an Olympics medal tracker app for Microsoft Excel. As with the Microsoft Windows Store, Microsoft will take 30% of the revenue from each paid app sale.

The Office Store is also the showcase for the new Web-based Office app model. Developers can still use Visual Basic and Visual Studio for Office, but Microsoft won’t allow versions of the app to be available via the Office Store, Brian Jones, Group Program Manager on the Office Solutions Framework team, said this week.

Helm - from Directions on Microsoft - said he believed that the VBA model would prove to be a “real challenge” to the ARM architecture underlying the lower-priced Surface RT tablet, another key reason for its omission. But, he added, he also believed that Microsoft would inevitably extend the Office app model to the Surface RT tablet and even Office Web Apps.

“Eventually Microsoft will want to extend apps to where-ever Office runs,” Helm said.

“If the Office Store doesn’t support Office RT, that’s because Office RT hasn’t broken cover yet,” Helm added.

What About Mac Office?

So far, Office for Mac has been conspicuously left out of the discussion. Microsoft has said only that the new model for Office apps won’t apply to the next version of Office for the Mac. The most significant recent changes for Office for Mac 2011 has been adding cloud storage via Microsoft’s SkyDrive and support for Apple’s “Mountain Lion” release.

“You’ll see that this is really just the first step in a new direction for Office programmability,” Brian Jones, group program manager of the Office Solutions group, wrote in response to a user question. “We would love to have had support across all of the platforms where Office runs, but for the first version we weren’t able to accomplish that. We [are] instead targeting the Windows client and the Web companion, but designed the app model in a way that we can start to add other platforms as well as we move forward.”

In some sense, that places Office for Mac in the same “legacy” category as Office 2010, leaving Mac Office users on the outside looking in at the new app model. That could push Mac users to competing productivity applications, from Google Docs to Apple’s own iWork suite.

What About Windows Phone?

Microsoft also hasn’t talked much about how Windows Phone and Office will interact, although Paul Thurott has noted that Office 365 will set up a live tile on the Windows Phone home screen, and users will be able to access a Lync client (for unified communications) and gain access to SharePoint collaboration sites.

Microsoft’s Office vision is simple, yet powerful: a connected workplace, where the appropriate form of Office functionality is available on whatever device you’re using. But there are issues, too, because not every version of Office will support everything you may need to do. Some business users, for example, will realize that their little bit of legacy VBA code may keep them from relying on lower-priced, lower-powered ARM-based devices running Windows 8 RT - including the entry-level Surface.

Microsoft sign image courtesy of Shutterstock.

Local development environments can be a pain to set up by hand, despite ready-made deployment environments offered by platform-as-a-service providers. Meanwhile, programmers still need to keep project dependencies consistent between development systems. Installing a private PaaS like Cloud Foundry or OpenShift locally is an option even if you're not planning to deploy to those particular systems, but a new startup called Action wants to make it even easier.

Founders AJ Solimine, Arun Thampi and Peter Jihoon Kim founded the company to scratch their own itch. Solimine and Thampi worked together at Anideo, the mobile application company backed by Facebook co-founder Eduardo Saverin. There, they had a hard time keeping development environments consistent. "We kept running into situations where something would work on one machine but not the other," Solimine says. So they started a project to solve the problem. The result is Action, a fully hosted development environment. The team calls it a Heroku for development environments.

Action is more than just a cloud-hosted IDE like Cloud9 IDE. Action includes a full Unix-like environment for app development, complete with an in-browser shell. Action has its own IDE, or you can use VIM or eMacs in the shell. Eventually, Kim says, you'll be able to use your native desktop IDE or text editor and sync your project with Action. That means Action will be able to accommodate Visual Studio, Eclipse, Sublime text or whatever tools with which you feel comfortable.

Some other features in the pipeline include a one-click deploy option for cloud providers like Heroku and Engine Yard, and an add-on system that will allow developers to integrate services like Heroku PostGres or MongoHQ.

Pricing will be based on usage, typical of cloud services. The service is launching today in private beta. ReadWriteWeb readers who want an invitation to take an early look can sign up here. Invitations will roll out over the next few days.

In an expletive-laced video, Linux creator Linus Torvalds blasts hardware vendor Nvidia as “the single worst company we have ever dealt with,” in response to a question on Nvidia driver support in the Linux operating system.

The statement, posted to YouTube and making the rounds over the weekend, was made during an interview and audience Q&A session at Finland’s Aalto University, where Torvalds visited last week after co-receiving the prestigious Millennium Technology Award.

Responding to an audience member’s laments about Nvidia’s lack of support for Linux, Torvalds enthusiastically agreed with her concerns.

“I know exactly what you’re talking about, and I’m very happy to say that it’s the exception rather than the rule. And I’m also happy to very publicly point out that Nvidia has been one of the worst trouble spots we’ve had with hardware manufacturers. And that is really sad because Nvidia tries to sell chips - a lot of chips - into the Android market, and Nvidia has been the single worst company we have ever dealt with.

“So Nvidia? Fuck you!” Torvalds concluded, extending the middle-finger gesture right at the camera recording the event. To laughter and applause.

Nvidia’s reputation within the Linux community has never been well-regarded. Although the graphics processing company started providing Linux support for its devices as early as 1999, that support has often been haphazard in execution and never open, as the Linux development community would prefer.

In order for any particular hardware device to run on an operating system like Linux, Windows or Mac OS X, a hardware manufacturer must provide driver software that will enable developers to make their code communicate with the device. Because of its huge market share, Microsoft has very rarely had issues with hardware vendors not supplying drivers. Apple doesn’t have the problem because it controls the core hardware that runs OS X.

Linux's Longstanding Driver Issues

But Linux has always had problems with getting hardware vendors to provide proper - or sometimes any - driver support for their hardware, which Torvalds went on to detail after dinging Nvidia:

“Don’t get me wrong. I’m not saying that other companies are perfect, either. We have had companies that just don’t care. We’ve had companies that felt that Linux wasn’t a big enough market. We’ve had situations like that,” Torvalds told the crowded university classroom.

And those situations are plentiful. Gigabyte, for instance, once publicly responded that users running Linux on one of its motherboards and having problems with a certain power regression features should just quit Linux and install Windows instead.

That same forum on the Phoronix website recently posed the open question “Where Are the Biggest Problems With Linux?” and many of the responses still cite hardware driver difficulties as serious concerns.

In the case of Nvidia, the company does provide Linux drivers, but they are often maligned as broken. Emphasizing intellectual property and contractual concerns, Nvidia has released only the binary executable versions of these drivers, which makes it much harder to solve compatibility issues between driver and operating system.

This rankles Linux developers, who would prefer the actual driver source code in order to design better interfaces between OS and hardware.

It is not clear if the gap between Nvidia and Linux will be closed anytime soon. There are indications that the desktop market may be shrinking, and Linux’s market share on the desktop has always been very small. Given Torvalds' public treatment of Nvidia, it would not be terribly surprising to see the vendor simply wash its hands of Linux.

Servers to the Rescue?

What may prevent that is Nvidia’s line of GPUs (Graphics Processing Units) for accelerated servers. Linux is still very large in the server market, and Nvidia might not want to cut itself off from that revenue stream just because of Torvalds' incendiary remarks.

Indeed, it is Linux’s strong presence in the server and cloud space that keeps hardware vendors interested in the operating system. Makers of desktop-specific hardware, on the other hand, may hear Torvalds' remarks and start to rethink their own commitments to Linux on the desktop. If that happens, we might see a lot more angry rants from Mr. Torvalds.

Venture capitalists are armed to the teeth with analytical tools. And they should be. Their careers depend on making intelligent investment decisions. And yet, against reason, VCs often behave like teenagers, throwing their money at companies simply because they’re in fashion.

Me-Too Investing

Lately the trend has been toward consumer internet companies: “Hey, that venture firm has a social media play in its portfolio, we should have one, too.” For too long, that’s been the thinking at a lot of VC outfits.

Not any more.

Venture capitalists placed $2 billion with IT startups in the first quarter of this year, according to a survey by Dow Jones VentureSource, a 14% increase from the first quarter of 2011. Meanwhile, investors put 76% less investment in consumer internet companies. Software companies attracted the most funding, $1.3 billion, which is a 61% bump from 2011.

Social Is Overcapitalized

“I see some people looking at the enterprise space again, probably as a reaction to areas like social being overcapitalized,” says Bob Ackerman, managing director at Palo Alto-based Allegis Capital. “The logic in the venture herd seems to be, ‘If five companies in an area are gaining traction, let’s create 500.’ But at some point reason prevails and people say, ‘Hang on, that’s not going to work out. What are other areas that are not as excessively capitalized?’ There’s some of this phenomenon from a venture perspective as it relates to the enterprise.”

Allegis Capital has long invested in enterprise startups, whether they’re trendy or not, targeting companies aimed at business problems that require high-value, technology-based solutions. These companies may not be sexy but they pay the bills, because enterprises have problems and they will spend money for solutions.

Avoiding the Herd Mentality

“Part of the challenge in the venture world is that people want to hitch their wagon to the fastest-moving star,” Ackerman says. “The problem with that approach is that when you see the herd moving in a given direction, it’s probably too late. So we tend to be counter-cyclical at Allegis. We don’t want to be running with the herd because it tends to pull down returns.”

It’s not only VCs who travel in herds, he adds, but entrepreneurs as well. Ackerman has watched a lot of talented engineers shift their focus to social media and other consumer internet startups in the past few years. Enterprise software is hard, and a lot of entrepreneurs these days are impatient.

Fighting Immediate Gratification

“This is a change,” he says. “Go back 15 years - people were more studied about identifying an opportunity and building a company for the long term. But when you get into these boom-and-bust cycles, with people trying to capture the boom, it’s driven by a desire for immediate gratification. That has sucked some of the air out of the enterprise space.”

There is innovation going on in the enterprise arena. One of the most-talked-about business-software startups right now is Asana, which was founded by two guys from Facebook. The company makes task management for teams.

Building Real Businesses

Another reason Enterprise startups don’t get as much attention is because “they’re not flashy,” Ackerman says. “But they are building real businesses and what we’ll see at the end of day is that many of these enterprise companies that have been slowly building their companies and succeeding, you will see a tortoise-and-hare scenario. In many cases they will prove to be more sustainable.”

Look, for example, at the $60 billion IT security market. It’s a real problem with real customers looking for real solutions. And as they find solutions, ROI-driven startups are already grabbing a significant piece of company tech budgets.

The Laws of Physics Still Apply

As the investment data indicates, VCs are once again recognizing the fundamental strength of enterprise startups - and putting more money into them.

“Some investors left the enterprise for the promise of faster returns,” Ackerman says. “But you will see more people waking up to the realization that the streets aren’t paved with gold, the laws of physics still apply, and let’s go back to doing things the old-fashioned hard way.”