I took 2011 off from researching the enterprise-software market. (Actually I had a big project in the winter that took all my time and then I took the spring and summer off and then I had a hard time getting back into the swing of things because fall golf was great here on Cape Cod this year. But why bore you with all that detail?).
Thankfully, a quick year-end Google tells me I didn't miss anything by taking 2011 off from enterprise-software market research. It looks like:
That last bullet sounds more like 2000 than 2010 but for enterprise software in 2012, the saying is still true:
"The more things change, the more they stay the same."
The only year-after-year repeating enterprise software headline that I didn't see:
The headline that gave me the biggest laugh:
"NetSuite (N) is Pushing into Enteprise Software."
-- Dennis Byron
No sooner had I said I missed the good old days when the Free and Open Source Software (FOSS) movement went ballistic over silly things (like too many electronic document standards when there were already a couple of hundred standards for paper documents) , it turns out the good old days are still here. Based on today's statement by the Apache Software Foundation (ASF) to the effect that
Only Oracle (ORCL) has replaced Microsoft as the bad guy. The thing is that when you have a movement like FOSS (or Occupy Wall Street or "Hope and Change"), you have to have bad guys. Neither your message nor your substance can stand on their own so in order to get attention, you have to attack someone or something else.
openoffice.org is a decade-plus-old, crippled Microsoft Office wannabee, turned over to ASF by Oracle. Oracle had inherited it from its Sun acquisition -- and probably would have preferred to just dump it deservedly into the dustbin of history -- but must have made a promise to the European Union (EU) to keep it alive in return for EU approval of the acquisition. Sun had inherited it from a long-ago acquisition of a miniscule European company.
The ASF is one of the good guys. Its web server is probably the most popular piece of open source software in existence. "The Apache Way" is really a positive, populist and progressive (in terms of information technology) movement unlike anything else in the industry. I'm sure this sort of notoriety is the last thing ASF wanted when it agreed to take over the code. Sorry about that, guys.
-- Dennis Byron
When something makes no sense, you have to connect the dots. That's why it's crystal clear to me that HP's board fired Leo Apotheker on September 22 in order to block -- or delay -- Larry Ellison of Oracle (ORCL) from taking a run at HP (HPQ).
Why else would the HP board hire Leo Apotheker as CEO less than a year ago (at the time the recently fired CEO of SAP, not that that was his fault), probably at a big signing bonus (I just don't feel like looking it up), OK HP's exit from the PC business of which it is the market leader, OK his acquisition of the mishmash of antiquated software called Autonomy (AUTN) to get into a market that is literally disappearing, OK his throwing away the value in the Palm acquisition (the acquisition itself happened before Apotheker's arrival), OK a list of other changes that fundamentally changed the world's largest information technology company (to the point that it would no longer be the largest), and then pay him $25 million in severance?
You might think that it is simply that HP's board is the most incompetent set of business people ever assembled. You might think there is clear and convincing evidence now for a true shareholder class action suit. You might think that the Buffett-types on the HP board wanted to help make President Obama's argument against corporate-jet deductions and millionairre salaries.
But it's simpler than that. I take Ray Lane's word for it, as reported by Eric Savitz, that this is a different board than the one that fired Fiona and Hurd and hired Apotheker. This board is smart. It knows that Larry wanted to buy HP so that he could fire Leo on the steps of the court house at the next TomorrowNow trial in downtown Oakland. Now he can't. Bravo!
-- Dennis Byron
You would probably be surprised to know that yesterday -- September 1, 2011 -- was one of the best days in Oracle (ORCL) CEO Larry Ellison's storied business career. An Oakland federal court vacated a $1.3 billion award in Oracle's favor and awarded Ellison a mere $300 million instead.
Now, in return for losing that measly billion dollars, Ellison and Oracle will get $10 billion in additional publicity as the case winds in two directions. What a return on investment.
Like I said, in November, SAP, get out of dodge. But first ask HP if it will kick in half of the billion-three fine. HP can't want this to proceed any further either.
-- Dennis Byron
Jim Jagielksi announced August 30 release 2.2.2 of the Apache HTTP server, the latest update to the most successful yet least controversial open source project. This is THE Apache, the web server, not to be confused with the hundreds of other open source projects the Apache Software Foundation has spawned, dozens of which have reached relative stability.
This is the project/product that killed the standalone middleware market when IBM decided, "Why build our own. Give these guys a few bucks to a have 'birds of a feather' meeting."
Congratulations but I sure miss the fun similar releases would have caused 10 years ago. BEA would tell you all the things that were wrong with it. Some open source zealot (not part of the Apache Software Foundation) would tell you that Microsoft (MSFT) causes world hunger.
From an investment point of view, starting with IBM's decision -- and Oracle's (ORCL) related decision to ship Apache with its app server -- increasingly the middleware market merged into the platform-software market and more recently the software market merged into the overall IT market. Today, all the IT leaders except SAP have declared they're in a business bigger than or different than the software business. (SAP's CEO made the declaration about 18 months ago and shortly thereafter was no longer SAP's CEO.)
Oracle sells servers. Microsoft sells (or is trying to sell) telephones. EMC sells document management software. Intuit sells second mortgages. And ironically many of the smaller companies in the former software market that have not yet made their declaration have started calling themselves "open source" companies. Looking for that Apache lightning to strike twice.
-- Dennis Byron
The marketing communications business is a lot tougher than when I last practiced it 25 years ago.
HP (HPQ) has had a bad week in the market because it admitted it wasted a ton of money on Palm, is planning to make another foolish acquisition, and has announced it is getting out of the consumer business. So HP canned its Marcom guy according to Bloomberg. Huh?
In a sense HP has a bad year with its then new CEO having to avoid going to headquarters, or apparently anywhere in the United States, for a while after he took the job. In fact, let's face it, HP is having a bad century.
But back in the day, those were not the kinds of decisions that Bill Smith and Dick Brown made. Really, those are the real names of two of the greatest information-technology marketing-communications/PR professionals of all time and they worked back to back to back to back at Data General. That is, Smith was replaced by Brown who was replaced by Smith who was replaced by Brown between 1973 and 1983 as the company went from $20 million in annual sales to over a $1.2 billion (remember that's in 1970s/1980s dollars). And PR guys certainly didn't get blamed, as some others have speculated, because some breaking news hit the wire 20 minutes before it should have on August 18.
The fact that Wohl is being replaced by another ex-SAP guy actually tells the story. I'm pretty sure this is another Brown replaces Smith replaces Brown sort of thing.
But at least someone remembered enough PR 101 that the news was released on a Friday afternoon(eastern U.S.)/nite (in Europe) in August in the northern hemisphere during a hurricane. Smith and Brown would be proud.
-- Dennis Byron
Boy, you take a few months off and the world goes crazy.
Congratulations to the guys at Autonomy (LSE: AUTN) for unloading that hodgepodge of old enterprise applications businesses for top dollar to HP.
Maybe it's something to do with Euro to dollar exchange rate... or a way to save on U.S. corporate taxes by not repatriating profits... or something else not immediately obvious... Whatever, HP (HPQ) is
Supposedly this deal has driven up the share prices of MicroFocus and Sage a few pence (Is a pence what I think it is?) and put SAP and Software Ag (SOW) in play.
It would be interesting to know if Oracle had bid and if this price was just the result of some kind of male-urination contest.
-- Dennis Byron
There has been a considerable debate over the years about whether Google (GOOG) is a technology company or a media company or consumer company or a new age company or a... As a result its future potential was analyzed and priced by some investment gurus one way and by others another, meaning they all used a separate set of assumptions against the same set of facts.
For the casual investor, to depend on such analyses is like depending on S&P to rate your mortgage-backed securities. When I last looked at this issue in February 2010, I wrote:
"Google begins its 10-K with the statement:
"Google is a global technology leader..."
"As such Google doesn't compare itself against Amazon or eBay, Disney or McGraw Hill. If you think of Google in that way instead of as an enteprise (sic) software market leader along with IBM, Microsoft (MSFT), Oracle (ORCL) and SAP, you do so at odds with the founders and other insiders that control 70% of the votes. If Eric, Larry and Sergey think they own a technology company, Google is a technology company.
So 18 months later, Google's pending (but likely to be adjudicated) acquisition of Motorola Mobility just puts the exclamation point on that way of looking at the company. (Except that Eric is gone and you can take SAP from the list.)
I concluded at the time:
"So instead, think of Google this way: Primarily Google indexes information and web sites on its extremely large worldwide server farms in order to facilitate free Internet searches that help Google “sell” marketing enterprise applications. Brilliantly these enterprise software sales are monetized by over $20 billion in advertising revenue annually instead of boring old license and maintenance contracts. But Google is still an enterprise software company."
Eighteen months later the pending Motorola Mobility acquisition just adds "from the palm of your hands to" to the phrase "worldwide server farms." And "over $20 billion" has become "over $25 billion." (And note that elsewhere -- thanks to Oracle -- I had changed the definition of "enterprise software company.")
When you invest in a company, take the owners' word for it -- not some investment guru's -- when they tell you what they do. It's their baby.
-- Dennis Byron
All the Internet fun being caused by Congressman Anthony Weiner helps explain why New Yorkers and Bostonians are always at odds about baseball, hockey, clam chowder, and so forth and so forth. I'm a Bostonian. All these years I honestly thought a weiner was a hot dog. But Weiner's weiner (actually, as the link describes, he's not sure it's his) is not that kind of wiener.
Which reminds me of the good old days when men were men and none of them would get caught dead saying the word Twitter. This was when mincomputers ruled the information technology world, and New York was a place where your company had both a Wall St. and midtown office (so it was easy to make both a morning and afternoon meeting, stop off in Chinatown or Little Italy for lunch, catch the Eastern Shuttle in both directions, and still be home in time for twilight golf).
I worked in the marketing department at Data General and one of the copywriters came in with a great idea for an internal sales promotion piece. It pointed out all the ways that the Data General minicomputer of the day was far superior to the Wang Laboratories mincomputer of the day (or DG office automation was better than Wang office automation... or whatever). So we polished up the comparison, had the art director make it look good and readable, and together the three of us -- all Bostonians -- came up with a headline:
"Beat Wang! Sell More Minicomputers."
Not too creative I admit but straightforward and to the point. That's what sales promotion is supposed to do. So we took it to the vice president, who was a New Yorker, to get his sign off. Here is the cleanest explanation I could find on the Internet for the problem we had with the VP. It comes from a parenting web site on the Albany NY newspaper so don't be afraid to click on it. (I can only guess at what vulgar lists I got myself on looking for this clean explanation.)
And this whole different meaning of words thing really bothers me now because two of my grandchildren are New Yorkers.
-- Dennis Byron