The Bloor Perspective: XP upgrades, Palm versus Xerox, and the ASP graveyard

This week Robin Bloor and his team serve up their views on upgrading to Windows XP, Palm's handwriting test, and what ASPs learnt last year.

Most commentators are agreed that the latest release of the Microsoft Windows operating systems doesn't offer much. However, the natural product support cycle does indicate that we will all upgrade to XP faster than, perhaps, we would have guessed. The big issue for most businesses is going to be Microsoft ceasing support for Windows 95 in 2002 - quickly followed in 2004 by dropping support for Windows 2000. No matter how comfortable organisations feel with the existing operating system, this lack of formal support will go against the operational policy of the majority of IT departments and corporate policy will demand they upgrade. This process of regular new versions is a deliberate ploy to stop us all from hanging on to our working systems and to force us into upgrades to less stable environments. The subscription-based licensing is designed to enable us all to make that problem go away - at a price - and XP is just the first step in this new cycle. The likelihood is that many businesses will take the opportunity to declare many of their systems to be at the end of their lives and just buy in brand new, beefier PCs that will already have XP loaded. At this stage, those that are committed to the cause would probably be wise to take a good look at the Microsoft licensing policy and take a decision on whether to just accept the multiple upgrades we are told will arrive in 2003 and 2005 or to go through the same cycle again in a few years. On the other hand, there is an opportunity for the Linux boys here. There is going to be a significant amount of upgrade activity in the next few months and Microsoft Windows is not the only tool in the box. (It is certainly not the sharpest.) Wouldn't it be interesting if businesses found an easy way to replace their office systems with a non-Microsoft alternative? It's the only way that this leopard will ever change its
spots. Xerox to Palm: "Heh, you copied us!" The once mighty Palm Inc, following a traumatic year, has just lost a patent infringement case in the US courts that could cost it millions of dollars. Back in 1997 Xerox Corp earned a patent covering its handwriting recognition software, Unistroke, which allowed users to write characters with just a single stroke of the stylus - essentially the same feature that the Graffiti software brings to Palm devices. Shortly after the granting of the patent Xerox filed a suit against Palm arguing that Palm's handwriting recognition software, Graffiti, infringed the Unistroke patent. Ever since 1997 the case has been bouncing around the legal system until recently when the US District Court ruled that Xerox's patent was "valid and enforceable". Palm immediately responded by stating that it will appeal against the decision. However, if the appeal should fail Palm could potentially be facing a payout of millions of dollars at a time when economic pressures are giving all IT suppliers a very bad time. Palm now finds itself in a very awkward position. It needs to carry on the fight against Xerox at a time when it is under severe pressure. Its financial results have not been particularly good over the last year and the company has already laid off hundreds of workers. At the same time, PocketPC devices will continue to be aggressively marketed by the likes of Compaq and HP. Further pressure will come from the next generation of mobile phones that will begin to offer more and more of the functionality traditionally found in Palm's devices. It is clear that Palm is facing a very tough new year. What does not kill us makes us stronger? ASPs in 2001 The reasons why many ASPs have not enjoyed the success that was predicted are varied but there are a few factors that they have in common. The first concerns the very nature of ASP provision namely that it is an entirely new business model in the IT world. As with any new area it is quite common for many companies to attempt to enter the market and for just a few to succeed. Now however, this successful few face an even tougher task - how to restore trust in the market. Creating trust in a comparatively untested market is notoriously difficult and quite often requires the suppliers involved to spend a lot of time preaching to the masses to get the basic business message across. However, there are some other steps that would greatly help the ASP community to create confidence. The first would be for the service providers to create meaningful, simple service level agreements that everyone can understand covering the basics of availability, expected end user application response times, service administration and call handling. Getting the basics right always helps. Another would be the creation of an independent standards body capable of verifying ASPs satisfy fundamental principles covering infrastructure, support capabilities and service provision, highlighting suppliers that did not measure up. There is still a valid business requirement for ASP services and indeed for many managed services. It is up to the suppliers to show they can deliver more than adequate service levels at an affordable price. Independent validation of service providers would be a big step forward for the industry as a whole but will it happen? Bloor Research is a leading independent analyst organisation in Europe. You
can find out more at www.bloor-research.com or by emailing mail@bloor-research.com .