catallaxy files

catallaxy in technical exile

Tech Toys

with 28 comments

I am a tech junkie. I enjoy buying new toys. I do not wish to give up my addiction. In fact it gives me much pleasure.

I am also fascinated with the business side of technology – how the game is changing and how it creates winners and losers more quickly than in the FMCG markets I used to understand.

I came across this new product which got me thinking all over again about IBM. The story of IBM and the PC is pretty well known. The company was in a hurry to develop the product in the early 80s and cut a lot of corners. In the rush they allowed Microsoft to keep ownership of the DOS operating system developed for IBM and thus made Bill Gates very very rich. All Gates had done was to buy  someone else’s DOS and polish it up a bit. IBM’s carelessness over the OS must rank as one of the biggest business blunders of all time. Gates was not a technological genius but was, for this coup alone, a business genius.

For a while IBM just about owned the PC market, especially for business use. In my company during the 80s and early 90s, before any other PC could be bought or attached to the network, it had to be checked as “IBM compatible”.

IBM was never  comfortable in what was really a consumer market. Its heart was still in mainframes. By the early 90s the PC was a commodity and IBM’s share was sliding. It could not match the Dell model of making to order nor the Asian grey box prices.

In 2006 the whole IBM PC business was sold to Lenovo a company controlled by the Chines government. By then IBM was mostly interested in the IT service business (a very rare example of a large company successfully remaking itself) though it still makes mainframes.

Lenovo has done a very good job with the PC. It is innovative and fast on its feet – quite unlike IBM. It is almost impossible to imagine IBM launching the IdeaPad. That product might fail but Lenovo understands that in the tech market you need to keep pushing products out there. They also seem to understand the importance of design, something else IBM never did.

There is a lot of fascinating new stuff at CES. Most will disappear without a trace – Engadget has its own category of Crapgadgets which are as much fun to read about as the good stuff. The truth is it’s too early to say which is which.

This post was written on a Macbook Pro which will surely need replacing before too long.

Written by Ken Nielsen

January 10, 2010 at 11:55 am

Posted in Technology & Telco

Tagged with , ,

28 Responses

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  1. It amazes me that it has taken so long for the market to come up with an e-book reader. Ten years ago I thought such a product was surely only months away. The Kindle appears to be very primitive, so much so that I wouldn’t consider owning one. I guess the reason for the delay is the copyright mess, ensuring great difficulty in having books and magazines published this way.

    A decent reader would be very handy for all written material. I would like to download a lot of stuff from the internet and read it book-like at my leisure on my lounge or on public transport. I hate screen-reading on my computer monitor and printing stuff is extremely expensive on ink.


    January 10, 2010 at 12:17 pm

  2. No, whyisitso, I believe the problem has been technological.
    Amazon has had no trouble getting rights to a large number of books for the Kindle.
    E Ink seems to be the only technology about and it is not great. There needs to be something that handles colour.
    Apple might manage it.

    Ken Nielsen

    January 10, 2010 at 12:24 pm

  3. I’m not sure that the DOS decision was a mistake. After all, IBM maintained market dominance for years afterwards as you say yourself. During this time, they didn’t have to worry about the tricky business of developing operating systems. That had been neatly outsourced to Bill Gates and Microsoft. Nothing wrong with outsourcing, and the partnership worked well for a long time (in IT years).
    However, IBM were shortsighted in other, more damaging ways. They did not recognise the coming supremacy of the PC and continued to invest in mainframes, even as the days of the mainframe became numbered. Pretty much nobody uses mainframes any more. The ones that are still around are legacy systems. That was probably a bigger blunder and the one that cost them their market dominance.

    daddy dave

    January 10, 2010 at 12:29 pm

  4. Nothing wrong with outsourcing, but you should not outsource the guts of your product. IBM realized their mistake and developed OS/2 which many say was better than Windows. By then the game was over.
    I understand IBM still has quite a nice business with mainframes. There are still quite a few applications that need them.
    But you are right – they could not shake off big iron thinking to do PCs properly. It’s amazing then that they could reinvent themselves as a service company.

    Ken Nielsen

    January 10, 2010 at 12:50 pm

  5. Mac has a virtual monopoly on computing equipment for creative professions. This sucks. There’s no competition for maintainence so it costs limbs to get things replaced. I have to buy new stuff this year and I’m seriously looking at Sony which has a similar intuitive interface with a lot of their products.


    January 10, 2010 at 5:36 pm

  6. Adrien, considering that photoshop et al are also available for windows, it is hard to see how Apple has a monopoly on creative professionals So perhaps the dominance in this area is less to do with monopoly as being the right tool for the job.

    I am not sure why tables have not been popular in the past. The mistake seems to be just planting a desktop/laptop OS and giving it a touch interface.

    The only tablet that seems to have taken off is the iphone/ipod touch. Which has a custom GUI and most definitely does not have a desktop GUI, but also is more more limited in what it can do due to power constraints.

    This lenovo hybrid is interesting as a possible solution to the reasons people don’t buy tablets, but uses a custom linux OS, which I suspect will be its achilles heel. And at CES microsoft was still churning out tablet collaborations using desktop GUIs with a touch interface, which if they follow the pattern of the past, will also fail (it seems microsoft’s courier was just vapourware).

    The only options for a new computing paradigm in the foreseeable future seem to be whatever Apple comes up with next or less likely, Google’s android.


    January 10, 2010 at 9:07 pm

  7. E Ink seems to be the only technology about and it is not great. There needs to be something that handles colour.
    Apple might manage it.

    Even Apple is limited by the technologies available from the upstream supplier. The iPod, for example, was only possible because Toshiba developed usable 2.5 inch harddrives. Until then it was impossible.

    Right now, nobody has a commercially viable colour e-ink screen. A spinoff from the “One Laptop Per Child” project is probably closest, however.

    Pretty much nobody uses mainframes any more. The ones that are still around are legacy systems. That was probably a bigger blunder and the one that cost them their market dominance.

    IBM’s mainframe business has been growing by double-digit figures for several years now, including brand-new installations.

    While some of that is legacy upgrades (nobody else does reverse compatibility like IBM), a generous fraction is new business. Mainframes turn out to be very cost-effective platforms for consolidating linux servers through virtualisation. Not to mention extremely reliable.

    OS/2 was actually developed in partnership with Microsoft, at first. Later Microsoft began developing NT in parallel with OS/2, then they dropped OS/2 altogether. The rest is history.

    Jacques Chester

    January 11, 2010 at 12:31 pm

  8. Jaques,

    Will IBM come back given “cloud computing” is meant to be the future?

    “Adrien, considering that photoshop et al are also available for windows, it is hard to see how Apple has a monopoly on creative professionals So perhaps the dominance in this area is less to do with monopoly as being the right tool for the job.”

    Maybe, they just seem to really like them.

    Semi Regular Libertarian

    January 11, 2010 at 12:40 pm

  9. Like Adrien I’m a Mac user (tied also to creative work; I got into the Mac habit when writing/designing and it was too entrenched by the time I started lawyering). The unit cost has come down considerably from the days of yore (hence increased marketshare), but the add-on maintenance plans are decidedly on the steep side.


    January 11, 2010 at 12:52 pm

  10. IBM’s mainframe business has been growing by double-digit figures for several years now, including brand-new installations.
    Huh! Well what do you know. I stand corrected.

    daddy dave

    January 11, 2010 at 1:06 pm

  11. It is interesting to watch Apple and the user attitude to them.
    For quite a long time Mac people were kind of proud of using a machine that only had 5% market share and was also way cooler than wintel gear.
    As Adrien points out, Mac has for a long time high penetration into design and creative markets.
    Now, with iPod and iPhone becoming so dominant Apple is beginning to be treated as too powerful and too arrogant – as IBM and then Microsoft were.
    I love watching the rise and fall of businesses – creative destruction is one of the greatest forcers for good in the modern world.
    Not that Apple is anywhere near death, but it seems Microsoft is on the slide.

    Ken Nielsen

    January 11, 2010 at 1:49 pm

  12. Yea Ken Microtheft really does look like it’s on the slow slide. They seem to be more like a utility these days with all their annoying rules/ conditions…… always looking for ways to take another bite.

    If the next version of software doesn’t work well, they’re petty much toast. Vista was a shocker.

    I’ve seen businesses work themselves to death in order to piss of the end user. Reuters services to the trading/banking community at one stage with it intranet was virtually a monopoly and behaved like one to the extent where they dictated terms and conditions. Their sales people were extremely arrogant.

    Anyways electronic dealing was introducd with tthe banks ganging up and introducing their own system as they were extremely sick of Reuters.

    The rest is history and EBS ( the Bank owned electronic dealing system) became THE currency market’s primary clearing platform.

    Reuters is now a secondary player. They basically screwed themselves to the extent where the customers actively spent money to work against them.

    This ought to be a business school case study.


    January 11, 2010 at 2:01 pm

  13. I haven’t watched Reuters closely. I do remember when the newspaper publishers sold their shares for serious money.

    “I’ve seen businesses work themselves to death in order to piss of the end user. ”

    “We’re not happy till you’re not happy” seems to be the slogan of many businesses.

    Ken Nielsen

    January 11, 2010 at 2:23 pm

  14. It turns out that my remarks about nobody being close to colour e-ink are already out of date.

    Jacques Chester

    January 11, 2010 at 5:20 pm

  15. Will IBM come back given “cloud computing” is meant to be the future?

    Yes and no. You can already get mainframe capacity on demand from IBM. You’ve been able to do that since the 60s. Indeed IBM rebrands and relaunches that service every few years to match whatever is trendy, so expect something with a high altitude water mist theme to appear before too long.

    What IBM don’t do, however, is market to small clients. Access to their mainframe services is pretty much marketed to their large clients. Certainly nothing like AWS, where you can get started with a credit card.

    I believe there’s room in the cloud and VPS hosting markets for a firm building around mainframe infrastructure. But it won’t come from IBM.

    Jacques Chester

    January 11, 2010 at 5:24 pm

  16. Jacques

    What’s the shtick on cloud computing and why is it being talked about as though it’s the second coming? Whats the deal here? Who are the real beneficiaries?


    January 11, 2010 at 5:30 pm

  17. Do you use AWS, Jacques?

    Ken Nielsen

    January 11, 2010 at 6:03 pm

  18. I have an account with them, yes, but nothing currently running there. I’ve got an on-again, off-again dotcom project which I envisage running on their system.

    For my regular hosting I’m using Linode these days.

    Jacques Chester

    January 11, 2010 at 7:55 pm

  19. jc — the shtick is that since nobody agrees on what cloud computing is, everyone gets to make up their own utopian meaning. For me the key components are:

    1) You pay by use, not by calendar months,
    2) You can spin up and shut down virtual servers on demand,
    3) You can do it programmatically as well as manually, and
    4) You can do it with no more than a credit card.

    For me it’s about the infrastructure. But every previous form has been rebranded as “cloud” because it’s So Hot Right Now. For example, what used to be Application Service Providers (ASPs) became Software as a Service (SaaS) which have become Software in the Cloud. There’s a lot of bullshit because it escaped from the technical world, where it might have converged on agreed meaning, into the business world, where the goal is to create as many fluffy yet incompatible meanings as possible.

    Jacques Chester

    January 11, 2010 at 8:00 pm

  20. You know anything about these dudes, Jacques. I rode these guys up on account that they’re into renting out server space and it was a decent ride but I should have hung on.

    (RAX) Rackspace Hosting, Inc.
    (Public, NYSE:RAX)

    Rackspace Hosting, Inc. (Rackspace Hosting), incorporated on March 7, 2000, is engaged in the business of hosting and cloud computing. The Company’s services are sold to businesses in more than 120 countries. The Company sells a suite of hosting and cloud computing offerings, all backed by Fanatical Support.

    I ran these dudes from 13ish to 18 and it still seems to be going higher.

    To be honest I bought them not even hearing about cloud computing at the time but thinking they were on a decent winner selling rented space of servers and that it was the way forward.

    They still look like going higher!!!


    January 11, 2010 at 8:11 pm

  21. Thanks Jacques – I’ve got an AWS account but not sure what to do with it.
    I have found fine for what I need which is a bit of storage and a way to share photos and a few other files around the world.
    Rackspace bought Jungledisk recently which supplies a front end for AWS.

    Ken Nielsen

    January 11, 2010 at 8:20 pm

  22. Rackspace are an “old school” service provider for internet firms, jc. Their original business was running private servers in their own centres. They’ve diversified into VPSes and “cloud” services both internally and through acquisition.

    They could probably do well as a second-tier firm into the future. But without looking at their numbers I couldn’t tell you if it’s truly organic (cashflow-driven) growth or debt-financed gambling.

    If they’re rising sharply, it’ll be due to hype. Remember: at its heart, cloud computing is basically a utility. Metered computing and storage. So while in the short to medium term it may have what looks like exciting growth, it would just be a reshuffling of who the server vendors are selling their kit to. Ultimately the figures will level out and it will look a lot like electricity, water etc.

    Though I am not a financial advisor etc etc.

    Jacques Chester

    January 12, 2010 at 2:26 pm

  23. Ken — for backups I am using, who also use Amazon as their backend. It’s a very cool system, but definitely not aimed at “ordinary” end users.

    Jacques Chester

    January 12, 2010 at 2:28 pm

  24. “For me it’s about the infrastructure.”

    Yes, ultimately you still need physical memory for everything.

    I wonder how many of the marketing types spruiking this and that actually understand this. I reckon some of them think they’re selling a free lunch.


    January 12, 2010 at 2:42 pm

  25. jc, Rackspace have huge industry trust. They’re considered the best at what they do.

    daddy dave

    January 12, 2010 at 2:46 pm

  26. Yes, they’ve got a good reputation.

    Jacques Chester

    January 12, 2010 at 10:26 pm

  27. Does that count for a lot? Reputation in what sense?


    January 12, 2010 at 10:30 pm

  28. jc — as being fairly reliable. For website operators that counts a lot.

    As for Amazon, there’s some mumbling that they’re not properly solving the “noisy neighbour” problem:

    ie someone else’s virtual machine can slow down yours if they’re doing something that’s CPU-heavy.

    This is an example of where a mainframe-based cloud service would shine. IBM have had this solved for decades, rather than a few years, and their support for virtualisation extends down to the hardware.

    Jacques Chester

    January 13, 2010 at 6:39 pm

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