Saturday, 24 March 2012

OnLive vs. Citrix: Understanding Consumerization

Since I last wrote on this there have been a few changes. It recently became apparent that Microsoft and OnLive weren’t on the same page with respect to Office and Windows offered from the cloud. Licensing can be a bitch, and I met with Citrix, which provided a compelling demonstration of why it is on 9 million desktops.

However, since the target market for a cloud-based desktop service is estimated to be closer to 3 billion, I think Citrix, like most enterprise vendors, doesn't yet get what consumerization means. I also think I know why OnLive, or another technology vendor like it, could become more of a threat.

Let’s explore this a bit.

The PC Jr. Example

The PC Jr. was IBM’s attempt to ride the last consumerization wave. That came in the 1980s when employees and line managers were driving in PCs to replace terminals. IBM saw the threat and created the PC Company to address it. At the start of the battle, IBM was the strongest company in the technology space, Microsoft was a tiny software startup, Apple was a little company selling computers to hobbyists, and Dell didn’t even exist and wouldn’t for around a decade.

IBM had one shot to iPod the market and that was with a product called the PC Jr. This was an amazing product that used a lower-cost monitor (a TV), could be upgraded with easily attached components and had wireless peripherals. It sold for a fraction of what PCs were selling for at the time and, had it taken off, it is doubtful that any of the existing players (except Microsoft, which was tied to it) would have been able to compete with it. It simply had too great a cost/price advantage.

However, IBM was afraid the product would eclipse its PS/2 premium offerings so it crippled the PC Jr. and instead of producing an iPod, it produced a Zune. Eventually, instead of dominating this new PC segment, it had to exit it and it no longer makes what many still think of as the IBM PC. It is made by a Chinese company named Lenovo, which is currently growing faster than any other PC company.

Consumerization and Confirmation Bias

We all see the world through our own set of colored glasses. There are two theories that currently surround this concept of twisted perceptions: argumentative theory, which puts winning an argument in front of being right, and confirmation bias, or selectively viewing the world in a way so that you don’t appear wrong. They are deadly during times of change because power players will argue against the coming change and blind themselves to it. There is a reasonable chance that one or the other will likely result in our death at some point either due to our not seeing a problem until too late or a doctor making a similar mistake.

It was clear in the meeting with Citrix (and it took me back to a similar meeting with Sun a decade earlier) that the firm fully understood that the market was moving to consumerization and the cloud, but just as clear was that it didn’t understand that this move wasn’t to its benefit — at least not the way it is now — anymore than Sun’s anticipation of a similar move was going to end well for it.

At the core of consumerization is the idea of bringing your own device. This is technology that is brought into the company by the consumer. Now how a company like Citrix could argue that it was on this wave given that no consumer can, knowingly, use Citrix, goes to the core of confirmation bias. Even while arguing consumerization, Citrix executives can’t see that the core component is the user as the primary customer even though he or she likely uses iPhones and iPads — both key examples of this trend, and both with no focus on where Citrix is most focused: on IT.

In short, the firm feels it is preeminent, but it is similar to what Microsoft Mobile was against the iPhone. Remember Microsoft had corporate and it had the leading position on standalone phone operating systems prior to Apple and Google entering the segment. Now they are all but gone and the company had far more resources than Citrix does.


What makes OnLive compelling is that it is focused like a laser on consumers and its offering includes a complete redesign of blade servers to address their requirements. It is attempting to do with servers what Apple did with smartphones, and while it isn't at the same scale yet, it does have powerful backers and at any point Apple, Google, LenovoDell or Microsoft could see what the company represents and their fortunes could change significantly. Currently, OnLive is in heavy negotiations with Microsoft, but it isn’t unusual for Microsoft to suddenly see that OnLive represents as much of an opportunity as a threat and to change its approach with the stroke of a pen.

Wrapping Up

OnLive needs to resolve its licensing problem with Microsoft, but it could solve some of the issues by entering with Microsoft embedded rather than full Windows and likely license the components it wants from Office. Or, alternatively, it could go to Corel and use its very similar and highly compatible office suite. However, Apple and Google represent the bigger threat to Citrix because these two firms are the poster children for consumerization and should one or the other buy OnLive or execute a similar strategy, or if Microsoft recognizes the threat and bypasses Citrix, that company is done.

Like a lot of battles, you don’t get to pick and choose your favorite battlefield. The consumerization battle is being decided with the consumer and Microsoft’s Windows Mobile effort showcased that an IT focus was an inadequate weapon. If you don’t have a winning consumer-facing offering, you aren’t in this fight, period.

SOURCE: Rob Enderle at ITBusinessEdge.

1 comment:

  1. On Bonus Bitcoin Faucet you can earn free satoshis. Up to 5,000 satoshis every 15 minutes.