Friday, May 22, 2009

The wheel in the sky keeps on turning …

It’s not as though cars dominate my private life, just as it’s not computers and information technology that dominate my public life. My colleagues, however, may argue that this is indeed the case, and that many conversations quickly turn to these subjects, but there’s been times when I was happy talking about sailing, or fine wines, or music. Readers will have seen the lines from songs, and even movies, routinely appear in these postings.

However, the association between cars and computers provides me with a wealth of content with which to work. None more so than when I read about cars in a computer publication this week shortly after I had finished reading a commentary on computers in a car magazine. The picture above was taken of Margo, under the tutelage of instructor Tom Paule, on a cool-down lap at Buttonwillow race track.

It was captured by an entrepreneur who makes a living from photographing the stream of cars and motorcycles that attend track days. And perhaps we need to enjoy driving cars on tracks like this while we can, as the future of high performance cars seems to be up in the air. The mood within governments and across the auto industry appears to be steering us back to smaller, more fuel efficient, cars but with Ford barely afloat, GM headed for the rocks, and Chrysler below the waves, these domestic manufacturers are anxiously trying to get the government to save them so that they get the chance to build these more efficient cars.

It was against this background that I recently ran across an editorial in the computer publication, InformationWeek. Rob Preston, the magazine’s editor, asked “maybe the bigger question is this: are the likes of Chrysler … even worth ‘saving,’ or are they reaching the end of their commercial viability, much as former tech titans Data General, DEC, and Prime once did?”

Ouch … it’s hard to remember how strong these computer companies were in the late ‘80s and how quickly they foundered. And yet, the fate of car companies today looks to be following a similar pattern. In a recent posting to the discussion Fast Lane in the Real Time View user group on LinkedIn, I remarked “so, how much overlap is there? As we try to ‘save the car industry’ do we also need to save the computer industry? Did anyone step in to save Wang? Prime? Data General? Nixdorf? ICL? and so forth – did we appeal to government bodies? There were some murmurings and some guidance / advice – but little else! Computer companies were simply left to collapse. And I wonder, are we quick to recognize the natural order of technology.”

In other words, businesses, no less so than technologies and products, have well defined bell-curve lifecycles and it’s as if the very foundation for the success that propelled them to fortune and fame is proving to be the engine of their demise. These bell-curves provide plenty of excitement as companies charge up the front side slope, but without navigating through technology and product opportunities and jumping onto another bell curve early, there will always be the back side slope to face, so to say. Few technology companies can develop (and adhere to) roadmaps that span more than a decade or so. And fewer still manage to reinvent themselves and to enjoy the rewards that come with the rush up a new front side slope!

Consider all the companies with which IBM competed for the hearts and minds of data center managers, back in the ‘70s – where are they today? Affectionately known as the BUNCH (for Burroughs, Univac, NCR, Control Data, and Honeywell) all were capable companies with product lines that stretched up to the mainframe class. For many years, Control Data provided the most powerful computers available, while Burroughs became world-beaters with their formable transactional / online computers. But they proved to be poor visionaries and failed to execute well in a marketplace where IBM flourished. While they all tried to reinvent their business model, even when it meant leaving behind the products that drove their early success, they simply couldn’t save themselves.

When Burroughs and Univac merged to form Unisys, they talked of the merger with references to “the power of two” but quickly, the rest of the industry suggested it was something much less – perhaps “the power of ½!” And this happened as Honeywell refocused on a smaller subset of clients – aerospace, transportation, and automation and control solutions – but only a year ago, it was dropped from the Dow Jones Industrial Average index. NCR faded badly and simply reverted to it’s originally business model based around specialized client devices, while Control Data today is largely forgotten. Slow to react, or perhaps still reluctant to commit, meant that even after accepting the need to change their business models, they couldn’t pull out of the ride down the back side slope of the business lifecycle bell curve.

Moody’s investor services are now promoting a “Bottom Rung” list of companies. Also referred to by one financial analyst as Moody’s “Bucket List” it highlights those companies with debts they will probably not be able to repay by early 2010 – and consequently, will fail. It’s a list that covers many market segments including some that are well known these days (media, automotive, retail, manufacturing, gaming and consumer products) but what caught my attention was the presence of Unisys. While the company has refocused on services and a line of windows servers, it still supports a large population of legacy systems that date back more than a decade and that are in wide use in government agencies around the world.

The Gartner Group quickly produced a research note on Unisys making Moody’s bottom rung that suggested Unisys customers should “devise a plan to mitigate risk … calculate any potential associated exit costs (and) assess the marketplace for potential replacement service providers …” The CEO of the software company Erudine, Martin Rice, was reported to have said “events like this will force the hand of CIOs who would otherwise prefer to leave legacy systems untouched.” Of course, Erudine offers its behavior engine as a good way to exit and Rice was quick to add “this will not be the last time CIOs need to escape a burning platform!” And should Unisys founder, as Moody’s is predicting, there will be many more software vendors relishing the opportunities that will develop.

There is a second reason why I included the photo above and not just because it features a high performance car laying down fast laps on a private track. For me, the more important reason has to do with how the picture came into my hands. The photographer spends weekends at the track and sets up a kiosk at the tracks only food and beverage stand. If you like any of his pictures, he provides them immediately on disk for a small fee. A very simple business model, yet working well for the young entrepreneur!

I had mentioned of how I read commentary on the computer industry in a car magazine. In a commentary on design in the magazine Automobile, columnist Robert Cumberford writes “programming guru Sir Charles Antony Richard Hoare talked (of how) … ‘there are two ways of constructing a (software) design. One way is to make it so simple that there are obviously no deficiencies, and the other way is to make is so complicated that there are no obvious deficiencies. The first method is far more difficult.”

And this took me back to the April 20, ’09 email Jonathan Schwartz circulated to everyone at Sun, as the acquisition of Sun by Oracle was announced, and that was released to the press. In it he said “we’ve never walked away from the wholesale reinvention of business models … we’ve never walked away form a challenge – or an opportunity … by acquiring Sun, Oracle will be well positioned to help customers solve the most complex technology problems related to running a business.” And I was struck by how, once again, a company that in the ended up failing to reinvent its own business model now sees itself as a player in helping others with “running a business.”

I have been a strong advocateof keeping things simple and many of the posting found here reinforce this message. With simplicity comes the chance to minimize defects and to have “obviously, no deficiencies!” History is littered with computer companies that have failed to remain competitive and whether they move to new markets, revert to old practices, or merge, without a simple easy-to-communicate business model, it hasn’t halted their slide down the back side slope. And Sun doesn’t have history on its side, this time.

Following the creation of Unisys after the merger between Burroughs and Univac, there was a story doing the rounds that suggested Honeywell would be buying Fairchild Semiconductor and that the new company would be called Farewell Honeychild – what then is the likelihood Ellison will rename the new company Sunacle (rhymes with Cynical)? Which, I have to admit is a little more preferable, to Oracsun (unless you’re Swedish, of course). Probably not – but it was worth a thought!

For me, the relationship between Oracle and Sun will, almost by design, be complicated and several quarters may go by before we see the “obvious deficiencies” that Hoare spoke of. Will we see another rush to “escape (the) burning platform,” as data center managers consider their options? And will we be adding Sun to the steadily lengthening list of former technology titans? Or, has that time passed and there’s already a place reserved for them?

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