Author: Alex Williams

The first peek at Apple’s new data center stoked much of the interest in our poll last week. We asked: “Why is Apple building a massive, $1 billion data center?” A total of 1,456 people responded.

This week is the RSA Conference, the largest security conference in the world. A major topic for discussion will focus on cloud computing security.

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In anticipation of RSA, the Cloud Security Alliance has listed the top security threats to cloud computing. What do you think?

Last Week’s Poll: Why Is Apple Building a Massive, $1 Billion Data Center

Last week’s poll reflected the deep interest people have in Apple’s data center. Of the 1,456 people who responded, 53 percent of respondents agreed that there are several reasons for Apple’s massive data center. Top reason: To give Apple the ability to deliver its own content, followed by the belief that Apple will make iTunes an online application.

In our post, several people commented with their own speculations:

Tim Jones:

“Why is Apple building a massive, $1 billion data center? Because it’s playing catch-up to Google, Amazon, etc. No way anyone would trust Steve Jobs to store their stuff with him when he’d likely wake-up one day and decide to erase all the words that begin with the letter H in the data center, because he felt he didn’t like words that begin with the letter H that day.”

Discuss

It’s rare when you will see a post in this blog about Saas and its place in the financial markets. But a report by former ReadWriteWeb-er Bernard Lunn shines an interesting perspective on the SaaS market.

The report is noteworthy as it comes on the heels of the annual earnings report from Salesforce.com, the first SaaS provider to hit $1 billion in annual revenues. We feel the SaaS market may be the most pivotal sector of the cloud computing world and we expect several other companies in the SaaS market to also reach the $1 billion mark.

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We think it’s important to look at the market from an investor perspective to get a view of the overall enterprise sector, which is now deeply affected by the onslaught of cloud computing.

SaaS providers should be smiling about this kind of report as it demonstrates that they have a place in the IPO market. Jive Software is believed to be moving toward an IPO.They are just one example of many companies we expect to see move in this direction.

The report looks at the following:

• Early stage companies, in particular those with venture capital funding
• Mature ventures with the financial strength to be IPO candidates
• Publicly traded companies

For our purposes, we find the Salesforce.com analysis of most interest. The report gives reasons why Salesforce.com is either over or undervalued.

Here’s an excerpt from the report about why Salesforce.com may be overvalued:

“Marc Benioff is selling shares. This was announced in the previous quarterly report on November 25th 2009. The % of his shares that he “may” be selling is significant. He has basically announced that he “may” sell 2,750,00 shares out of a total of 13,371,006 shares he owns. That is 21%. Whether investors are concerned about this remains to be seen. Insider selling is often a trigger for smart outsiders to sell. Currently he is selling shares at a rate of 10,000 per day. Maybe he wants to give serious money to charity and who can fault him (or Bill Gates) for doing that? Concern factor: low.”

And undervalued:

“Internet market leaders are never cheap stocks. Waiting for these leaders to become bargains has seldom worked. The only times they are bargains are when other stocks are super- bargains.”

The market is still young even though SaaS is mainstream. A report like this one helps provide additional perspectives on the state of the market.

Discuss

It’s a Friday morning and goodness knows we will be up to our eyeballs in discussions next week as the RSA Conference shovels out enough cloud security news for us all to groan just a bit.

So, let’s lighten it up a bit with one of the funnier YouTube videos that spoofs Hitler. This time, the subject is cloud computing in “Der Führer in Cloud Computing,” by Marcus Ranum and Gunnar Peterson.

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Hitler’s generals have to deliver some bad news. Someone tampered with the The Third Reich’s customer database and changed every last name to “pwnz0red.”

This is really funny. I know the Hitler parodies get a bit overplayed but this one works. The cloud is so ripe for satire. And this one hits it right on the mark.

Discuss

Yammer is opening up its microbogging platform. In “Yammer Community” people may now create a community without the requirement that an email address be associated with a particular domain.

This is a big change for Yammer. Many companies do not have their own domains. Opening up the platform means that the service is open to a much larger audience – and has created a much wider place for itself in the enterprise.

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Yammer has done what any smart service does these days: open the network. Communities can be created internally and are associated with the overall company network. They may also be set up with people outside the company, be they customers or partners.

Companies can use the new service, or not if they prefer to remain with the Yammer service as it is without communities. Admin controls allow a business to set permissions for employees. Admins may also control who can sets communities and what extent they can use them.

Yammer says the service is available on the iPhone and will have a desktop client. It will be available March 1.

We wonder where Yammer is heading. it has that quasi-business/consumer quality to it. It feels in some ways like an application that would be applicable to any number of groups, be they civic organizations or tech communities.

This is a good next step for Yammer. It extends its real-time capabilities. It’s focused. It’s similar in some ways to Chatter but with constraints. And we don’t mean constraints in a bad way. Yammer has decided to go deep with its core capabilities instead of trying to add services that are not part of its DNA.

Discuss

We posted yesterday about WordPress.com founder Matt Mullenweg and his view that cloud computing is marketing speak.

The conversation followed a significant WordPress.com outage. In our research looking into the role that cloud computing played, we discovered a lot of discussions about backing up your WordPress.com account.

One method looks especially interesting.

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With an Amazon S3 account, you can do an automatic back up to the cloud with a WordPress plugin called Automatic WordPress Back Up. Dan Coulter developed the plugin. It is sponsored by Web Design Company.

The plugin makes it pretty simple to back up your blog. All you need to do is provide an Amazon S3 account key.

Digital Inspiration’s Amit Agerwal says there are few advantages to this approach:

The plug-in won’t just backup your WordPress databases but it will save a copy of your WordPress themes, plug-ins and other important configuration files (like .htaccess, wp-config.php, etc) to Amazon S3.

Amazon S3 charges you for every byte of data storage so you can set the plugin to automatically delete backups that are older than a month.

You can either run scheduled backups (once per day, or per month) or take snapshots manually. The backup happens in the background and you don’t have to wait in the browser for the process to complete.

Of course there are several ways to back up your WordPress account. But this looks like an effective way to use the cloud to automatically keep your blog backed up in case of an emergency.

Discuss

A study by Burson-Marsteller finds that 79 percent of the largest 100 companies in the Fortune Global 500 index are using social media tools.

At first glance, this may seem significant. But a closer look shows that Fortune 100 companies are showing interest but nothing to prove that social media tools are gaining significant corporate acceptance. Here’s a copy of the full report and an accompanying power point presentation.

But it is early in the game and these are results show that social media tools are making credible gains.

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The services of choice? No surprise: Twitter, Facebook, YouTube and blog platforms.
Twitter is number one, followed by Facebook, YouTube and corporate blogs.

The study found that 65 percent of the largest 100 international companies have active accounts on Twitter, 54 percent have a Facebook fan page, 50 percent have a YouTube channel, and one-third (33 percent) have corporate blogs. Only 20 percent of the major international companies are utilizing all four platforms to engage with stakeholders.

The fact that the Fortune 100 do not leverage multiple tools is a sign of how consumer-based social media tools are not fully understood or leveraged for maximum benefit. It’s also evident of just how much of an opportunity big companies have in using the social Web if they use it to its full extent. Companies that extend to multiple media networks still have a chance to get ahead of competitors.

The frequency of posts illustrates that companies are posting but not nearly as often as they could.

Let’s take a quick look at some of the findings for Twitter, Facebook, YouTube and corporate blogs:

Twitter

The report says that Deutsche Telekom uses Twitter for announcements while Volkswagen uses it to RT and Home Depot for customer service. Conclusion? Fortune 100 companies are still searching for the best way to use Twitter. But just posting announcements seems pretty sterile.

From the white paper:

“Leaders of the pack on the Fortune Global 100 are Sony’s SonyPlayStation with well over 115,000 followers and SonyPictures who is followed by almost 50,000 people and following over 6,000 Twitterers themselves.”

Burson-Marsteller also states that Fortune 100 companies are supporting multiple accounts. This is perhaps most encouraging: customer engagement is beginning to be more widespread across product groups.

Facebook

Facebook shows some of the most promise. Most of the Fortune 100 companies have tens of thousands of users.

Perhaps the strongest sing of acceptance is in the number of corporate product groups that use Facebook. Companies like Sony have multiple fan pages.

YouTube

YouTube is used mostly by U.S. companies. Entertainment, electronics and auto companies are the most likely to have YouTube channels. Viewership shows promise. Consumers want to see product videos. Connecting YouTube with Twitter, Facebook and a blog can make for a potent combination if all are updated on a regular basis.

Blogs

Fifty-percent of the Fortune 100 companies from the Asia Pacific have blogs. Burson-Marsteller says Asian companies prefer blogging due to the control they can have over the conversation.

“Only 11% of active U.S. company blogs had posts in the past three months as compared to 83% of European blogs and 77% of Asia-Pacific blogs. The U.S. blogs also had fewer blog posts.”

The results show the increasing popularity of the real-time web and its use across the enterprise. But is it smart not to update a blog? We wonder what company fares better. The one that is active on its Twitter account and its blogs or the one that has an active Twitter account but infrequently updates its blog?

Conclusion

Corporate America is using the social Web. It’s apparent that companies have waded a bit deeper into the water but the opportunities are clear. The companies that embrace multiple mediums and keep up with a consistent volume of updates will be the big winners, no matter if they are a Fortune 100 or a Fortune 1,000 company.

Discuss

Google App Engine is down and there are problems with a backup data center. The problem is affecting untold number of customers.

Google App Engine is a service for application developers.

It provides hosting and data storage for applications.

A post at 8:36 a.m. PST to the Google App Engine Group stated:

“Since 7:53am PST, App Engine has been experiencing an unexpected
outage affecting the majority of App Engine applications. The team is
working quickly to correct the cause and will have an ETA on the fix
shortly. Please watch this thread for updates. We sincerely apologies for the
inconvenience. “

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And this update was posted at 9:30 a.m. PST:

“We are still actively working on the on-going outage. We’ve also
experienced a problem with our backup datacenter. We will continue to
provide status updates on this thread every thirty minutes. “

Even the Google App engine site is down:

No further details are available. We will keep this post updated as we learn more about the outage.

Update: Google App Engine is back online but not without issues. Google restored the service around 10 a.m. The service was unavailable for 136 minutes. No explanation yet about why the service went down and what took so long to get it back up.

Here’s the latest update:

“As of 1 pm PST, we are seeing lingering write issues with a small percentage of datastore entity groups. As well, a small percentage of cron jobs are not running correctly. We believe both issues are linked to the unforeseen outage earlier today and we are treating them as high priority. We will update this thread hourly with more information going forward.”

Discuss

The WordPress.com network went down last week. In the wake of the outage, we started looking at what infrastructure WordPress.com uses for serving its 10 million blogs.

WordPress.com is run from data centers in Chicago and San Antonio. Layered Technologies (LayeredTech) manages most of the WordPress.com infrastructure. According to LayeredTech materials, in 2005, WordPress.com had five servers. Today, LayeredTech manages about 1,000 servers for WordPress.com.

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WordPress.com founder Matt Mullenweg said in a blog post that a routing issue in the data center caused the outage.

The cloud gets blamed for almost any online outage these days. It used to be that we’d just say the service went down and there was a failure at the host or the data center.

Sure enough, the WordPress.com outage is not a cloud disaster. Instead, it’s what happens when failover does not work in a data center. According to Founder Matt Mullenweg, that’s what happened at WordPress.com:

“There was a latent misconfiguration, specifically a cable plugged someplace it shouldn’t have been, from a few months ago. Something called the spanning tree protocol kicked in and started trying to route all of our private network traffic to a public network over a link that was much too small and slow to handle even 10% of our traffic which caused high packet loss. This “sort of working” state was much worse than if it had just gone down and confused our systems team and our failsafe systems. It is not clear yet why the misconfiguration bit us yesterday and not earlier.”

We took a long look at the issue and still it bugged us that it is so vague about the differences between a data center network and a cloud computing environment.

Well, Mullenweg is clear. We asked if WordPress.com is hosted through a traditional data center or if it is on a grid, which would qualify it to some respect as a cloud
computing environment.He took our question and shot it right back. And in many ways, we think he is right:

“That’s a silly question, like asking whether Facebook is a cloud computing environment,” Mullenweg said. Most “clouds” besides Amazon’s are just marketing BS. WordPress.com is a collection of many physical servers across multiple datacenters to create a scalable, resilient environment for our customers. You could call it a grid, or cloud, we just call it service.”

Cloud computing is over-hyped. No doubt. It’s interesting to hear this from someone like Mullenweg, who knows first hand the challenges of scaling. Who cares if it is cloud or not. It’s just cheaper to do it yourself at some point.

Here’s how Mullenweg answered the rest of the questions we posed:

Question: WordPress.com uses traditional hosting. Why not use the cloud or does part of your service rely on a public cloud service?

Answer: We use cloud services where appropriate but always have a fall-back to local services. The best we’ve used is Amazon S3.

Question: I saw you present at Microsoft PDC about Windows Azure. Are you using Windows Azure? How?

Answer: We aren’t.

Question: Are you planning to move more of your service to a public cloud environment? Why? Why not?

Answer: No, in fact we’re going the other direction so we can have more control and lower our costs.

Question: But if it is a cloud, how could one router take it down? I saw your explanation but a clarification would be most helpful.

AnswerWe have dozens of hardware and networking issues each week, and our system adapts and works around them so they’re invisible to users. This particular failure broke all of that. For an explanation of why, please check out my blog post on en.blog.wordpress.com.

So, really what is the difference? There may be very little difference at all. The only distinction being that cloud computing remains difficult to define and sometimes is just marketing speak.

Discuss

In last week’s poll, we asked if one company will come to dominate cloud computing. We had 115 responses.

Today we posted about the massive data center that Apple is building in Maiden, NC. We know so little about what Apple plans to do with the 500,000 square foot data center. So, we want to ask you: Why is Apple building a massive, $ billion data center?

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Speculation runs the gamut.

Is it to give Apple the ability to deliver its own content?

From Dan Rayburn:

“…it does indicate that over time, third party CDNs like Akamai and Limelight could very well lose a large portion of Apple’s business. While it’s way to early to speculate what kind of content Apple will deliver and in what volume, this strategy is nearly identical to what we’ve seen Microsoft do over the years.”

People point to Apple’s Lala acqusition as a case in point that Apple wants to offer iTunes in the cloud.

Michael Robertson, the founder of MP3.com gives this scenario:

“What is of value is the personal music storage service which was an often overlooked component of Lala’s business. As Apple did with the original iPods, Lala realized that any music solution must include music already possessed by the user. The Lala setup process provides software to store a personal music library online and then play it from any web browser alongside web songs they vend. This technology plus the engineering and management team is the true value of Lala to Apple.”

Will One Company Come To Dominate Cloud Computing?

We asked that question last week. We had 115 people respond. About 45 percent of you said, no, there is too much diversity in the market for it to be dominated by one company:

So, what do you think? Why is Apple building this massive data center?

Discuss

If there is any doubt about the social Web moving into the enterprise, then the news today from Jive Software has to make even the hardest skeptics start to wonder.

The Portland, Oregon company that has built its success on providing a social layer to the enterprise is pursuing a path that may lead it to a public offering.

Fueled by venture capital, the company said today that it is looking for a new CEO.

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Current CEO Dave Hersh is stepping aside from his role to become chairman of the Jive board. The interim CEO will be Tony Zingale, a Jive board member.

Hersh has lead the company since 2001. He will lead the search effort for a new CEO. Zingale is an experienced CEO. He most recently lead Mercury Interactive, a company acquired for $5 billion. He was also CEO of Clarify, a CRM company.

In a phone interview today, company executives said an IPO is a possibility. It’s a move that makes sense. Jive is now competing with the largest technology companies in the market. For instance, Jive has a Sharepoint integration with Microsoft. But the reality is the two companies are vying for the same accounts.

The issue is size. Companies like Microsoft have huge sales channels. Jive does not have that kind of reach. An IPO would give Jive the resources to compete more effectively with the giants of the tech world.

It’s also a clear sign that the market is there for social software in the enterprise. Hersh said to us in an interview recently that there is a mad chase for all applications to be social.

That’s quite true. And Jive’s dreams of an IPO are representative of that reality.

Discuss

A first peek at Apple’s new data center in Maiden, North Carolina, shows a massive complex that demonstrates the huge commitment Apple may be making to cloud computing.

According to Data Center Knowledge, the $1 billion data center is 500,000 square feet in size, nearly five times the size of Apple’s 100,000 square foot facility in Newark, New Jersey.

The data center is considered a major part of Apple’s cloud computing roll out.

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It is speculation at this point what Apple is planning to do with the data center and how it will leverage cloud computing.

From Data Center Knowledge:

The most interesting question is whether Apple needs a much larger facility to support growth in its existing services, or is scaling up capacity for future offerings. One of the leading theories about the size of the NC project is that Apple is planning future cloud computing services that will require lots of data center storage.

In December, Apple acquired Lala, the music service. There has been speculation that the acquisition was meant to help Apple get into the cloud-based music world. That could mean that people would access their iTunes accounts from an online service.

It is also possible that Apple is getting into the online video space. To offer such a service would require data centers on the magnitude of what Apple is building in Maiden.

Discuss

CloudCamp Tour India will feature five CloudCamp events over the next eight days, illustrating the the growth of the movement in one of the largest technology communities in the world.

India is on the edge of seeing significant adoption for cloud computing. Janakiram MSV works with Alcatel Lucent as Deputy General Manager, Bell Labs-India. He makes a few points about why India is poised for significant growth in his post about the battle ahead in the cloud computing market.

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“Why should Cloud vendors take India seriously? Here are some points:

1) India hasn’t hit the saturation levels yet. Unlike Americas and EMEA, India and APAC have ample scope for IT adoption. This market has a huge, untapped potential at every level – Let that be enterprise, Public Sector or ITES.

2) India is a playground and a test bed to pilot strategic adoption techniques. No other geography will give the platform vendor access to the whole ecosystem. Want to engage with ISVs and excite them to develop on your platform? Well, India is the place to go. Do you need a mature developer community to pilot a SDK adoption plan? Want to setup a Center of Excellence to showcase the capabilities of your platform? Go, talk to Infosys or Wipro!

3) The Small and Medium Enterprise (SME) story is just warming up. Some of the inherent problems that India has been grappling with can now turn into a great opportunity for Cloud vendors. Think of how you can empower the clusters of small businesses through the Cloud and you have a winning story there.”

Interest in India and the Asia Pacific Region is growing. For example, Amazon Web Services recently appointed Simone Brunozzi as an evangelist for the Asia Pacific region. Its the first time Amazon has had an evangelist for the Asia Pacific region.

Microsoft’s Windows Azure is sponsoring a number of the cloud computing events. Yahoo!’s R&D group will hold the first India “hadoop Summit,” on February 24 at the event in Bangalore.

These are all signs that cloud computing is growing as rapidly in India as other parts of the world.

Events are scheduled throughout the country, starting with CloudCamp Delhi, which is now underway.

Here’s a schedule of CloudCamp events taking place through next week:

February 23, 2010 in Chennai, India

February 25, 2010 in Hyderabad, India

February 27, 2010 in Pune, India

February 28, 2010 in Bangalore, India

Discuss

The Windows Phone 7 news kind of threw us a bit this week. It had almost no mention about how it would serve the enterprise. It almost seemed like Microsoft had given up.

Now we are starting to see some reports about how Windows Phone 7 would fit for the mobile enterprise. And it makes us wonder. Will the Windows Phone 7 better serve the enterprise than the iPhone?

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The Blackberry is the leader in the market. For our purposes, we are looking at how the challengers compare to each other. Android may become the biggest rival to the Blackberry with its tight integration into Google’s enterprise suite and the ability to use multiple applications at the same time.

I’s the iPhone that looks a bit vulnerable. Without a doubt, the iPhone is showing success in the enterprise. Apple had a robust earnings report for the fourth quarter thanks in good part to sales of the iPhone to people who use it for work.

But here’s the catch. We really have not seen any bona fide use of mobile collaboration tools as of yet across any device. People are using smartphones to check messages and use applications. The applications they do use are services like Twitter.

When mobile collaboration does find its place in the market, it’s not going to be a one application world. It will require the ability to mashup data, pulling information from multiple sources. Our daily work requires us to use multiple applications simultaneously. That’s not possible with the iPhone. And it will not be possible with the iPad. This issue will become even more pronounced as more enterprise applications enter the mobile market.

In comparison, Windows Phone 7 is an information centric device. Information is stored in hubs and you can view the different hubs as a panorama on the device screen. That makes it potentially better than the iPhone or the Nexus One, which do not have that capability.

People want to see the information without having to go from application to application. A panorama is more akin to the experience we get on a device like a laptop. That’s far more suitable for the enterprise.

Gizmodo:

“Out of the box, this information is organized into areas called hubs, which follow the user’s areas of interest. Accessible through live tiles in the home screen, the Me (the user), people, pictures and video, music, and games–plus the omnipresent search–hubs give views into several data sources, connecting and presenting them into an interweaved panoramic stream. These hubs dig heavily into many databases, both locally and into the cloud.”

Ironically, Microsoft often get labeled as a company that creates silo environments. From our view, the mobile applications of today have a certain silo effect. Windows Phone 7 and its hub structure means that it can draw from deep databases from on-premise and the cloud. That to us seems like a powerful combination that is well suited to an enterprise world.

Discuss

In a Microsoft video extolling its virtues, the narrator makes the point that marketing is difficult with Google Apps. It’s far simpler with Microsoft Office.

So we find it deliciously ironic that Microsoft is marketing a number of anti-
Google Apps videos using Google’s YouTube. Hmm…doesn’t that defeat the point a bit?

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The video is one of several on Microsoft’s YouTube channel highlighted by The Google Operating Systems blog, an unofficial blog with news and tips about Google.

The videos all go to great lengths to show why Google Apps is insufficient. They go through a number of scenarios. For instance, a CEO loses his smartphone and then realizes a conference room may be overbooked. It all makes Google Apps seem extremely complicated and risky to use.

The Google Operating Systems blog points out that Google has fixed a number of the issues that Microsoft talks about, including:remote data wipe, the calendar issue and better copy/paste experience in Google Docs.

It’s all a bit hard to swallow. Google Apps has to be one of the easiest applications to use. Yes it has its faults. And many will never make the switch as they want the deep feature sets that Microsoft Office provides.

But Google Apps is adding new features at a constant rate. The productivity suite is filling out with new services like Google Voice and Google Wave coming into the picture.

We are all for using video to explain products and services. But these videos come off as quite defensive. They illustrate a sense of fear.

Microsoft has such a strong product in Microsoft Office. Microsoft Corp. President Stephen Elop seems to be someone who understands the interdependency of the Web ecosystem. But he has a tough road ahead if this kind of marketing continues from Microsoft.

It all feels like a company protecting its power base more so than embracing the current disruption in the market.

Discuss

The Obama Administration told the country on Wednesday about all of the jobs saved since the U.S. Congress passed the stimulus package one year ago. This got us to thinking about how the technology world is faring in these hard times.

Unfortunately, some of the largest technology companies in the world don’t want their story to be told. In this post we tell the story about the racial and gender makeup of technology giants in Silicon Valley; and how diversity has changed over the past several years.

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Recently, federal regulators ruled in favor of five technology companies that waged an 18-month battle to block a San Jose Mercury News Freedom of Information request for employment information. The federal regulator ruled that collecting the data would cause “commercial harm” by potentially revealing the companies’ business strategy to competitors.

According to the San Jose Mercury News, Google, Yahoo!, Apple, Oracle and Applied Materials argued that the race and gender of its work force is a trade secret that cannot be released.

It’s a decision that borders on the absurd. It’s unbelievable that the racial makeup and gender of a company would reveal its strategy to competitors.

We highlight this news to point out how the lack of diversity in the tech sector prevents minorities from enjoying the high salaries and benefits that come when working for large technology companies.

Plus, as the Mercury News reports, it prevents us from understanding what the civil rights legislation should be in this day and age. Technology companies like Apple did not exist back in the 1960s when civil rights legislation first passed.

The issue about diversity in the tech economy is especially relevant when you look at what communities are suffering the most during this current recession. Joblessness among blacks is twice that of whites.

The Mercury News eventually did get access to Department of Labor data and the results show how great the gap is in the Silicon Valley:

“The Labor Department data ultimately obtained by the Mercury News shows that while the collective work force of 10 of the valley’s largest companies grew by 16 percent from 1999 to 2005, an already small population of black workers dropped by 16 percent, while the number of Hispanic workers declined by 11 percent. By 2005, only about 2,200 of the 30,000 Silicon Valley-based workers at those 10 companies were black or Hispanic.

In addition, among the roughly 5,900 managers at those companies in 2005, about 300 were either black or Hispanic — a 20 percent dip from five years earlier. Women slipped to 26 percent of managers in 2005, from 28 percent in 2000.”

We look at Google, Apple and Oracle as leaders in technology development. How they fare in terms of diversity is a matter that unfortunately will be kept in the shadows under the cloak of trade secrecy.

Discuss

Microsoft President Stephen Elop says the cloud has created a “constructive disruption,” in the market, creating an opportunity to offer Microsoft Office on the Web at no cost.

It also looks like the cloud is disrupting Microsoft’s pricing structure quite a bit. The issue: cloud computing may be the future but the margins will drop.

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In an interview with Bloomberg, Elop said future updates to the Web-based Office suite may add Twitter-like functions that allow users to post short messages.

Elop is an interesting guy. The Bloomberg story is as much as a profile of this newcomer to Microsoft as a story about the the margins that will get squeezed by cloud computing.

Elop looks at the issue philosophically. From Bloomberg:

“In that cloud environment, we are not only selling them software but we are also saying, ‘We’ll take care of your networking, your hardware your operations, your customer support,’” Elop said in an interview. “We’re doing much more work for the customer. What that does is increases revenue and allows us to participate in more profit.”

Elop comes from Macromedia where he made Dreamweaver the most popular web-page authoring application in the market. You can tell he sees the market from a different viewpoint.

Many companies we cover look for ways its products can work on any device and perform on any or browser. Microsoft is different. Elop’s role is to walk the path that balances the need to prepare for the future while supporting Microsoft Office, a product worth billions.

From Bloomberg:

Elop’s Office unit is Microsoft’s biggest business, accounting for a third of the company’s $58.4 billion in sales last fiscal year. The shift to Internet-based versions of Office may cut margins by 5 to 10 percentage points, said Matt Rosoff, an analyst at Directions on Microsoft in Kirkland, Washington.

‘Have to Do Something’

“Elop’s challenge is to move carefully and not undercut the traditional software business,” Rosoff said. “You don’t want to give everybody free Office over the Web because that jeopardizes a highly profitable business, but you have to do something.”

It’s not an easy road. Elop is right. The cloud is disrupting the market. And he seems like the right guy to guide Microsoft through the complexities that Microsoft and the rest of market faces in the months and years ahead.

Discuss

Samsung is taking aggressive steps to reach deep into the enterprise with plans for a suite of mobile collaboration applications and partnerships with the likes of Cisco, Microsoft, Oracle and a host of others.

The collaborative tools including enterprise email, instant messaging security, mobile device management, unified communications, customer relationship management, salesforce automation and business intelligence.

Samsung is working with its channel partners to provide the applications. It’s another form of bundling, really, providing options for what products an enterprise customer may want to include on devices for its employees.

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Partners include Cisco, Formotus, Microsoft, Spring Wireless, Sybase and Wipro. Oracle, SAP and IBM are expected to be added later this year. The approach allows people, for instance to use Ciscco’s WebEx for mobile conferencing.

According to v3.co.uk, Samsung will release the devices this year as it makes deals with mobile carriers. The company will also support Android on some of the devices. Additionally, Samsung will offer offer enterprise applications on the LiMo platform and its own Bada mobile operating system.

The mobile market seem to be getting religion. Application environments are emerging. The Alcatel-Lucent news is a case in point. Carriers puffed their chests at the World Mobile Congress by offering their own platform they call the “Wholesale Applications
Community,” intended to be a write-once, read anywhere environment.

It’s striking how long it has take the mobile industry to catch up. Samsung seems to be taking a bit more of a modern approach with its partnerships. Regardless, it’s clear that 2010 is the year of the mobile enterprise.

Discuss

Google CEO Eric Schmidt said in his address to the World Mobile Congress on Tuesday that Google’s future is not to compete with mobile operators. Instead, he pointed primarily to search advertising as Google’s focus. But notably, Schmidt also mentioned Google’s interest in enterprise software to deflect operator’s concerns that the search giant wants to compete with them.

Schmidt’s address to the world’s leading mobile executives came as Google treads a delicate path. Google entered the mobile market in January. Instead of working through carriers, Google decided to sell its Nexus One directly to consumers. Last week, Google announced it would be offering Internet connectivity to select communities. That’s another sore point for operators who wonder if Google is planning to enter the networking business.

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Talking about the enterprise makes it seem like Google’s business is entirely different than that of mobile operators. How could a focus on enterprise applications corollate to complex mobile networks? Well, who would have ever imagined that Google would be offering free WiFi to communities or 1 Gigabit connections to 50,000 homes?

Google plans to offer high-speed fiber to select communities is in part designed to pressure operators to offer high speed Internet access. The idea being that the ISP’s could offer far faster Internet access than they do now.

Google knows that super high speed access would mean people spending more time online, more time using Google Apps in a far more fluid manner. It would mean that Google’s investment in cloud computing would have considerable additional returns.

Google is also in favor of net neutrality. Mobile operators and ISP’s are in favor of tiered networks. A tiered network could disrupt Google’s cloud computing business and its enterprise strategy. If the U.S. Congress permitted tiered networks it would force Google to decide if it really should be reliant on the carriers. The carriers and the mobile operators could in effect dictate the price and the type of content in the packets traveling over the network. If that happened, Google would have to consider building out its own network.

Schmidt’s reference to the enterprise is not ground shaking news. But it is noteworthy in its mention at an event as significant as the World Mobile Congress. Google may have offered an olive branch to the mobile operators but in the background are a number of issues that could have ramifications for Google’s strategy to be the king of the enterprise.

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Alcatel-Lucent is launching a cloud-based ecosystem where developers build applications on enterprise API’s that are distributed by service providers. The platform builds on the company’s application suite announced in December.

The news points to the almost unstoppable wave of new development for the mobile market and the growing importance for enterprises to expose API’s to developers so they may create applications that reach deeper into vertical markets.

The news also shows the surging value for application developers, arguably one of the most important communities for the enterprise and service providers to embrace.

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The platform is intended to create a place for the enterprise to realize the benefits that come when exposing API’s. There has been some resistance on the part of the enterprise to expose API’s. Concern has focused on security and what we perceive as a general lack of understanding about what API’s can do.

For developers, it seems like a no brainer to be part of a community where APi’s are aggregated and distributed via service providers, such as carriers. It’s a bundling model that gives the developer better distribution. At least that is how the theory works. For a model like this one to work will require a deep availability of API’s that developers can use to develop and test applications.The key is in what services are provided the developer. To start, Alcatel-Lucent will provide a dashboard to track applications they have created after they been distributed on the service provider network.

Third party application developers are enjoying what may be remembered as a golden age. They are as sought after as any community.

The Alcatel news is a case in point. It is platforms like this that creates a market for developers in a variety of ways. Developers can work with enterprise customers and sell the applications through large carriers. And it’s not just Alcatel that is reaching out to developers. Every carrier on the planet is courting developers. iPhone developers, Android developers – you can go on and on with examples.

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The Windows Phone 7 received a lot of praise after its launch at the Mobile World Congress today for its elegant, minimalist interface. From what we’ve seen, it does look striking.

What we also find to be crystal clear: Microsoft is putting far more emphasis on the consumer market than its productivity features for the enterprise.

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Windows Mobile 7 Series is getting rave reviews. Bloggers say Microsoft really has started from scratch to get back in the game with Apple and Google. It is a brand new OS. And it’s like nothing like we have seen on the market. It is similar to the Zune HD but apparently it goes deeper than that.

According to Engadget:

“First the look and feel. The phones are really secondary here, and we want to focus on the interface. The design and layout of 7 Series’ UI (internally called Metro) is really quite original, utilizing what one of the designers (Albert Shum, formerly of Nike) calls an “authentically digital” and “chromeless” experience. What does that mean? Well we can tell you what it doesn’t mean — no shaded icons, no faux 3D or drop shadows, no busy backgrounds (no backgrounds at all), and very little visual flair besides clean typography and transition animations.”

Microsoft is playing to win in the consumer space but we wonder where the enterprise fits in.

Philippe Winthrop of Enterprise Mobility Matters says there was almost no mention of its enterprise applications:

“However, the amount of time devoted during the presentation to “Productivity” was disappointing for me. Sure, I’m not expecting to see a full blown technical demo when a company is launching a brand new platform, but I would have loved to see how an actual email (and not just the Inbox), as well as accepting a calendar entry looks.”

It’s not unusual to have a lot of questions when a company like Microsoft makes such dramatic changes in its technology strategy. Microsoft is keeping mum about all sorts of issues that are important to the enterprise. Here are a few questions that are popping up:

• Windows Phone will most likely not support Windows Mobile legacy applications. The OS is entirely different. What does that mean for the enterprise now using these applications?
• What security features does it have? Can data be wiped from it remotely?
• How will the Zune software be adapted to the enterprise? Will IT permit people to sync to their PC’s?
• How does Azure fit into the picture?
• Is this a service the CEO would use or is it really best as a consumer service?

We are very curious about how this will play out. Enterprise collaboration is becoming deeply tied into mobile platforms. The Blackberry, iPhone and Android devices all have their spots in the enterprise. The Blackberry is a messaging device. The Android and iPhone are both application and Web-centric.

Windows phones are a bit of a mystery.

Consumer and enterprise markets continue to overlap. It may just be that people find Windows Mobile 7 more to their liking. And in that case, they will find ways to use the phones for their personal and business use.

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