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Market Roundup November 19, 2004 Redmond Takes a Step toward Reality? Or More FUD? Sun Introduces New Industry CPU Timeshare Usage and Pricing Model |
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Redmond Takes a Step toward Reality? Or More FUD?
Microsoft has invested in a small Utah-based company that
provides software allowing Windows-based authentication, management, and
monitoring abilities to non-Windows environments, specifically UNIX, Linux, and
Macintosh. The exact amount of the Microsoft investment in Vintela was not
announced, but it was said to be less than $10 million. Vintela is a startup
company that intends to seek another round of funding in the next year, the
company said, and its base technology is based on intellectual property the
company acquired from former Microsoft rival Caldera. Vintela is shipping
products, including its Vintela Systems Manager, which allows Microsoft
Operations Manager 2005 to provide management, authentication, and monitoring
capabilities to UNIX, Linux, and Macintosh OS X systems.
For the most part, the bridge between the Windows and
non-Windows world has largely been engineered and built by folks who do not
reside in Redmond. To these engineers and builders, the reality is simple;
Microsoft has a significant footprint in the marketplace — and a dominant one
on desktops — so that the river of IT development must flow through it. In this
regard, Microsoft is a large boulder in the river that water must find a way
around. And of course, Microsoft sees things largely the same way, only to the
point where it hopes that it will not only be a boulder on the river, but a
complete dam from which all IT resources will flow. From this point of view, it
is not surprising that Microsoft has engaged in so little bridge building to
this point in time.
So does the investment in Vintela mean that Microsoft recognizes it lives in a heterogeneous world and that it must do its part to at least provide an anchorage on which its rivals, the bridge builders, can build toward? Are we seeing a new realpolitik from Redmond? Before we go too far out on that rhetorical tree branch, let’s remember that this investment is a mere grain of sand in the Microsoft treasury. It is not the stuff of a major repositioning of Redmond’s strategy. Think of it as more of a hedge bet. Microsoft detractors might go so far as to argue that this is just so much more FUD that the company is putting out, a seemingly conciliatory gesture to customers with heterogeneous environments that will evaporate at about the same time these customers seek major upgrades to their non-Windows IT infrastructure. Perhaps. But given the undeniable market presence of Linux (and yes, Macintosh) one would think that the world’s dominant software company might have finally recognized the inevitable: there will be competition. We will know the answers to these questions in years, not months, and in the meantime we’ll keep an eye out on the relative success of companies like Vintela who seem to be taking up Microsoft’s bridge-building work for it.
Sun Introduces New Industry CPU Timeshare Usage and Pricing Model
Sun will offer a new computing service by the end of 2004,
called the N1 Grid Service, which will allow customers to buy computer
processing power on an hourly basis. The customer will pay $1 for every hour of
CPU usage. No service contract will be required and customers can purchase
computing power with a credit card, using a Web browser. The service will be
purchased on Sun’s web site and the company will let customers upload their
software and data onto one of two1000-CPU Sun grid-computing facilities. These
data centers are designed to harness all or some of the processors, on one or
multiple big processing tasks. The system will support software running atop of
Sun’s Solaris operating system, and various versions of the Linux open-source
OS. When the processing is completed Sun will clean all traces of the user’s
software and data. The company plans to eventually expand the program to
auction off excess processing capacity on eBay, at prices that could be less
than $1 per CPU per hour.
Renting time-shared computer services on a fixed price-per-hour
basis and auctioning excess capacity through eBay is new. Further, the utility
computing market is just emerging. For example, a recent market survey found
that only one in five IT managers understood grid computing and only 6.8% of
the respondents indicated they were implementing or planning to adopt a grid
computing model. In view of these facts, N1 Grid customers will be technically
more sophisticated and fall into three main categories: those with high compute-intensive
applications, those with limited IT resources, and/or those that require excess
capacity to meet cyclical computing demands. Up to this point utility computing
has been targeted at large enterprises, and utility computing implementations
have been primarily within the four walls of the enterprise. However, IBM and
other vendors offer utility computing services hosted in their datacenters,
external to the enterprises they serve. These pay-as-you-go services typically
require, at a minimum, an annual contract, with multi-year contract terms more
common. Contracts usually incorporate a fixed annual fee and a pay-per-use
component. The Sun offering is a pure pay-as-you-use model. The payment and
financial scenarios for utility computing may differ, but the customer value
proposition remains the same. From this perspective Sun’s N1Grid offering is
not so new.
The N1 Grid Service, in a sense, makes the computing resource a commodity and would seemingly undercut Sun's business. That said, Sun remains a value-added computer seller; in fact, Sun would claim that is its differentiation. Just because an ERP solution is running inhouse or on a leased compute grid does not change the value of the ERP solution to the enterprise using it. This is similar to the choice of leasing an internal phone system or owning the phone system outright: the value is in the use of the system, not how it is delivered and financed. Hence, we don't think Sun is about to become a commodity solutions provider, but rather that it will deliver some of the solution with what the company hopes becomes commodity components (CPU cycles), with a favorable bottom line to the company.
Microsoft has announced that it and SBC Communications
have entered into a $400 million, ten-year deal in which SBC will use
Microsoft’s TV Internet Protocol Television (IPTV) Edition software platform.
SBC has been testing an IP-based television service using the Microsoft IPTV
product since June and will begin field trials in the middle of next year, with
a commercial availability in late 2005. SBC plans to begin construction of
Project Lightspeed, in which the company hopes to
deploy fiber optic networks closer to customer locations in order to offer
IP-based services, including IP telephony and TV. The company hopes to have the
network in place to serve 18 million households by the end of 2007.
At first glance, this would seem to be largely a
consumer-directed offering, with the most impact made on the various market
participants in delivering bits to households. Certainly cable companies can
expect to feel a squeeze as SBC and other regional phone companies begin
offering a host of IP services — including entertainment — over an IP network.
Of course, the phone companies are looking for ways to eliminate or at least
substantially reduce the enormous glut of unused bandwidth capacity they own,
and delivering feature-rich TV signals and services is certainly one way to do
so. Microsoft gets the opportunity to find another way to move its franchise
out of the home office and into the living room just as it is trying to do with
its Internet gaming services.
On the enterprise side of things, the development of a successful IP network that can reliably deliver video at today’s required standards will have impressive impacts on the perceived viability of IP services, especially the nascent IP telephony market. Reliable, high-quality VoIP will be a mere afterthought when all the bugs in IPTV are worked out, thereby driving it more into the enterprise mainstream. If IPTV is good enough to deliver the Lord of the Rings Trilogy to discerning viewers, one suspects it will be good enough for enterprise videoconferencing (and a host of other features). The changes these developments could foment are not abstract, nor are they very far into the future. We call that moving at the speed of light.
Microsoft Focuses Its Management
Vision
At its IT Forum Europe, a Microsoft user event, Microsoft
revealed more of its vision of management for the Windows universe, called the
Dynamic Systems Initiative (DSI), which is meant to deliver improved
technologies to simplify and automate tasks associated with creating and
maintaining existing Windows infrastructure. At the heart of DSI is the
intended combination of creating relevant knowledge bases and modeling the
appropriate architecture. It begins initially with the implementation of
management packs — which monitor server health indicators within applications
and call attention to problems preemptively when possible — through Microsoft
Operations Manager (MOM), and longer term will be driven by use of the System
Definition Model (SDM), which is available in Visual Studio 2005.
Microsoft’s plans are ambitious and involve yet another
round of new standards (SDM) to be introduced and adapted by partners and
developers, as well as massive shifts in IT department thinking about their
Microsoft environments. At the same time, Microsoft has listened to its
customer base, and understands that management of the Windows environment is
the first and most important goal. Microsoft has made it clear that it is
interested in managing things Microsoft rather than seeking to replace the
management applications already in place within the data center. Microsoft is
adopting an architectural approach to management, seeking to accumulate and
make use of the enormous knowledge base that exists in systems and using models
that demonstrate how systems should be built. The idea of a knowledge
management engine at the core is attractive and much needed in the highly
distributed world that is Microsoft.
At the same time, Microsoft’s approach reveals both the strength of its software heritage and their relative lack of experience with business processes. Microsoft’s approach is to understand the relationship between IT professionals, application developers, and information workers. What is obviously missing from this picture is the role of business processes, the inherent service value, and the explicit potential for cost savings. Microsoft’s response is that it is starting with the plumbing at the core and will move out to encompass business issues over time. And yet, an application’s importance and performance is not affected by technical factors alone. Business issues and politics are equal players in the battle for resource allocation at all levels of a company, including the deployment and use of technical resources. We expect these components will be added into the modeling process over time, but without them businesses will be unable in the interim to achieve optimal efficiency without figuring out technical ways to express those elements. We believe that one of the primary benefits of adopting this technology is that it will lower costs both in terms of how IT personnel spend their time, but also in overall efficiency, as Windows systems are notoriously underutilized and under-managed in many environments. However, Microsoft continues to focus most of its cost-of-ownership resources combating Linux. It would do well to help customers understand the important potential cost benefits of incremental increases in efficiency as part of its launch message to a user base with widely divergent needs and experience levels. Finally, the complexity of management means that although the tools are shrink-wrapped, the solutions must be tailored to the specific user environment. Microsoft will also need to demonstrate partner programs that guarantee users that their service provider is capable of using Microsoft tools effectively. Poor implementation of this product would reflect back on Microsoft itself. This product has great potential and is sorely needed. Microsoft’s success in driving DSI will be an indicator to the rest of the IT world that Microsoft remains a key competitor for the heart and soul of the data center and an industry thought leader for the next wave of computing.