Daily Archives: June 22, 2006

Follow Up: The Martin Taylor Mystery

Following up on a post yesterday, Martin Taylor’s mysterious departure from Microsoft is generating more heat than light on the blogosphere and beyond.

We still haven’t received an official explanation from Microsoft as to why CEO Steve Ballmer’s protege and basketball buddy — and, more recently, the corporate vice president of Windows Live and MSN marketing — became persona non grata practically overnight on the Microsoft campus.

The Seattle Times weighed in earlier today, noting that no further explanation had come from Taylor or Microsoft. The newspaper also reported that neither Google nor Yahoo! claim to have had contact with Taylor. That would seem to eliminate the possibility that he accepted or was about to accept a job from either company.

Speaking of mysteries, Mini-Microsoft, the anonymous and covert agent of internal change at the software giant, apparently is neither Martin Taylor nor out of job. He posted on his blog today, mentioning the Taylor affair and other matters.

As I said before, there’s a story here. The abrupt nature of Taylor’s departure, and the atypically awkward manner in which it was handled by Microsoft’s HR and corporate-communications personnel, signals emphatically that this was not a planned event.

Chambers Says Cisco Not Charging Enough, Customers Shudder

At Cisco Networkers 2006 in Las Vegas, Cisco CEO John Chambers, apparently with a straight face, told a group of assembled trade press and analysts that Cisco probably isn’t charging enough for its software products.

Some Cisco customers might laugh or stammer, depending on personal disposition, upon hearing that bit of news. After all, the idea of Cisco not charging enough for its products seems outlandish. If you were to poll enterprise network managers and CIOs, you’d find that “low prices” aren’t a concept they associate with Cisco Systems. Instead, many buy Cisco gear, and pay a brand premium in the process, because just as you once never got fired for buying IBM computers and services, it seems that you don’t get fired today for buying Cisco network infrastructure.

There’s no question that Cisco’s margins are healthy, but Chambers believes they could be better, and he’s probably right. About 50% of Cisco’s engineering staff works on software — I think the figure is higher, but that’s the percentage Chambers quoted in his roundtable discussion at Networkers — but Cisco builds and accounts for that software value on a hardware-predicated pricing model.

Yes, there are support and maintenance charges that apply both to software and hardware, but Cisco might be thinking that, with the rise of network appliances and software as a service (SaaS) — as well as the increasing prominence of software in networking products that facilitate and optimize the convergence of voice, data, and video, plus real-time presence and collaboration across all media — it can easily squeeze more margin and revenue out of their product portfolio by moving to subscription-based software pricing across a range of offerings.

SGI’s CEO: Bankruptcy “Positive Event”

Those of you who have been in the industry for a while will know that Silicon Graphics (SGI) was once a darling of Silicon Valley, the vendor of choice for graphics-intensive technical workstations and servers. It was the Rolls-Royce of computer hardware for visual simulations.

Like Rolls-Royce, however, SGI has seen better days. It’s current chairman and CEO, Dennis McKenna, is now on record saying that the company’s filing of Chapter 11 bankruptcy protection in early May was a "positive event."

I suppose when one is handed lemons, one makes lemonade, and Silicon Graphics, if it can renegotiate its debilitating debt load and creatively milk revenues from its legacy technologies, might survive or subsist for a for more years.

Surely, though, Mr. McKenna must know that SGI will never return to its place in the pantheon of technology titans, just as Silicon Valley itself will never again dominate the world of information technology the way it did during the delirious 90s. Those days are gone forever, and there’s no point denying reality, which has an uncanny knack of impinging on our delusions.

No matter what Mr. McKenna says, the best of SGI’s employees already have bolted for the exit doors and the majority of its formerly loyal customers heard the death rattle and sought solutions elsewhere. Enormous damage has been done to SGI’s brand and its credibility, and ambitious plans to dig out of the rubble of bankruptcy won’t reclaim SGI’s sprawling campus headquarters in Mountain View, Calif., or its status as a market leader.

SGI’s former campus is now part of the Googleplex, sold recently to Google for $319 million, which will be used to defray SGI’s prodigious debts. What’s more, in what is perhaps a climactic admission of strategic bankruptcy, SGI’s plan to generate new revenue seems to revolve around lawyers rather than engineers. Yes, it’s following the dubious lead of SCO Group and preparing to unleash the well-educated dogs of litigation on any and all parties who might be infringing on the intellectual-property rights associated with SGI’s software visualization, collaborative decision-making tools, and even flat-panel display technology.

It’s a reach, but apparently that’s all SGI has left in its arsenal.

How did it get to this point? While McKenna points to a series of clearly poorly conceived and dreadfully executed acquisitions during the 90s, I believe SGI ultimately was victimized by its inability to see the impending commoditization of visual computing as represented by industry-standard Intel-based microprocessors and the Windows operating system. It was the Innovator’s Dilemma, before it was called that.

In that sense, perhaps SGI’s decline and fall, while unquestionably sad, was also inevitable. Forces were at play — economic and technological — that were impossible to resist. Then again, resistance probably wasn’t the best course. By the time SGI adjusted its strategy to go with the inexorable flow, it was too late. 

Boardroom Revolt Topples Novell CEO, CFO

In a move that had been presaged last autumn, Novell’s board of directors ousted CEO Jack Messman and CFO Joseph Tibbetts this morning. Ron Hovsepian, the company’s president and chief operating officer (COO), has been named CEO, while Dana Rusell, the current vice president of finance and corporate controller, will serve as the interim CFO while Novell hunts for permanent replacement for Tibbetts.

Early last year, the 66-year-old Messman indicated that he would not leave voluntarily, so it was no surprise that the board had to show him the door. Nor was it startling to see Hovsepian take over as CEO. He had been touted for the job for some time, and his experience and talent at operational execution helped position him for the promotion, which was undertaken by the Novell board to "accelerate the execution of our growth strategy and build value for shareholders."

Both elements have been sadly missing, as Novell, which acquired the SuSE Linux franchise in 2003, has fallen behind other Linux competitors and distributions, including current fan favorite Ubuntu, while suffering a protracted slump in its stock price.

Although execution might be the order of the, it appears Novell’s board acted belatedly and perhaps not as comprehensively as some shareholders might prefer. There are concerns that, aside from execution issues that have seen Novell drop the marketing and sales balls on the Linux front, Novell lacks a coherent strategic vision.

If the following statement from Thomas G. Plaskett, a director who’s been elected non-executive chairman, is any indication of current big-picture thinking at Novell, I’m inclined to agree with those who harbor concerns about the company’s strategic vision:

"The board concluded that a management change would be the best way to accelerate the execution of our growth strategy and build value for shareholders. Ron is the ideal choice to lead the company as we continue with our transition to Linux-based products and identity and resource management and leverage our unique support of mixed source environments."

That’s some transition, encompassing not only Linux-based products, but also identity and resource management, plus the supposed mastery "mixed-source environments," which presumably denotes any enterprise that runs proprietary and open-source software. What that statement really seems to be saying is that Novell’s board wants Mr. Hovsepian to get out there and sell all the stuff that Novell has agglomerated through its various mergers, acquisitions, and strategic contortions during the past few years.

Good luck with that, Ron, though I’m sure you’ll get a good severance package when you eventually fail to deliver the desired results from mixed product portfolio and a overall strategy that hasn’t come together.