Reality Check | Ephraim Schwartz | March 2007

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March 2007

March 30, 2007 | Comments: (0)

The H-1B news out of Washington this week as reported on InfoWorld's site, is that the U.S. Citizen and Immigration Service (USCIS) expects application for the 65,000 H-1Bs available to be filled in days this year instead of weeks or months as in the past.

According to the news story, "technology companies have long been proponents of a higher cap, saying they would like to see the cap almost twice as high as it is now. The Information Technology Industry Council (ITIC), whose backers include Apple, Dell, eBay, and Intel, last year asked that the cap be raised to 115,000."

Here's what Bill Gates had to say at last months hearing on the subject, as reported in sister publicaton Network World.

"In a statement sure to bring the wrath of US job proponents everywhere, Microsoft Chairman Bill Gates went a-calling on U.S. Congress today to tell them that the country's economic future was at sake if they don't raise the cap on skilled-worker visas, to something closer to 300,000."

"Gates told the Senate Health Education Labor and Pension Committee that the country is facing an "acute crisis" in its shortage of engineering professionals..."

So if what Bill Gates and other CEOs say is true, an "acute crisis" looms, then shouldn't we expect a major downturn in new technology development and research from Microsoft and other high tech vendors?

Maybe there will be no Office 8, heaven forbid!

I say, let's call their bluff. We should send emails and ask Gates and Intel's Paul Otellini among others to tell us what projects are being postponed or cancelled due to lack of talented software engineers, programmers and project managers?

My guess is there would be a long pause. The only reason projects might be cancelled is due to the fact that they will have to pay higher wages to U.S. workers.

Posted by Ephraim Schwartz on March 30, 2007 02:56 PM

March 30, 2007 | Comments: (0)

Can you trust vendor sponsored information?

Imagine if you read a feature story in the Sunday magazine edition of your favorite paper on, say nuclear power plants, and at the top it had the usual byline of your favorite reporter but at the bottom it said something like, "this article was sponsored by General Electric."

What would you think? Would you trust the information? You've known the publication for years and it has a reputation for integrity. Does that get thrown out the window along with the story?

This is the issue facing online readers today where sponsorship of content is a growing phenomenon.

I spoke with Bailey Sory, president and CEO of RealTime Publishers, a self-described Web 2.0 marketing and publishing firm that provides targeted IT communities, subscriber-based, with books, sent out chapter by chapter on a weekly basis, and daily blogs written by experts in their IT field.

For example, Dan Sullivan writes a blog called Messaging and Web Security which serves as an interactive platform where readers can seek out advice, add commentary, and communicate with technology professionals.

Sullivan, the resident editor, is an independent expert paid as a contract worker by Realtime, says Sory.

Here's the first line from Sullivan's bio: "Dan Sullivan is a systems architect with 20 years of IT experience that includes engagements in enterprise security, application design, and systems architecture." The rest of the bio is very impressive and he certainly appears qualified to speak to the subject of securtiy

Sory proudly claims that Realtime's content is "non-advertorial content, objective and the community members, about 200,000, access the information through permission-based marketing."

Permission-based marketing basically says you are willing to hand over contact information in exchange for getting something for free.

Sponsored content is an integral part of the Web. InfoWorld does it with Webcasts on IT subjects sponsored by major vendors. Everybody does it. The question is will the information be as impartial as content you read in print where there has been a centuries old tradition of separation of church and state, separation of advertising and editorial.

Journalism is one of the few professions where a person has the right, if not the obligation, to tell off the person who hired him if he thinks he has blurred the line between church and state.

Will that tradition carry over? I'm not sure. IT in some ways is a special case. Because the technology can be so complex, users of the technology are eager to learn and are willing to listen to anyone who has some expertise.

Since it is often the case that the vendor is the one who may have actually created or invented the technology, they are the one you may be most eager to hear from.

But at the same time, information can be subtly slanted toward one flavor of the technology over another.

And even if it is pure as the driven snow now, will it remain so five years from now as competition heats up? I can't say.

What do you think? Do you trust vendor sponsored information? Have you ever seen any sponsored content that you felt crossed the line?
I'd like to hear from you.

Posted by Ephraim Schwartz on March 30, 2007 11:13 AM

March 29, 2007 | Comments: (0)

Apple tries to save recording industry, but who will save enterprise software industry?

With CD sales tanking as more and more music lovers buy just the songs from the album that they like, Apple iTunes is set to offer a plan to boost album sales.

Apple will try to help the recording industry by offering iTune users a discount on any full album they buy based on the singles they have already paid for from that album. If an album is $9.99 and a user already has two songs for which they paid 99 cents, then the cost of the album would be $7.97.

I suppose after a major battle between Jobs and the recording industry over holding the price of single tunes to 99 cents, the industry wanted a tiered pricing structure based on the popularity of the song and the singer, Steve Jobs is trying to show some good will.

But there is a far bigger issue here. If as the pundits say we are seeing the consumerization of the enterprise then as consumers go so goes enterprise users. In other words we can soon expect the same attitude to extend to enterprise software. No one will want to pay for an entire application. Rather companies will only pay for what they need and use.

Of course, I know that this has been talked about for several years and the SaaS [Software as a Service] is a form of this model.

However, now we are seeing a real live digital example of the theory being put into practice.

In fact, why couldn't even my SaaS application be componentized more? Why should I pay $120 per user per month when I use only a small portion of what is available?

The news from the recording industry should be a wake up call to the giants of the software industry.

Posted by Ephraim Schwartz on March 29, 2007 02:20 PM

March 23, 2007 | Comments: (0)

Apple TV opens up a world of possibilities

The Apple TV is a curious product. On the face of it Apple TV would appear to be a very temporary technology with a life expectancy of maybe five years.

Why do I say that? Simply because once your TV has Wi-Fi embedded in it, or your set top box, why do I need the Apple TV?

For the moment the product's reason for being is to act as the middleman between downloaded content living on your PC from iTunes like movies, pictures or TV shows and your television.

So if the TV became part of your network, just another node why couldn't you transfer all of that content from your PC to the TV directly?

But then there's that USB port. What's that for?

Could it become the link to a series of other boxes sitting atop the Apple TV. Maybe it becomes the hub for your home entertainment center or a sort of portal for unified communications?

Imagine the Apple TV with a dumb IP PBX plugged into it and the Apple TV has the smarts, so you could manage all communications from one central console: VoIP, email, IM, even downloaded faxes and old fashioned cellular and analog phones as well.

It's sort of a fun guessing game. But the nature of high tech is such that anytime someone in the industry comes out with a box, almost any kind of box, everyone with a little imagination can see a whole world of possibilities. That's what makes it fun.

So, anybody out there want to add to those possibilities.

Posted by Ephraim Schwartz on March 23, 2007 03:13 PM

March 21, 2007 | Comments: (0)

Infusion: World's first portable Internet radio

Australian company Torian is now shipping its Infusion, which it claims is the world's first mobile Internet radio, or Wi-Fi radio.

The radio, which also doubles as an MP3 player, debuted at the CeBIT conference in Germany this week.

[Video: Internet radio goes mobile]

If you're a real sports fan or someone who likes to listen to music from around the globe, Infusion kind of makes sense. I say kind of because while it will give you access to just about every Web radio station or Web sports broadcasts, it requires you to be in range of a Wi-Fi hot spot.

If, however, you're a listener who is satisfied with the pop radio stations, then buy yourself a $10 portable radio or continue using your iPod.

The company is also producing what it calls an Internet radio module that third party manufacturers can adapt to other devices like a car radio -- perhaps another nail in the coffin of satellite radio -- or your home hi-fi system.

Other features of Infusion include 16 presets of your choice, MP3 player with five hours of playback, and 4GB of expandable memory plus an SD card slot, FM radio receiver, and headphones.

The price is expected to be about $230.

Posted by Ephraim Schwartz on March 21, 2007 11:52 AM

March 19, 2007 | Comments: (0)

Microsoft phone is a stalking horse for bigger things to come

The news, "Microsoft unveils small-business phone system" that Microsoft allowed an independent product team within the company to develop a phone, Microsoft Response Point phone, without consultation from other product teams doesn't sit right with me.

According to the report by Elizabeth Montalbano of the IDG News Service, Jeff Smith, a senior product manager at Microsoft said the team that "built the Response Point system acted as an independently funded startup with Microsoft, which gave it the advantage of developing the product 'from the ground up' for small businesses without having to work with other product teams."

Nothing has ever sounded fishier.

Microsoft doesn't work that way. Integration across product lines is at the heart of what they do and is one of the company's major competitive advantages. And it must be admitted they often do it very well as long as you stay within their system.

The mantra usually goes something like 'we may not have all the bells and whistles now but stick with our solutions and we will get there and it will be easier for the enterprise to manage because it stacked on a single well-understood platform.'

My conclusion is this is a stalking horse for something bigger. But what?

My guess is a comprehensive unified communications solution built on proprietary Microsoft technology which of course they will license to other handset manufacturers.

Rather than the Response Point Phone being a standalone device, it represents the tip of the iceberg. The phone represents what Microsoft would like to do in the future, offer a complete Unified Communications system, from handset on up, all running in a Microsoft environment.

They won't have to actually manufacture the handset. Owning the software that runs it and licensing that software to other handset manufacturers is equivalent to owning the handset. As with the current Mobile Windows handhelds, manufacturers are required to offer certain features or they don't get to sell a Microsoft branded product.

And certainly Microsoft will sort of adhere to all the current communications standards but if you want all the extras Microsoft can offer in a unified communications solution you should go all Microsoft, they will tell us.

And if by some chance this phone actually does sell well, don't be surprised if the next step is an M-phone.

Posted by Ephraim Schwartz on March 19, 2007 11:49 AM

March 16, 2007 | Comments: (0)

Cisco-WebEx will define the future of computing

Cisco-WebEx will define the future of computing While most industry analysts see the Cisco acquisition of WebEx as a shot across Microsoft's bow for ruler of the collaboration seas, I see more to it than that.

This is really a preemptive cannonball fired at Google.

Cisco had two choices. Either accept being the dumb pipe, a.k.a. network infrastructure supplier, for the coming age of SaaS and other Web 2.0 applications, or enter the fray and offer services as well as infrastructure.

This acquisition obviously gives us the answer to what Cisco wants to be. WebEx, most widely known for its video conferencing capabilities, also has a very strong hosted application suite, WebEx WebOffice, offering the same calendaring, e-mail, and collaboration tools that Google has.

Watch for Cisco to upgrade its desktop collaboration package with desktop tools like word processing, spreadsheet, and presentations within the year, maybe with OpenOffice. At that point, Cisco will combine these applications with their collaboration and unified communications, and you have a killer desktop with just about everything you need.

And what is not widely known is that WebEx also has a business doing on-demand desktop management. For this it partners with a company called EverDream.

The desktop management technology lets them take control of the desktop for security and virus protection upgrades, patch installation, and help desk.

"For Cisco this may be the more interesting part of the acquisition than video conferencing," according to Josh Greenbaum, principle at Enterprise Applications Consulting.

Google will have its work cut out for it. First, it will have to partner or buy a company that can offer the same high-value unified communications platform that Cisco offers, made even stronger by a recent partnership with IBM.

But as far as desktop management goes, it might be a bit of a stretch for a company known for its search capabilties. Cisco, on the other hand, is at heart an infrastructure company. For it, managing the desktop, especially when the network is its heartbeat, is a logical addition.

At the end of the day, this kind of comprehensive offering will allow the user to live within the desktop application environment, hardly ever having the need to venture into the outside world of an operating system.

This is the promise of Web 2.0. A pared-down and simplified OS that works in the background, more like an embedded operating system that you might find in simpler devices like calculators or even refrigerators, is all that will be needed.

Now for the real irony in all this. While Microsoft can offer the unified communications and the collaboration, what it can't offer is Web-based desktop applications like word processing, spreadsheet, and presentations. Microsoft Office is quickly becoming an albatross around its neck.

Microsoft will have a hard time transforming a business model built on that premise to one designed for software as a service, especially when its competitors offer the same functionality for free!

Meanwhile, Cisco knows that the world is moving rapidly toward a collaborative desktop environment that will finally take the complexity out of computing.

Cisco's WebEx acquisition shows us that Cisco understands that in the future, Google, not Microsoft, will be its real competitor.

We have a podcast interview with Charles Giancarlo, Cisco's chief development officer. When you listen to this interview you will hear Giancarlo downlplay any ambitions to offer applications on the desktop but either Giancarlo is being less than forthcoming or he doesn't realize Cisco cannot offer unified comunications and collaboration without the applicaitons that go with them.

Posted by Ephraim Schwartz on March 16, 2007 12:05 PM

March 14, 2007 | Comments: (0)

Why did Attorney General back off the HP case?

For the final word on the Hewlett-Packard pretexting case I spoke with Bob Ridge, a white collar criminal law attorney for the firm of Thorpe, Reed and Armstrong.

The big question is why the California Attorney General reduced the charges to a misdemeanor, thus allowing the judge to dismiss the case after community service is performed by the three of the four co-defendants. After all, pretexting is still a big issue and in fact the Feds are still looking into it.

While Ridge was not privy to any inside discussions he was willing to opine on what might be going on behind the scenes, speaking as he did from his long experience as a defense attorney for those charged with so-called white collar crimes.

For Ridge the big question is what was the policy change in the AGs office that caused them to "take their foot off the accelerator?" as he put it. Was there a change in attitude that caused the AG to back off? This remains an open question.

From Ridge's perspective it may be that these charges as originally filed were inappropriate. In other words there is a question of whether or not there is a statute on the books now that easily fits this crime. In which case perhaps the AG decided he needed to prioritize, determining that his office would have to use up a great deal of attorney time to force fit the case into the current statutes which in the end could still turn out to be a losing case.

From a precedent point of view, the decision not to prosecute a case doesn’t have any value, noted Ridge.

By not prosecuting the case, the AG may be sending a signal to legislators and policy makers that if they think this type of conduct should be stopped they should go back to the legislature to address this kind of activity directly.

As a layman my instinct tells me that no Attorney General wants to risk loosing a case. If it wasn't a slam dunk maybe the AG decided to wipe it off his calendar and await legislation that clearly defines wrong doing in future cases like this.

Posted by Ephraim Schwartz on March 14, 2007 03:41 PM

March 08, 2007 | Comments: (0)

Off shore hiring frenzy darkens domestic high tech employment picture

While high tech enterprise vendors continue to partner up when needed, IBM and Cisco, Cisco and Microsoft, Microsoft and Sun, on the home front, all smiling for the camera so to speak, behind the scenes there appears to be a vicious battle taking place over who can hire more skilled high tech people off shore.

IBM is on its way to having 100,000 employees in India by 2010, according to Bruce Richardson, a very senior research analyst at AMR.

Accenture this year will have more employees in India than in the U.S. according to Vikas Sehgal.

Sehgal should know. He is president and CEO of Nagarro, a boutique
offshore software development company that caters to smaller companies who can't afford to hire and then stockpile skilled employees--as Sehgal puts it--like the big guys.

The major problem looming, if it isn't already here, says Sehgal, is that small enterprises can't compete with the large high tech firms in recruiting, which like professional football recruitment, often starts in high school.

Nagarro helps those smaller companies compete says Sehgal.

Sehgal also says the largest vendors are also stockpiling H-1B visas. They can afford to apply for H-1Bs en mass and hire the employees months before they can be admitted into the States under the visa and actually start working.

"These companies are taking big chunks away from the available talent pool," says Sehgal.

"H-1Bs are slanted toward larger companies because they have the money to stockpile more people," he adds.

The hiring frenzy overseas appears to be putting U.S. high tech workers between a rock and a hard place.

On the lower end of the spectrum where less skills are required, such as infrastructure support and maintenance, companies look to offshore to save money.

On the high end, where application development skills for creating core enterprise applications are needed, companies want the largest pool of potential employees they can find, no matter where they are located.

Globalization which at first was said to be disenfranchising workers from poorer countries may also be disenfranchising workers from the rich nations as well. So who benefits? I guess the big international companies who call no country home and who only answer to their share holders.

Posted by Ephraim Schwartz on March 8, 2007 03:43 PM

March 07, 2007 | Comments: (0)

To Gates on H-1B: How about unlimited visas to those who design better OSes than Windows?

The headline reads, "Gates: Tech needs more immigrant visas--
Microsoft CEO tells Congress the county's economic future depends on raising the cap on skilled-worker visas"

I wonder how Bill Gates would feel if each new H-1B applicant came here with a new operating system in his portfolio? An OS that ran rings around Windows and included the best desktop applications ever seen.

I wonder if Mr. Gates would then be so eager to remove the cap on H-1B visas.

Actually, we know how Mr. Gates reacts to competition. We saw the evidence, including memos from Gates to staff, during the United States versus Microsoft antitrust trial back in 1998.

So it is okay to squelch competition and innovation and the possible creation of more jobs if it threatens your dominance.

I think Gates and others know very well that H-1B is often misused as a way to reduce wages by hiring foreign workers at a lower pay scale. But they assuage their guilty conscience, if they have one, by believing that in the long run, increasing the pool of skilled high-tech workers available to U.S. companies will benefit our economy by creating more innovation, which in turn creates more jobs.

Even if this is true, does that mean we should let people drown in the short run for the common good? I don't think so.

Here's an excerpt with Berry's links from the blog of Kim Berry, the president of the Programmer's Guild, written in anticipation of Gates' testimony.

Gates will claim that H-1B workers are paid the "prevailing wage." To the extent that this means "parity with what U.S. workers earn in the same jobs," this is false. DOL defines four levels of “prevailing wage,” and Level One is about the 17th percentile of the average wage of U.S. workers within the job classification –- more than 80 percent of H-1Bs are at Level One. DOL approves H-1B programmers to work in Silicon Valley for $40,000 per year -- hardly a "prevailing wage" -- and hardly an indication that these workers are the "best and brightest."

Here's the link for the entire blog by Berry.

There has to be a more equitable solution, and that is to monitor the H-1B program more closely. Yes, allow H-1B visa applicants to work here, but also make sure that every visa is actually used for a person who possesses a skill that cannot be found here in the States.

Posted by Ephraim Schwartz on March 7, 2007 10:43 AM

March 06, 2007 | Comments: (0)

Tech 101 for startups

How a new breed of entrepreneur is tapping technology to succeed in nontech sectors

"It's not the old guard in manufacturing anymore. Now there is a new guard" that understands technology and can digest the information and knowledge that advanced business applications offer to young, growing companies.

So says Tod Replogle, COO of Business Computer Technologies (BCT), a channel partner to a new generation of manufacturing entrepreneurs such as Boon and World Pet, both of which started up in the past five years.

Ryan Fernandez, cofounder, president, and CEO of Boon, represents this new breed. Fernandez's company makes children's bath toys, which it sells directly to retailers in the United States and through distribution to the rest of the world. But does Fernandez have any experience in toy manufacturing? No. Retailing? No. Well then, what does he know, you ask?

Technology. Fernandez spent the 10 years prior to starting Boon at Intel. Before that he was in college. Fernandez is 32 years old. His business partner Rebecca Finell is 30. Finell designed the company's first product, Frog Pod, a bathtub scoop, rinse, and toy storage unit.

In less than three years, Boon has expanded to offer nearly 10 products in 35 countries at 500 retailers, including Target, Toys "R" Us, Burlington Coat Factory, Costco, and BJ's Warehouse.

When you are a startup manufacturer, it's all about streamlining, Fernandez says. It's about taking human error out of processes, shrinking the number of processes in place, and making them invisible. And keeping head count to the bare minimum.

With technology in his blood, Fernandez intuitively understood that the company could not manage a global supply chain using phones and faxes.

"Old school is OK if you have one or two products. But if you want to grow, it is impossible for a few people to manage everything," Fernandez says.

Fernandez decided on a solution from Exact Software, which makes a suite of front- and back-end apps, including Macola ERP, Exact Event Manager, and e-Synergy. The heart of the suite is e-Synergy, a portal product that allows Boon to create dedicated, virtual portals with different levels of access for distributors and suppliers, as well as for internal use.

A distributor in Germany, for example, can access print ads, images, PDFs, and any documentation the distributor might need. A retailer can place an order through the portal; the order is then sent to accounts receivable, where a pick ticket is generated. For e-commerce, Boon has a button on the Web site that links the local retailer with the buyer so that the storefront gets the benefit of the online purchase.

Sitting on top of it all is a BI component that acts as the eyes and ears for a young company, the principals of which may be so buried in the day-to-day grind of running a new business that they don't have time to evaluate how the company is actually doing.

Fernandez offers some advice to other would-be startups.

"IT is my background," Fernandez says, but he warns,"if you lack that expertise, don't hire an IT company that may just want to sell you equipment."

Rather, a new company should find an IT consultant who has "skin in the game," as Fernandez puts it, and who understands how technology fits in.

In working with many new startups, BCT's Replogle says there are a lot more companies out there that are successful because they recognize technology enhances the delivery of their products and improves overall company performance. Boon is a great example.

Posted by Ephraim Schwartz on March 6, 2007 03:00 AM

March 05, 2007 | Comments: (0)

SAP exec says Oracle deal changes PM landscape

The acquisition of Hyperion by Oracle has spurred a great deal of debate on this site and many others.

I wrote in my analysis that many CIOs are reluctant to buy a performance management [PM] solution from enterprise ERP vendors like SAP or Oracle.

The analysts say that PM is a mission critical application and a CIO would prefer a company that is 100 percent committed to that PM. The alternative is a company that is juggling many balls in the air at the same time. Some analysts think this will work against Oracle.

But one argument I hadn't heard comes from Peter Graf, executive vice president, Proeuct & Technology Group, at SAP.

Graf takes a very pragmatic view of the Oracle purchase and rather than agreeing with single solution PM vendors like Cognos and Business Objects who say this will send enterprise customers scurrying to them, Graf says the opposite will happen. Why?

Because, Graf says, this acquisition demonstrates to CIOs the instability of the boutique or single focus vendors. It points out that no matter how large they are a bigger fish like Oracle, or IBM can swallow them up.

So CIOs who are risk averse would rather go with an SAP or one of its large compettiors so as not to worry about buyng a mission critical application from a company that may disappear overnight.

After all, even a company that has been around for over twenty years like Hyperion is now history.

Graf makes a good point and if nothing else it will have to be put into the pot of things to onsider before any company decides what to deploy.

Posted by Ephraim Schwartz on March 5, 2007 02:02 PM

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