All New Horsemen

Erik Schmidt got some attention at the All Things Digital conference naming new horsemen in the tech industry.  The old horsemen were commonly listed as Microsoft, Intel, Cisco, Dell.  Schmidt rather self congratulatorily named Google,  Amazon, Facebook and Apple as the new four.  Sure things are changing, but a completely new field of horsemen, really? 

What is it with the horsemen anyway?  One must wonder how we got onto the horsemen thing in tech, it seems like we would want to stay as far away as possible from an allegory rooted in conquest, war, famine and death.  If you have some time to kill, check out the Wikipedia entry for the Four Horsemen of the Apocalypse, for a not so brief introduction to the idea of horsemen.

Is there a new reality in tech and if so is this it?

With the possible exception of Dell, which specialized in advanced supply chain management, the old four developed technology and sold it to individuals and businesses and those customers employed the technology to achieve their ends.  The old horsemen are in fact still in business, and will be for some time.  IBM may not have liked being left off of the old list, but they have done pretty well for themselves in the last decade with their stock up 50% in the last decade compared to losses for the others.

With the possible exception of Apple, the new four don’t sell technology at all.  I suspect they are often thought of as technology companies because of their use of the Internet in their business models.  The wholesale switch is notable, and mostly for Microsoft.  Indeed, Microsoft has not been performing well on the stock market over the last decade with a drop of over 50% while all of the others are up and Apple is up a whole bunch.

These new horsemen are going to drive the delivery of a new kind of computing services. Even if this shift only turns out to be half as big as Mr. Schmidt predicts, it is going to have a profound impact on how technology is sold.  This is commonly referred to today as the migration to the cloud, and is so overhyped that often we forget to stop and think about what that actually means. 

First a review, technology resellers used to make money marking up hardware and shrink wrapped software.  Then they made money adding integration and support services to the sale of hardware and software, and next they will make money delivering innovation.  Here are some examples of this phenomenon:

• DropBox (www.dropbox.com) is a file system in the cloud.  You can get to your files from any device.  It is Amazon’s infrastructure on the back end, but no one has to know that.
• WordPress or SquareSpace (www.wordpress.com; www.squarespace.com ) are content management systems in the cloud.  Anyone can publish a website or blog on these sites and all of the hosing is handled.  Although one step removed, these companies rely on Google for indexing and discovery.  Google is also seeding the next wave of these companies with Picasa and Google voice. These may seem like birds of a different feather, but before you say so think about searching images or audio files.  Google’s partners make money by helping their clients manage content and show up online in the right places.
• Security is making sure content does not show up in the wrong places like when credit card information is stolen, or weapons system blueprints land in Peking.  Facebook has designs on knowing who you are and where you are and (soon) what you buy and what you have access to.  Making sure the keys to the kingdom, your keys that is, remain in your own control is important and will be big business.  Emerging in this field are upstarts like Reputation.com and Klout.com, and established firms like Symantec.

Before you think that this blog post has gone off of the rails, let me state plainly that I am not proposing DropBox, WordPress, SquareSpace, Reputation.com, and Klout.com as services that partners can mark up and resell.  I am proposing that these are the new channel partners and that they exist in a sympathetic ecosystem with the new horsemen.

These forward thinking channel partners do not think of themselves as channel partners.  They think of themselves as the inventors of a new wave of services.  Nevertheless, they are channel partners because they make money packaging new technology into services that add value to consumers and business.

Intel Wants the Consumer

The grass is definitely greener on the consumer side of the fence in 2010.  Companies that have built their businesses on their ability to sell to the enterprise, or that are a step or two removed from direct access to the consumer, are looking for a the gate through the fence. Increasingly mobile is that gate, and it appears that Intel thinks McAfee is their best shot at getting over there.

It is much more fun as a writer to be negative on announcements like this -- and the business press is having their share of fun with Intel.  Anyone that wants the business press to be positive should remember not to surprise them.  A few good leaks will get some of the journalists onto your side ahead of the announcement.  With the exception of Steve Jobs, who gets to play by a different set of rules, scoop equals page views, page views equals happy writers, happy writers equals "this is a brilliant idea".

Intel depends on the PC makers to get its chips to market and has managed to dominate that business over the years through business tactics that just keep getting them in trouble with the Justice department and the EU.   The top PC makers in the world control over half of the sales of new PCs including HP (18%), Dell (13%), Acer (12%), Lenovo (10%), and Asus and Toshiba tied (5% each).  The industry is on the rebound, up 22% in Q2, so everyone is growing.  However, HP and Dell are growing only slightly, and the other guys are smokin' with growth rates up to 87% (Asus).

The deal to buy McAfee may or may not be a good idea, but it does signal Intel's concern over its traditional route to market, and its corresponding desire to find a new route.  Their best domestic friends are getting pounded by the guys in Asia, and they are increasingly prevented from pulling monopolistic stunts, so I would guess there will be more deals to follow.

Other coverage:  

BusinessWeek

WSJ Digits Blog

Daily Finance

Read Write Web

CNet (for the PC industry numbers)

Importing The Desire to Win

There is one common thread that runs through the three main problems with our public education system.  The three main problems are: the administrators, the teachers, and the students.  The common thread is the desire to win. If we could just change this one thing, we could actually reform our public education system and establish some momentum on the path back to worldwide competitiveness.

The enemy of the desire to win is entitlement.  Our students feel entitled to a good life without having to work for it, our teachers feel entitled to their jobs without performance measures, and our administrators...well they are so deep in their own goo that they have not thought about actually fixing education for over a decade.

We can do this the easy way or the hard way.  The easy way is to open the immigration floodgates and import the desire to win.  Sure the contra argument is that freeloaders would come in with the tide -- just to get our awesome healthcare.  But they will be a tiny minority.  The rest will be energetic, motivated, people with the desire to improve themselves and their position.  This is not an original thought and it worked for our country for its entire history -- save the last 50 years or so.  

Thomas Friedman's column today absolutely nails this point.  In it he cleverly lists the names of the finalists for the Intel Science Talent Search - which even the most ardent anti race profiler cannot help but admit hail from points east from here.  

These amazing people all share two traits -- they came to America to change their stars, and they have an insatiable desire to win.  If we could only get more of them.