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While a renewed search deal between Google and Mozilla is welcome news to millions of Firefox users, Mozilla has three big ideas for 2012 and beyond that will see it competing much more with Google, Facebook and Apple. Here’s why you should be cheering Mozilla on.

Biting the hand that feeds it?
As InfoWorld’s Woody Leonhard writes, it was in Google’s best interests to prevent Microsoft’s Bing from becoming the default search provider in Firefox. As much as Mozilla relies on Google for 80 percent plus of its revenue, so too does Google rely on the search traffic from millions of Firefox users. While Mozilla’s blog post about the recently signed deal espouses a mutually beneficial agreement, its difficult to believe that the relationship is anything but strained between Google and Mozilla.

However, that relationship is going to get a lot more tenuous if Mozilla is able to make progress on three key areas laid out by Mozilla’s David Aacher.

Mozilla and Firefox became household names through the browser wars, particularly against Microsoft’s Internet Explorer, but mainly as a proponent of open standards and user rights on the web. Ascher writes: “In the case of the browser wars, the outcome has been pretty good for society, if slower than we’d have liked: standards have evolved, browsers got better and faster, and websites got more interesting.”

But now, Mozilla feels it’s time to look beyond the browser as the main front in it’s mission to safeguard the future of web for the people. Mozilla is also investing in an open stack for hardware OEMs, user-centric identity on the web and tools for building and running apps. These initiatives add to the value of Firefox from a user standpoint, but are being developed in parallel. Additionally, the latter two initiatives are applicable to other browsers also.

A truly open alternative to Android
The first initiative, named Boot to Gecko aims use open web technologies to deliver a runtime and underlying operating system for desktop and mobile applications. If this sounds like Android or Chrome OS, it should. Boot to Gecko is using some of the same lower level building blocks that Android uses, such as the Linux kernel and libusb. The team explains this choice was made to reduce the burden on device makers and OEMs who will be faced with certifying Boot to Gecko on new hardware. While some building blocks are shared, Boot to Gecko is not based on Android and will not run Android applications.

If Mozilla can successfully execute on initiative number 3 below, Boot to Gecko will be difficult for OEMs to ignore. There is a lot more work for Mozilla to do before Boot to Gecko can attract the attention of Android device manufacturers. However, OEMs and users will benefit from serious open source competition to Android.

User controlled identity
The second initiative, currently named BrowserID, although Mozilla is looking for a different name, addresses the need for users to regain control over their identity and sharing of personal information on the web.

BrowserID aims to become the open alternative to Facebook Connect and Google username on Google’s far reaching web properties. With BrowserID, Mozilla has built a user centric identity system that works in all modern browsers and will make the protocol available for other browser vendors to use. Ascher explains:

“For Mozilla devs, this is a bit shocking, as we’re not starting by putting a feature in Firefox first (although we sure hope that Firefox will implement BrowserID before the others!). While I love Firefox, this makes me happy, because in my mind, Mozilla is about making the internet work better for everyone, not just Firefox users, and in this case being browser-neutral is the right strategic play.”

The notion of making the web better for everyone, not just Firefox users, is one I’ve not picked up on until now. But I completely agree with Ascher. Few can argue that even Internet Explorer users are benefiting from Firefox’s efforts and Microsoft’s response.

If Mozilla is successful with BroswerID, which is certainly possible as developers increasingly grow weary of their reliance on Facebook or Google, users will get back control over their identity and information without having to sacrifice a personalized web experience.

Apps, if you can’t beat them, join them
Finally, Mozilla is addressing the “app-ifcation” of the web, not by fighting the trend it as may seem reasonable for a browser vendor, but by guiding how these apps are built, found, paid for and installed.

Mozilla’s Apps initiative aims to make web technologies the basis of building applications that can run across devices. Mozilla also wants to introduce a standard for application purchasing and installation that would allow users to consume applications from multiple app stores without restrictions. This initiative undoubtedly goes after the Apple App Store and Android Marketplace.

It would be interesting if Mozilla were to partner with Microsoft on this initiative as Microsoft builds out its app store.

Success isn’t guaranteed, but Mozilla knows about tough fights
Whether Mozilla can execute against all three of these initiatives while maintaining its efforts in the still important browser war is an open question. As a user, even if one of these three initiatives are successful, we’ll all be better off.

While Mozilla will face a lot of resistance on this front from the likes of Google, Facebook and Apple, fighting an uphill battle isn’t new territory for Mozilla.

should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies, or opinions.

With the holiday season upon us, and tablets at the top of many gift lists, it’s all but certain that millions of new users will get exposed to an open source based Android Tablet. By all accounts, Amazon’s Kindle Fire is expected to leapfrog into, at least, number two position in the tablet market. While this would appear to be good news for Android tablets and the Android OS, it may actually be exactly what Apple and Microsoft had asked for Christmas (or any other holiday these companies choose to celebrate).

Great price and Amazon content versus clunky user experience
I’m not going to do a blow by blow review of the Kindle Fire. Glen has a good review of the Kindle Fire versus Apple iPad. I’d also recommend the Kindle Fire review from Instapaper developer Marco Arment from a user experience standpoint.

The first common thread across reviews is the price of a Kindle tablet, at $199, can’t be beat. Some have referred to the Kindle Fire as the people’s tablet.

Second, reviews are virtually unanimous that the Kindle Fire is great when restricted to Amazon’s content, even if some magazines aren’t optimal for a 7 inch screen. The Kindle Fire becomes less attractive as users venture outside of Amazon’s content garden. Even the new Silk browser, touted to speed on device browsing, appears to be a let down.

Finally, many reviews describe a less than delightful user experience while using the Kindle Fire operating system and user interface. The Kindle Fire OS responsiveness is said to lag user input, sometimes forcing users to redo an action only to find that the first input was in fact registered.

The 7 inch form factor, while easier to hold than a 10 inch tablet, presents the added complication of smaller targets for users to press in order to carry out their intended tasks. One of Arment’s issues with the Kindle Fire interface is that: “Many touch targets throughout the interface are too small, and I miss a lot. It’s often hard to distinguish a miss from interface lag.”

Like it or not, iPad is Kindle Fire’s comparison
There are many older users who don’t need a laptop and could benefit from a small and moderately priced tablet for email, browsing and reading. A Kindle Fire seems like a great solution. It’s likely that many of this cohort will receive a Kindle Fire from a well meaning family member or friend. In fact, my wife suggested getting a Kindle Fire for several retired members of our family.

However, the usability issues that Arment brings up, especially surrounding interface lag and smaller touch targets will undoubtedly have an impact on their desire to use the device, or store it away with that interesting looking tie received over the holidays.

It seems that a lack of comfort with new computing devices, fat thumbs and poor eyesight, something we all have to look forward to, aren’t great ingredients for being delighted with the Kindle Fire.

Even younger users, many who own or have used an iPod touch or iPhone are at risk of being annoyed with the lag and user interface roughness of the Kindle Fire.

Some have argued that you can’t compare a $499 iPad with a $199 Kindle Fire. That’s true, on paper. In practice, users are going to compare their Kindle Fire experience with an iPad. There isn’t a tablet market, there’s an iPad market. It’s the reason that most Kindle Fire reviews compare to the leading entry in the market, the iPad, and not other Android or 7 inch based tablet.

A poor Kindle Fire experience reflects on Android
When the Kindle Fire is perceived to deliver a less enjoyable experience than an iPad, the real risk is that the Android tablet market will be viewed in the same light as the Kindle Fire. That may not be fair considering Amazon has forked the Android OS, and Android continues to get better. However, since the Kindle Fire is expected to reach an order of vastly more users than other Android tablets, and considering Amazon’s technical reach, don’t be surprised if typical users generalize their Kindle Fire experience to Android tablets.

Earlier this week Bloomberg BusinessWeek’s Ashlee Vance wrote on his Twitter feed: “Just opened up the old Kindle Fire. Android sure has a Windows 3.0 feel, dunnit?”

That is exactly the type of comment that should make Apple happy and give Microsoft a faint hope in their tablet plans. If Amazon, with its great content and proven track record with Kindle devices, can’t pull off a device users prefer to an iPad, then what’s the likelihood that any Android vendor can?

I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies, or opinions.

Google announced Chromebooks  just three months ago to wildly positive and equally negative punditry. Evaluating recent product announcements and business growth for Chromebooks, it’s becoming increasingly clear that Google has a winner with Chromebooks. If you haven’t been following Chromebooks closely, you’d better start.

Chromebooks are a disruptive innovation
I have previously countered ZDnet’s Ed Bott’s claims that Chromebooks aren’t Windows killers. Here are of two key points I raised:

1. Google’s pricing strategy is a step toward IT as a service. By reducing the cost per notebook and business applications to approximately $35 per user per month, Google was reducing the total cost of ownership to less than 20 percent of today’s cost of acquiring, maintaining and supporting the IT infrastructure needed per knowledge worker.

2. All apps that some users need can run in a browser. Simply put, a Chromebook is not for every employee. However, a majority of knowledge workers, specialized workers or mobile users could use a Chromebook with little to no impact to their workflow.

Google continues to make Chromebooks enterprise ready
Google’s claims Chromebooks are designed to get better and faster over time through software updates.

Google recently announced the availability of new features that support their claim of Chromebooks “getting better over time”.

VPN support and Secure WiFi have been added to the latest Chrome OS release, which is the operating system software that runs inside a Chromebook.

With these two additions, businesses that protect access to their wireless network and restrict remote access to their internal network – that would be virtually every business I know of – can now consider a Chromebook in their enterprise.

It’s a little surprising that Chromebooks were targeted at businesses without support for WiFi security at a minimum. VPN support would be a close second in basic requirements for a business seeking to use Chromebooks with mobile employees.

That said, Google did close these two holes in three months since first shipping Chromebooks for businesses.

Google also announced a Tech Preview of Citrix Receiver for Chrome OS, which would address users who need to run existing applications not suited for a traditional browser. For instance, Google and Citrix show Adobe Photoshop on a Chromebook through Citrix Receiver.

I’m still convinced that this is a checkbox feature versus something Google truly expects broad adoption of. For instance, the Citrix Receiver Tech Preview currently counts 38 users on the Chrome Web Store.

Chromebook customer traction is encouraging
While the pace of feature additions to Chromebooks in encouraging, Google’s client references for Chromebooks are even more impressive.

Google groups client references into several categories that could resonate with potential business buyers.

IT departments have to contend with the challenge of supporting branch locations. As Google rightly points out, onsite IT support at some branch locations can be expensive and impractical. Google now counts the likes of AmericanAirlines, RubyTuesday and Jason’s deli as clients using Chromebooks to reduce the cost of IT at branch locations.

Another key target user group is specialized workers. Virtually every business has a set of users whose IT needs don’t expand beyond email, and access to intranet and web-based applications. These users are perfect trial groups for rolling out Chromebooks at your company.

Salesforce.com, Groupon, Logitech and InterContinental Hotels Groups are key clients using Chromebooks to meet the needs of specialized workers.

Finally, Virgin America, National Geographic, the City of Orlando, and Konica Minolta are amongst reference clients using Chromebooks for mobile employees. Again, I find it interesting that these organizations adopted Chromebooks for mobile users before VPN and secure WiFi capabilities were added to Chrome OS.

Your organization could very likely find mobile users, specialized users and branch office deployments that could benefit from Chromebook usage.

With the strong list of client references Google has already collected, what are you waiting for?

I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies, or opinions.”

Lync, Microsoft’s unified communications platform, combining voice, web conferencing and instant messaging, is reportedly poised to become the next billion dollar business at Microsoft. It’s time you considered alternatives before Lync becomes engrained in your IT environment, much like SharePoint has for many companies.

Lync follows in SharePoint’s billion dollar footsteps
According to reports from Microsoft’s Worldwide Partner Conference (WPC) 2011, the company has high expectations for Lync, with several Microsoft managers telling editorial director of MSPmentor, Joe Panettieri, that Lync’s sales trajectory will make Lync Microsoft’s next billion dollar platform.

With Lync, formerly Office Communications Server, Microsoft is following a similar strategy to Microsoft’s SharePoint, another billion dollar plus business.

With Lync, as with SharePoint before it, Microsoft has built a set of applications that leverages Microsoft Office’s massive install base. Microsoft is now accelerating partner involvement to shift Lync from a set of applications to a platform that partners can manage and customize.

Microsoft expects to target the 10 million legacy voice over IP (VoIP) phone lines that Cisco currently controls, largely in the enterprise space. However, as Panettieri explains, Microsoft has the install base and partner channel to grow Lync in the small and medium business market.

Lync is available on the Office 365 cloud, but is expected to garner higher on premises interest, an attractive point for Microsoft’s managed service provider partners, driven by a more complete feature set on premises.

Consider alternatives before Lync arrives at your door
Lync only furthers your company’s reliance on Microsoft Office – a smart strategy for Microsoft.

As Microsoft partners get more involved with Lync, you’ll be getting briefings on the benefits of Lync in your business. Now would be a good time to start considering alternatives, especially a few in the open source arena, to be ready for Lync conversations with your friendly neighborhood Microsoft partner.

As Lync is growing by selling into the Microsoft Office install base, the first alternative to consider is Google Apps, a direct cloud competitor of Microsoft’s Office 365. While Google doesn’t yet offer a PBX, OnState Communications offers a cloud-based PBX that from the Google Apps Marketplace. It also stands to reason that Google will add some degree of PBX capabilities into Google Apps.

Twilio, a self purported cloud communications vendor, offers a platform to build voice and SMS applications using simple to use APIs. Twilio also offers an open source phone system through its OpenVBX offering. Twilio is targeted at developers while Lync is a ready to use platform for companies. However, systems integrators or managed service providers could take the Twilio APIs and build a repeatable solution that offers much of Lync’s capabilities.

While several open source PBX phone systems are available, the open source Asterisk project is by far the best known. Companies could consider Asterisk as a piece of a Lync alternative. However, Asterisk, as a PBX product, does not itself offer the full platform for voice, web conferencing and instant messaging as yet.

Perhaps the best alternative to Lync, especially for small and medium sized business, is a unified communications offering from the likes of Cisco or Avaya.

Earlier this year Cisco announced the Cisco Unified Communications 300 Series, aimed at companies with up to 24 employees. Cisco also offers the Cisco Unified Communications Manager Business Edition 3000, for companies with up to 300 users.

It would be interesting for a Cisco competitor, such as Avaya, to acquire Twilio and build a customer and developer friendly offering that rivals Cisco’s unified communications platform and Microsoft Lync.

Whatever alternatives to Lync you ultimately decide to consider, ensure that you’ve done this due diligence before Lync arrives at your company’s doorstep. Make no mistake, Lync offers value, but it also further entrenches Microsoft into critical pieces of your IT and communications environment.

I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies, or opinions.”

An ex-Google employee recently expressed concerns about the antiquity of Google’s software infrastructure. This is the same software infrastructure underpinning Google’s App Engine. Learn more before your enterprise considers Google App Engine.

Engineer claims Google’s software infrastructure is obsolete
In a post explaining why he’s leaving Google, former Google Wave engineer Dhanji R. Prasanna wrote:

Here is something you’ve may have heard but never quite believed before: Google’s vaunted scalable software infrastructure is obsolete. Don’t get me wrong, their hardware and datacenters are the best in the world, and as far as I know, nobody is close to matching it. But the software stack on top of it is 10 years old, aging and designed for building search engines and crawlers. And it is well and truly obsolete.

Protocol Buffers, BigTable and MapReduce are ancient, creaking dinosaurs compared to MessagePack, JSON, and Hadoop. And new projects like GWT, Closure and MegaStore are sluggish, overengineered Leviathans compared to fast, elegant tools like jQuery and mongoDB. Designed by engineers in a vacuum, rather than by developers who have need of tools.

Prasanna argues that Google’s software infrastructure hasn’t kept up with alternatives developed in an open community forum.

Don’t take Prasanna’s statements as those of a disgruntled ex-employee. He writes that working for Google was the “best job I’ve ever had, by a long way”. Additionally, Prasanna had built up serious technical credibility, both within and outside of Google, especially in the Java arena.

As interesting as Prasanna comments may be, Google software infrastructure has little impact on your enterprise, right? Correct, unless you’re considering Google App Engine.

Google’s software infrastructure bleeds through Google App Engine
Google isn’t going to open source its back end software infrastructure. However, as the Register’s Cade Metz writes, Google’s software infrastructure is surfaced for enterprise usage through Google’s App Engine.

Google App Engine product manager Sean Lynch, who has since left the company, explains how Google exposes their internal software infrastructure to 3rd party developers and enterprises. Lynch states:

We decided we could take a lot of this infrastructure and expose it in a way that would let third-party developers use it – leverage the knowledge and techniques we have built up – to basically simplify the entire process of building their own web apps: building them, managing them once they’re up there, and scaling them once they take off.

Make no mistake, Google App Engine is a success with developers, with over 100,000 developers accessing the online console each month and serving up 1.5 billion page views a day according to Metz’s story. However, keep in mind the difference between success with developers versus success with enterprises.

Lynch stated that Google App Engine is a long term business focused on the enterprise space. Later this year, Google App Engine expects to exit of a three-year beta period and introduce enterprise class service level agreements.

Google App Engine started as a way to expose Google vaunted, to use Prasanna’s description, software infrastructure to third party developers. But it appears that the market has moved faster than Google’s internal users demanded.

Enterprises seek vendors whose core business is linked to the software platform they’re selling
I would propose that part of this gap between Google and outside technologies is driven by the fact that offering a cloud platform as a service is not core to Google’s business. This is why I’ve argued that commercial software vendors have little to fear from vendors that produce software primarily for their own use and then opt to secondarily open source the code. Unless and until the open sourced code is picked up by one or more vendors whose core business is tied to the project, enterprises will shy away from adoption.

Consider where Hadoop, first developed and open source by Yahoo!, would be if not for Cloudera and other vendors whose core business is linked to the enterprise success of Hadoop.

In the case of Google App Engine, a key question to ask is how your enterprise needs will be prioritized against the needs of internal Google developers.

While both user groups would share a set of feature requests, there are undoubtedly features that enterprises will seek that Google developers will not need. With both user groups vying for the next feature on their wish-list to be completed, will Google address the needs of its internal developers or third party enterprise? Keep in mind that revenue from projects that internal developers are working on will far outweigh revenue from third party enterprises through Google App Engine for the foreseeable future.

According to Prasanna, developers and enterprises can get more innovative, state of the art and high performance software infrastructure from open source projects that have replicated some of Google’s best ideas, like Hadoop or mongoDB, than by using Google’s software infrastructure itself.

Combining individual best of breed software building blocks into a cloud platform as a service environment that offers the functionality of Google App Engine, requires enterprises to do a lot more work than simply using Google App Engine.

Another alternative would be to consider a vendor whose business is tied to the success, or failure, of the cloud platform as a service offering. For instance, SalesForce.com, VMware, Red Hat, Microsoft, and IBM, to name but a few vendors, offer environments designed and built for third party enterprise use.

Keep these considerations in mind while evaluating Google App Engine, or any cloud platform as a service offering for enterprise use.

Follow me on Twitter at SavioRodrigues. I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies, or opinions.”

Reaction to Google’s Chrome book announcement at has ranged from wildly positive to, shall we say, less than positive. To naysayers, I’m reminded of Clayton Christensen writing on sustaining vs. disruptive innovation. Chromebook is a disruptive innovation, and will play a growing role in tomorrow’s IT department. I’ve said it before, and I’ll repeat it now – plan ahead to use ChromeOS/Chromebooks in your enterprise.

ZDNet’s Ed Bott isn’t sold on the value or success potential of Chromebooks. He came up with five reasons why Chromebook isn’t a Windows killer. I’d like to respond to Bott’s five points.

1. Google’s pricing strategy a step towards IT as a service
Bott feels that the price is too high “for a glorified netbook”. However, Bott is focusing on the acquisition cost, not the total cost of ownership.

Back in 2008, Gartner estimated the total cost of a $1,500 notebook over a 4 year period could range between $5,033 and $9,900. The ongoing cost far outweighed the initial cost by between 236 percent and 560% percent.

Google bundles the hardware, OS, maintenance and some administration cost into that $28 per user per month. Companies can opt to pay $50 per user per year separately for Google Apps, an alternative to Microsoft Office and Microsoft Exchange. On a monthly basis, these two prices net out to under $35 per user per month.

Another point to consider is that the monthly fee, versus an upfront hardware cost, allows companies to plan their IT budgets more effectively. Some may see the pricing as allowing companies to move capex dollars into opex dollars.

2. Automatic updates don’t have to be a nightmare
Google claims that automatic updates enable a continuously improving system. However, Bott feels that pushing updates to users can sometimes break things, calling them a nightmare.

The key difference between Chromebooks versus Windows PCs or Macs is there is only an operating system to update on the machine.

Google and other providers of apps for Chrome can update their applications on their servers and not have to push out the changed application. Users connect to the web and always use the most current version of the application.

3. All apps that some users need can run in a browser
Bott rightly calls into question whether a Chromebook is appropriate for everyone in your enterprise. A Chromebook isn’t going to be useful for your programmers or graphic designers, as Bott calls out, but could your knowledge workers, or some portion of them, use a Chromebook? Absolutely.

Bott also calls into question the value of using a desktop virtualization technology, like Citrix, to provide access to native applications that a Chromebook can’t support. However, the ability to use Citrix reads to me like a simple way for Google to deflect FAQ questions versus something that a typical Chromebook adopter would do.

4. Universal connectivity and off-line access is not a pipe dream
Bott asks: “Do you really want to bet the productivity of your entire workforce on having reliable, fast Internet access everywhere?”

Most knowledge workers spend considerable time at the office, coffee shops or home, all places where an internet connection is readily available.

Additionally, Google had already announced that off-line access to GoogleApps is forthcoming. It’s only a matter of time before other web applications use local storage to offer off-line functionality.

Bott also mentions the issue of a user needing access to documents stored on a server somewhere, when they are unable to find an internet connection. Apps such as Dropbox for Chrome OS, or the ability to store, say the last 50 documents used within Google Apps on the 16GB of local storage makes sense.

5. Understand the security implications of using Chromebooks
Google claims that its sandboxing, encryption and recovery capabilities provide a higher degree of security than current PC environments.

Bott asks, whether you’re ready to bet your company on Google’s security feature claims. He also asks whether you want your company’s business data stored on Google’s servers.

These are valid concerns. However, these concerns apply to any corporate use of a web-based technology, be it Salesforce.com, SurgarCRM, or Amazon EC2.

Not ever company will be willing to trust their data to Google. But, deciding which users would be the best targets for a Chromebook, and considering the data they access, create and store, will be critical to getting comfortable with using Chromebooks in your enterprise.

Evaluate Chromebooks with a long term view
Consider Chromebooks as a way to make your IT environment more flexible and responsive to users. Don’t ignore Chromebooks because it’s not the right solution for each and every user in your company. Pick a set of users whose needs align with the benefits of Chromebooks and consider a trial rollout.

Follow me on Twitter at SavioRodrigues. I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies, or opinions.”

Microsoft’s CEO attended a joint press conference with New York City (NYC) mayor Michael Bloomberg to announce a new software deal for NYC. Details of the deal, including the related discount and Microsoft’s willingness to be flexible, suggests open source and cloud-based office productivity suites are becoming central to licensing discussions with Microsoft.

First of a kind deal or first of many?
According to New York Times reporter Ashlee Vance, Mayor Bloomberg began the press conference stating:

I am sorry if you are looking for a story of sex and pizzazz. That is not what this is about. This is about making the city government work better.

The deal, labeled as a “first of its kind” by Ballmer is valued at $20 million per year and will save the city $50 million over five years. To put these figures in perspective, NYC’s annual budget is about $63 billion.

NYC shifted from individual city agencies negotiating separate deals with Microsoft to a city-wide licensing deal for the city’s 100,000 employees. Additionally, Microsoft is allowing NYC to pay license fees based on the actual applications that city workers use. Vance reported that “New York will put workers into three categories based on how many applications they use.”

It could be argued that few enterprises are large enough and have not yet consolidated corporate-wide licensing to follow in NYC path. In fact, Ballmer is quoted: “corporations often negotiate more nuanced licensing deals than government bodies”. However, categorizing employees based on the applications they use, and paying for a few applications together versus selecting between an individual product license and a significantly larger product suite license could become more common in the enterprise.

Did Microsoft accept a 33 percent revenue reduction?
While “sex and pizzazz” may have been absent in the announcement, the deal, and the negotiation, could hardly be considered just another sale.

For one thing, it’s not everyday that Ballmer attends a press conference to announce a deal. Especially when the deal will, at least potentially, see Microsoft make $50 million less from the NYC over five years.

The quick math suggests NYC was able to negotiate significant concessions from Microsoft.

The deal is valued at approximately $20 million per year, suggesting approximately $100 million in revenue to Microsoft over 5 years. Next, the deal is expected to save NYC $50 million over that same period.

Using these two pieces of data, one could assume that Microsoft was on track to make $150 million over the five year period, had it been able to negotiate separate contracts with NYC agencies. Instead, Microsoft will settle for $100 million, or 33 percent less, over the five year period.  Additionally, this is a 33 percent reduction against the discounted rates that each NYC agency had already negotiated themselves as part of the potential original $150 million over five years.

It could be argued that the $50 million in savings are not entirely due to a reduction in license fees paid to Microsoft. Maybe some city agencies were using alternatives to Microsoft technology, and will now use Microsoft products and thereby save the city money. This would represent net new revenue for Microsoft while also reducing NYC’s costs.

However, to even consider a 33 percent discount on already discounted city prices, if Microsoft were displacing a competitor in any part of the NYC, Microsoft would have negotiated to make this fact public.

There was no mention of Microsoft displacing a competitor in the announcement.

In fact, quite the contrary, NYC Deputy Mayor, Stephen Goldsmith, credited competition for helping NYC negotiate the significant discount. Goldsmith is quoted: “we took advantage of the competitive moment.”

Playing the Google & open source card
IT decision makers are increasingly using Google Apps and open source office productivity suites as negotiation tactics. Vance quotes Mary-Jo Foley, a well known Microsoft reporter, stating:

So many of the customers I am talking to play the Google card even if they have no intention of going to Google. Microsoft knows people are doing it, but what can they do?

It’s logical to assume that Microsoft will be pushed to a point at which they will aggressively attempt to call a customer’s bluff. As much as companies would like to threaten “we’re going to drop Microsoft Office”, the realities of doing so are far from clear cut – at least today.

IT decision makers are encouraged to help a subset of users to build skills with alternatives to Microsoft Office today. Users that require infrequent access to office productivity tools, or that need to access files and collaborate across computing devices could be good candidates.

At the very least, this will help companies appear more credible during future negotiations with Microsoft.

It’s interesting to note that as part of the NYC deal, Microsoft was able to convince NYC to license Microsoft products for a, as NYC deputy mayor Goldsmith claimed, “a large number of individuals that don’t even have e-mail access”.

While NYC has certainly negotiated an aggressive deal with Microsoft today, one can’t help but wonder if they’ve lost future negotiation power. Not only is NYC remaining fully committed to Microsoft client technologies, they are also increasing the number of city employees skilled with Microsoft products. These two points will make it even harder for NYC to adopt a competitive solution in 5 years.

Negotiate hard, like NYC did. But don’t forget to take steps to ensure future negotiating power.

Follow me on Twitter at SavioRodrigues. I should state: The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies, or opinions.

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