BriefingsDirect Insights analysts probe future of online advertising and find transactional lucre lurking

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The future of online advertising captures the headlines and attention when the likes of Microsoft courts the likes of Yahoo! And Wall Street still has a hard time figuring out how much Google is worth, based on just those little text ads next to search results.

But the future of online business has a lot more in store than advertising as we know it. The cloud compute fabrics now being constructed can support a lot more finely tuned matching of buyers and sellers, for consumers and businesses alike.

In the latest BriefingsDirect Insights Edition, Vol. 29, our experts examine the future of online advertising, and how the gathering cloud of services hosts like Google, Yahoo, Microsoft and Amazon will fare in the next era. The consensus moves toward an algorithmic meta-data driven future in which the winners will likely be taking a piece of many online transactions. This real-time marketplace can scale up to global mass media, and down to the audience and location of one.

So join us for our latest BriefingsDirect discussion and dissection of software, services, SOA and compute cloud-related news and events, with a panel of IT analysts. In this episode, recorded May 9, 2008, we gather noted IT industry analysts and experts Joe McKendrick, an independent analyst and ZDNet blogger; Tony Baer, principal at OnStrategies and blogger, and Phil Wainewright, independent analyst, director at Procullux Ventures and ZDNet SaaS blogger. This discussion is hosted, produced and moderated by me.

Here are some excerpts:

I really think people have got this completely the wrong way around. To focus on advertising is just so "0.0," to coin a phrase. Advertising exists only because we don't have the Web. Advertising is something the B2B market has to use through magazines, TV shows, or whatever, because they couldn't reach the consumer directly.

Now, the Web enables people to reach potential consumers and business prospects directly, rather than having to go through this advertising. So, the idea that the software industry is going to get funded by advertising has got it completely the wrong way around. Actually, what is going to happen is that business is increasingly going to use software in order to get closer to its consumers and its prospects. It can actually skip having to spend the money on advertising in order to make that connection.

Let me explain how that might work, instead of running adverts on sites that host discussions about bookkeeping services for small companies, for example, or instead of paying for search ads that pop up when people are searching on the Internet for bookkeeping services for small companies. As a small company, if you are using a financial application to run your company and you want some bookkeeping services, a bookkeeping service might pop up as a menu option in the software. You can sign up for and use an outsourced service over the Internet.

Instead of the bookkeeping service actually having to advertise on the search engines, in the publications, the discussion forums, and the social networking sites, they just pay to have their service made available within a software package that relates directly to the service that they are offering.

Therefore, it's not really advertising any more. It's just product placement at a point where the consumer or the business, in this case, actually needs that service.

Now hold on. So, what we were saying is that business activities and consumer activities more and more move online. Not only will we be doing away with the on-premises software business to a significant extent, but we will be doing away with the advertising business to a significant extent. Then, no longer will the entertainment businesses be glossing themselves with adverts to support themselves, but, increasingly, we'll see placement of services in the context of an activity or process, be it for consumer, entertainment, or business, in the same way that we might go to a shopping mall. People pay rent to the mall organizer, which draws people in, to put their wares out on the doorstep in front of the glass pane, in order for people to pick and choose.

So we are moving from an advertising to a placement or even visibility value, and it becomes rent to those who can draw the people in.

I think that there are some indications that the bloom is off the rose of social networking, both as a significant revenue generator, as well as an application development platform, at least for one of the social networks to become a development platform. That's from some recent revenue indicators from Google that its relationship with MySpace has not proven to be as monitizable as they expected.

Some recent statistic show that the types of applications that have been generated on Facebook are very tenuous, very one-off or fun things that would appeal to teenagers, but not with any significant depth or business value. The amount of activity from developers on Facebook has been slacking off, or at least plateauing, which is not a good indicator.

I remember back in the Web 1.0 boom and the dot-com boom, one of the things that was interesting was the discussion sites were very bad at generating ad revenue, because people didn't click on the ads.

The cost per thousand (CPM) for discussion sites, or for the discussion area of a site, was always a lot lower than other types of sites that were more information heavy. So it's old news about kind of sites where people follow what other people are saying.

People start chasing page views without remembering the reason that they are chasing is to generate value for advertises. They think, "We've got lots of page views," but they don't think back to whether those page views are going to deliver value.

Another memo from Ray Ozzie surfaced a couple of weeks back. You may recall the memo back in 2005, the famous "turn the world upside down" memo that talked about the advertising support of the online model for software. He kind of reinforced that with his latest memo.

It wasn't saying, "We must offer software advertising to support software," but it was more of a discussion about the social mesh, the community, the social networking, a paradigm that's emerging.

It's going to be interesting, but I think it's going to leach into the enterprise over the next couple of decades as well. I'm talking years from now, but it's definitely a model that will be sustaining consumer computing. We are seeing that emerging on the social computing side.

You start looking at migration to digital broadcasting. At some point -- I don't know the exact technology mix involved -- combining that with the Internet, there will be some way of micro casting. There may be a large population segment watching a specific program, but you maybe identified in terms of which demographic you specifically are. It's almost sounding 1984-ish.

I think Google actually realizes that and understands that. Therefore what they are aiming to do is get into TV advertising and all these other sectors. These are vendors that enable this kind of personalization of the message, being a conduit between the prospects and the business that's trying to sell to that prospect, and using software automation to enable that.

They are thinking beyond the old model of advertising, and I think that's Microsoft's problem. Microsoft hasn't really understood this, is still thinking about online advertising as a segment, and is not looking beyond the wider opportunity to use the automation on the Web as a way of just bringing buyers and sellers close together.

This requires a tremendous amount of cloud compute to the same levels we have seen in matching search criteria to results and then matching that to advertising. That advertising is then bought through an auction bid process among those seeking the highest placement. So, if we take that same model and apply it to all sorts of different needs and wants of business, personal, entertainment, and luxury across the board, what do we call it? It's not really advertising.

So, we think that advertising is in the rear-view mirror. We're going to move to a new era of something different or better, perhaps subscription as a business model, where you, in a sense, rent digital assets.

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HP partners with Desktone to advance virtualized desktops as a service

Desktone, the desktop as a service (DaaS) provider, has lined up a powerful ally in Hewlett-Packard (HP), which has signed on as the first member of Desktone's partner program for desktop virtualization technology.

Desktone announced HP's involvement at the same time it unveiled its service provider partner program designed to enable service providers in the IT hosting, outsourcing and datacom businesses to offer DaaS to their clients. HP's Flexible Computing Services (FCS) will be the first participant. [Disclosure: HP is a sponsor of BriefingsDirect podcasts.]

HP, along with ClearCube Technology, also provides physical PC Blade Desktops. In this model, individual "client blade" PCs are used to host multiple independent user sessions, each one running on its own physical PC blade. In this case, it's possible to host as many client PC blades as you have rack space, power and data center space to accommodate, according to Wikipedia.

The Desktone partner program is aimed at service providers already in the hosting or outsourcing business and who want to leverage existing data center assets. Desktone said that partners who sign up in 2008 would have direct input into the company's Virtual-D platform product direction.

While many companies can benefit from virtualizing their desktops, building the infrastructure can be expensive, especially for small and medium-sized businesses. Acquiring the technology as a service, and paying for it as an operating expense can put the technology within the reach of many of those businesses.

For those who may be hazy on the concept of desktop virtualization, ZDNet blogger Dan Kusnetzky gave a short primer back in March on what desktop virtualization is and why you should care:

Desktop virtualization is encapsulating and delivering either access to an entire information system environment or the environment itself to a remote device. This device may be based upon an entirely different hardware architecture than that used by the projected desktop environment. It may also be based upon an entirely different operating system as well.

The Virtual-D Platform enables service providers to offer hosted, subscription-based virtual desktops through a single, automated self-service platform. Enterprises can realize the full benefits of centralized virtual desktops without having to build and deploy the infrastructure internally. The Virtual-D Platform comprises two tiers, enterprise and service provider, which lets enterprises maintain ownership and control over their desktops while outsourcing the physical data center infrastructure powering those virtual desktops.

I saw the vast potential of DaaS nearly a year ago, when Desktone announced a big infusion of venture capital. At the time, I wrote:

The ability to deliver a PC operating environment in a way users are accustomed to via grid/utility efficiencies in a way that appeals to the realities of enterprise IT departments and needs may be a seed that has a long way to grow. But compelling economics and the movement generally to services delivery portends a fast-growing new market segment for home, SMB and large business users. Telcos and cable providers will need to provide these kinds of services, for sure.

Desktone is part of a burgeoning ecology of desktop virtualization providers, including Quest's Provision Networks, Citrix, VMware, WebGlobix and Ericom.

Combined HP-EDS can explore missing methodology around how to offload IT to the cloud(s)

HP's now official pending EDS buy for just shy of $14 billion positions the combined companies to organize and manage the hosted/on-premises mix to maximum efficiency and lowest TCO. It's a great goal to shoot for because all they have to do is beat IBM.

With this merger, the IT/business transformation second-source in the global market is a alive and well. There's always this: The better IBM does, the more need there is for an alternative.

HP with EDS has now clearly staked its future on the top prize in IT: next-generation IT operations efficiency, proper outsourcing methods, cloud computing services management, and high-level consulting as the onramp. This amounts to business transformation via IT transformation via IT multi-sourcing.

Both business and IT need to change, but with a hugely complex migration process in store over the next decade. The end goal is a symbiotic and ultimately fully aligned means to business agility, innovation and holistic change management. [Disclosure: HP is a sponsor of my BriefingsDirect podcasts.]

But there's a missing methodology in this migration process, sort like the "missing link" of how IT and business will evolve from lumbering and reactive gatherers into sharp-stick wielding, proactive hunters and inventors. That missing methodology is a tried and true way to determine -- enterprise by enterprise, unit by unit, department by department -- what elements of IT to offload to clouds and what to embed deeply into the core business as strategic assets. This is the bread and butter of HP and IBM for quite some time.

Most companies and IT strategists now recognize that some portion of what they now do for themselves in IT they ought to offload onto someone else -- or at least provide it as a service via some hybrid underlying support means. The cost efficiencies, utilization rates, flexibility, marketplace-driven productivity aspects of cloud computing are simply too wonderful to ignore. We simply should not have standalone email servers every 60 square yards inside of companies. It's foolish. Same with a lot of other applications. SOA can help use and extend those assets better, but we also need to take a look at offloading them all too.

At the same time that we recognize a milestone shift in how software and services are used and matured inside of businesses, the macro environment is driving the impetus for the same transformation. Perhaps more than ever, businesses need to not only to be efficient and seek to reduce recurring costs -- they need to be able to adapt as quickly as possible, and never stop.

The missing link methodology needs to enable companies to adjust to globalization, raw resources/commodities scarcity, dreadful energy costs, transnational labor use patterns, Internet time, social networks, transaction-driven business models, and massive upheavals in e-commerce, media, transportation, compliance, and the usual vagaries of competing against tough competitors springing up from who knows where next.

Companies clearly need to innovate better, and that innovation must use and leverage technology far better than in the past, and at lower total cost over time. Yet IT departments are not designed (if they ever were designed) to innovate at speed or scale. They are designed to carefully support the crystal and china setting upon the legions of racks, and to prevent any bulls from entering the closet -- lest the whole thing crash, and no fingers to point at the cure. There is a huge disconnect between what IT does and what businesses need to do. It's not IT's fault, it's just the way it's all developed over time ... but it's largely a dead-end.

As a result, total business innovation must seek alternatives to just transforming internal IT capabilities and practices alone. Fortunately they seek these alternatives at just the time when those alternatives are increasingly available and viable. Choice on IT and business services off of the wire is entering a fertile and impressive stage. There will be lots to choose from. Choosing right is a big deal for the next decade.

But how to move best on this momentous opportunity? This is the question that HP-EDS can answer as the driver to their businesses growth. Only through deep, consultative partnership can huge enterprises undertake internal IT transformation while making the essential decisions about what to keep inside, and what to seek as the best services alternatives. At the same time, they need to build and adjust continually the business processes that are supported by these services from many sources. And they must position their abilities with multi-source IT with their current and future business requirements and goals.

HP's services units have been diligent about establishing meta methods that allow for both efficiency improvements, and transformation. HP's software and hardware units have been diligent about business technology optimization (BTO) and high-efficiency/high-availability computing. HP's acquisitions have given it an arsenal through which to operate data centers at peak efficiency and top operational integrity.

Adding EDS to the mix to tackle the definition of and implementation of the missing methodologies to take IT functionally to a multi-source level that actually enables businesses at the strategic level seems a very strong fit indeed.

SOA Software acquires respository and governance vendor LogicLibrary

SOA Software, a provider of governance solutions for services-oriented architecture (SOA), has acquired LogicLibrary, a leading SOA repository and governance vendor.

The acquisition of the Pittsburgh, Pa.-based LogicLibrary by Los Angeles-based SOA Software creates a more comprehensive SOA governance and automation solution, said the companies. The goal is to allow companies to accelerate their full adoption of SOA and rapidly deliver services for distributed and mainframe environments.

The merger underscores not only the SOA vendor consolidation trend (ongoing), but also highlights the market driver of more end-to-end governance and management aspects of SOA deployments. HP and TIBCO also had recent announcements that point up a wide and more automated approach to SOA governance/management.

We're increasingly seeing the means to relate the design time aspects of SOA with the runtime, or operational, aspects. This will no doubt be a big topic at the upcoming IBM Rational Developers Conference.

What's more, I expect to see more of this "total management" approach to SOA coming from the open source SOA infrastructure providers, too. The juxtaposition of SOA and cloud computing and wider use of server virtualization will also drive the need for better total management.

LogicLibrary's technology will extend its integration capabilities across both governed development platforms and governed service platforms. LogicLibrary provides a set of features with reporting and analytics capability focused on SOA development governance. Its products include an enterprise repository providing broad support and governance for development assets/services, along with deep integration and federation with IDEs and application-development point solutions.

The prevalence of services, both internal and external, in enterprise applications now requires companies to have an enterprise-wide SOA governance solution to ensure the integrity of their policies, the companies said. According to Alan Himler, chief executive officer and chairman of LogicLibrary:

“The combination of SOA Software’s governance products, with LogicLibrary’s strategy to provide federation with other leading repositories, creates a single solution that provides unparalleled lifecycle and policy governance across all major platforms.”

A year and a half ago, I blogged about the consolidation trend in SOA governance, and I raised the question of who would be next? While I listed the candidates in what I said was no particular order, SOA Software and LogicLibrary were in the top two spots.

So who’s next in the buy-or-be-bought sweepstakes? Likely candidates (in no particular order) include SOA Software, LogicLibrary, Progress, IBM, Novell, IONA, Red Hat/JBoss, HP, Cape Clear, Mind Reef, Rogue Wave, Cisco, Sybase, TIBCO, BMC, Borland, AmberPoint, Software AG, Composite Software, CA, Above All, Adobe, Oracle, SAP, Sun Microsystems, among others.

There are still some names here that may need dance partners. Fortunately, the music has not stopped yet.

Software AG's Mik0 Matsumura has some more thoughts.

Service Oriented Enterprise also reports on the merger.

Profits-strapped Sun continues decade-long pitch to developers on Java dominance

Leading up the the JavaOne developers conference, Sun Microsystems posted an embarrassing quarterly profit loss, is making OpenSolaris more open than ever, bringing the OpenSolaris platform value to the Amazon Web Services cloud, and is still using variations on the projectile theme to send T-shirts into the international crowd of eager Java developers.

Here in San Francisco on Tuesday, the 12th annual JavaOne developers conference opened, still drawing throngs of the Java devoted. It's clear from the gathering that Java tools, standards, middleware, runtime instances and distributed computing methods still dominate the non-Microsoft enterprise IT landscape.

Even as many other innovations over the past decade have encroached on and often out-delivered on the "write once, run anywhere" mantra, Java has done great things for the ability to develop and deploy complex, mission critical applications that leverage assets and resources across multiple tiers of computing. The n-tier computing model based on standards of interoperability is alive and well.

Java continues to play a binding role among hundreds of the most impactful IT vendors and their products -- from IBM to Oracle to SAP to developer consultancies of one busy person. Yet the arenas in which Java, now an open source reference model stack, dominates has is limits. Java's role in the future growth areas of Internet and mobile computing may well be as a foundational but necessary pivotal component.

The growing arenas of SOA, Web 2.0, cloud computing, webby applications design/delivery, OSGi container flexibility, PHP, Ruby on Rails, Adobe and Silverlight RIA/cross-browser development/deployment -- all are moving beyond the Java orbit.

At the same time, Sun has aligned itself to Java so much it recently changed its stock ticker to JAVA. Sun certainly helped create the Java community and value -- with a lot of help -- but then also alienated many Java contributors and market drivers as Sun sought to dominate Java and to mashup Java's success onto Sun.

So far, some 13 years in, Java remains consistently more successful than Sun.

And there was plenty more evidence at this year's show of the always-interesting relationship between Sun and Java. Sun's Executive Vice President for Software Rich Green, in his keynote, said that the Amazon's Kindle device is powered by Java, even the store that the content is bought from, uses Java. And we were given a demo of Kindle's prowess by Ian Freed, vice president of Kindle at Amazon.

Interesting to note that neither the device, nor the cloud services supporting the Kindle's content sales and syndication, comes from Sun as a business. But the software was developed on Java. So, Java=1.0, Sun=0.1.

Rikko Sakaguchi, senior vice president of Sony Ericsson, showed some neat mobile handset devices running cool video and media. Java's role is core to the handset and content and applications. Java helps make the software run on the device, and encourages partners to develop content and apps. "Java powers the device," said Green. But again Java and Sony Ericsson=1.0, Sun=0.1.

We were also showed a demo of a Facebook widget, Connected Life, that at first crashed, perhaps due to Moscone Center's Internet connectivity. But then it came back up. The widget was written in JavaFX, a Sun scripting language and runtime. The demo showed that the widget can run in a browser or as a rich Internet application using Java runtime, but that crashed too. And the widget can run on mobile devices too.

JavaFX also allows for video to run, 2D and 3D. There was some nice eye candy, but nothing you can't get with Adobe AIR/Open Screen, Silverlight, or QuickTime, among other RIA approaches.

So Java still helps "write once, run anywhere." Facebook and widget writers with Java=1.0, Sun=0.4 (if it sells the tools and licenses the Java runtime, and perhaps sells some servers to Facebook).

JavaFX Mobile will be forthcoming (spring 2009)to allow one runtime across the mobile and desktop tiers (fall 2008), said Green. A demo showed a mobile device running the Android emulator running Connected Life. Showing that JavaFX-written applications runs in many places, including mobile phones supporting Java.

Sun took some heat last year when it introduced JavaFX, but the "create-once, present anywhere" value is clearly a priority for Sun, as well as for Adobe, Microsoft and others. Sun will try and leverage the Java runtime installed base to be a player in this market, but it will be a real tussle given the competition

Glassfish kernal container at 98 kB will also support a wide swath of device types, said Green. He said Glassfish downloads are robust and global. Recent MySQL addition to Sun is getting 65,000 downloads per day, said Green.

NetBeans ecosystem is growing year over year by 44 percent, based on active users, said Green. And Java ships in the prominent Linux distributions, including Ubuntu and Red Hat, he said.

Sun's Project Hydrazine offers a platform for mashable services in the cloud, for "find, merge, deploy and share," said Green. It's due in later 2009. Another project, Project Insight, involves managing actions of users and data for ad placement.

Sounds like Sun is building an ad delivery platform, or at least to manage the meta data that supports ad placements. So Sun is competing with Google, Microsoft, and Yahoo! on ad infrastructure?

Sun CEO and President Jonathan Schwartz said battle is brewing for development platform for next generations of devices. "No matter where they are, Java will reach them," said Schwartz.

He likes the idea that apps running in a browser can be dragged off of the browser by the end user and onto the desktop of devicetop, thanks to Java on the device.

"And it will all be free," said Schwartz. So again, Java=1.0, Sun=0.x.

Neil Young joined the Sun executives on stage. Neil likes Blue-ray, and plans to deliver a multimedia anthology content offering via Blu-ray from his illustrious and prolific 45-year career.

"Just recently we've been able to bring this forward, ... it's really quite an experience," said Young, referring to using Blu-ray and Java, over past technologies, including DVDs.

And Java runs on Blu-ray devices! So Java+Neil Young=1.0, Sun=0.x.

Sun continues to try and define x as a major means to drive its future growth and profits. Let's hope that the past is not prologue on that account.

JustSystems boosts acceptance of XBRL with donation of intellectual property rights

JustSystems said Monday that it is contributing its intellectual property rights for its invention of extensible business reporting language (XBRL) to XBRL International, the standards body responsible for overseeing the language's specification.

JustSystems is making the move as part of its campaign to help organizations adopt XBRL, the XML -based standard for communicating business and financial information. The company made the announcement at XBRL International Conference in Eindhoven, Netherlands.

Under the terms of this contribution, JustSystems will not assert patent rights to the XBRL formatting linkbase, although the company will maintain invention rights. The developer community will be able to freely apply intellectual property and all documentation.

The XBRL formatting linkbase provides a standards-based method for defining how XBRL data — which is complex and largely unreadable by people — is rendered to documents, web pages, wireless devices and other applications. By mapping data elements to specific formatting conventions, the formatting linkbase helps organizations to ensure the consistent display of XBRL data across multiple output formats and delivery channels.

Jake Sorofman, senior vice president of marketing and business development for JustSystems, said in a press release:

“Now that XBRL has matured and regulators such as the U.S. SEC are gearing up for a mandate, organizations must take aggressive action to understand the implications and applications of XBRL within their domain. With XBRL momentum building, our campaign is designed to help organizations jumpstart their XBRL initiatives and stay ahead of the curve.”

I recently produced a podcast with Sorofman, in which we discussed the importance and future of structured documents and authoring tools. You can listen to the podcast here, and read the transcript here. [Disclosure: JustSystems is a sponsor of BriefingDirect podcasts.]

Genuitec marks progress with two milestone releases of MyEclipse 6.5 products

Genuitec, the MyEclipse IDE vendor, has marked development progress with two interim releases. The Flower Mound, Tex., firm has announced availability of the initial milestone releases of MyEclipse Enterprise Workbench 6.5 and MyEclipse 6.5 Blue Edition, a tool suite for WebSphere developers.

The Enterprise Workbench release includes an upgrade of MyEclipse Spring tools, which provides integration of the latest Spring framework 2.5 libraries. Also in the release are:

• JAX-WS 2.1 Web services
• Support for JSR-168 portlets
• Improved JSF and Facelet visual page design and coding features
• New web.xml editor; and
• Updated ICEFaces JSF component support.

The M1 release of the Blue Edition offers project migration support from IBM Rational Application Developer and WebSphere Application Developer into MyEclipse.

With the new release, developers can configure, launch, and manage multiple WebSphere profiles simultaneously from within the IDE, allowing the developers to develop, deploy, and debug enterprise Java applications to any number of customized WebSphere profiles.

In another announcement, Genuitec has released the Pulse 2.1, which allows users to manage and configure Eclipse-based products. Among the product enhancements in this release are:

• Desktop Express, which allows ISVs to deliver software to their customers
• Enhancements to Pulse Freelance, which allows users to add and share plug-ins to customize their catalog and share workspace settings.

Last February, I did a podcast with Maher Masri, president of Genuitec on his companies Eclipse-based tools and the migration path to WebSphere. You can read the transcript here. [Disclosure: Genuitec is a sponsor of BriefingsDirect podcasts.]

Last January, I wrote about the Pulse product and its implications for the development and deployment market:

I also expect that Genuitec will move aggressively into “development and deployment as a service” offerings in 2008. There’s no reason why a Pulse set of services could not evolve into a general platform for myriad developer resources and increasingly tools/IDEs as a service. Indeed, Genuitec is finding wider acceptance by developers of developing and deploying in the cloud concepts and benefits.

The milestone release of Workbench 6.5 is currently available from the MyEclipse site for a free trial. The milestone release of Blue Edition is available for a free trial from the Blue Edition site. The subscription price is $149, and those with current subscriptions will receive all upgrades and support at no additional cost. The general release of both products is scheduled for June of this year.

What MicroNoHoo means for enterprises

Now that Yahoo gets to remain a stand-alone company for a few more months, you may think that a battle royale between Microsoft and Google over the online advertising and social networking/communications services future has little bearing on enterprises. But you'd be wrong.

Here are seven reasons why:

• As we discussed Saturday on an emergency Gillmor Gang, this cloud wars business is largely about audience size, reach, and details on consumer needs/preferences. This audience intelligence value can be sold to advertisers, but also to enterprises, retailers and marketers as they seek to deliver their brands, goods and services more efficiently to users/buyers everywhere, every digital way. The cloud compute-based, automated, bid-auction-driven, buyer-seller matchmaker powerhouses will be necessary partners for most enterprises. In other words, you will be doing business with the top one or two cloud leaders.

• Nearly all enterprises and SMBs will continue to have large Microsoft product footprints in their organizations for at least several years. You want such a critical supplier to remain focused and fiscally healthy and to invest in current and future products -- or you have a Microsoft extraction problem. If Microsoft goes tits-up online, it will be a weaker company and therefore a weaker supplier. If Microsoft needs to spend lavishly on labor, acquisitions, technology and marketing to get to number one or number two online, it will be distracted from its business-focused businesses. In other words, enterprises spending on Microsoft now subsidize Microsoft's future needs to go cloud-strong, and perhaps enterprise software soft. You'll need to pay Microsoft on premises now so that you can pay Microsoft online later.

• As a hedge on the future, Microsoft is creating online strategy sets that can satisfy consumer online markets while also bringing purely online and "software plus services" hybrid services to SMBs and enterprises. How well these services compete with other offerings from other cloud-based services providers will determine how well these services perform for you as a company. In other words, your future in leveraging Microsoft's path from on-premises software provider to services provider hinges on how well Microsoft does online, which depends on audience and advertising/services (see no. 1). It will at some point behoove Microsoft to push you to its online business services, probably by making on-premises stuff expensive. But you will have more choice over your online suppliers than your did on your PC and department server supplier.

• An emboldened and stronger Google, resulting from a hobbled Yahoo and a runner-up Microsoft, means that more partners and applications will emerge around the Google ecology. We'll see more deals with Google from Salesforce.com, IBM, Apple, mobile handset providers, mobile Internet device makers, and probably the major media companies (lacking a choice). This just makes Google stronger, more diversified, able to spend $1 billion per quarter on capital investments, able to woo the best engineers, and a darling of online start-ups and entrepreneurial developers and content creators. This means Google is not only a channel for enterprises to reach consumers, it increasingly becomes the provider or channel for more and more business services to more types of businesses in more global locations.

• Microsoft is becoming more open. In order to catch up to Google and other ad-driven cloud compute-based providers, probably without Yahoo's audience clout, Microsoft will need to become even more open on standards. That's good news for enterprises. Microsoft is loosening up its strangle-hold on enterprises through its self-imposed standards. More importantly, Microsoft is giving its developers more choice. This is a slippery slope, because at some point Microsoft gets so open that the stickiness and lock-ins lessen so that the Windows runtime (and associated license sales) can be swapped out for open source or virtualized runtimes. Developers can pick and choose what Microsoft stuff they want to use, and then seek cheaper alternatives. To seduce developers and start-ups from Google, Microsoft must continue to get open in more ways, aiding the open source evolution and maturity, and giving enterprise more choices and lower total IT costs.

• Requirements on the PC change and shift. As Google and Yahoo drag Microsoft into a more pure-Web-play, and seek to offer attractive online alternatives to "software plus services," enterprises can re-evaluate their hardware spend and requirements on the desktop. Apple will also offer compelling alternatives for the full Windows PC experience. So enterprises, already resisting the hardware upgrade costs and help desk hit from moving to Vista, may benefit from Microsoft's need to "go Webby" because their hardware requirements will amount to supporting a browser mostly, at least for some users like call centers. This also opens up the market for use of more thin clients, as well as more use of desktop-as-a-service and virtualized app delivery services. Dumb terminals are not dumb if you need to pay for them and support them. By backing off of client-server, Microsoft will cut your PC device total costs. And no more audit threats!

• Microsoft's stock performance in the cloud era will depend less on its business revenues and more on how well it competes against Google, Yahoo et al. In the post Yahoo acquisition saga (volume 1), Microsoft may well see its value as a corporation decrease, even as recessionary pressures build against growth rates for its consumer and business product lines. Microsoft could have fewer resources to devote to its enterprise businesses (see above). At the same time, IBM, Oracle, Red Hat, and HP are firing well on their enterprise business cylinders, and they may see Microsoft blood in the enterprise sales waters. As an enterprise buyer, ask now and for the foreseeable for discounts and better terms from those enterprise vendors that compete directly with Microsoft. Microsoft's sales reps may not be able to respond like they used to. Microsoft's enterprise competitors will seek to take some oxygen from the field in the next several quarters. This is good news for enterprises, and SMBs.

So there are a number of reasons for enterprises and IT departments to be aware of and concerned about what goes on between Microsoft and Yahoo, and -- most importantly -- Microsoft and Google.