Market
Roundup |
October 12, 2001
This Week
McAfee.com Gains Real
Traction
Sun Sets Sights on IBM and Microsoft
Microsoft Previews .NET
Services
Microsoft Relaxes Some
XP/W2K Registration and Certification Requirements
McAfee.com
Gains Real Traction
By Jim
Balderston
McAfee.com announced in its third quarter earnings statement
that it has pro-forma results of $0.06 per share earnings on revenues of $16.2
million for the quarter, a jump of 13% from the previous quarter. The company
also announced it had acquired 200,000 more new subscribers – boosting its
total of unique subscribers to 1.22 million. Furthermore, McAfee declared that
it was holding on to approximately 80% of its existing subscribers come renewal
time. McAfee.com provides anti-virus and personal firewalls as subscriptions.
Users do not purchase CD versions of the AV applications; instead the entire
offering is delivered online, with updates delivered over the Internet.
While
there is no doubt that computer security has become an even more critical
concern over the past month, we do not believe that the events of September 11
account for McAfee.com’s strong – if not breakout – quarter. Instead, we see
increasing evidence that the concept of software as a service is making it into
the mainstream of the computing public. While there will always be some consumers
who insist on having products delivered in a medium they can touch and hold,
like a CD, it is increasingly clear that these folks will slip into the
minority as time passes.
The ease
and relative painlessness of maintaining one’s anti-virus application online is
making more and more sense to more and more people. Anti-virus applications are
pretty simple when you boil them down. The key is to minimize the time between
the moment a virus is released into the wild and point at which the antidote is
made available to the end user. If end users are too lazy or forgetful to
update their AV products, they extend the time window and proportionately their
risk of infection. McAfee.com is not the only AV company that offers updates
online. All do, but McAfee.com has spent an extraordinary amount of time and
money building out the infrastructure needed for a 100% online product delivery
system. Apparently, the company has made that infrastructure robust and
responsive enough to convince 80% of their customers to stick around. There is
a lesson here. Any enterprise hoping to offer online delivery of applications
is going to have to invest heavily in the infrastructure needed to support
those customers, lest they see 80% defection – instead of retention – rates.
Sun Sets Sights on IBM and
Microsoft: Lighting a Fire or Just Blowing Smoke?
By Charles King
A few
days after announcing that the company would post a five to seven cent per
share quarterly loss, take a $500 million charge and lay off up to 4000
employees, Sun Microsystems announced a 37% price reduction in the cost of its
iPlanet Web Server Enterprise Edition 6.0 from $1495 to $940 per processor. The
move was regarded as an apparent attempt to wrest market share from Microsoft’s
Internet Information Server (IIS) product. In an unrelated development, an
article posted on Sun’s public Web site claimed that IBM’s new high-end p690
UNIX server (AKA Regatta) “is trying to do what Sun has been delivering for
years,” and claimed that Sun’s own Sun Fire 6800 UNIX server performs at higher
levels of efficiency than the Regatta.
One
generally expects most any company to exhibit a fair bit of public contrition
after announcing a half billion-dollar write-off and major layoffs, but Sun has
always reveled in its self-elected role as high tech’s recalcitrant bad boy so
a bit of puffery is hardly out of character. However, a company nearly two
decades old is a bit long in the tooth to be play-acting as an enfant
terrible, and the events of the past week bring two serious questions to
mind that cannot be answered with mere bluster. First, are Sun’s losses and
lay-offs due to the “well-documented macroeconomic factors” company CEO Scott
McNealy prefers to blame or are deeper problems vexing the company? Second, do
Sun’s aggressive and public swipes against IBM and Microsoft suggest that the
company believes it is capable of taking on and winning against either or both
competitors?
While the
past year’s spiral into recession has caused a good deal of damage both inside
and outside the high tech sector, we believe that the genesis of Sun’s problems
lays a bit deeper than the general economic malaise. Over the past year, the
competition in the UNIX server space has gotten fierce, with IBM, especially,
gaining ground on Sun’s once apparently insurmountable market lead.
Additionally, the company’s competitors have virtually all implemented
strategies that embrace both Intel’s 64-bit Itanium chipset and open source
Linux solutions, leaving Sun as the only vendor focused solely on proprietary
business hardware and software products. Does this suggest that Sun is headed
directly or even quickly down the tubes? Hardly, but it does leave the company
standing squarely at odds against a substantial market shift within its own
industry. So far as the company’s tactics toward IBM and Microsoft are
concerned, the best Sun can realistically expect is to scrape a bit of cream
off its rivals’ much broader and deeper product offerings. The currently weak
demand for business hardware and Sun’s own softening sales suggest that the
company’s aggressive yammering should be regarded as just what is is; so much
vocal sturm und drang directed at an audience that appears to be turning
to new sources for entertainment and edification.
Microsoft
Previews .NET Services
By Jim Balderston
Microsoft
announced that twenty-four partners would be deploying the .NET Alerts Service
to their customers sometime this quarter. Among the partners are eBAY, Bank One
Corp., E*Trade, Expedia, McAfee.com, MSN CarPoint, NASDAQ.com and VeriSign.
These vendors will use the .NET Alerts Service to provide their customers with
up-to-the-minute information about the availability of predetermined items,
such as sought-after items on eBAY, virus alerts, stocks and the like. .NET Alerts
Services is designed to deliver information to users by a variety of means,
controlled by the user. Email or instant messaging can alert users on desktops,
and alerts are available for mobile phones, PDAs and pagers.
While we
are not ready to declare this announcement as evidence that .NET has attained
the full here and now, this announcement provides enough for a fairly clear
look into the future of computing. We believe what we call “Service Computing”
is inevitable, and that the architecture that will allow for all the benefits
entailed in Service Computing will be provided by the like of .NET or SunOne,
to name two contenders in the Web-based service arena. While this announcement
highlights the delivery of simple messages on a variety of devices in a variety
of formats, it does provide a lens for a future view that view looks something
like this; Applications will be delivered, assembled and used in an entirely
different way than they are today. Instead of loading huge masses of “one size
fits all” suites onto each and every computer in each and every department of
an enterprise, users will instead be given a much more focused package of
applications that are built of componentry deployed on a much more ad hoc
basis. Just as the users of the .NET Alerts Services can configure how and
where they receive messages, they will in effect be able to determine what
applications and functionalities will be available to them on their working
desktops or handhelds.
We do not
believe that each and every employee within an enterprise will be given the
rights or ability to build apps on the fly within this vision of Service
Computing. However, the determination of what apps are built, what features
they possess and who will have access to them will eventually live much closer
to the desktop than the server room where such decisions currently reside with
apparent impunity. In essence, Service Computing will give department level
Line of Business managers the ability to provide their personnel with
applications that are suitable to the work at hand, thereby shrinking the slope
on learning curves, speeding adoption times, and generally giving the
enterprise end user what they need most, whenever and wherever they need it.
By Charles King
Over the
course of the past week, Microsoft has issued a trio of announcements that
relax or alter specific registration and certification requirements for
business users of Windows NT, Windows 2000 and Windows XP. The company extended
the deadline from February 28, 2002 to July 31, 2002 for its Software Assurance
plan, which will eliminate some discounts and raise software prices for some
business customers. In addition, Microsoft stated that customers will not have
to upgrade to Office XP to qualify for the program, as was previously required.
Microsoft also softened its policy for Windows XP re-imaging fees for large
enterprise customers, though it left the policy in place for small- to
medium-sized businesses. Finally, the company announced that it would not
decertify Microsoft-certified systems engineers (MCSEs) for Windows NT 4.0 and
below whose organizations do not upgrade to Windows 2000 by December 31, 2001.
While they
might appear trivial to many Windows users, these events provide an interesting
counterpoint to the crescendo building behind Microsoft’s upcoming Windows XP
launch. The first message, of course, is that Microsoft is a happy smiles kinda
company that is always willing to bend over backward to accommodate the myriad
and sundry requirements of its best buddy business customers. Time to key up
the violin ensemble and Mormon Tabernacle Choir.
There
were, however, a couple of other messages that came through the subtext of
these announcements. Subtext message #1: If Microsoft thinks it can shove new,
higher priced Office licensing requirements down business users’ throats at the
same time the company demands that they use a newly launched OS, they’re smoking
rope. Subtext message #2: If Microsoft thinks its biggest business customers
intend to cater to the company’s technical whims or pay additional fees for
re-imaging, an installation process that Microsoft has accommodated for years,
the rope they’re smoking must have been dipped in weed killer. Subtext message
#3: If Microsoft thinks it can simply abandon companies who paid good money for
Windows NT just because they do not wish to upgrade to Windows XP, the company
is obviously smoking their rope from both ends at the same time. Subtext
message #4: If a company decides it is going to simultaneously introduce a
radical new operating system and office productivity suite, and substantially
change the way they charge customers for products, licensing and support staff
certification, it should put out the rope its executives are obviously smoking
and gauge said customer opinion on the subject before proceeding. The moral of
the story: If you insist on smoking rope, don’t leave so much around that you
can be hung with it.
The Sageza Group, Inc.
900 Veterans Blvd, Suite 500
Redwood City, CA 94063-1743
650·366·0700 fax 650·649·2302
Europe (London) 44·020·7900·2819
Copyright © 2001 The Sageza Group, Inc.
May not be
duplicated or retransmitted without written permission