I’ve been personally quite interested in the “digital home” for decades.  Yes, I’m one of those X.10 geeks.  I put Tut Systems IP-over-POTS cards into my equipment in the ’90’s.  I use Sonos.  All of the above and more.

Professionally, I’ve been wondering what’s holding back the Digital Home?  What I mean is: there are multiple networks in lots of homes today — WiFi for data, service-provider cable or FIOS or whatever for Internet access and video, maybe dedicated audio for home theater et. al.  When will this all be tied together?  When will vendors rush to equip homes with servers, converged networks, NAS/SAN, cloud backup, media servers, and every bit of kit you’d think you’d need for a home.  What’s stopping homes from being like SMBs, in a word?

Well, obviously consumers/households think about capital investments differently from SMBs, but not all that differently, if truth be told.  My guess would be that SMBs are being tipped because of the need for a web presence and the lure of ecommerce.

What will drive households is probably video.  Video is increasingly used where text was before: for news, for communciation, for entertainment, for instruction.  And current video plant in the home is ripe for tipping into something that converges networks and systems.

One bet would be that the first generation of connected TVs somehow causes a massive tipping point in the way households consume video, which will necessitate new networks, new network gear, and new kinds of servers.

What do you think?

From talking to a few data center operating execs — tier 1 and otherwise — we get similar numbers: 10% of their business today is cloud business (the rest is colocation and other forms of hosting).

What does this mean?

1. Early days for cloud.  Lots of upside still for cloud providers, both computing and storage.  Good long-term news for our companies Nirvanix, BlueStripe, and Solidfire,
2. Early days for cloud.  Bad news for immediate growth in these marketplaces.  20% is the magic number in many markets for when penetration starts to inflect.  Plausible to believe that’s close to the magic number here.  It could be longer than we would like to get from 10% penetration to 20%.

What are you seeing?  What do you think?

Again, maybe I’m a slow learner, but it dawns on me that service providers — Rackspace, Savvis, Terremark that was, and all kinds of MSPs for the SME/SMB market — are going to be the trusted providers of public cloud services in the near future.

Maybe not this year (it’s fashionable to sneer at public cloud nowadays, which means nothing except that it’s passing through the Trough of Disillusionment).  But in 3 years, or 5 or 7?  You betcha.

And, just like customers today won’t buy storage systems from startups, but buy them from VARs and OEMs today, customers won’t buy public cloud from startups.  They’ll buy it from service providers and MSPs.

Which puts these guys in a similar structural position to storage OEMs: they need to buy startups in order to get R&D, and startups them them to partner with in order to show a great balance sheet and other stigmata of credibility to their customers.

My impression — pretty uneducated, but I’ll look into it shortly — is that service providers are still somewhat green at the partnership/BD/M&A game.  That should change rapidly.

Your thoughts?

Maybe I’m behind the curve here, but it strikes me that we need to start seriously planning for the death of the PC.

Those of us who remember the Larry Ellison/Scott McNealy “network computer” chatter of the ’90’s will wince a bit, but this time it’s for real.

Consider:

1. The network is now ubiquitous enough and reliable enough for an almost-always-connected model to work.  Not perfect, but good enough.
2. New clients (tablets, to be sure, but netbooks and smartphones as well) are gorgeous and compelling, more usable in some ways than desktop PCs and creeping up on laptops.
3. We are beginning to understand how to connect cloud backends with multi-client front ends.  These will get better and better.

All of this is a recipe for multiplicity of clients, and a accelerated drop in share for PC clients.

HP’s move to spin off its PC business, and Dell’s flailing about with new acqusitions and acquisition models are evidence that the top two PC makers are planning for the deatfh of the PC.  Microsoft’s bluster about the robustness of its Windows and Office franchises is typical disruptee talk.

More later on how to invest.

A September 2010 post by Michael Stonebraker was the subject of some back-and-forth in a recent CACM.  Dr. Stonebraker was saying that enterprise customers were skeptical of non-SQL or anti-SQL approaches because, among other things, they lacked ACID coherence and didn’t have a uniform functional query language like SQL.

The discussion was reminisicint of many in the “disuptor/disruptee” wars of technology: noSQL approaches (lumping them together for the moment) are inadequate for the cutting-edge needs (OLTP) of the cutting-edge users (big enterprise customers).  Of course, there are a number of niche applications — processing Web logs, for example, or call data records, or maybe BI applications in general — where the noSQL-based solutions are “good enough”, or, maybe, even better.

The trick for the noSQL vendors — and their investors — is to find out which niches those are and suffice them, quick.

Seven years ago, AOL acquired Advertising.com for some $500M, a nice payday for brothers Scott and John Ferber, who had co-founded the company, named TeknoSurf.com, in 1998.  Valhalla founders backed the company as investing professionals at predecessor firms.

Estimates are that the company, before and after the AOL acquisition, has grossed some $3B in online products and services.  Understandably, the Ferbers (and other investors) felt that we left money on the table by what now seems a “premature” acquisition.

A made-to-order Serial Entrepreneur scenario.  Scott Ferber has taken another turn at bat with TidalTV, a video ad network founded in early 2008, and this summer John Ferber has stepped up as co-founder of Domain Holdings, a “domain-lifecycle management” company.

In both cases Valhalla has invested in its winners.  Why not?  These are brilliant guys with a great business sense and a technology-enabled advantage that should help them win — and win perhaps even bigger than before — in their new ventures.

In an earlier post on “software factories”, I touched on the question of why America’s software engineers were not, by and large, working on projects that would enhance American software competitiveness:

…the finest software minds of the current generation are not interested in solving the American productivity problem, but are interested in profiting from what I elsewhere call flash-fads, huge blockbuster moneymakers that last for the comparative blink of an eye but, like the Pet Rocks of my youth, make lots of money.

This is probably rational behavior on the part of these software engineers.  Sacrificing current income to make the income of the nation greater over time is a bit like voluntarily helping to pay down the national debt by giving extra money to the Treasury: patriotic, maybe, but certainly not a mass choice.  (One of my partners told me this morning that some $81M had been contributed to the Treasury in this fashion, versus a national debt service obligation several orders of magnitude greater.)

But how does the rational behavior of individual software engineers feed the public good?  Our market orientation in the U.S. gives us a touching faith in what we might call “the healing power of greed”, an exaggeration of Adam Smith’s point of about the “invisible hand” into the notion that individuals can do whatever we darn well please and somehow benefit the polity.  In this raw form, it probably ain’t so.

Yes, over time the drive for hundreds of flash fads has in fact made software development more productive.  It is probably an order of magnitude cheaper and quicker to bring an application to market today than 30 years ago, when I got started in the tech business.  But these benefits accrue to everyone, and don’t provide specific advantage for our country.  Which is what we need to remain competitive.

It seems we can’t escape from a policy that targets innovations which are game-changing and then invests in them directly from the public purse or incents the private sector to factor innovation projects in among the Pet Rocks.

Your thoughts?