The PC's Time is Gone

Several current news items clearly show that the personal computer–the primary driving force product in the IT industry since 1980—has become just a minor piece of hardware .  The first set of data shows that the PC has been replaced by the mobile phone.  In Q04 2010, 92 million PCs were sold,while 101 million smartphones were sold.  By 2014 there will be over 1 billion smartphone users.  Nearly all Generation Y consumers own a mobile phone of some kind and 72 percent own smartphones  Over three-quarters of Americans age 43 and under now use a smartphone.   53 percent of American consumers use their smartphones to access search engines at least once a day.  Smartphones and tablet computers will increase mobile Web traffic by 26 times during the next four years.  The  other current news items that are pointing to the demise of the PC include:


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  • Dell, the company that mastered the low-cost commodity distribution strategy for PCs, is struggling, and its board is asking its founder to buy it and take it private.
  • HP, the company that tried to save itself by buying Compaq, perhaps the premier desktop provider,is thrashing around , generating rumors of a break-up.
  • BillGates, the master of the PC product world, is now seeking to invest,not in PC-related businesses, but rather in the next-generation condom maker!

These major events have been driven by more than just the rise in mobile phones, but the smartphone is clearly taking over some of the key uses previously performed by the PC—like eCommerce ( now it’s mCommerce. )  Dell–although they undoubtedly beat the market by being the cost/price leader, never did get a toehold in account management via professional services.  Dell was just the cheapest commodity box maker.  HP,  for years looked successful because of their dominance in the desktop printer market.    The results produced by that dominance masked the deep problems and old-fashioned vision inside the company.   They never succeeded as a system solution provider, and their service business never evolved from the primitive break/fix cost center model.  They hoped that buying Compaq’s line of high-end servers would help them succeed as a mid-range system provider, but their stodgy approach to services locked them into the commodity product corner.


When you live by the product–instead of providing needed canadian online pharmacy services to your customers— you die when the product gravy train is interrupted by the next best thing.


Oracle CEO Larry Ellison is not universally respected and/or admired.  Viewing this video of him ranting about Cloud Computing may  or may not  change your opinion of him, but it will help you understand why Oracle’s “Cloud” offerings are not good deals.     For example, Oracle is now offering IaaS (Infrastructure as a Service) that features Oracle selling you  some hardware and software to run your own “cloud” on your premises.

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In other words—the cloud is the same old same old—we make a product, dump it on you, say goodbye, and then you do your computing.

Ellison, and therefore Oracle, just doesn’t “get” the Cloud, which he admits in the video.  In his words, “What the hell is Cloud Computing?”Even though Ellison says, with false modesty, at one point, “Maybe I’m an idiot.,”   It’s clear that he chooses to ridicule what he just doesn’t understand.   And there’s a reason—other than him being an idiot— that he and his company don’t understand.   They are locked into the product-driven model.   The Cloud is a metaphor–Yes, Larry, everybody—except you—understands that water vapor has not replaced hardware and software—-a metaphor for the networked environment created by the Internet.
In the Cloud, economies of scale can be gained by leveraging computing resources to serve multiple users.   This computing model is service-driven, not product-driven, so it is difficult for people who have done well in a product-driven world.   Being service-driven means staying with the enduser customer, working with them , to maximize the effectiveness of their computing capacity, whether it’s owned, leased, or in the Cloud. The Product model is”Dump and run.”   The Service model is, “We’ll help you get the job done.”   For decades some technology companies have treated service as a cost center, and the only attention executives like Ellison have paid is to squeeze the costs, and to deliver as little post-sale support as  possible.  Now, with the customer more in the driver’s seat, able to buy only what they need  in the service-driven computing model, it’s understandable that some of the old-line product mavens feel lost and confused, which is a better title for the Ellison video.



Google and the Open Internet

Google co-founder,  Sergey Brin, was recently quoted extensively in an article in The Guardian   about keeping the Internet open.  He said he is “scared” because current conditions and the trends he sees in the future are endangering the freedom and openness of the ‘Net.  He says that he and Larry Page would not have been able to create Google in today’s environment, due to efforts by governments, the entertainment industry, and “walled gardens, “like Facebook and Apple, to control content .   The warning that he could not have developed Google in today’s environment   is perhaps a bit of hubris from Google’s view of the rest of us.  He is making an argument, trying to convince the reader/listener of a point—that governments and others are controlling content.    To make his point, he’s assuming that we hold Google in such high regard, that we are swayed to his side of the argument by the fear that  a Google-like entity will no longer be possible …

He over-estimates the affinity for Google…..Too bad, Sergey, you wouldn’t be able to make a billion bucks…so sad!    He also seems to under-estimate how the 800 million Facebook users feel about Facebook.  They feel that Facebook is theirs, and they probably take Google for granted.


There are many issues involved with keeping the Internet free and open—-here’s

Secretary of State Hillary Clinton’s summary:

“We want to keep the internet open for the protester using social media to organise a march in Egypt,” Clinton said in a major policy speech last year. “[For] the college student emailing her family photos of her semester abroad; the lawyer in Vietnam blogging to expose corruption; the teenager in the US who is bullied and finds words of support online; for the small business owner in Kenya using mobile banking to manage her profits; the philosopher in China reading academic journals for her dissertation … internet freedom is about defending the space in which all these things occur.”

These are serious freedom-of-information and freedom-of-speech issues, as opposed to dire predictions and absolute judgements against entities trying to control content on the Internet by the organization whose goal it is to “crawl ” and control all the information on the Internet.  But in recent years Google has not seemed satisfied with acessing and aggregating all the content, they have seemed to be going through an identity crisis.  With Google Apps f0r word processing and spreadsheets, they seemed to want to be Microsoft.With Google Plus, they now seem to want to be Facebook.   They crushed the search engine market, missed the social media market, and are trying play in the app market. ‘Stick to your knitting ‘ is an old strategic planning concept that may apply here.

Keeping the Internet open is important, but we have to remember that we in the US have many decades of experience managing and protecting free speech ( tricky issues, like do the Nazis get to be in the parade in Chicago). The rest of the world needs our help in managing a completely free Internet.  There’s lots of work to be done there….No time for throwing stones at  and raising fears about “walled gardens.”

Google is a great search tool. We all use it, and depend on it more than we perhaps realize.  Let’s hope they thrive and continuously improve, and that the Internet remains free of control by governments….and giant media/entertainment conglomerates.

Bill Patch






Great Expectations

Expectations are powerful, and they affect our lives all day every day. High expectations are combinations of hope, optimism, and trust.

Negative expectations are based primarily on fears.

We set ourselves up for reality by expecting it to be either good or bad. When it happens and it’s better than our expectation, it’s a pleasant surprise.

Since the mid-’80s service companies have understood that customer satisfaction is tied directly to the customer’s expectation. If the service delivered meets or exceeds the customer’s expectation, then customer satisfaction has been achieved. The term ‘exceed expectations’ has become an idiom.

Negative expectations can also influence outcomes. Sociologist Robert K. Merton is credited with coining the term “self-fulfilling prophesy.”

In his book, Social Structure and Social Theory, Merton says, “The self-fulfilling prophecy is, in the beginning, a false definition of the situation evoking a new behaviour which makes the original false conception come ‘true’. This specious validity of the self-fulfilling prophecy perpetuates a reign of error. For the prophet will cite the actual course of events as proof that he was right from the very beginning.”

Examples of self-fulfilling prophesy happen many times in daily life. Every year it impacts grade school students, for example:

Little Johnny does ok in first grade, but he fidgets at his desk and talks a lot. At the end of the year, the first grade teacher notes these behaviors in Johnny’s record.

In August the second grade teacher is reviewing the students for the upcoming year, and Johnny’s behaviors in first grade are noted.

The second grade teacher decides to deal with Johnny right off the bat, and assigns him to the desk right in front of the teacher’s. His behavior is scrutinized by the teacher, more so than the other students’, and the first time Johnny fidgets or talks, the teacher comes down hard.

Pretty soon, Johnny starts forming his own expectations.

The Price is Right?

Pricing high-end technology services is a complex process, and it’s different from pricing a product.

When you price a program for services, all the costs have yet to be incurred.  With a product, the costs have been spent, and the margin can be more easily determined.

Sophisticated service organizations utilize complex algorithms and modeling to predict costs that will be incurred to deliver service.  There are lots of averages and metrics applied to the process:  The average time between failures, the average time to restore, the average cost of the labor component, the travel.  Unfortunately, some of these complex methodologies end up reducing the forest to the trees, and as a result services pricing is more art than science. We tend to me more inward-looking, and price according to our costs–rather than focusing on the market and what the customer will pay.

A true story from about 25 years ago illustrates this point, and a couple others:

The owner of a jewelry store in Santa Fe, NM, took a large inventory position in high-end turquoise and silver jewelry made by a leading local artisan.  Unlike the stuff sold on the roadside in the Southwest, this was very high-quality art jewelry.  She displayed it in one of the regular cases in her store, priced moderately.

For weeks the line did not move.  She moved it into the feature showcase in the center of the store, and featured some information about the artist.  The jewelry still didn’t move.

She was getting ready to go on a 3-week vacation, and she was reviewing the various items to be done around the store with her assistant.  Among the other items, she told the assistant to cut the price of the jewelry in half–she had decided to cut her losses and move out the inventory.

When she returned from her vacation, she noticed that virtually all the art jewelry had sold.  She mentioned to her assistant that it was a shame to have to lower the price to move it, but at least it was gone.

The assistant was surprised.  She informed the owner that she had misunderstood, and instead of cutting the price in half, she had doubled the price.

It is ingrained in each of us, “You get what you pay for.”

People expect to pay a reasonable price for quality services.

Nobody wants a “cheap” turquoise bracelet.



As we celebrate our national independence, it’s a good time to reflect on benefits of Independent Service.  Today we take for granted the freedom to choose our service provider for computers and medical equipment.  It wasn’t always so…

In late 1969 Control Data (CDC) launched a venture called “Comma.”  At the same time MAI launched “Sorbus.”  Until that point the company who manufactured and sold the product also provided the post-sale support.  Period.

This obviously limited customer options for migration and change.  Service served as an effective account control tactic.  The early Independent Service Organizations (ISOs) broke that control by offering service on primarily IBM equipment.

The ISOs (or 3rd-Party Maintenance Companies, as they were first known) flourished through the 70s, and into the late-80s.  In 1987 IBM declared “The Year of the Customer.”  Major customers were signed to NDAs and given 5-year contracts with drastic price reductions.  About $1B went off the IBM service revenue for the year.  (Of course ISOs immediately countered with, ‘If this is the year of the customer, what’s next year going to be…The Empire Strikes Back?’)

IBM went on to suffer some tough years in the early 90s, but then recovered, partly because IBM developed an effective, win/win, business model for co-existing with independent service companies.

By the 90s every major IT manufacturer was engaged in a “multivendor” service strategy, competing directly with the independents, but the existence of an alternative for support helped fuel the growth of open systems, and the cat was out of the bag.

Today, ISOs provide unique advantages over manufactuers’ services:

The infrastructure/cost structure of an ISO is totally and solely devoted to direct customer service productivity…Service is the ONLY business.  In OEMs the service organization absorbs costs from the manufacturing and product sales side of the house.

ISOs can be selective about what products they maintain.  OEM service organizations have to service EVERY product the company produces, in EVERY town and hamlet they sell the product.

ISOs are customer-, not product-, driven.

The existence of an alternative helps customers get better deals and service from their OEM service providers.

By their nature, Independent Service Organizations produce benefits for clients of high-end technology products…So happy 42nd birthday!