Dear Microsoft (or anyone): Please Make This

I have written a bunch about how Microsoft should just focus on the enterprise.  However, if they are committed to the consumer -- I this is what I would want:  the iTunes of PC management -- maybe it could be called iPC.

I think Windows 7 is great.  Each of the two times it was installed on my machine it ran great.  Well it did for a month or so anyway.  After a while it just seems to get full, and like someone that can breathe in but not out.  Once it gets that full feeling everything seems to slow down.

But wipe the thing clean and it smokes again.  Unfortunately, to wipe it clean is a 3 or 4 day process.  Half a day to find the my files all over the thing and back them up, half a day to reinstall the main applications, a couple of days to chase down the other apps as I discover I still need them.  I am getting better at keeping track of all of my software license keys and install files, but the install, update, configure process is taxing.  Yes I do know about the rollback feature, but it has never worked well for me.  I go back to a prior point but the bloat hangs on and the performance really does not seem to change.  The last time I did the wipe and reinstall I got 10GB of disk space back!

So I would like someone to make iPC – essentially a parallel to iTunes that would run my computers.  One of the things I like about my iPad and my iPod Touch is that any time I want I can wipe the device and reinstall everything – in just a few minutes – push restore and faster than rebooting a Windows machine my iPod is completely reinstalled.

I think it would work like this: An application that would run on my desktop, backs up in the cloud, and keeps track of everything I install on my machine from the "App Store".  It would enable me to wipe my machine clean and reinstall everything with just one push of a button – it would be an infinitely better experience.

Now the insiders are going to say either: we have that already or we tried that already.  To that I say -- if it exists sign me up, and come on already -- Bob was 15 years ago!  Let's try again.  

Kevin Turner has Gloves Off and is Ready to Fight

It was a sharp contrast to Steve Ballmer's presentation when Microsoft COO Kevin Turner took the stage today at the Microsoft Worldwide Partner Conference.  For every implied competitive situation in Ballmer's presentation, KT took direct aim at a competitor, and was not shy about naming names.  It will be interesting to see the press coverage, because he was handing out some juicy quotes.  Try these:

"We (Microsoft) are the undisputed leader in commercial cloud services."

"Sharepoint online is the fastest growing product in the history of Microsoft."

 "The smartphone game is just starting."

"The Go Do is don't let our customers get Googled."

"We don't want some of the customers, we want all of them."

"In a market where we were left for dead." (about search)

"Don't let Customers pay the Apple Tax".

"It looks like iPhone 4 may be their Vista."

He didn't stop there.  Without hesitation he rolled into direct assaults on Linux, VMware, and Oracle.  After Turner's show, Microsoft's 640,000 strong partner army know one thing:  General Turner is itching for a fight and he is willing to engage on not just more than one front, but all of them.  Forget Sun Tzu and wasting time trying to figure out whose enemy's enemy is the friendliest.  Let's get busy shooting.  

As crazy as it seems for a strategy, it could just be the right recipe for Microsoft.  Microsoft's partner army is so large, so deep, and so well developed -- this kind of thing just could work.  Given the press over the past few months and the morale in Redmond, Kevin Turner's energy did seem to be quite welcome.  The Ballmer / Turner 1-2 could be a knock out.

Bill Says Steve has Taste, and Steve Says Bill can Partner

In my quest to figure out what is happening in the computer business I have been thinking a good deal about how we got here.  In two separate conversations in less than a week friends have pointed me back to the 2007 All Things Digital conference where Walt Mossberg of the Wall Street Journal interviewed Steve Jobs and Bill Gates together.  The whole thing is available on YouTube here.  There are many fine moments, but if you want to cut to the best one, go to 3:30 of part 11.  Where an audience member has just asked what they had learned from each other and Bill Gates says:  "Oh I would give a lot to have Steve's taste."  He then goes on to eloquently summarize the magic of Steve Jobs all in a couple of sentences.  

The focus moves to Steve and he talks about Microsoft's skill at partnering: "Bill and Microsoft were really good at it." and Steve further explains how Apple didn't need to think that way because they were building the "whole banana" and Microsoft needed to be good at it because they needed partners to succeed.  This could not be more true today.  While a fair amount has transpired in the three years since this interview was taped, the basic facts are as the two founders said on that day:  Apple has taste and Microsoft knows how to partner.

There has been all kinds of news out of the Microsoft Worldwide Partner conference this week about how Microsoft is going to leverage its partner ecosystem to be the biggest player in the cloud and other areas.  I don't think anyone could have said it better than Bill and Steve did in 2007.

The entire hour is very much worth watching and amazingly revealing about post PC devices, tablets, social media, multiple screens -- all the stuff we are talking about today.  Check it out.

Parsing Ballmer at WPC 2010

A couple of days ago I said that it was time that Steve Ballmer step and take a swing... at just about anything.  Today he was the keynote at the Microsoft Worldwide Partner conference in Washington DC.  

Here it is point by point:

• Thank you, Thank you, Thank you - to partners (9,500 in attendance) for taking Azure (cloud services) from 0 to 10,000 paying customers in the last 12 months.
• Cloud - A rework of the UW Speech from February - getting IT savings reinvested in services is both an opportunity and responsibility -- big emphasis on enterprise.
• Cloud - can do things that could not be done anywhere else (natural language, search...again focus on enterprise).
• Cloud - Better social and professional interactions (Sharepoint is the answer to Salesforce.com's chatter); Dynamics CRM online.
• Cloud - Server advances drive the cloud.  Managing scale is different.  Microsoft knows scale through windows update, Bing, Live, Hotmail.
• Cloud - Rich Client instead of thin client.  Smart cloud and smart/rich clients (not thin) - HTML5 is supported by MS. Cloud enabled Kinect (Natal). 
• Cloud - Windows 7 Slates and Windows 7 Phones - this is on to the consumer, uses language like "you need to see" and is different from the more concrete statements in the earlier points.

We are ALL IN together.  You want to know if you can bet on Microsoft?  If you want to help people be more productive -- you need to bet on Microsoft.  Microsoft Enterprise IT and IT management. If you don't want to move to the cloud then we are not your folks.

Here is some other coverage of his talk and the event:

eWeek's Microsoft Watch

Channel Insider

Seattle Times

My take:  He delivered on the enterprise, promised on the consumer.  Since it was an enterprise audience I suppose that works.  The slate promise was really the only new product announcement, but new product announcements were not what was needed.  There was not much encoded partner messaging -- and I think that is a good thing.  Microsoft has so much to offer the enterprise customer -- it is nice to see the focus on that and a minimum of other distractions.

Microsoft Partners Ponder Their Future

The Microsoft Worldwide Partner conference starts on Monday at a time when many people inside and outside of the company are wondering what the company is doing and where it is going next.  Ever since AAPL passed MSFT in market cap everyone has raised the issue -- is Microsoft doomed?

The announcement last week that the KIN was dead did not help.  The Mini Microsoft blog really lit up with that one and the lay off rumors.

The consumer geek world has been amazingly silent about Microsoft -- which may be a good thing but says a good deal about where the excitement is in the industry (not at Microsoft).  John Dvorak wrote a column on Marketwatch about what Steve Ballmer should do.

The list of people giving Microsoft advice is long.  Here is a post I did summarize some of it last month.

Mark Anderson did a short interview on KPLU this week where he boiled it down to this:

• Microsoft has to decide if it is going to be in the consumer business or not.
• If yes, it needs to create a new division and get outside leadership.
• If no, it needs to double down on the enterprise.

I could not agree more.  In fact, I think Microsoft's strong position with the enterprise has been under appreciated and undervalued for a long time and mostly because Microsoft under-appreciates and undervalues it.

Microsoft has 9,000 products -- most of them are aimed at the enterprise, and many of them are quite good.  Microsoft has hundreds of thousands of partners that are in place and driving billions in enterprise business.  These are partners with substantial and established businesses with big revenues and loyal customers.  They are a significantly different group than could be found at the Google partner conference or the Apple Developer conference.

So this is it.  Monday morning Ballmer gives the keynote -- its showtime.

Microsoft's Best Investment Ever?

Does anyone remember Steve Jobs and Bill Gates getting together in 1997 right after Jobs came back to Apple?  On that August day in 1997, the companies announced that Microsoft would invest $150 million into Apple and promised to refresh the Microsoft products for the Mac OS.  

I have no idea if Microsoft held on to the 31 million shares they would have been able to buy for $150 million.  If Microsoft still owns those shares they would now be worth over $8.5 BILLION! 

Are You Twittering or Communicating?

During the Channel Management Summit this week it was no surprise that we ended up talking about social media.  It was interesting that we got onto the thread of how we talk about what we are doing in social media.  When using Twitter, we have a tendency to think of our activity as using Twitter, or Twittering, or Tweeting.  In fact we are really communicating with our followers.  

This tracks back to an earlier concept I wrote a post about:  The difference between the How and the What.  In this case the what is:  communicating, the how is using Twitter.

When we insert this concept into the context of channel marketing, we would do better to talk about what we are doing more than the how we are doing it.  Marketers have always had multiple ways to communicate with their customers or partners -- many hows.  Twitter is just one of those hows.  

Credit due:  Axle Shultze of the Social Media Academy deserves credit for bringing up this point.

Good People with Good Ideas

Put 75 people together in a room and you never know what the conversation is going to turn too.  That is the magic of conferences and what keeps me coming back.  The Channel Management Summit created this effect and then some.  Yesterday I made a forecast about how I thought the conversation would go and well, it went a whole different way.  There were some great panel discussions, and good presenters.  The conversation quickly departed the stated theme of “From Volume to Value”.  That being said several of the channel partner program owners did indicate that they wanted to invest more meaningfully in a lower number of partners – which seemed to fit the bill.

Here were the items that stuck out for me in my notes:

Look in the Mirror First

If you want your partners to respect you, make sure you have your act together and that starts by working internally to ensure that everyone inside your company understands and agrees with the direction and is willing to stick with the messaging.  This will result in fewer random changes, a greater ability to explain the reasoning behind your decisions, and less confusion.  All seemingly simple, but in real life – quite a challenge to execute.

Get in their Shoes

We can get so caught up in our own stuff that we lose touch with the reality of our partner’s businesses.  Take the time to actually talk with them, figure out how they make money, understand their pain points.  We had a great conversation about what partners will and will not do.  Will sell your product (if it works), will work side by side with you, won’t penetrate new markets, won’t lose money.

The Death of Leads has Been Exaggerated

Instead of killing leads, social media has increased the volume.  Along with this increase has come a decrease in quality.  This has increased the importance of good process, professional qualification, and rigorous feedback tracking.  This was great validation for us – because it is what we do at CSG.

There were also some good presentations about measuring investment in partners – partner by partner – and comparing it to revenue generated.  Some ideas about how to start using social media tomorrow (get your partners to do it).  And good thoughts about specific things you can do with your most valuable partners. 

All together a great conference.

Getting from Volume to Value

One day in 1906 the Italian economist Vilfredo Pareto discovered that 80% of the peas produced in his garden came from 20% of the pea pods.  Ever since that day, channel partner program managers have been trying to grow just the highly productive pea pods.  For the next two days, those of us attending the Channel Management Summit in San Jose will be talking about how to escape Pareto’s 80/20 rule and get from Volume to Value.

I have the pleasure of chairing the event today.  Here are a few of the thoughts I hope to use to get the conversation going.

• Why now?  After 104 years of living with the 80/20 rule why do we think that we can now escape it?
• What happens when we cut off the less productive 80 percent?  Pareto also found that if you deconstruct just the top 20 percent, the rule still applies – 80 percent of the peas produced by the top 20 percent of the pods are produced by 20 percent of those top 20 percent.
• How do we find the top partners of next year?  The top 20 change over time so shouldn’t we invest most heavily in the partners that are going to be the most productive next year?
• Are Value and Volume mutually exclusive?
• How are social media, better data management, and automation changing the game?
• Is the environment getting more competitive?  Could the partners we turn away from become the top 20% for someone else?  Does that matter?

I am very much looking forward to the conversation.  

The Secret to the iPad is iTunes

The best thing about the iPad is iTunes.  There have been many reports of people walking out of the Apple store with their shiny new iPad, sitting down on the curb, only to find that the thing will not work until it is connected to iTunes on a Mac or a PC.  The Apple store will actually do this for you in the store if you want.  Many people have called this a shortfall of the product, but I propose the connection to iTunes is one of the things I like the most about both my iPod Touch and my iPad.  Here are the reasons:

1. Nothing to Lose:  Since the iPad is just showing me the things it got on the last sync up from iTunes -- my stuff is always backed up.  No worries -- I could run the thing over with the car and be out the iPad, but not my data or apps.
2. Easy Restore: Reinstalling an operating system on a PC is a week long exercise.  Sure I can wipe and reinstall the OS in a matter of a few hours, but then it takes me a week to find all of the other applications and files.  And I remember each application just when I need it and don't have time to install it.  I can wipe and restore my iPad with one button push and about an hour.  
3. Online or Offline:  The above listed backup and restore benefits sound a lot like the thin client benefits that have been championed for over a decade.  The difference is that once synced, the iPad can work connected or not connected to the network.  A thin client or a web OS type machine could not do that.
4. Lower Expectations:  Sure there are many things my desktop or laptop computers can do that my iPad cannot do.  But I never expected the iPad to do those things.  Steve has made the iPad do the things it does very well, which also means that the things not well suited for the device are not even attempted.  This is a much better user experience.

PC makers could apply some of these lessons and create a much better PC experience. Did Steve say that Apple was working on reducing the iPad's dependency on iTunes?  I think that would be a mistake.

Microsoft Losing its Killer Reputation

There was a time not long ago when Microsoft was the most feared company in the tech industry.  The rare individual that has not had at least a second hand (if not a first hand) experience with Microsoft's predatory practices, would certainly have read about them in the press.  From legends about the original DOS code deal, the OEM pricing policy, to Netscape, to tech startups that found their product ideas incorporated into MS products after pitching MS to acquire them, there is seemingly no end to this story.

Until now.  Could we be entering an era of a less predatory Microsoft?  Here are three things that contribute to such a thought:

1. Other predators on center stage:  Facebook, Apple, and Google are really getting into the act of either ripping off the ideas of others, to just swallowing start ups in one gulp.  
2. Microsoft's Partners are a significant asset:  Microsoft has been building its partner program for 25 years and it is the biggest, most sophisticated, and most mature business ecosystem the industry.  There was a time that people partnered with Microsoft because they had to, now they partner with Microsoft on its merits.  
3. Microsoft's margins are on the decline:  95% margins for packaged software were great -- but exist no longer.  Margins in the cloud are much lower -- maybe half that.  Declining margins mean less budget for R&D and Sales and Marketing.  This is going to be added encouragement for Microsoft to get along with its neighbors.

Microsoft may or may not be engaged in a thoughtful strategy of playing more nicely with others.  Premeditated or not, Microsoft does seem to be losing its killer reputation. I think this is a good thing for Microsoft, and its partners.

Intuit and the Tyranny of the Uptime Clock

Those of you following my Twittering and blog posts must think I have become obsessed with the Intuit outage.  At CSG we operate a hosted enterprise software service and face the tyranny of the uptime clock -- just like Intuit.  As the technology industry moves to adopt cloud computing, we all suffer a credibility loss when a major player like Intuit has a long term outage like this one.  The lack of an explanation, and generally poor levels of communication by Intuit during this episode does not help.  Sure they could not post on their own websites while down, but they have official blogs outside of their control that were up and so they did have the ability to communicate.  Here is a short list of the communications:

Intuit on Twitter @Intuit: First post was 11.5 hours into the outage, at this writing 8 posts, including a gap of 16 hours before the latest post saying they are now on the way back up.   The posts pointed to their community page with 4 undated or time stamped updates, and 2 references to the small business blog, where they posted an update 12 hours into the outage.

Quicken on Twitter @Quicken: First post was 13 hours into the outage, at this writing only 4 posts -- saying they are working on it.

Official Quicken Blog:  No posts, last post was April 26th.

Quickbooks on Twitter @Quickbooks: No posts, last post was May 21st.

The main site just now came back online -- making the outage approximately 34 hours in duration.  Current explanation: 

Our preliminary investigation indicates the outage occurred during a routine maintenance procedure Tuesday night. An accidental power failure during that procedure affected both our primary and backup systems, taking a number of Intuit websites and services offline. While power was quickly restored, we're working diligently to validate our systems and bring them back into full operation.

Intuit reported 300,000 online customers in May of this year -- many of whom use accounting and merchant services applications that require near universal uptime.  In the industry this is often referred to and "four nines" or "five nines" uptime for 99.99% and 99.999% uptime.

A few basics about uptime:  Scheduled outages are usually not included in the calculation, so the .001% downtime permitted in five nines uptime buys only 5.26 minutes of unscheduled downtime in a year.  Three nines gets you almost an hour, and two nines gets you almost a day.  Fortunately nobody died in this outage, so even a 34 hour outage is not a catastrophe on the BP scale.  But it will take 388 years of perfect uptime before Intiut can claim five nines of uptime.

All of us are relieved that they are back online.  This event will undoubtedly slow migrations to the cloud, and should give all of us reason to check and recheck our redundancy and uptime plans.  In addition, we should be checking and rechecking our communication plans associated with any downtime.  We are certainly capable of turning a bad situation worse by failing to communicate well with customers.

Intuit's Cloud Outage

When I saw some traffic in Twitter last night about Intuit's web site going down I first thought it would be back up in a minute and would be no big deal.  An hour later I checked back -- still down.  I checked @intuit, @quicken, and @quickbooks on Twitter thinking they would post an update -- none.  I searched for Intuit related blogs -- no posts in over a month!

Knowing that millions of people use intuit's accounting, payroll, tax preparation, and merchant services, and thinking that these activities are almost always time sensitive, I naturally thought that this was going to be a big story. Next I thought that since small businesses are a big deal for technology companies, and technology companies want small businesses to adopt cloud computing, this would be a big deal in the technology industry.  A major vendor like Intuit going down for hours without any communication to its users is enough to set back cloud adoption a few years -- right?

So I searched the news on Google about a story.  Top search result: Intuit press release about low cost Payment Solutions, next was CEO Brad Smith being profiled by "Inspiring West Virginians", and the next four were all about stock performance upgrades due to good recent financial results.  No stories about the outage.

Back to Twitter, a real time search for Intuit Down:  just a few tweets.  Nothing like I expected.

When a $3 Billion company with millions of customers goes down for over 12 hours without a mention in the press, without an update to its customers, and without any public outcry to speak of I can only conclude one of three things:

1. I fell down the Alice in Wonderland rabbit hole and never came back, or 
2. Not communicating during a crisis works -- no communication = no crisis, or
3. Not that many people are using Intuit's Cloud Services.

I did watch the movie and even with the 3D I don't think I am chasing the Jabberwoky -- so #1 is out, BP and others will tell you that #2 is not true, so logic tells us that #3 could be the most rational conclusion.

Intuit's recent acquisition, Mint, has stayed up the whole time.  No mention on any of Mint's blogs either.

Microsoft News 180?

The news herd has a tendency to travel together for a while until someone "breaks" a story and breaks away from the group.  The contrasting new perspective becomes news itself and then the herd reforms going the other direction.

This kind of thing may just be happening with Microsoft right now.  Microsoft has been getting the short end of it in the media for months - or even years - with that week when AAPL gained the number one market cap spot being the low point.  

This week looks to be different however.  The Xbox is really standing out at E3 with Natal/Kinect (why do they do that code name thing?), and a positive piece about profits, cash, and general sanity on CNN Money.

Maybe Microsoft has been characterized in the media as a predatory monopolist, a second rate innovator, and uncool for long enough that the new story about a Microsoft comeback will stick for a while.  As the CNN Money article points out, Microsoft is the second most profitable company in the US, has a giant pile of cash, and is adding to the pile at a pretty good clip.  And you can be part owner for a P/E of only 13.2!

Microsoft has so many products and technology assets that there is no end to the possible interesting combinations.  The combination Microsoft chose to spotlight yesterday is Xbox 360 Kinect + Windows Live Messenger = Video Kinect.  Let's imagine this for a moment.  A high quality game environment, big bandwidth connectivity, an interface that reads the motions of the user (formerly known as the controller), and two way live video chat.  If this works we could have real life emulating person to person interactions in a dimension we don't even have a way to categorize yet.

This could be cool.

Innovation Meets the Desire to Sell Less

Google's pursuit of efficiency through superior engineering has already driven a great deal of change in the advertising industry and is now driving change in how selling is accomplished.  They have achieved extraordinary growth without any sales or customer service to speak of and now other companies are trying to emulate this lowest of selling costs.  The question is: How does a company with a high cost of selling become a company with very low cost of selling?  I can think of two routes:  sell better or sell less.

Effective companies do this by measuring everything, then cutting the things that don't measure up, and doubling down on the things that do.  The result: increased selling effectiveness and lower cost.  In the dynamic world of sales and marketing a once highly effective sales tactic can lose momentum and fade into inefficiency.  After all, we hope that the things that don't measure up did not start out that way.  This seems simple enough until the conversation turns to innovation.  A company only focussed on measuring the relative efficiency of the things it is currently doing will not try to do new things and will be quickly passed by competitors that are not so burdened by yesterday's thinking.  

Time is an additional layer of complexity in this analysis.  Selling costs money now and delivers benefits in the future.  Very few companies have successfully neutralized the time dimension when analyzing sales effectiveness.  So cost cutting always looks great at first because the lower cost is being compared to sales activities purchased in previous periods.  Then the gradual decline in revenues starts and things don't look that great anymore.  Often at this point more cutting is administered and you can see where this is leading.  Bleeding the patient has obvious limits.

Better selling comes from innovation.  Innovation comes from rapid experimentation.  Rapid experimentation comes from the freedom to try new things.  New things are never sure things and all of this costs money.  Whether you are an investor looking to put your money to work, or an employee looking for a career, or a buyer looking to standardize on a product/service, beware of the company that is on the sell less track.  

If you are interested in more on this topic, try these posts:

Sales vs. Engineering

The Changing Role of the Salesperson

Making Marketing More Measurable

Science vs. Spray and Pray

Is Your KPI and RBI or an OBP?

Brand Promise vs. Intention

Could Small Business Go Without Networks?

Lately I have noticed two very interesting developments that don't seem like much at first but could have bigger implications down the road.  

First is Google's Cloud Printing Initiative

This yet to be released product is intended to let you connect printers to the web and print to them from anywhere.  I for one would appreciate this very much because my side job as tech support guy for my kids would get much easier.  Our network printers at home are a pain in the neck.

Second is Tungle.me's Web Based Scheduling System

This new service enables anyone to coordinate scheduling across multiple calendar platforms.  Exchange has done this forever inside companies -- but such functionality has not been available between companies before.

If you put these two things together, small businesses can delay building their own networks much longer than before.  Add to this cloud based file storage, databases, and collaboration tools and small businesses may not need their own networks.  Just a router and a connection to the internet.

That would change things a bit.

The Power of Why

Some time back I commented on Ric Merrifield's book: "Re:Think" where he created definitions for How and What in a business context.  Today I came across a book that ads Why to the list:  Simon Sineks's book: "Start With Why". In this book Sinek argues that if you want to motivate people to do something, think about Why your company exists.

If you are interested in the topic, I recommend going to Mr. Sinek's web site and watching the 18 minute video introducing the idea at the TEDx Puget Sound.

I agree.  Here are his ideas applied to our business:

What (the business we are in): We help large technology companies sell more through their channel partners.

How (what makes us different from our competitors):  Like our competitors, we bring our capacity to do work to the table, unlike our competitors, we also bring our experience and expertise.  In other words, our competitors want to be told what to do -- and then they do it.  We help our clients decide what to do, and then we do it.

Why (do we exist):  We exist to create a great place to work.  Many people could think of our business as a commodity.  As processes that can be standardized so each and every last penny can be squeezed out of its production.  We have unmatched passion for working together with each other and our clients to do things that make a difference.

A great place to work -- really?  I say yes.  There are many reasons to work and countless studies about why people work.  Getting paid is in there, also the challenge, and also doing things that matter.  These are mostly focused on the end result of work -- the destination.  We are focused on the journey.  Working side be side with each other and with our clients to deliver measurable results makes for an awesome job.   

AT&T Takes a Bite Out of the Cloud

It has been widely reported that AT&T changed its pricing model from unlimited to limited data plans.  The changes go into effect on June 7th. There have been many articles about this and some even come down on the side of AT&T.  As people work to figure out who the winners and the losers are -- I think the cloud could be the long term loser.

We are moving towards a world with thin wireless devices and computing in the cloud.  A variable cost of connecting to the cloud will certainly cause friction in this migration.  Slowing down the migration would be bad for Google and Apple, and give Microsoft a chance to catch up.

Google announced at Computex this week that their 100% cloud operating system Chrome OS will be available sometime this fall.  

This will be yet another interesting story to follow.

Ballmer Brings Ozzie to D8

I was at a small conference last month where Ray Ozzie spoke and he demonstrated, as he has done many times before, a refreshing grasp of the state of the industry and Microsoft's position within it.  Steve Ballmer did the right thing by bringing Ray to D8.  There has been a great deal of coverage, so instead of adding to the heap, here are some links:

• Ars Technica: This one is probably the best distillation 
• eWeek: A quick summary
• All Things Digital: A rough transcript
• Engadget:  This one contrasts Job's comments about PC = Truck to Ballmer's response

In the end Ballmer seemed on the defensive, and was not able to land an innovative forward thinking idea.  Ray Ozzie had some well crafted thoughts about the industry direction but in the few video clips I saw he seemed to get cut off right before he was going to say something meaningful.  Microsoft still has great deal of work to do.

Loyalty Love On the Decline

Done right, loyalty programs do a great deal to drive revenue.  Doing them right is much easier when the inventory of loyalty love is on the rise.  Frequent flier miles that can never be redeemed can even damage customer relationships.  When building a loyalty program it all seems quite easy.  Set aside some inventory, in the airline example this would be seats, and increase the inventory a bit each year to keep up with the increasing number of loyalty customers and their increasing expectations and you are all set.  This all comes to an unhappy end when the number of loyalty customers continues to rise, or worse accelerates, at the same time the inventory of awards contracts.

This is exactly what is happening right now with the airlines.  The airlines have reduced their capacity by paring back schedules and parking planes.  The people flying are mostly those that always fly -- those in the loyalty programs.  This means fewer reward tickets, fewer upgrades, and eventually, structural changes to loyalty programs.  My main airline just increase the highest level from 40,000 miles to 75,000 miles -- ouch.

We see the same thing happen to partner programs.  While on the upswing there is plenty of loyalty love to spread around.  In this case the loyalty love usually comes in the form of leads (opportunities for new business).  When in a recession the flow of leads goes down and the focus on leads by partners goes up.  Expectations up plus delivery down equals unhappy partners.  Here are three things to do about it:

1. Invest what you have in the right place:  As painful as it may seem, the airlines are doing the right thing.  They know they do not have the capacity to make everyone happy, and they are going to make sure the reduced number of happy people are the right ones.
2. Add new features and benefits:  There are always things that can be added to fill the gap.  Soft benefits are not as good as hard benefits -- but better than nothing.  As above, these new benefits have to go to the right places.
3. Engage to grab market share:  Vendor and partner both want to grow out of the cycle -- which in a down market means take market share.  Since this investment is being made anyway -- make the most of it by working closely with key partners to drive increased revenue for both entities.

Yes all of this means we have to pedal faster in a down market.  It is worth it however because the potential gains are tremendous.