Focal Points: 

• According to the Pew Internet & American Life Project 65% of the respondents believe that most people will have fully adopted the "mobile wallet" as their day-to-day means of paying by 2020.
• The audience of this study was over from over 1,000 respondents.
• Current applications that enable electronic transactions are Google Wallet and Square. 
• Another indication of the growing trend is in a report from comScore where 38% of smartphone owners used their smartphones to make purchases.
• An earlier Pew study noted that one-third of smartphone owners had used their phone to do some sort of banking (such as checking their balances or paying bills) and that nearly half (46%) had paid for an app with their phone.

Editor’s Note: While Experton Group agrees that the trend is in this direction, there is a lot that must be done to ensure that electronic transactions from handheld devices are not compromised. This is a multi-sided challenge as the solution must take legal, regulatory and practical aspects into consideration.

It is expected that a financial and technical consortium needs to be created to address the challenges and opportunities created by this trend. This will not occur overnight.

IT executives should be wary of early adoption.

Focal Points:

• It is interesting to note that although there are still serious security issues, like Dropbox’s security breach last year, there are still a proliferation of storage offerings like SugarSynch, Microsoft’s SkyDrive and LogMeIn’s Cubby.
• While storage is pretty much a commoditized service there are some differences between services - like free storage capacity. Dropbox offers up to 2GB, Sugarsynch 5GB and Microsoft’s SkyDrive 25GB, but they will “sell” you more as needed.
• One great feature of Dropbox and SugarSynch is ubiquitous storage. In this case, storage placed on the cloud will be synched with all of your other devices that are running Dropbox like mobile phone, laptop, etc.
• Not all of the services mentioned offer synchronized storage the same way. Microsoft requires that you purchase another product LiveMesh, but plans on combining the functionality with SkyDrive later this year.

Editor’s Note: It is suggested that IT executives look closely at the historical development of the storage cloud offerings as they may serve as blueprints for how other services will develop. Experton Group expects that the other services will develop faster.

No matter how quickly the general public and/or the enterprise wants/demands new cloud services, it is cautioned that there is overhead in development - gestation of any product/service can only be reduced so far before quality is compromised.

Focal Points:

• IBM released its first quarter 2012 financial results. The company stated it had total revenues of $24.7 billion, which was flat from the same period a year ago. Net income on a GAAP basis was $3.1 billion, up nine percent from the previous year's quarter of $2.9 billion. Although revenues were flat overall, IBM saw a 10 percent growth in the BRIC (Brazil, Russia, India and China) countries and a five percent gain in software revenues. Within the Software Group, the WebSphere family of products was a standout with a 16 percent jump in revenues. Within the Systems and Technology segment the System z revenues fell 25 percent from last year's quarter and the retail store systems revenues shrank 13 percent. The company's services revenues were flat while systems revenues shrank seven percent. However, IBM noted that its business analytics revenues leapt 14 percent, cloud revenues doubled, and its Smarter Planet initiative grew more than 25 percent year-over-year. 
• A unit of Toshiba Corp., Toshiba TEC, acquired IBM's Retail Store Point of Sale (POS) solutions business for an estimated $850 million. The new unit would be the largest provider of POS systems and equipment. According to the Nikkei, IBM holds the top slot in the global POS terminal market with a 22 percent share while the Toshiba subsidiary only has a seven percent share. In fiscal 2011 IBM's retail store business generated $1.15 billion in revenues while all of Toshiba TEC's businesses produced approximately $2.27 billion over its fiscal 2011 period. The headquarters for the new holding company will be in Research Triangle Park, NC. The unit will become an IBM Premier Business Partner for Smarter Commerce and will continue to use IBM software solutions. Initially Toshiba TEC will acquire an 80.1 percent stake in the holding company and in order to promote a smoother transition, IBM will hold a 19.9 percent stake. Eventually the holding company will become a wholly owned subsidiary of Toshiba TEC. IBM will continue to provide maintenance service for all products covered under the agreement and clients will still place service calls in the same way they do today. Over time maintenance specialists are expected to join the new company.
• IBM launched a new family of "expert integrated" computer systems. According to IBM the systems are designed from the ground up with three objectives in mind. They have built in expertise to address complex business and operational tasks automatically, are integrated by design to tune systems for optimal performance and efficiency, and offer a simplified experience from design to purchase to maintenance. The IBM PureFlex System is designed to be expert at sensing and anticipating resource needs to optimize infrastructure. It is factory integrated with a newly designed integrated management console to maximize automation and optimization. The IBM PureApplication System is designed to be expert at optimally deploying and running applications for rapid time to value. Each system comes pre-configured and pre-integrated with one or more chassis, Power System or System x compute nodes, Storwize V7000 storage nodes, an optional management appliance, networking and expansion slots for PCIe storage. All systems are cloud ready and support Red Hat Inc. KVM, Microsoft Corp. Hyper-V, PowerVM and VMware Inc. hypervisors and AIX, IBM i, and Microsoft Windows operating systems as well as Linux from Red Hat and SUSE. A single system can hold up to 896 cores, 43 TB of memory, 480 TB of storage, 26 million I/O operations per second, per rack and can scale up to four racks. IBM claims the PureFlex system can handle 54 percent more virtual machines per compute node, has half the latency of top of rack configurations, and can be deployed with four clicks. The PureApplication system is built upon the PureFlex infrastructure and incorporates a number of application patterns of expertise that enables applications to be deployed 20-30 times faster and reduces change and security management by more than 50 percent, according to IBM. More than 150 patterns of expertise have been developed and optimized for the PureSystems by more than 125 of the world's leading independent software vendors (ISVs). The "scale in" integrated provisioning and virtualization reduces cost and management time by 50 percent. The system requires zero downtime for maintenance and upgrades and can be managed from a single pane of glass. IBM claims a new system can be up and running within four hours. IBM is so convinced of the capabilities of its new systems family that it is offering onsite installation support, a 10 day onsite service engagement, use of the PureApplication system for 30 days, a lab advocate for advice, and a single point of IBM maintenance and support.

Experton Group believes IBM remains on target with its five year plan and its moves into expert systems and out of POS systems should help the company achieve its goals. Although IBM had 22 percent of the POS market, its growth rate and margins – as well as the overall market size – does not fit the mold IBM is looking for. Whereas the addition of the PureSystems family gives IBM a differentiated set of integrated hardware and software offerings that should enable the company to gain market share without sacrificing margins. If the systems perform as advertised, enterprises will find them to be the answers to some of their business and data center needs and therefore will readily adopt them. IT executives should evaluate the PureSystems solutions to see if they perform as claimed, meet business and operational requirements, and offer the best alternative for certain of their target environments. If enterprises intend to incorporate the PureSystems standardized expert environments into their target environments, then IT executives will also need to alter their development and operations culture so that development conforms to the platforms delivered by operations rather than dictating them.

Focal Points:

• Microsoft is providing details about its forthcoming Windows 8 operating system, slated for release in October 2012. According to a posting on the company's blog, Windows 8 will come in four versions; three will be targeted at PCs running x86 and 64-bit architectures and one for tablets running ARM's reference design.  The mainstream version is aimed at home users and is called simply Windows 8. Windows 8 Pro and Windows 8 Enterprise include corporate features including encryption, domain connectivity, PC management, and virtualization. Windows 8 RT will be pre-installed on Windows tablets and feature touch-optimized versions of the new Microsoft Word, Excel, OneNote, and PowerPoint. New memory management capabilities will allow memory used in Metro-style apps to be suspended for repurposing to other applications while allowing the suspended apps to quickly reclaim memory when moved back to the foreground.
• Rumors began swirling this week when a Microsoft evangelist stated that the current install base of Windows Phone 7.5 devices would be provided with an upgrade path to Windows Phone 8, codenamed Apollo. Unnamed trusted sources within the company have stated through backchannels that this information is inaccurate; however, official company channels will only confirm that all Windows 7 apps will work on the future release. In related news, four European telecom providers are said to be unhappy with Nokia's Lumia line of Windows 7.5 smartphones, saying that they are overpriced and lack the marketing investment to make headway against Google Inc.'s Android and Apple's iPhone. Lumia smartphones have been on sale in Europe since December, but one telecom executive in charge of mobile devices says "no one comes into the store and asks for a Windows phone." The executive added that the same hardware running Android "would be much easier to sell." Nokia has been having a tough time in recent years, and while it remains the world's leading smartphone purveyor, market share has shrunk from a high of 40 percent in 2008 to 29 percent this quarter. The company warned that first quarter financials would be negative and miss expectations as device sales plummeted to 83 million compared with 108 million in the same period last year. At 12 million units, smartphone sales are half of what they used to be.
• A second Java exploit in so many weeks targeted at Apple Mac OS users has made itself known. Now that Apple has patched the Java hole last week which was exploited by the Flashback Trojan to infect over 600,000 users, and a new backdoor known as SabPub has been identified. SabPub spreads itself via a malformed Microsoft Work document referencing Tibet and uses the backdoor malware to execute commands, steal information, install additional code, and take screenshots of an infected computer. Though only recently discovered, the new threat dates back February and is not addressed by the last week's Apple Java patch. Apple and security experts suggest users check for infections by looking for "com.apple.PubSabAgent.pfile" and "com.apple.PubSabAGent.plist," and keep their systems up-to-date with patches to ward off future threats.

Experton Group believes Microsoft's streamlining of the versions available for its new client operating system eases the purchasing process. As the Enterprise version of Windows 8 will be sold only to large customers and governments, the functional line between Windows 8 and Windows 8 Pro parallels that of home and corporate user types. User interface changes in Windows 8 will require some getting used to, particularly the new Metro-style live tiles incorporated on all versions, but the end result remains a distinct bifurcation between desktop and tablet implementations. While that difference is akin to the disparity between Apple Mac OS X and iOS, Microsoft's endeavors to tout the uniformity of Windows 8 across device platforms remains more bark than bite. IT executives will find that upgrading to Windows 8 requires users and administrators to update their skills to fully acquaint themselves with new features and functionality. Experton Group believes that Windows 8 is not an enterprise imperative on the PC given the platform's cost in training and potential support procedure changes. While nowhere near as tightly defined as Apple's control over iPhone hardware, Microsoft is far better at controlling the components used in its smartphones than Google. That said, it seems unlikely more than a minority of Windows 7 smartphones will have get a Windows 8 upgrade as doing so would not prove sufficiently profitable or match with past performance. Nokia's monetary troubles are, at the very least, just getting started. The company continues to struggle with its move towards a Windows base and Microsoft is not backing up the effort with sufficient marketing support or "must have" features. The downward slide for Nokia will continue at least until 2013 when the success of Windows 8 will either make or break the company. IT executives should not count on Nokia or Microsoft returning to their former glories. Experiences of the past month demonstrate the need for IT executives to adopt security policies that encompass the Apple Mac platform. The continued consumerization of IT will not slow down any time soon and fanatics of iPad and iPhone bases are forcing enterprises to support a wider swath of Apple hardware offerings. Network, server, and device-side firewalls and antivirus software should be employed across all connected products, and IT executives should further invest in virtualization and Web-based solutions to help minimize risks.

Focal Points:

• MindSumo – is a place for organizations to crowdsource innovative solutions to their internal challenges and connect with potential recruits. Companies post challenges for our community of bright university students to solve. Students propose solutions, boost their experience, and win cash prizes. 
• AgeTak – integrates disparate sources of healthcare information. Anonymized and aggregated data can be used by analysts, researchers, physicians and pharmaceutical companies for research and analysis.
• Zoku - lets you combine your email and social networking contacts, then pick out people and actions that you want to keep track of. It uses algorithms to filter for what you care about, then shows you the signals – people who are visiting town, changing jobs, or doing anything else relevant to what you might need to get done — in a dashboard on its site.
• Vi Energy - Vi Energy is developing a new kind of rechargeable battery that promises to be three times cheaper and last 50% longer than anything on the market today.
• Breakthrough - This online mental health treatment startup uses secure video and chat features to help people connect with professionals to get the help they need privately and immediately. Clients can search for providers (including psychiatrists, psychologists and nurses) on a variety of criteria, including price, specialty (i.e. depression, schizophrenia, post traumatic stress disorder), and gender. 

Editor’s Note – so who says that innovation is dead in the U.S.? It is encouraging to see the variety and inventiveness of the students in our universities. Granted this is a special program, but nevertheless it is impressive.

Note that many of the applications make use of the internet and social media.

Focal Points:

• Apple's legendary and often touted virus-free nature abruptly terminated this week as the first major successful attack on the Mac platform made its successful rounds. The Flashback Trojan, estimated to be running on approximately 600,000 Mac computers, exploits an unpatched portion of Java code to download a malicious executable from a remote server. Once loaded, infected systems become part of a botnet. Oracle Corp. had released a patch for the exploit in February but Apple had not yet patched the code as it is generally under less pressure given the Mac's comparatively small user base. Approximately 50 percent of the affected systems are located in the U.S. and 98 percent of those are running a version of Mac OS X, according to reports.  A fix is now available from Apple in an OS X software update available in Software Update under System Preferences called Java for OS X 2012-001.
• HP executive chairman Ray Lane recently stated that he believed the majority of the company's future innovations were going to come from outside sources. In her endeavor to ensure future innovations are also produced internally, CEO Meg Whitman promised the company would recommit and increase research and development. Whichever path or combination of paths comes to pass, the company will be doing so without Prith Banerjee, the senior vice president who has been running HP R&D for the last five years. He is replaced on an interim basis by 25-year HP veteran and senior fellow Chandrakant Patel, who has been running sustainability research. Elsewhere, RIM announced that two more of its senior executives were leaving their posts. Alan Brenner, senior vice president of the BlackBerry platform, will stay on during a transition period. The company also confirmed that vice-president for the BlackBerry messaging service, Alistair Mitchell, had already departed. On a positive note for the company, BlackBerry sales within the U.S. government are rising from the 400,000 sold last year and that 40 percent of RIM's government customers upgraded in the last 12 months.
• New mobile research shows new theoretical attack vectors that could be used for stealing data from smartphones and tablets. Security firm Cryptography Research recently demonstrated a theoretical attack that showed how encrypted data could be deciphered during sensitive transactions, including virtual private network sessions and online purchases. The threat requires an attacker to be nearby with access to eavesdropping devices. In another demonstration, Intel Corp.'s McAfee division demonstrated ways in which Apple's iOS devices could be compromised. The security firm was able to remotely activate microphones on test devices and steal data stored on the device including call histories, e-mail, and text messages.

Experton Group believes Apple's reliance on security through obscurity is an adage that no longer holds true as its devices continue to gain widespread popularity. By its own admission, Apple is not an enterprise-centric vendor despite significant advances fueled by the popularity of its iPhones and iPads. IT executives should expect Apple-focused attacks to become mainstream within the next 24 months and will need to adopt a multi-faceted security schema that incorporates antivirus software, firewalls, virtualization, and heavy doses of rule-based policy monitoring and enforcement. Unfortunately, problems are likely to get worse before they get better, as enterprise measures must be met with increased attention from Apple. Experton Group believes HP's renewed attention towards research and development is paramount to the company regaining a glory of innovation that has somewhat slipped over the past five years. HP Labs accounts for approximately 2.5 percent of sales revenue and has had few gains that have become market leaders.

Vendors across the board are increasingly relying on entrepreneurial acquisitions to boost market leadership, and IT executives should view HP's ability to quickly turn those acquisitions into integrated product sets as representative of the company's improving strength. As for RIM, not much more can be said about the company's continued decline. While it does need to clean house of the old guard to reinvigorate product and direction, the huge gains already made by competitors make an independent revival to its former position a near impossibility without being acquired by a major player. Lastly, IT executives should understand that smartphone and tablet vendors are not security experts nor do they take the care in planning and execution to ensure the privacy afforded by BlackBerries a near decade ago. IT executives should invest in redundant security architectures controlled under central management umbrellas wherever mobile access exists, but should understand that real threats remain just around the corner.

Focal Points:

• Dell announced it has acquired Clerity, a leading provider of applications modernization and re-hosting solutions and services. Dell claims the addition of Clerity's capabilities will enable Dell Services to help customers reduce the cost of transitioning business-critical applications and data from legacy computing systems and onto more modern architectures, including the cloud. The privately-held Chicago-based software firm was founded in 1994 and employees approximately 70 people that will join the Dell Services team. The terms of the transaction were not disclosed. Back in 2006 Clerity bought the UniKix mainframe rehosting business from Sun Microsystems. The UniKix rehosting environment mimics IBM Corp.'s mainframe's COBOL application environment, CICS transaction monitor, Job Control Language (JCL) for managing batch jobs on mainframes, and 3270 Pathways, which emulates the green-screen protocol mainframes use to communicate with the outside world. Clerity states it has more than 1,300 sites worldwide using its migration and rehosting tools. 
• Dell's second acquisition in a week was the purchase of Make Technologies, whose tools are aimed at modernizing mainframe and midrange applications. Make Technologies was founded in 1999 in Vancouver, British Columbia, and is privately held. Terms of the deal were not disclosed. Similar to the Clerity acquisition, Make Technologies and its 100 employees will be rolled into Dell Services under Steve Shuckenbrock instead of into Dell Software under John Swainson. The Make Technologies acquisition gives Dell a tool that can examine the structure of mainframe and midrange applications, generally written in COBOL or RPG. The tool also works on applications written in Natural, PL1, PowerBuilder, VisualBasic, and other languages. Other features of the Make software enable it to see how applications are interconnected, are actually used in production, and then generate new application code in modern programming languages that can run on the same or different platforms. Usually the conversion is from COBOL to Java and from CICS to a services-oriented architecture n-tier application. Over the past five years revenues have grown in the triple digits annually. Dell can also use the tool to develop new code based on the tool's modeler package. The Canadian application modernization company currently has IBM and Oracle Corp. as business partners.
• In March Dell purchased SonicWALL, a privately held provider of data security measures for businesses. The purchase price was undisclosed but according to the New York Times, Dell paid about $1.25 billion, including the assumption of SonicWALL's debt. The new acquisition gives Dell a provider of high-grade networking security services, which include next generation network firewalls, e-mail protection, backup and recovery, and policy, management and reporting offerings. SonicWALL was founded in 1991, is headquartered in San Jose, CA, holds more than 130 patents, and has more than 300,000 customers in 50 countries. Dell's acquisition of Wyse Technology was covered in last week's snapshot.

Experton Group believes Dell is aggressively pursuing its transformation into a full-service commercial IT products and services provider and should make the transition successfully. Dell recognized that its personal PC business would not continue to provide it with the growth required once Apple Inc. started to dominate the market with its smartphone and tablet products and services. Dell also saw it was not making headway in the smartphone business and needed to refocus on the enterprise businesses, where its margins are better. Management realized the success it was having with its Data Center Solutions unit, which had grown to be a $1 billion business and is the largest provider of densely-optimized servers. Now with its expansion into services, software and storage Dell can compete head-to-head as a full-service provider against its primary hardware and services competitors. Dell, like IBM and Oracle, has a clearly defined strategy that differentiates the company in the market and can play well to its strength. As long as executive management keeps an eye on the ball, Dell should be able to compete effectively, maintain a strong market position, demonstrate decent margins, and keep a loyal customer base. IT executives that view Dell as a strategic partner should meet with Dell executives to understand the strategy and roadmap to ensure that Dell's direction and timing is compatible with corporate goals and requirements. In companies where Dell is not a strategic partner but a supplier, IT executives should continue to keep Dell on the short list to help ensure the company is getting the best deals possible from its full-service competitors.  

Focal Points:

• Enterprise Application Integration & Integration Platform as a Service – there is movement on many fronts to simplify application integration not only from one vendor, but many. Standardization of cloud application interfaces at a higher level than APIs will help promote cloud usage. It is generally recognized that in order for “new-comers” to introduce and gain acceptance of their applications, they need to interface with generally accepted social media tools like Facebook, Twitter, etc.
• B2C will Drive B2B Agility – it is clear that the consumer market is driving a lot of what is being developed and used in the corporate market. In other words, the consumer is driving the cloud market.
• Data as a Service – as more and more information from multiple sources becomes available, there are manufacturers and service providers that have recognized the need for data management, which includes filtering, curation, etc. See iFlow.com.
• Master Data Management – building on data as a service, the management of data and integration with existing enterprise data will develop significantly in the near term.
• Data Governance/Security – as more consumer data becomes more prevalent and service providers offer management and integration services, the protection of private information becomes even more paramount
• Business Process Modeling & Activity Monitoring – as the capabilities of the cloud mature and enterprises take advantage of cloud-sourcing, sophisticated tasks like process modeling and business activity monitoring will move into the cloud.
• Cloud Service Brokerage – it makes sense that while multiple cloud services become available and cloud service integration platforms develop, that there will be a need for knowledgeable service providers to offer brokerage and service integration services.

Editor’s Note: A lot of what is presented above is based on traditional business development. If we were to go one step further, it is expected that there will be a lot (more) of service merger and acquisition – new leaders will emerge that will offer a wide range of cloud services and threaten traditional service providers like Amazon, SalesForce, etc.

IT Executives should make sure that they keep abreast of market developments before making significant investments and commitments.

Focal Points:

• Box, which now has over 10 million users with more than 200 million files accessed via Box each month, is a cloud storage platform for the enterprise that comes with collaboration, social and mobile functionality.
• OneCloud provides a suite of more than 30 productivity applications, allowing businesses to access, edit, and share content from their mobile devices.
• Box, which started out as a storage platform, has evolved into a multi-platform collaborative platform that not only offers its own applications, but enables the user to interact with Salesforce, Google Apps, Netsuite, Yammer and others.
• As co-founder and CEO Aaron Levie explains to us, Box OneCloud is the culmination of several years of work. “We’re taking the idea that we are in the post-PC world and seeing how that fits in with Box,” he explains. And by the Post-PC era, he refers to the movement in the enterprise towards mobile platforms.
• Box OneCloud is representative of a new wave of service offerings that include both an end-user application as well as a rich set of APIs that promote mobile development using their platform.

Editor’s Note: It is clear that the face of application development and delivery has changed. Experton Group believes that this definitive direction towards mobile delivery will force all traditional application manufacturers to provide sleek mobile interfaces. Without those, competition will win out.

IT executives should keep abreast of the latest developments and in many cases should develop strategic partnerships with the most promising manufacturers that are aligned with the enterprise’s roadmap.

Focal Points: 

• The United States, China, Japan, the European Union and Russia are all investing millions of dollars in supercomputer research. In February, the EU announced it was doubling investment in research to €1.2 billion ($1.6 billion).
• Today, the fastest computer is held by is Japan's K computer developed by RIKEN and Fujitsu, according to TOP500 -- a project that tracks trends in high-performance computing. The machine, installed at the RIKEN Advanced Institute for Computational Science, in Kobe, Japan, currently operates at over 10 petaFLOPS.
• The current projections suggest that power consumption of exascale computers will be 100 megawatts.
• These new computers could enable discovery in many areas of science, including aerospace, engineering, astrophysics, biology, climate modeling, national security and social sciences.

Editor’s Note: While it is projected that this type of computer will require a lot of space, (football field), and megawatts of power, this seems to be based on the current limitations of today’s technology. Experton Group suggests that the opposite could also be just as true, i.e. smaller footprints and reduction of power consumption. In any case it may not matter as the trend towards cloud computing may place these challenges in the hands of service providers and not consumers.