wellington cloud
wellington cloud

Four years ago Microsoft lost its mojo. The software giant had failed to compete in web search.

People questioned whether Microsoft was on an IBM-style path to irrelevance. When the phone business flopped, it looked like Microsoft’s time in the sun was over.

Today it is back. The 2017 Microsoft is a different beast, the main reason for its revival is a successful transition to selling cloud computing services. Microsoft’s birth isn’t yet on the same scale as Apple which came back with the iPhone, but that can still happen.

This week Microsoft reported quarterly profits that are more than twice the level of a year earlier.

It’s not all good news. Some of the jump was down to the company realising a tax benefit after writing off its failed mobile phone business.

Fast growing cloud transition

Yet that’s the past The important part of the quarterly announcement is that Microsoft’s cloud business is growing at a clip. That was enough to send the share price up three percent.

This wasn’t the first quarter where Microsoft’s cloud business was the star of the show. It’s been climbing for years now. In the latest quarter Intelligent Cloud revenue was up 11 percent to US$7.4 billion. Revenue for the company’s Azure cloud services was up almost 100 percent.

While Azure still trails behind Amazon Web Services, there is clear blue sky between Microsoft and the next set of cloud service providers. Being second in the most important market of the day is a huge win for Microsoft.

Azure profits

At the same time, cloud economics means it is close to a winner takes all game. Amazon and Azure share almost all the cloud profits.

The other cloudy good news from Microsoft is that revenue from the cloud version of Office 365 went past traditional software sales for the first time. There are now 90 million Office 365 users on iOS and Android. That is a big thumbs up for CEO Satya Nadella’s decision to support non-Microsoft operating systems.

Although Microsoft is doing a better job of transforming than rivals like IBM, Oracle or Google, it isn’t in the clear yet. Sales of Surface devices fell two percent during the quarter. Meanwhile enterprise service revenues fell. Yet it appears to be keeping pace with AWS, that’s something no-one else can manage.

Microsoft is cutting ‘several thousand’ employees, mostly in its sales organization, following a reorganization earlier this week.

Source: Microsoft to lay off ‘several thousand’ employees | ZDNet

Mary Jo Foley writes:

“One source close to the company said Microsoft would be cutting “several thousands” of employees. CNBC said Microsoft would be shedding up to 3,000 employees, but didn’t cite the source of that number.”

Microsoft has been here before. The company cut around 10 percent of its staff in 2014. That was mainly to do with the failed Nokia devices acquisition.

If the 3,000 number is correct, that’s around 2.5 percent of the employee total.

Sure, it’s a smaller number, but there’s a danger Microsoft is in a place where it has continuing rounds of redundancies. If you want to know how that story ends, look at IBM. The company never recovered once it started making big cuts to its staff numbers.

Cuts are not good for company moral. Employees constant wonder who is next. They become cautious, take fewer risks, play only the safest bets. This kills innovation culture.

Stressed survivours

Those left behind are often stressed. The more employable workers evaluate their prospects. Often, in technology companies the best, most valued employees — even the ones left after a round of cuts — decide they may be better off elsewhere anyway.

IBM’s cuts became a destructive vicious cycle that, eventually, undermined the company’s ability to innovate and serve its customers. They may have unleashed short-term value to shareholders, but the board ended up killing the golden goose.

Microsoft is not yet at that point. This is a trimming exercise. Most of the jobs that will go are in sales and the company is in transition to a new model where it will emphasis its Azure cloud computing over traditional product lines.

Yet, the jobs-cut-easy-fix can become an addictive and damaging habit. If it happens again in the next year or two, you can take it as read Microsoft is doomed to irrelevance.

The cloud only holds a fifth of the enterprise workload, which means there is time for the enterprise to decide the risks are not worth the rewards.

Source: When the Cloud Becomes Just Normal Infrastructure

After ten years of writing about Cloud Computing, it’s easy to lose sight of how far the technology still has to go. And as Arthur Cole points out in the linked story, cloud native applications are only 15 percent of the total. The number is likely to be higher in New Zealand, but all the same, the cloud is still smaller than we sometimes think.

 

Passive Optical Lan

Chorus held a Tech-Week event introducing Passive Optical Lan technology at it’s Auckland laboratory.

Thanks to the government-sponsored UFB roll-out most New Zealand businesses are now on the fibre network. Fibre delivers gigabit internet to offices, factories and other business buildings.

It means better, more reliable communications. Done well, fibre delivers productivity gains. In business, network speed is the killer app.

Yet for many companies, fibre stops at the door. Or, more likely, a termination point somewhere in the building. From there most connections are copper.

Passive Optical Lan, or POL, is the modern way to build local area networks. POL uses fibre to move data around a building. It is, at core, a local version of the UFB network technology.

Passive is good

A group of homes or other buildings on the UFB network share a single fibre line. The single fibre is split using a device called a passive splitter. It’s called passive because there’s no switch involved. The main fibre line divides into a number of lines; one for each building.

You may hear fibre network people talk of GPON, that’s a Gigabit Passive Optical Network. A Passive Optical Lan divides fibre lines in the same way.

Passive is the important word here. In a copper network you need electrical power. That’s active; the opposite of passive. Data signals in a copper cable are electrical currents. You also need power to drive the copper switches.

Fibre data signals are light waves. Power is needed at each end of the connection. There is no need for power at each step of the journey. That means cost savings. It also means there’s no electricity warming things up, so you don’t need air conditioning. It also means there is less to break.

Speed

The most obvious benefit of moving to fibre for internal networking is that it is fast. In practice this is less important than other considerations.

In most business buildings the internal network still relies on copper, usually Ethernet cables.

That’s OK from a performance point of view. Gigabit Ethernet, even 10 GigaBit Ethernet, can move data around fast enough for every practical office application over short distances.

Moving data is harder in a large office spread over many floors or on a campus-like site. But for most office purposes copper is still fast enough for most networking. That doesn’t make it ideal.

Cost, complexity, compact

POL’s other benefits are more compelling. It is much cheaper to install and operate. At a TechWeek function held at the Chorus Lab, Peter Vandaele from Nokia said the capital expenditure for a POL is about half that for a copper network.

Underlining this point, Alan Warne, an IT project manager working for Environment Canterbury says the organisation saved more than $100,000 when it installed New Zealand’s first POL. He says: “We got a quote of $185,000 for a copper network. The fibre we used cost $82,000”.

Vandaele says it’s not just capital savings on the install. Fibre needs less physical cable and power consumption is up to 75 percent less per connection. The hardware takes up much less space, in many office buildings this means enough room for extra desks on each floor.

Impact on building design

Warne says his one regret about installing POL at Environment Canterbury is that the organisation decided to use the technology  after the building was constructed. An early decision would have meant a different, more efficient building design.

POL is popular with hotels, especially upmarket ones. Vandaele says the saved space means they can often add an extra room to each floor.

Fibre doesn’t degrade like copper. It needs less maintenance and, more important for many companies, it doesn’t require skilled technicians to reconfigure. In most cases people can plug or unplug connectors as needed.

Passive optical lan promises easy care networks

Because of lower power requirements and the elimination of constant heating and cooling, fibre networks are less prone to faults. If something does go wrong, it is far easier to find the fault.

There is also greater resilience. Warne tells of a test where he deliberately cut one incoming fibre line during a video conference call. The network switched over to another line so fast that participants were not aware of the event.

So, if POL is this good, why isn’t it everywhere? The first reason is that companies don’t upgrade networks as often as, say, servers. The technology is still relatively new. While it has many benefits, few companies are going to rip out their existing copper networks for a fibre replacement. However, when the next upgrade comes many will look at POL then.

deathtostock_modernworkshop-04At The Register Shaun Nichols writes:

“The tech press has dared to lean away from its core mission of making technology companies more profitable, says tech advocacy house ITIF.”

The ITIF or Information Technology and Innovation Foundation is an industry think-tank. It issued a report looking at “a change of tone in technology reporting” between the 1980s and this decade.

Long story short, it says the media moved from a positive attitude towards the industry to confrontation.

This, according to the ITIF, is because being tough on the industry makes it easier for tech media to turn a profit.

It goes on to talk about the media being ‘biased’ and distorts the public view of technology.

Yes, it’s all stuff and nonsense. There’s a lot to unpack, but here are a couple of ideas to think about.

Advertising

In the past publishers made money selling advertising to technology companies. They were a great sales conduit. It worked.

The technology industry was the tech media’s most important customer. Rivers of gold poured in.

While there are publishers who publish nice stories in return for advertising dollars, that was never a great business model. Reader are not fooled. They don’t stick around for blatant propaganda.

The advertising money didn’t buy favourable coverage, at least in the better publications. It did foster a favourable attitude towards the industry. The coverage reflected this.

The partnership also meant journalists and publishers spent time in the company of tech industry people. That too is good for creating a positive attitude.

One conclusion of the ITIF report is more advertising would repair media relations.

Readers and journalists

In the old model, advertisers paid for journalism, but journalists serve readers. Few understood this then. They still don’t.

As Nichols says, we’re not industry cheerleaders. We don’t earn cheerleader, public relations or marketing-type salaries.

Our job is to inform readers. If there is more cynicism in technology media (see the next point) then that is what readers want.

Modern reporting tools mean we know what stories rate from the minute they go online. Guess what? Readers are less likely to click on happy-slappy, isn’t everything wonderful darling stories.

In other words, journalists and publishers respond to reader demands.

Don’t shoot the messenger if they now have a darker view of the tech industry. Get your own house in order.

It’s all nonsense anyway

To argue tech media is meaner than it ways, say, thirty years ago is bonkers. The big newspapers and media sites are full of thin press release rewrites. It is common for blatant propaganda to appear as factual news.

Take, for the sake of argument, Computerworld New Zealand. Thirty years ago, even a decade ago, it was breaking news stories. It was quoted in Parliament. Today, it runs nothing that didn’t start life in a public relations office.

That’s not to say all the tech media is soft. It isn’t. But the ratio of soft stories to more hard hitting news is off the scale. You have to wonder if the ITIF is paying attention.