05.11.07
A Tale of Two Industries
It’s been an interesting week for sure, as we’ve split our time between two ends of the software industry. First, we hung out with investors and CEOs of software firms at Sand Hill’s Software 2007 conference. Then we camped out in a fleabag hotel, forgot to shave, and hung out with developers at JavaOne. This week, we got to have it both ways.
We saw a tale of two industries that was joined by a common theme. Customers are feeling freer to mess around – and even buy – software again, and investors are coming back in. “The VC community is finding higher value companies, so there shouldn’t be any more bubble effect,” said MR Rangaswami, in remarks opening Software 2007. And this year’s JavaOne, which was otherwise quite uneventful, had its fullest turnout in years. Companies have given their developers travel budgets again.
At the macro economic level, it’s a tale of cyclical spending. The bubble was followed by the bust. But whatever goes down must go up –- at some point. IT spending is a lagging indicator -– business must be well into an up cycle before they feel hunger pangs for modernizing their systems to cope with growth. And so, as there are questions on whether the 4 – 5 year old recovery from the bust is now flattening out, coming to a soft landing, or hitting a momentary pause, IT budgets are this point still on the upswing as a reaction to last year’s growth. (We’ve seen the same phenomenon in our consulting business, with vendors having accumulated a backlog of marketing projects.)
On the customer side, it’s safer to invest, or at least to kick the tires, and because of the new pricing structures brought on by open source and Software-as-a-Service, buying, subscribing, or simply evaluating new software no longer requires major capital commitments. That’s prompted legacy players — like IBM, Microsoft, and Oracle to offer free kick-the-tires “Express” editions of their products. And you’ve got vendors that incorporate freebie open source pieces so they can better focus on adding spot innovation, rather than having to reinvent the wheel.
In some cases, this makes markets downright boring. We ended the week at JavaOne, where aside from Sun’s useless announcement of yet another rich Internet client framework (we’ll get to that in a moment), we saw little if any news. Or, as our friend Bill Roth of BEA put it, “JavaOne never ceases to amaze me. Year after year, I expect the show to be a flop. This year is no exception. I am wrong again this year.” Roth was referring to the show’s turnout, which was probably the largest since the days of Sun being the dot in dot com.
Sometimes no news is good news, if it means that vendors and customers are concentrating on implementing product, rather than blindly spewing out new features for new features sake. Or if you listen to Sun, there’s no news because “we’re delivering what we promised last year.”
But, as we hinted above, Sun just can’t avoid painting itself into a corner. We’re speaking of JavaFX, its just-announced answer to Adobe Flex and Microsoft Silverlight for a market where, for now, commonly used Ajax just seems good enough. Instead, Sun reminded us that at heart their engineers are still driving their marketing decisions, believing that neither Adobe nor Microsoft’s Web 2.0 solutions are good enough. And they also reminded us that they still don’t know how or when to partner.
OK, it wouldn’t make sense for Sun to embrace Microsoft’s Silverlight, which is rooted in the .NET framework. But come on, there’s nothing threatening or antithetical to Sun -– or Java –- that’s posed by Adobe’s Flex framework. We hate to get primitive, but let’s face it: Taking an enemy-of-thy-enemy approach would at least allow Sun to ride, rather than fight a wave for a change. That’s because Flex is based on Flash, which is ubiquitous, rather than Silverlight, which is not. Nope, Sun seems doomed to repeat past history, digging itself into yet another NetBeans hole.
Sun isn’t the only player that’s frustrating us by repeating past behaviors. We saw Steve Ballmer back at the Sand Hill conference mention on one hand how Microsoft is leveraging its huge Office advantage with renewed effort to get third parties to hook into it. We saw some cool demos where Dassault Systemes, an engineering software supplier, plug visual 3-D CAD models into Word and Excel documents to more effectively communicate mundane processes, such as pinpointing which compliments in an aircraft fuel pump must get fixed as part of a work order.
But we don’t know if Microsoft is curing its annoying habit of adding useless innovation into its products, as we remarked in a post a few weeks back. When asked after his speech whether the phasing in of Microsoft’s Live hosted software services might prompt it to plug innovation in shorter, more iterative doses that might better respond to what customers really want, Ballmer said that Microsoft would not necessarily change its software development models.
“If anybody thinks future is only innovations are done in short time are worth doing is wrong minded,” he said. On the face of it, we can’t disagree, but we’d hope that developers in Redmond might get out of their bubble a bit more often.
Well, actually, maybe we’re being a bit harsh here, as old habits die hard. You can’t go cold turkey from a software development model. We had a discussion with a director of “disruptive innovation” from a major household e-commerce brand, who discussed the necessity of mixing up software development methodologies to suit the requirements of the particular project. But in his case, his organization is dealing with only a 10-year legacy of development, rather than the 20 – 30 years common among companies like Microsoft -– or financial services companies on Wall Street for that matter.