12.19.02
Posted in Technology Market Trends at 11:57 pm by Tony Baer
One of the unwritten laws of economics is that whatever goes down must come up, eventually. So it was with interest that we heard several leading venture capitalists present their outlooks for the year ahead.
On our end, we’ve seen anecdotal evidence that enterprises are finally signing the dotted line for projects previously stalled in the pipeline over the past 12 – 18 months. And we’re seeing companies, like Oracle, actually beating the street in their latest earnings reports.
Undoubtedly, the last 12 – 18 months have been pretty quiet for VCs, at least for those that survived the dot com carnage. The VC speakers mentioned several technologies — mostly consumer-oriented — that they believe will take off next year, such as WiFi and digital photography-related services. It’s no surprise that enterprise customers are more preoccupied with consolidating their IT investments, not venturing out on limbs for new technology bets. Significantly, the VCs regarded web services as investment areas for existing IT vendors, not themselves.
When we asked the VCs to compare today’s conditions with past recessions, their answer was surprising. The current scenario more closely resembles the early 80s, when similar VC bloodbaths occurred after failed bets on disk drive and related hardware technologies. By contrast, the early 90s recession proved relatively tame, because VC numbers had not rebounded — so there was less money for less firms to lose.
So who will get funding during the next go-round? Chances are, it will be prospects that have already fallen on their faces, because VCs value experience — and, most importantly the ability to finish something that you have already started. Which proves that in the venture world, if at first you don’t succeed, those VCs left standing would be more than happy if you try, tried again.
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12.13.02
Posted in .NET, Application Development, Application Lifecycle Management (ALM), Java at 11:55 pm by Tony Baer
In the week following IBM’s announced $2.1 B bid for Rational, rumors have surfaced about Microsoft coming in with a rival offer. But these have only been rumors, Microsoft hasn’t tipped its hat.
But if Microsoft was smart (and it usually is, whether you like it or not), they won’t try topping IBM’s bid. Instead, they’ll consider offering Borland a deal its stockholders can’t refuse. Keep in mind that, thanks to recent acquisitions, Borland now has a stable of products almost as broad as Rational’s, and for the most part, they’re much newer, have similar architectures, are easier to use, and potentially easier to integrate.
Of course, the catch is that Borland’s new life cycle products are built in Java, they aren’t integrated yet, and converting them to C++ wouldn’t be a trivial exercise. Nonetheless, because Java and C++ are quite similar, translation shouldn’t be impossible.
The Borland suite would give Microsoft the perfect opportunity to trump IBM with better product, not to mention the chance to bind Borland’s languages (including the popular Delphi) more tightly into the .NET orbit. Adding insult to injury, Microsoft would preempt Java in the process.
Obviously, such a move wouldn’t be pretty — but then again, when has Microsoft shied away from controversy? Admittedly, such a deal might be too hot to handle, given the federal court’s recent sympathetic hearing on Sun’s case to force Microsoft to bundle JVMs with Windows. Furthermore, given the fact that Borland’s customer base has always prided the vendor’s independence, they would certainly regard a Microsoft acquisition as nothing but a sell-out.
But what are Microsoft’s alternatives? Either they could beef up tools such as Visual SourceSafe into a full configuration manager and develop or acquire some requirements management tools. Or, maybe buy some technology from Compuware. Under such a scenario, Microsoft could view a Borland takeover as the most expedient course, regardless of whether they retain Borland’s customer base.
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12.06.02
Posted in Application Development, Application Lifecycle Management (ALM) at 11:53 pm by Tony Baer
IBM’s acquisition of Rational isn’t surprising, given their longstanding relationships and complementary product sets. IBM has the software development and deployment, while Rational covers the analysis, design, testing; both intersect at deployment. And both have worked closely in global accounts for years.
So why get married? Two factors: the emergence of Microsoft as a rival for both companies, and the fact that Generation Y developers are driving a new fusion of analysis, design, and development.
The Microsoft factor: IBM — which has eclipsed Sun in Java market share — is the most prominent rival to Microsoft’s .NET environment. Rational, which used to OEM a “lite” version of its ROSE UML modeling tool to Microsoft, is increasingly finding Microsoft in its space courtesy of the beefed-up Visio modeling tools in Visual Studio .NET.
The new fusion boils down to the “just do it” factor. By nature, developers below age 30, dude, tend to be impetuous. They’d rather quickly shoot out their own code than stop to analyze or, perish the thought, reuse somebody else’s. Emerging approaches, such as Extreme Programming, supported this mindset with the notion of software design after the fact. The popularity of new concurrent design/development tools, pioneered by TogetherSoft (now part of Borland), offer the supporting technologies. And with TogetherSoft becoming part of the Borland stable, there is the possibility of delivering the degree of rapid integration with requirements and configuration management that Rational never completely offered.
But Rational’s strength has always been in large enterprises with complex development challenges that are ill suited for quicker “Extreme” measures. Its marriage with IBM presents, not only the chance to leverage an existing relationship, but new integration opportunities, such as defect tracking and change management with software distribution and transaction management, or, for those smoking funny things in their pipes, autonomic computing.
As to the here and now, we believe consolidation will focus new competition. As we noted when IBM bought PwC Consulting last summer, smaller customers who fear getting lost with larger players will seek out alternatives. So we see the application lifecycle market devolving to IBM/Rational, Borland, and Microsoft.
Ironically, with IBM’s Rational acquisition giving it tools covering virtually the entire software lifecycle, it fulfills a vision first expressed with the company’s ill-fated AD/Cycle over a decade ago. We believe that this time IBM is older and wiser.
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Posted in IT Value/ROI, Linux, OS/Platforms at 10:53 pm by Tony Baer
We’ve all heard the maxim that there are lies, damn lies, and statistics. Nowhere is that truer than in the Windows vs. Linux cost of ownership debate. This week, IDC released a Microsoft-sponsored study concluding, surprise, surprise, that Windows 2000 Server proved cheaper over a simulated five-year period. It provided varying sets of numbers for a representative set of server functions.
Yes, Linux costs less to buy than Windows, but that’s trivial in the grand scheme of things. According to IDC, the big differentiator is that Windows admins can be hired more cheaply than UNIX (read: Linux) counterparts, and that the server management tools for Linux are less mature. Now contrast that with numbers published by the Robert Francis Group a few months back (sponsored by IBM, which pushes Linux) concluding that Linux webservers are cheaper. RFG’s data was based on the assumption that you get what you pay for: while Linux folks are paid more, they’re more experienced and able to handle larger workloads.
So what should a poor CIO/CFO believe? Both sets of studies had valid methodologies, debatable assumptions. While their numbers are technically valid, the reality is that Microsoft’s licensing schemes are currently more onerous than Linux (today’s plans tend to push upgrades at customers). In response, Linux continues to gain market penetration, with a recent Goldman Sachs survey indicating 39% of respondents at large U.S.-based global organizations having at least “some” Linux.
Yes, big vendor support for Linux is increasing dramatically, but the market remains in its infancy. Today, Linux primarily competes with UNIX, but tomorrow it will have Windows dead in its sights.
So let’s not get carried away here. Studies are easily skewed. A couple years back, we conducted our own Linux TCO study. The timing of the study in effect limited the sample to pioneers who tended to be more ambitious and outside the IT mainstream, so of course, our Linux numbers looked quite good. But we believe that our conclusion back in year 2000 remains valid: when (not if) Linux gets really competitive with Windows, Microsoft will drop their pricing fast.
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