Last Sunday, I was enjoying my morning coffee and reading the NY times at the local diner. It was slow and the cash register was in sleep mode, with the Windows XP logo floating across the screen. The diner owner clearly wasn’t concerned about XP end-of-life and no updates/support over the past four months. Tens of thousands of other retailers probably have a similar lack-of-interest in buying new cash registers, which is why the “Backoff” malware - allowing hackers access to credit card data stored on these old devices - is so pervasive and dangerous. This threat goes well beyond Target.
It will take many years before EMV Smart Chip Technology - which stores data on a highly secure chip versus the relatively unprotected magstripe - gets widely deployed amongst both credit card issuers and terminal manufacturers. This is the best solution. In the meantime, when you see the XP logo floating across the cash register at your local store or restaurant, just pay cash and give up the points. Or be willing to check your credit card statement online, every day, for possible identity theft.
Backoff reminds me of the threat vector poised by copiers, or “Multi-Function Devices” (MFD’s), as Xerox likes to call them because they copy, print, scan, fax, etc. MFD’s are not protected by anti-virus or firewalls, and while they are not running XP, sensitive data can theoretically be access by hacking through the fax phone line, network cable connection, and/or over wifi with newer machines. Your internal security team, possibly with some outside help (there are reputable and honest “ethical hackers”), should conduct their own simulated attack and confirm that your confidential information is not at risk.
I recently had a great conversation with Tom, the head of global desktop architecture at one of the world’s largest financial institutions. He attended the Angelbeat 2010 seminar and got a lot of good insights around wireless and security. This proved extremely useful when the CEO bought a first generation iPad and pushed his boss (the CIO) to make email work on the tablet. But the IT organization was nonetheless reacting to a Line-of-Business (LOB) request.
Four years later - and after hearing comments from me and other Angelbeat presenters about IT organizations pro-actively driving workforce productivity - Tom told me about a great project that he initiated with real estate. They conducted a study and determined that on any given day, 36% of their workforce is not at their desk: traveling, on vacation, sick, meeting with clients, etc. So the company is theoretically leasing 1/3 more space - in very expensive metropolitan cities - than it needs, at a cost of billions of dollars.
Tom proposed that the company use a hotel-style system, whereby individuals would no longer have an assigned desk, desktop PC and dedicated phone. Instead IT would enable the iPad (or laptop or even a smartphone) to become the center of a flexible voice/data/video unified communications platform. With a robust wifi instrastructure, complemented by enhanced security, individuals would be assigned an open desk and use their iPad to do their jobs. To make phone calls (all done over wifi) just use a bluetooth earpiece, or if a traditional handset was preferred then an iPad docking station was available (see photo above). Traditional keyboards and larger display monitors could be “checked out”, as these items are needed to efficiently “produce” content (versus just reading/browsing the web).
Over the next ten years, IT projects total savings (from consolidating offices and reducing the total square footage of leases) in excess of $3 Billion.
What a great success story that we can all learn from!
Microsoft and Amazon are battling to become the number three player in the smartphone market (I can’t see Samsung nor Apple losing their top positions anytime soon). It is interesting to compare how these two Seattle tech giants decided to enter the market, from a marketing, business and financial perspective.
Microsoft, despite having hardware manufacturing expertise with Xbox, Surface, keyboards and mice, decided that they wanted to acquire market share and expertise, hence their Nokia acquisition (I still think that they should have gone after BlackBerry….). But the total cost is at least $13-15 Billion, including the purchase price of $7 Billion, $1.5 Billion in layoffs (you buy a company just to fire 50% of the workforce?), $3 Billion in annual and on-going operating losses, with no profitability expected in the short-term, not to mention other expenses that are harder to isolate/quantify. I guess with more than $50+ Billion in the bank, you can make big bets. And it is rumored that Microsoft spent this much for Nokia’s patents, just as it cost Google $10 Billion for Motorola’s intellectual property.
While Microsoft does promote OneDrive and automatic cloud backup of all photos with its Smartphones (nice touch but the same feature is available on Apple and Android), I am surprised at the lack of explicit and tight integration with Skype, XBOX and Bing. It is there, but you have to look for it and don’t hear much about it.
Amazon took a much different approach, in two main areas. First, they decided to build their own device and avoided billions in acquisition costs, given their Kindle hardware experience. Second, they strategically integrated the phone with their core retail and growing video/music business, through the Firefly technology (no wonder that Best Buy is struggling) and one-year of Amazon Prime, including free content and shipping. These marketing expenditures are a lot easier to justify when you don’t have to buy another company.
Both companies are admittedly struggling in the US market but this a long-term battle, with tremendous strategic importance. While there are questions/concerns about Microsoft’s approach - much bigger, riskier and expensive - this is just the first inning.
The Fire SmartPhone launch is just the latest escalation in the high-stakes battle for control of the increasingly digitized living room. And yes, this is absolutely a war amongst Apple, Google, Microsoft, Amazon and others, each looking to capture the hearts and minds of the consumer – and of course their pocket book.
In the short-term, this competition is definitely good for the consumer, with tens of billions of dollars being spent to lower prices, improve service, boost quality, etc. Long-term however, there are risks as each firm wants to lock you in on multi-levels (device, application, platform), so going to a competitor isn’t as easy as clicking on another website. That was Google’s standard (and correct) response when it faced desktop-oriented search antitrust questions. But the world has changed in just a few years. Each of these firms is building a bigger and more robust walled-in garden, with an increasing number of complementary and interconnected services/products, to lock in your wallet over many years to come.
My advice to the Angelbeat community is to relax, enjoy and try out many of these wonderful services and innovative products. Lots of free promotions and trial offers. But remain cautious as technology is changing at an ever-increasing rate – remember just a few years ago when the Motorola Razr was so hot? – and keep your options open. In the end content/creativity/design still wins out and you will always find a way to buy something you want (be careful Amazon, in your battles with top authors….).
Some concluding comments:
1. Will Comcast give better service (faster speeds) to its corporate-owned NBC websites/business units, and charge more to Disney and other Comcast/NBC/Universal competitors?
2. Should Microsoft buy Netflix and Barnes & Noble, to compete with Amazon’s video streaming business (perfect fit with xbox) and to take advantage of Amazon’s poor standing amongst authors/publishers? Microsoft already owns a minority stake in B&N’s Nook digital unit.
3. Should and/or will Verizon, Sprint and T-Mobile block the Amazon mobile app from their wireless service?
One of my neighbors recently did an online search for a new backpack for her son (needed for summer camp). Then a few days later she did another search for a pressure cooker (planning a summer BBQ).
The next day the FBI arrived at her door, making sure that (God Forbid) there wasn’t another Boston Marathon-type terrorist attack.
Many people were initially caught off guard by this NSA-type surveillance, wondering if there was any privacy left in the world. Knowing my profession and technology knowledge, they asked for my opinion, which is summarized below.
I thought that this Government-driven Big Data Mining, trying to “connect anonymous dots” to keep all of us safe, was absolutely great. There was no explicit targeting of my neighbor, just massive amounts of computing power blindly analyzing data to prevent another attack. All good in my book.
This does bring up the larger question of Edward Snowden, and the role of government in compiling digital records. Before 9/11, government clearly did not do enough. But reading Edward Snowden’s disclosures - and then seeing subsequent actions by Congress - government probably went too far.
I can only hope and pray that our elected leaders, and workers within the FBI/CIA/NSA, find the right balance. As a New Yorker who lost friends on 9/11 and father whose son serves in the Coast Guard’s Law Enforcement Unit, I am comfortable with the government knowing more than less. But that is just one man’s opinion. In the end, my credit card company knows infinitely more about my life, in great detail, than the NSA. And that is okay too.
Google purchased Motorola and Microsoft acquired Nokia for the same strategic reasons and at approximately the same time, namely to strengthen their position in this increasingly mobile world. How these acquisitions have played out offer some revealing insights into these two technology giants.
1. Both used substantial profits from other businesses to fund the multi-billion dollar acquisition price, and cover annual operating losses that are expected to continue for the near foreseeable future.
2. Both saw strategic value in patents/intellectual property, in light of an increasingly litigious common enemy, Apple.
3. Both saw a strategic fit between their core businesses - search and PC/Desktop - and handheld devices, which could not be fully achieved by simply offering a smartphone operating system.
4. Google wants to replicate (in the mobile world) Microsoft’s PC/desktop dominance, which was achieved through a thriving eco-system of vendors, partners, developers, OEM’s, etc. So the Motorola business unit is explicitly separated from the Android development teams, to retain the loyalty/trust of Motorola handset competitors including Samsung, HTC, LG and others. In the end Google wants Android to be as powerful in the mobile space as Windows is in the PC world.
5. Microsoft in contrast, suffering from both Apple envy and virtually no manufacturers willing to build Windows Phones, is going “all in” with Nokia.
The 2013 Holiday season should be dominated by Android and Apple purchases, with Microsoft a distant third. But Microsoft’s long-term commitment to the Windows Phone/Nokia platform – regardless of its next CEO – is a very good thing for businesses and consumers, as it will keep Apple and Google on their toes.
Here is my assessment of Ballmer’s legacy and how Microsoft as an organization responded to Gate’s 1995 Internet Tidal Wave memo and the Department of Justice 2000 antitrust case. Hopefully you’ll find some new insights and let’s start with my grades for Ballmer:
Strategic D: After becoming CEO in 2000 he correctly prioritized the importance of tablets/touch screens, mobile software/smartphones, smart watches, gaming and Internet portals (msn.com). With the exception of the (still unprofitable) XBOX, he either executed poorly or prematurely eliminated projects in all these areas, directly causing Microsoft’s current problems.
Leadership/Top Management Development & Succession C-: During the past decade three top Microsoft executives Ray Ozzie (Chief Software Architect), Rick Belluzzo (Corporate President/COO) and Steven Sinofsky (Windows President) all quit or were asked to resign. The lack of an obvious 2013 successor is not good, but understandable in light of these past failures. As a point of comparison, everyone knew the likely candidates when Intel’s past CEO resigned in November 2012. When the successor was announced in May 2013, no surprises, no turmoil, no confusion.
Financial C: Sales and profits grew significantly under Ballmer but this is much more a reflection of Gates, product pipeline and broader global economic growth. The ultimate financial criteria for a publicly-traded CEO is stock price and on this measure he failed.
Technology D: Everything started to go downhill with Windows Vista, Ballmer’s first major update without Gates’ involvement. More recent product upgrades got good reviews but unfortunately it seems like too little too late.
To help determine what Microsoft should do now, in 2013, it is useful to go back to Gates’ 1995 Internet Tidal Wave memo. Click here for the full memo; here is one insightful comment, "The Internet is at the forefront of all of this and developments on the Internet over the next few years will set the course for our industry for a long time to come."
So Gates, Ballmer and Microsoft got the Internet right almost 20 years, but are now languishing. Why?
First, in the late 1990’s Microsoft focused primarily on the browser (the Netscape wars) and not as much on the applications/websites driving browser usage. Though people do forget that Microsoft launched Expedia in-house before spinning it off as a separate company.
Second, the 2000 Department of Justice antitrust action seemed to drove out not only Gates (“I’m worth $100 billion; do I really need a bunch of government lawyers telling me what to do???”) but also the creative spirit within Microsoft. The Internet Tidal Wave urgency and creative passion was gone.
So what should Microsoft do now?
First, cannibalize your existing cash cows - get people moved to Office 365 from Office 2013 now, before they switch to Google Apps.
Second, give away tablets and smartphones for free (in the United States at least), but lock these devices into Bing search for at least a year.
Third, stop stupid investments like $300 million into Barnes & Noble’s Nook, just because you are scrambling to compete against Google, Amazon and Apple. Instead of wasting this money, you could have given every single one of Microsoft’s 100,000 employees a $3,000 bonus.
There is lots of hype around the recent iPhone 5S release because of its inclusion of a fingerprint sensor developed by Authentec - acquired by Apple last year - for increased device security and mobile payment functionality. Couple of observations.
First Authentec was acquired for $350 Million as much for its intellectual property - which strengthens Apple’s position against Samsung and Google/Motorola in Billion Dollar patent disputes - as its fingerprint expertise. Authentec’s annual revenue was $80 million but they lost money on every single fingerprint sensor they sold/made. Authentec’s management team did a great job in securing patents, but could not create a profitable biometrics business. Apple could have simply purchased product and/or licensed the Authentec fingerprint technology but decided (in my opinion) to buy the whole company for its IP portfolio.
Second there is growing pressure on every phone manufacturer to maintain/boost its margins. A silicon-based biometric chip does increase the manufacturing/material cost of an iphone, plus require additional overhead and customer support expenses.
Apple competitor’s, who already build phones with a camera and microphone, can also provide biometric-based device security but use readily established voice and facial recognition software, without any incremental hardware costs. So instead of swapping your finger (which is difficult if your finger is cut or if weather is cold), you simply tell “Google Voice” a predefined word, then point the camera at your face to unlock the phone. This approach provides three-factor biometric authentication - you must know the correct word, spoken with the correct voice, coming from the correct mouth/face - and greatly enhanced security, with virtually no impact on the user. And there is the obvious concern about fingerprint data and privacy concerns in light of NSA/Snowden controversies.
The challenges and pro’s/con’s of moving Angelbeat’s internal infrastructure to the cloud provides some valuable insights to organizations of all sizes, who are undoubtedly grappling with similar issues. IT at Angelbeat is fairly robust, including onsite and remote/traveling workers, >250,000 contacts maintained on Exchange, customized CRM/event registration apps developed in 1999 (when Angelbeat was formed), a dedicated server/data center/storage room, plus a website that is obviously mission-critical. Here is a summary of what we did and didn’t do.
The website Angelbeat.com was originally hosted on internal servers but moved to a specialized web hosting firm in 2000. A great decision (if I do say so myself) as hosting can be complicated, is not our core expertise, and the site has never gone down for longer than 15 minutes. Later in 2013, event registration processing will be switched to a cloud-based service such as EventBrite or Cvent. Both entities have links/interfaces already created to social media platforms, plus their webpage displays are automatically rendered correctly across different browsers and hardware platforms. The next logical step.
Data backup was originally done via an attached drive physically connected to the servers. But this creates a single point (or location) of failure, should there be a fire or flood. About 7 years ago, all data files and contact records were also backed up to cloud-based backup firm, and this has worked great. Fortunately I have never needed to recover my information!
The biggest (and in the end unsurmountable) challenge was moving internally-hosted/managed exchange data to an external Microsoft exchange hosting firm. We could not find one that supported public folders, plus preliminary costs were much higher internal expenses. If I were starting Angelbeat today, then using salesforce.com or sugarcrm would be a no-brainer. But given this legacy application that is the core of Angelbeat’s business (just like Cobol applications running on mainframes), we still have our own data center/servers that run exchange. On a related note, remote workers use thin client/virtual desktops applications to securely access this information from any location.