Daily Archives: August 1, 2006

Avaya Joins Nortel, Cisco with SMB Channel Programs for VoIP

Avaya is moving downmarket, trying to get a chunk of growing VoIP deployments at small and midsize enterprises, with the launch of a new SMB-focused program for North American channel partners.

Nortel Networks expanded its distribution partnerships last week to bolster recruitment and training of SMB partners, just after launching its first data-networking product line targeted exclusively at SMB customers. Nortel’s distribution announcement also came after it had committed to an extensive unified-communications partnership with Microsoft that is likely to increase its appeal to the software titan’s channel partners and midsize enterprise customers.

Cisco’s Linksys division, as well as Netgear and D-Link, also has spent time courting channel partners to better address the VoIP and data-networking requirements of SMBs.

Avaya is late to the party, but it has a shot at garnering some business with the right mix of solution sets, pricing, and partners.

Microsoft Makes Personnel Changes to Windows Engineering

Mary Jo Foley of Microsoft Watch reports today that next Windows chief, Steven Sinofsky, is not waiting for the perpetually delayed Vista release to go out the door before making significant personnel changes to the Windows engineering team.

Microsoft announced internally to its employees today some of those changes, including the reassignment of Brian Valentine, senior vice president of Microsoft’s Core Operating System Division.

Wrote a Microsoft spokeswoman in an email memorandum to staff:

"After Windows Vista RTM, Brian Valentine will transition into a new role and contribute in another (unspecified) area for the company."

I am not sure what that message portends for Valentine, but it doesn’t sound as though he’s getting a promotion.

Valentine, a 19-year Microsoft veteran, has been in charge of Windows development since December 1998. Effective immediately, he will be sharing his job with Jon DeVaan, Senior Vice President of Engineering, a 20-year Microsoft veteran who will gradually assume the entire mandate.

If one of Foley’s sources is correct, these changes, in and of themselves, won’t make an appreciable difference to the performance and productivity of Windows software developers.

Said one developer, allegedly close to Microsoft, who requested anonymity:

"The basic problem has to do with MS’s upper middle management on Windows. Microsoft thought it was a good idea to promote developers to managers. And it’s cost them. What’s happening is that the managers just aren’t getting things done. They have no concept of how to organize resources."

If that’s true, we’ll either see a lot more personnel changes, though perhaps not of the headline-grabbing variety because lesser-known personalities will be involved, or the problems Microsoft has experienced with Vista will continue to recur well into the future.

Bloggers Implore Microsoft to Delay Vista Release

If I might put on my tinfoil hat for a few moments, I wish to ponder whether Microsoft might have directly or indirectly encouraged three prominent bloggers to publicly and passionately implore the company to delay the release of its long-awaited Vista release of Windows.

No, I don’t have evidence that Robert McLaws, Robert Scoble, and Ed Bott were involved in a conspiracy to give Microsoft cover for a significant delay of the next major release of its franchise operating system.

Still, the context of this three-part remonstration is awfully convenient for the executives back in Redmond. Last week, Steve Ballmer and his chief lieutenants were reeling under the pressure of market analysts and journalists peppering them with questions regarding whether the consumer and business releases of Vista would meet their latest deferred schedules of November and January, respectively. The analysts and journalists received ambiguous responses to their questions, leading them to infer that all was not well, yet again, on the Vista front.

Now, less than a week later, three bloggers with access to the Microsoft camp and considerable credibility and influence with the online community — the future users of Vista — leap into the fray beseeching Microsoft to act in the best interests of its customers by putting Vista through another beta cycle and quashing bugs that could prove hugely embarrassing (or worse) in a commercial release.

I don’t think this an argument Microsoft wanted to make — it’s delayed Vista already, and Ballmer himself is embarrassed that it’s taken Microsoft so long to develop this latest iteration of Windows — but it’s probably an argument Microsoft wanted made for it. Now, thanks to the intervention of Scoble and company, Microsoft can make the right call, putatively in the interests of its user community, and blunt at least some of the fallout from the decision.

That said, the fallout will be considerable. It’s not just Microsoft that has been banking on another wave of revenue and profits from Vista. The entire PC ecosystem — hardware vendors, ISVs, resellers, distributors, IT consultants, and so on — has been anxiously awaiting Vista’s commercial debut. There has been, and will continue to be, enormous pressure on Microsoft to push it out the door as expeditiously as possible — earnings guidance and stock prices (not just Microsoft’s depend on it) — but Microsoft now can cite external parties in adducing good reason for putting it off just a bit longer.

The reaction won’t be favorable, but it might have been a lot worse if Microsoft didn’t receive such perfectly timed and undeniably cogent advice from a few high-profile bloggers.

ISS Quarterly Results Overshadowed by Takeover Talk

Internet Security Systems (ISS) issued its second-quarter financial results last night, delivering a mixed bag to market watchers and shareholders.

On one hand, neither earnings nor revenues were spectacular, with reduced profit barely meeting analysts’ expectations and revenue growing just five percent over what was generated in the comparable period last  year. Nonetheless, revenue from two product lines on which the company is depending for future growth was encouraging.

As Tom Noonan, ISS’s CEO and president noted, revenue from the Proventia IPS products grew 23 percent on last year’s numbers, and the Proventia Unified Threat Management (UTM) product line grew 55 percent annually.

The company offered third-quarter and year-end guidance that tracked close to the expectations of market analysts, though somewhat on the low end of forecasts.

But it is takeover talk, not the company’s financial results, that has thrust ISS into the spotlight today. Analysts from UBS, Jefferies & Co., and RBC Capital markets are speculating today on the likelihood of ISS being acquired.

Katherine Egbert, the analyst at Jefferies and Co., opines that CA, Symantec, and IBM are the most likely candidates to buy ISS, whereas RBC Capital Markets’ Robert Breza sees International Business Machines Corp. as the leading acquisition candidate. For what it’s worth, we side with RBC’s Breza on this one.

The most likely candidate to acquire is IBM, for the reasons discussed here in an earlier post.

Analyst: Customers Should be Concerned About Open Text’s Hummingird Bid

We have yet to see official word on whether Open Text Corporation was able to successfully negotiate an acquisition of Hummingbird Ltd. According to the latest report from Hummingbird, the plan was to see whether a revised deal could he cobbled together by July 30.

Well, that date has come and gone, and there’s been no statement yet from either company. Perhaps they’re struggling with the task of writing a press release as impenetrable as the last one.

Today, though, Bloor Research provides an analysis piece arguing that customers using Hummingbird’s business-intelligence and connectivity products should be concerned about the what might happen to those products if Open Text’s acquisition bid is successful. What’s more, writes author Bharat Mistry, the overlap between Hummingbird and Open Text ECM products might lead to confusion as to which offerings will continue to be developed and regularly updated and which might be wound down and eventually discontinued.

As for the previous competing bid for Hummingbird, launched by Symphony Technology Group, Mistry is more sympathetic. He believes Symphony, if its current acquisition bid or a modified one were successful, would bring in its own executive team to run the company but would otherwise leave the companies product portfolio relatively intact, meaning that customers would see negligible difference in product development and support.

I’m not sure that assumption is entirely correct, but Mistry makes some interesting points, and his analysis is worth reading for those following the acquisitive tug of war over Hummingbird.

Cingular Surcharge on Old Phones Speaks Volumes

Cingular Wireless says it wants to move all its cellphone subscribers to its GSM network, which accommodates more than 92 percent of its 57.3 million customers. Toward that end, Cingular will charge subscribers in possession of older handsets — those based on analog or TDMA networks — an extra five dollars per month as a not-so-gentle nudge in the direction of signing up for a new GSM phone and accompanying service plan.

In other words, Cingular is turning to the stick rather than to the carrot in its approach to customer relations. Instead of selling customers on the virtues of superior GSM phones and services, Cingular has chosen to use a monthly surcharge, which will add $23.5 million per month to the wireless operator’s revenues, as a financial truncheon to beat its technology-holdover customers into submission.

But is the goal here really to persuade customers to upgrade their cellphones and services? Or is Cingular just looking to pull down some easy money at the expense of its old-school customers? As the wireless progeny of prospective merger partners AT&T Inc. and BellSouth Corp., Cingular is a telco with a decidedly telco mentality, so we have to wonder about its motives and about its respect for the people who use its services.

Telcos look at their subscribers base and attempt to ascertain how they squeeze them to boost average revenue per user (ARPU), preferably without having to spend money to do so. That’s why signing a contract with a wireless service provider is so fraught with peril. You can be sure the price advertised in promotional campaigns will bear no resemblance to the inflated price you will pay once they’re finished checking as many of those boxes as possible on the service contract.

It’s an abusive relationship, and one that breeds a high degree of consumer cynicism.

Now, though, Cingular has moved the bar higher, so to speak, setting a new precedent: deriving punitive revenue from subscribers who couldn’t be or haven’t been sold on the merits of moving to GSM handsets. It’s a move that’s absolutely breathtaking in its gall.

If Cingular’s objective was to persuade subscribers to upgrade, rather than to pry a few more dollars from their wallets, why didn’t it devise a suitably compelling incentive program for that purpose? It probably would have been more effective than the surcharge, and it would have served to demonstrate that the company appreciated its customers and wished to reward their loyalty. It could have used the carrot and not the stick, and isn’t it just generally better business practice to follow the high road when dealing with customers?

Well, in most other industries, yes, but not in telecommunications, which remains an industry with a profound sense of entitlement and a view that the customer is always ripe for the pocket picking.

And yet wireless operators wonder why they experience "customer churn." When all else fails, blame the customer, but be sure to pluck that five-dollar bill from his hand as he’s heading out the door.