Google plays in Microsoft's yard

Getting Attention

Google plays in Microsoft's yard; plus Big Blue's Information Agenda, Ellison's on shaky ground in the courtroom, and more software news of the week.

Week Ending Sep. 05, 2008

After launching with much fanfare earlier this week, the consensus appears to be that the shiny new Google’s Chrome browser is no match for Microsoft’s Internet Explorer or for Firefox. Consumers are paying attention to it, but enterprise IT departments are not. The browser is designed to become an application platform (for Google’s apps, of course). You can bet Microsoft is paying attention. And a certain food manufacturer might be paying attention, too. Open source Chrome has a JavaScript Virtual Machine known as ”V8” (which certainly puts a new spin on the advertising slogan: “Gee, I could have had a V8…”)

Eyes are on SaaS, too. Companies are still hesitant to allow their sensitive data into the cloud, and it continues to impact the adoption rate of software-as-a-service (SaaS). Integration challenges and lack of customization are two of several other issues that plague the SaaS model. As a result, some believe the industry will turn toward a hybrid approach to SaaS.

Big Blue announced Information Agenda, information Agenda, its new strategy and tools that provide deeper insight into data. It signals the maturation of IBM’s Information on Demand strategy.

When it comes to strategies, IBM has a long track record of success, including its focus on services. IBM Global Services still accounts for approximately 56 percent of IBM’s revenues; that’s a result of integrating its research business into the services arm.

Three acquisitions made the headlines this week. Oracle plans to acquire ClearApp, whose technology enables companies to manage applications built on service-oriented architecture platforms. Red Hat bought Qumranet Inc., which will bolster Red Hat’s virtualization offerings. Roper Industries acquired Horizon Software International, the leading provider of software solutions to the K-12 education market.

Several earnings reports are also getting attention. Take-Two Interactive Software Inc. is enjoying a significant 3Q profit. Take-Two increased its international sales, which made up 46% of the company's revenue in the latest quarter. The second-quarter of FY2009 revenues for Descartes Systems Group,
Descartes Systems Group, an SaaS logistics solution provider, were up 20 percent from 2Q 2008. However, American Software’s preliminary 1Q 2009 results indicates a decrease of 12 percent over 1Q 2008.

Noted & Quoted

• Red Hat, Intel and the City University of New York are collaborating to build a new lab. New York government IT officials will be able to use the lab to test and evaluate open source software solutions using Intel architecture
• A U.S. District Judge doesn’t believe Oracle’s Larry Ellison and is convinced he deliberately destroyed or failed to preserve e-mails and tape records involved in a lawsuit

“Our strategy remains unchanged. Microsoft competes with Linux and Unix servers with Windows servers; we're going to find ways to interoperate between Linux and Windows because lots of our customers run both; and we want to grow the open-source ecosystem as it relates to Microsoft software.”
- Microsoft’s senior director of platform strategy, Sam Ramji in an interview about Microsoft’s open source strategy

Red Hat: Virtualization will be free

Red Hat has predicted that virtualization will be included in all operating systems for free, while setting out the roles of the two hypervisors it is working on for its own product range.

Red Hat is making a kernel-based hypervisor using KVM, developed by its new acquisition, Qumranet. This will provide better performance and power management on new hardware optimized for virtualization, Paul Cormier, Red Hat's president of products and technologies, said on Wednesday.

However, Red Hat will continue to support the Xen hypervisor bundled in its Red Hat Enterprise Linux 5 (RHEL 5) operating system until at least 2013, both as part of RHEL 5 support and because it provides legacy support for virtualization on older, x86-based hardware.

"KVM is clean, and is accepted in the upstream Linux community," Cormier said at a Red Hat press event in London. "All Linux distributions will work on this virtualization technology. It's not a bolt-on or graft-underneath technology."

"At the same time, Xen was the right decision and still is the right decision," Cormier added. "We are the number-one contributor to the Xen project, and it is very much part of RHEL 5." Xen and VMware were produced earlier and had to run on Intel x86 hardware, which was not optimized for virtualization, he explained, saying: "VMware and Xen have to do a lot of work, and that has an impact on performance."

For this reason, today's implementations of virtualization--used on an estimated 10 percent of servers--are largely for test and development, he said. Most users find they cannot be optimized well enough, for performance or power conservation, to move onto large-scale production servers.

Virtualization is predicted to move onto 90 percent of servers in the next five years, but, to do so, it will have to take more control of the hardware--hence the need for KVM, which is in the kernel and can use the extended instruction sets that Intel and AMD are providing for virtualization in their newer processors.

"Xen was pioneered virtualization on old hardware, but KVM was designed around new hardware," explained Red Hat's chief technology officer, Brian Stevens, at the same meeting. Having both hypervisors will not cause problems for users, since Red Hat has developed an API layer called Libvirt, which has been widely adopted.

Red Hat claims to be unconcerned about Microsoft's recent virtualization push, saying that Microsoft has offered its Hyper-V product virtually for free purely to attack the commercial VMware product. "Microsoft has its eyes on VMware," said Cormier.

Cormier pointed out that virtualization is already included for free in RHEL 5. "We didn't uplift the price of RHEL when we added it," he said, saying that the open-source model is well suited to virtualized servers.

I.B.M. Steals the Spotlight Ahead of H.P.’s Big Day

September 11, 2008, 11:00 pm

I.B.M. Steals the Spotlight Ahead of H.P.’s Big Day

By Ashlee Vance

I.B.M. has lobbed a preemptive strike of sorts against rival Hewlett-Packard. Late Thursday, it announced four fresh services contracts just ahead of a Monday meeting in Silicon Valley where H.P. is expected to explain the strategy and structure for its new acquisition, Electronic Data Systems.

The flurry of announcements marks the start of a protracted marketing and technology battle between the technology industry’s largest companies.

One of the deals secured by I.B.M. took place in the Philippines with PSBank, the second largest savings bank in the country. I.B.M. was eager to point out that the bank shifted from an Oracle database running on H.P.’s hardware to performing its online transaction processing on an I.B.M. mainframe.

The other deals included a seven-year outsourcing agreement with the PTT Chemical Public Company of Thailand, a new data center for Saigon Commercial Bank in Vietnam and a technology agreement with Skynet in Lithuania around Internet protocol television, or IPTV.

I.B.M. was not terribly subtle about celebrating the international flair of its services and technology expertise. But it’s not really subtlety that the company is after when it comes to H.P. and the services battlefield.

“HP will claim next week that they have some great new capabilities,” said David Parker, the vice president of strategy for I.B.M. Global Services. “I will be surprised if they are able to be very specific about that. It is still yesterday’s business model.”

At H.P.’s Monday meeting, the company make its E.D.S. pitch to securities analysts. Chief executive Mark Hurd and other top H.P. executives plan to explain why the $14 billion acquisition makes sense and what kinds of internal changes will take place now that the purchase has been completed.

Since the megadeal was first announced, industry observers have been quick to question why HP would want to take on a business with 140,000 employees and lackluster financial results. Meanwhile, H.P. sees E.D.S. as a way to add weight to its services lineup and, well, give I.B.M. a harder time.

Without a doubt, the E.D.S. acquisition establishes the services realm as the next big battleground for I.B.M. and H.P. –- both of which look to make money off customers introducing new technology projects as well as those consolidating their infrastructures.

I.B.M. continues to argue that it is in unmatched in its combination of vast experience and research and development. H.P. is just adding more bodies and still lacks the consulting muscle needed to compete on a global scale, according to Mr. Parker.

H.P. will, of course, be sure to take its counter crack at I.B.M. next week.

SM Software

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Awards

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