A Software Insider's Point of View

News Analysis: Adobe Firefly - A Generative AI Offering For Creators

rwang0 — Tue, 21 Mar 2023 13:06:00 +0000

News Analysis: Adobe Firefly - A Generative AI Offering For Creators rwang0 Tue, 03/21/2023 - 06:06

Adobe Delivers Generative AI With Adobe Firefly

At Adobe Summit on March 21, 2023, Adobe announced and delivered its generative AI offering known as Adobe Firefly. Adobe Firefly (in Beta), is a collection of generative AI models built for creative applications. The offering joins the platform’s AI services. The first Firefly model will focus on image generation and text effects, trained on the hundreds of millions of Adobe stock images, openly licensed content, and public domain content where copyright has expired. Adobe plans to integrate Firefly into their Creative Cloud, Document Cloud, and Adobe Express product lines.

While Firefly is intended to be made up of multiple models, the first model is trained on Adobe Stock images openly licensed content and public domain content, where copyright has expired, and is designed to generate images safe for commercial use. Future models will target additional use cases and content types, potentially leveraging other technology and training data.

Adobe feels, this approach to training differentiates Firefly models from other stable diffusion models where rights, copyrights, and ethical boundaries of an artist’s individual style have come into question. Adobe has also announced new Sensei GenAI services that will continue to expand across Adobe Experience Cloud, deploying multiple LLMs including the Microsoft Azure OpenAI and FLAN-T5 models.

A CRTV Interview With Adobe's Ely Greenfield on Adobe Firefly

Adobe's Takes A Comprehensive Approach To Empowering Creators

What sets Adobe Firefly apart from other offerings is the integration into content workflows such as image creation and text effects. The goal - deliver generative AI capabilities wherever content is created and modified. Moreover, the focus on safe for commercial use ensures that Firefly won't generate content based on other individual's or brand's IP. This eliminates potential legal issues down the road.

In addition, Adobe's Content Authenticity Initiative (CAI)'s provenance technology creates transparency for digital content via Content Credentials. Creators can use Content Credentials to attach important information to a piece of content using meta data to include their name, date, and what tools were used to create it. That information travels with the content wherever it goes so that by the time people see it, they can experience content and context together. They can also add tags to ensure "Do Not Train" as well.

On the monetization front, Adobe intends to take a compensation-forward approach with Adobe Stock contributors. Creators who contribute content for training will benefit from the revenue Firefly generates once Firefly is out of beta. Creators may be able to license and monetize their own style and design in the future.

Advancements In Generative AI Have Rapidly Improved

While generative AI has been around for some time, ChatGPT has captured the hearts and minds of the general population in highlighting tangible possibilities of what AI can accomplish both in the consumer and enterprise world. In fact, Generative AI has the ability to create chat responses, designs, and other new content including deep fakes and synthetic data. Neural network techniques such as generative adversarial networks (GANs), variational auto encoders (VAEs), and transformers work together to create original content based on prompts.

On the languages side, GPTs or what’s known as a generative pre-trained transformer, generate conversational text using deep learning. The pre-training capability allows the AI to take the model from one machine learning task to train another model. These models are then pre-trained on large corpus of text. Transformers, a type of neural network, maps the relationships among all the data sources such as text and sentence patterns.

For images, diffusion models allow images to be created from text prompts. Using random noise applied to a set of training images, the diffusion models allow one to remove noise and create a desired image. Common approaches include DALL-E also from OpenAI, Dreambooth by Google, , Imagen, Lensa, Midjourney, and Stable Diffusion.

The more organizations interact with these AI systems, the quicker the AI systems will improve their rate of learning.

The Bottom Line: Expect Exponential Improvements In AI Driven Creativity And Productivity

Generative AI will improve content velocity and improve the ability to power content supply chains with improved collaboration in the delivery of precise, high quality content. Creators can easily expand their capabilities from one medium to another while making variations to their work. Moreover, the establishment of creator marketplaces for monetization will augment creativity not automate it.

Your POV

Ready for the new world of creativity and AI? What's your experience to date with generative AI?

Add your comments to the blog or reach me via email: R (at) ConstellationR (dot) com or R (at) SoftwareInsider (dot) org. Please let us know if you need help with your strategy efforts. Here’s how we can assist:

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Disclosures

Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy,stay tuned for the full client list on the Constellation Research website. * Not responsible for any factual errors or omissions. However, happy to correct any errors upon email receipt.

Constellation Research recommends that readers consult a stock professional for their investment guidance. Investors should understand the potential conflicts of interest analysts might face. Constellation does not underwrite or own the securities of the companies the analysts cover. Analysts themselves sometimes own stocks in the companies they cover—either directly or indirectly, such as through employee stock-purchase pools in which they and their colleagues participate. As a general matter, investors should not rely solely on an analyst’s recommendation when deciding whether to buy, hold, or sell a stock. Instead, they should also do their own research—such as reading the prospectus for new companies or for public companies, the quarterly and annual reports filed with the SEC—to confirm whether a particular investment is appropriate for them in light of their individual financial circumstances.

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News Analysis: The Run On Silicon Valley Bank

rwang0 — Fri, 10 Mar 2023 05:05:16 +0000

News Analysis: The Run On Silicon Valley Bank rwang0 Thu, 03/09/2023 - 21:05

Will there be a run on Silicon Valley Bank?

The run on Silicon Valley Bank is real. VCs have told founders to take their cash out. This could be more than a one day thing. SVB was forced to sell the assets to cover deposit withdrawals. The latest memo from Peter Thiel at Founders Fund has set off a chain reaction among other VC’s who have also warned their startups to do the same. Gary Tan also sent of a note to all the Y Combinator portfolio today. Many VC's have sent or will send warning letters to their portfolio companies.

MyPOV: bummer for @sxsw startups #sxsw

what really happened with @SVB_Financial catch the @BBCWorld interview with @BBCJoao pic.twitter.com/L3SMXkqFjm
— R “Ray” Wang 王瑞光 R.NFT #1A #Sxsw (@rwang0) March 11, 2023

By Friday, March 10th, the markets will be able to asses how much damage has been done. Several startups have mentioned issues with logging in to their accounts, even with the correct login and password. Account access appears to be frozen. Many companies tried to get to the branches before 3pm pacifc on Thursday March 9th and were unable to move their money out.

Poor Forecasts On Interest Rates And An IPO Drought Led To This Scenario

These banks are the casualties of the hike in interest rates and a poor IPO market. 2022 was the worst record for IPOs, with a total of 151. For context, 2021 saw 1035 IPO's. Basically SVB bet on the fact that interest rates would be coming down. They bet wrong. At SVB, unrealized losses had been piling up throughout last year and were visible to anyone reading its financial reports.

More troubling, in February, the FDIC reported that U.S. banks faced over $620 billion in unrealized losses on available-for-sale and held-to-maturity securities. Just one year ago, that number was $8 billion.

The Bottom Line: Trust In Institutions Continue To Fall

Interest rates are the root cause of the problem. The Federal Reserve appears to be the culprit with its ideological interest rate tightening. Many folks expect the run on the bank to continue and potential acquirers could include JP Morgan Chase.

Industry observers worry that this could be the beginning of a bank bankruptcy scenario starting with Silicon Valley Bank and moving onto other banks facing unrealized losses on available-for-sale and held-to-maturity securities. The IPO drought has left many banks without the means to cover losses.

Could this be the next banking crisis?

Your POV

Will you pull your money out of SVB? Do you worry your startup may be caught in this crisis of confidence? Will unrealized losses on available-for-sale and held-to-maturity securities be the catalyst for the next financial crisis?

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News Analysis: Microsoft's Bing with ChatGPT versus Google Bard AI

rwang0 — Wed, 08 Feb 2023 15:13:15 +0000

News Analysis: Microsoft's Bing with ChatGPT versus Google Bard AI rwang0 Wed, 02/08/2023 - 07:13

The $450 Billion Ad Tech Market Is About To Be Shaken Up By AI

When Google was officially launched in 1998 by Larry Page and Sergey Brin, it was the 21st search engine to enter the market. In 2022 Google generated over $200 billion in revenue off of search advertising and other digital advertising. MIcrosoft launched the Bing search engine in 2009, built from the assets of Live Search which was released in 2006. By all accounts, Microsoft Bing was the laggard among Google and Yahoo in the space. Round 1 of the search engine wars was won by Google which has dominate for almost two decades.

Microsoft - Open AI Alliance Challenges Google Ad Dominance

The recent announcements on Tuesday, February 7th by Microsoft that the new Bing engine would use technology with a more powerful large language model than the one that underpins ChatGPT. Microsoft's model would add massive data sets of online data for user queries and prompts.

Google countered with Bard AI, an experimental conversational AI service that would do the same and be released soon. Feburary 7th, 2023 will be recognized as the day conversational AI disrupted traditional search advertising.

Round 2 in the battle will be remembered when large language models, NLP, and conversational AI changed the game. Will MIcrosoft finally come in first for technology in this decade? What will Apple do with its large data sets?

ChatGPT vs Google Bard AI (What We Know For Now)

So what started all this was the launch of ChatGPT on November 30, 2022. Chat GPT is an AI language model that communicates with users in a conversational manner. The AI and large language model (LLM) summarizes text, translate languages, answers questions using a technology called Natural Language Processing or NLP

Google Bard AI is like Chat GPT, but it’s build on Google’s Language Model for Dialogue Application (LaMDA). Google Bard AI can access the entire Internet, ChatGPT can’t yet, but the new Microsoft Bing Search is expected to. Today, ChatGPT is limited to the data it’s trained on. So it’s good with stuff before 2021. When available, Google Bard AI will be fresh and current by pulling vast data troves from the web.

From preliminary insights from engineers at Google and Microsoft, Google’s tech will use less computer power so it could handle more users and consume less energy than ChatGPT. However, Chat GPT is available now and being trained, Google Bard Is coming soon.

The Bottom Line: AI Is An Exponential Game Changer

How we access information on a search bar has fundamentally changed. Expect AI to suggest ideas, explain complex concepts, write code, prepare speeches, and translate languages. At Davos this year, every third presentation began with "ChatGPT wrote this speech". With 100 million users in less than 10 days, this is just the power of LLM's, AI, NLP and text.

On the computer vision side, other cool tech like stable diffusion, Midjourney, and DALL-E2 will do to images and computer vision what conversational AI is doing to text. AI is an exponential game changer in the enterprise and how humans interface technology is about to be changed right in front of one's eyes.

Disclaimer: this post was written by an actual human

Your POV

Ready for conversational AI and large language models to change how you interface with data and search? Who will win Round 2 - Google or Microsoft? What are your views on AI ethics?

Developing your metaverse and digital business strategy
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Disclosures

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Monday's Musings: Tech Layoffs, Is Silicon Valley Losing Its Influence?

rwang0 — Mon, 06 Feb 2023 20:54:46 +0000

Monday's Musings: Tech Layoffs, Is Silicon Valley Losing Its Influence? rwang0 Mon, 02/06/2023 - 12:54

Market Conditions In California Working Against Silicon Valley Big Tech

Pundits and industry watchers continue to forecast a demise in Silicon Valley and the tech companies in the region. While the valley's influence may be slowly diminishing, there's still a significant hub and concentration of talent unlike any other region in the world. For those who can still afford to live here, access to top talent, capital, weather, and industry expertise remains parallel to none.

Yet, five factors play a role in the long-term decline of Silicon Valley:

Punishing tax environment. The CA state income tax is as high as 12.3%. Sales tax is 7.25%, but in many counties it’s almost close to 9%, Meanwhile, corporate tax earned in state is 8.84%. Despite record inflows, the state is running a $22.8 billion deficit with a plethora of poor spending priorities.
Housing unaffordability. Despite tons of "Stalinist" type central planning ripping local control away from cities, these top down policies have led to more expensive housing and less abundant affordable housing. In fact, housing is more regulated and more expensive to build. For example, an "affordable" housing unit for most cities will cost between $850k to $1 million a 1200 square foot unit. Homelessness remains a huge issue despite all the housing bills passed..
Anti-capitalistic, social policies. The unfriendly social policies go further than most. Woke ideology, teacher unions wreaking havoc on schools, support for illegal immigration, lax policy on drugs, encouragement of homelessness, and a belief that capitalism is evil works against the entrepreneurial spirit.
Lack of public safety and increasing crime. Weak DA's, defunding the police, and lax enforcement for property rights has led violent crime to increase 6%, aggravated assault to move up 8.9%. Property crime is up 16.9% including home break-ins, catalytic converter thefts, shoplifting, and car break-ins.
Population and corporation flight. Over 249,000 people left in 2021. Since 2020 173,173 have left and since 2018 524,494 have fled the Golden State. California's tax base shrunk to $24.6 billion between 2010 and 2018. In fact 352 major companies have moved their HQ since 2018.

Recent Layoffs Are An Opportunity To Cull The Herd, Not A Sign Of Weakness

After massive hiring over the past three years, tech leaders have ramped back hiring and started cuts. Many companies hired lower quality talent at higher wages. Tech companies have traditionally stack ranked employees and reduced the work force from 3 to 7% every year. Consequently, despite the large number of layoffs, the net increase in jobs from 2019 to 2021 remains above 20%. Every company is using this opportunity to let go of low performers, rebalance allocation of talent, and reduce fixed costs.

The tech market has had over 1400 rounds of layoffs with 220,000 jobs cut in 2022. As of 2023, over 75,000 job positions have been cut to date. The result has been improved rebound in the stock prices. Despite these cuts, there remains a huge demand for tech talent. Most IT services vendors can not hire enough new talent and still face massive attrition in the 20 to 30 percent range.

The good news - despite losing their positions, many workers who have been let go have been able to find a new position in less than 60 to 90 days. A good number are creating the next wave of innovation as they build their own startups.

Those Producers and Creators Who Can, Have Left

Many billionaires have already left the Silicon Valley including Elon Musk, Jack Dorsey, Charles Schwab, Sergei Bryn, Larry Page, Safra Catz, Reed Hoffman, Scott McNealy, and others. The ones that have to work here have stayed like Mark Zuckerberg and Sundar Pachai.

The big out flux is to Austin, South Florida, Denver, Seattle, Raleigh-Durham, Las Vegas,Dallas-Ft Worth, Space Coast-Orlando,, Atlanta, and Indianapolis. Vala Afshar and I recently interviewed Rebecca Fannin for her book Silicon Heartland detailing the growth and manufacturing renaissance. Expect more regions to gain tech talent as housing affordability and quality of life create new tech centers.

To add insult to injury, the state of California is trying to tax folks from leaving, including those who have left. Starting in January 2024, Progressive democrats such as Assemblyman Alex Lee, hope to impose unconstitutional taxes on those who leave and many who left. He's proposing an extra annual 1.5% tax on those with a “worldwide net worth” above $1 billion, starting as early as January 2024. In 2026, the tax would impact hose exceeding $50 million in net worth. the threshold for being taxed would drop: Those with a worldwide while billionaires would still be taxed 1.5%.

These progressive democrats have continued a pattern of destructive tax and housing policies leading to Silicon Valley's decline.. A reread of Ayn Rand's Atlas Shrugged would be a good refresher for those in power. Fortunately,on the federal front, Congressman David Schweikert of Azrizona is proposing a prohibition of an exit tax at the federal level.

The Bottom Line: Opportunity Zones Will More Evenly Distribute Tech Talent

As folks flee Silicon Valley, many seek to defer taxes on previous year end gains and avoid paying federal taxes on capital gains after 10 years for stock, real estate, and sales of business. Created by the 2017 Tax Cuts and Jobs Act, Opportunity Zones (OZs) provide tax benefits to investors who invest eligible capital into these communities. This combination of flight from California and OZ's will serve as the catalyst in creating mini tech hubs throughout the United States.

Your POV

Were you impacted by the recent job cuts? Do you plan to leave the valley? Where do you see the next set of tech hubs? Are you investing in an OZ?

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Monday's Musings: Q1 Earnings Benefit From The Great Big Tech Reset

rwang0 — Tue, 31 Jan 2023 07:55:05 +0000

Monday's Musings: Q1 Earnings Benefit From The Great Big Tech Reset rwang0 Mon, 01/30/2023 - 23:55

Big Tech and Market Reset Bring Optimism To Markets

While many in the market are still psyching others into a recession, the fears are subsiding and the NASDAQ appears to be where the optimists are. Five factors have led to the mini rebound in this market of lowered expectations as watchers await the fed rate decision.:

Slowing growth warnings set expectations to the street
Culling the herd is needed to meet financial projections
Tech talent still in demand despite the headline job cuts
Critical infrastructure in cybersecurity, cloud, analytics, automation, and AI outperform
Digital giants still rule the world with new asset classes created.

These factors have led to the NASDAQ up almost 9% as of this post.

Slowing growth warnings.

Every CFO has decided to warn the street and reset expectations. Valuations have been cut since Fall of 2022. Recently, Microsoft talked about slowing cloud growth, IBM shared insight into a slowing in services revenue. SAP talked about shifts in spending to core and sustainability in Europe. Tesla forcasted lower numbers than 50% growth and put in a price cut.

Culling the herd.

The tech market has had over 1400 rounds of layoffs with 220,000 jobs cut in 2022. As of 2023, over 57,000 job positions have been cut to date. After minimal job cuts amidst a labor shortage, tech companies failed to cut their bottom 5% since 2019. The companies have often hired lower quality talent at higher wages. Leaders are taking this time to rebalance their workforce and reduce low performers. If one's keeping score, Microsoft cut 10,000, IBM cut 3900, SAP cut 2800, Amazon Cut 18,00, Meta announced 11,000.

Despite these cuts, there remains a huge demand for tech talent. Consulting and services drove IBM's growth in the past quarter. Most IT services vendors can not hire enough new talent and still face massive attrition in the 20 to 30 percent range. Many workers who have been let go have been able to find a new position in less than 60 to 90 days.

Critical infrastructure outperforms.

From Constellation's Q4 2022 Business Confidence Survey, digital leaders continue to increase investments in analytics, automation, AI, and cloud. Few folks are reducing investment in cyber security. ServiceNow's performance in the latest quarter showed how these factors come together for outperformance. In fact, SevrviceNow outperformed the Rule of 40 and achieved the Rule of 58%. CEO Bill McDermott also vowed not to fire anyone in 2023.

Digital giants still rule the world.

The MATANA class of stocks (Microsoft, Apple, Tesla, Alphabet, Nvidia, Amazon) and other digital giants are still doing well due to strong fundamentals. These enterprise win because they:

have large networks
disintermediate markets
compete on data
apply multiple digital monetization models
operate with a long term mind set

The Bottom Line: Watch For An Emerging Asset Class In Data Driven Digital Networks

A new asset class will emerge from data driven digital networks or the DDDN's as featured in Everybody Wants To Rule The World. These networks of 100s of millions and even billions of connected people, devices, and their data will create a new asset class exponentially bigger than existing big tech categories. The signals on pricing, supplier availability, demand, consumer preferences, regulatory impact, and risk will create new business models in every industry. The organizations can bring the content, distribution network, technology platform, and multi-sided markets will dominate the next decade and beyond.

Your POV

Where will you put your money in 2023? Do you see big tech and digital giants coming back? How do you see the Q1 earnings season playing out for the economy?

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Disclosures

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Event Report: Metaverse As A Force For Good, Sustainability

rwang0 — Sun, 15 Jan 2023 20:54:17 +0000

Event Report: Metaverse As A Force For Good, Sustainability rwang0 Sun, 01/15/2023 - 12:54

Gain Pragmatic Advice For What's Next In Web3 and the Metaverse Economy

Much hype has been made about the metaverse. However, very few organizations have fully grasped the impact the metaverse will have on experiences, engagement, and even sustainability across the enterprise. From improving inclusion practices, to integrating climate-aware virtual environments and expanding access to opportunities; The metaverse will bring the world closer together. Learn how enterprises and brands bring their stakeholders together, customers, employees, partners, and suppliers around major use cases and contemplated approaches. Subsequently, we will understand why the physical presence and 3D digital presences will emerge as an unifying force for good.

The Wipro hosted panel will bring insights on the future of interfaces, what use cases will gain traction, what standards are needed to move forward, where the metaverse will play a role in sustainability, and how organizations can get started.

Join the esteemed panel moderated by R "Ray" Wang, Chairman of Constellation Research, Inc. with:

Sandy Carter, SVP of Unstoppable Domains
Dirk Lueth, Co-Founder & Co-CEO Upland and Chairman of OMA3 (Open Metaverse Alliance for Web3)
Srini Pallia, CEO for Americas 1 of Wipro
Mike Sutcliff, CEO and coFounder of Mobeus
John Waldron, SVP and Chief Commercial Officer of Honeywell

LOGISTICS

DATE: Tuesday, 17th of January, 2023

TIME: 5:30 PM TO 7:00 PM CET

LOCATION: Wipro Pavilion at Promenade 74

REGISTRATION LINK: Register Here.

The Bottom Line: The Metaverse Moves From Hype To Pragmatic Use Cases

With the metaverse, where we work, how we learn, who we engage with, what we buy, who influences us, and why we exist will be massively transformed. As physical and digital worlds converge, the metaverse economy provides a frameshift from the 2D digital world to a 3D digital world.

Constellation expects the metaverse to be a proxy for humanity’s aspirations. In this time in which individuals, organizations, and governments reassess their priorities and technologies to advance what an individual can achieve, a great refactoring of our plans has arrived. The metaverse is an exponential technology that will be used to empower our ambitions. And as with any new exponential technology, the technology may be used for good or for evil.

Hopefully, the principles of Web 3.0 ensure that decentralization returns power back to the individual and the creators of value. During this Great Refactoring, expect the metaverse economy to play a key role throughout the decade in accelerating business models, meeting expectations, and improving the human condition itself.

Your POV

Done with the hype of the metaverse? Ready for a pragmatic approach? What use cases are you pursuing?

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Monday's Musings: The Davos Agenda Versus Public Trust

rwang0 — Sun, 15 Jan 2023 07:44:15 +0000

Monday's Musings: The Davos Agenda Versus Public Trust rwang0 Sat, 01/14/2023 - 23:44

Davos Is The Place For Ideas and Elite Networking

The World Economic Forum (WEF) will hold its annual meeting January 16th to January 20^th in Davos, Switzerland. Over 2500 delegates from 1000 companies and thousands of additional attendees gather to discuss international trade, business practices, government, politics, economics, and society. While the official meeting is a series of highly PR reviewed and crafted statements, the real conversations happen in the serendipitous environments around the conference. The networking throughout the town at hotels, on the Promenade, and at unofficial Davos events or known as UnDavos are where entrepreneurs, investors, and influencers convene to create the next big idea.

The WEF Crowd Seeks A "Great Reset"

Since 2020 the World Economic Forum has been pushing its Davos Manifesto, a series of ethical principles and policy positions members have been coalescing around to address a new world order. WEF sees a need to address a “brittle system” by influencing business leaders, the political class, and academia with its point of view. Using private-public partnerships or PPP's, the organization pushes their policy initiatives into the boardrooms and hallowed halls of power around the world. Klaus Schwab, the founder of the WEF and other prominent business leaders have rallied around key themes such as:

Forcing actions to reduce climate change despite market conditions
Pushing for stakeholder capitalism over shareholder capitalism
Advocating for globalization over nationalism
Supporting big pharma over independent medicine
Harnessing technology for greater control versus championing individual freedom
Forcing a global competitive level playing field instead of enabling market based approaches
Reducing inequality of income
Addressing wage gaps
Achieving zero tolerance for corruption

2023 Agenda Extends On Fourth Industrial Revolution Theme

While the May 2022 meeting was unusual after an 18 month hiatus, the WEF set sought hard to psych the world into a recession. This year's meeting will attempt to stem the tide of fragmentation and push for corporations to take on more policies that align with many of the United Nations 17 sustainable development goals such as:

Economic growth and resilience. The creation of a Resilience Consortium is designed to bring leaders in public sector, business, academia, and international organizations to plan for the next crises ahead.

Globalization. The Davos set have faced criticism as the rise of deglobalization and nationalism have attacked the notion of open borders and a global unelected elite dictating terms to citizens of nation states. The Reimagination of Globalization attempts to convince the world that in the aftermath of the pandemic global leaders must take a stakeholder approach and address global interdependencies

Sustainability. WEF estimates that $4 trillion is needed to address climate change. Leaders are trying to push Net Zero and Net Negative carbon emissions policies around the world to address the transition to sustainable economies. A large number of sessions will focus on sustainability as well as energy and food security.

Parity and equality. Building on many of the diversity, equity, and inclusion principles , the WEF seek to push this agenda in every aspect of society.

Lack of Public Trust In The Expert Class Drive Fragmentation

The notion of elites making decisions for the rest of the world and academic experts deciding policies without public input has eroded faith and public trust over the past decade. Political systems have been challenged by a push to deglobalization and nationalism as the expert class has failed to deliver results and have not taken accountability for their mass failures. For the general populace to trust the experts will require much more policy and debate than the expert class is willing to tolerate. But without the public input, fragmentation will only increase not decrease and resentment will only grow, not lessen. Yet, many of these leaders seek to force these policies through public, private, partnerships without citizen input.

For example, rising energy prices have mainly come from a rush to an energy transition without a full accounting of the cost benefit analysis. What may take 50 years is being pushed into 20 years. The push to electrify has left Europe without redundant systems and a dependency on hostile neighbors. A smarter move would have been a shift to natural gas and small modular nuclear reactors. In California, the push to electrify vehicles and remove gas stoves comes as unfunded mandates without further investment in the electrical grid and infrastructure potentially leaving many residents without reliable power and some of the highest electrical prices in the United States.

While globalization has led to lower prices for goods and services, this has come at an economic cost and societal cost to the middle class requiring two income families to make up for wage losses and a massive knowledge transfer of critical intellectual property to hostile regimes. This dependence on hostile governments have put countries under economic and military threat for key pharmaceuticals to the control of rare earths needed for green energy initiatives.

In addition the growing debt levels from governments buying votes for tax breaks, economic incentives, corporate lobbyists, free education, subsidized food, and healthcare have added to the rising inflation and higher interest rates wreaking havoc on economies around the world. Unfortunately most governments have not been able to control spending and take a long-term view. With population declines among the wealthy democracies and higher benefit outlays due to aging, these factors will compound existing economic pressures unless exponential improvements in automation and robotics emerge.

The Bottom Line: Seven Uber Trends Dominate The Decade

As the WEF set deliberate on their set of issues, larger uber trends will continue to influence most aspects of politics, economics, society, technology, environment, and legislation (PESTEL). Constellation's Futurist Framework builds on seven consistent uber trends. These uber trends power the PESTEL analysis used to determine the business and technology futurist frameworks known as AstroCharts. Here are the seven uber trends:

Globalists vs Nationalists. Those who believe they should do good for their citizens battle those who believe in open borders and globalism.
US vs China. The two global superpowers continue to battle on all fronts from economy, politics, society, technology, environment, and legislation.
BRICS vs G7. Expect Brazil, Russia, India, China, and Saudi Arabia to improve cooperation as they battle the established G7 powers.
Centralization vs decentralization. A push to use digital technologies for population control challenges new efforts to preserve individual rights and freedoms.
War on the dollar. Global powers seek to challenge the hegemony of the world's reserve currency. From crypto currencies to new alliances, expect the continued effort to dethrone the US dollar.
Experts vs the general public. The expert class seeks to force their policies on the unsuspecting general public. However, modern global networks now shed transparency and accountability on failed expert policies creating massive fragementation between the experts and the average individual.
Attack on institutions. Trust continues to erode among all public institutions as extreme left and right groups chip away at existing power bases.

Your POV

Can an organization like WEF rally the world to prevent fragmentation? Do you see WEF as a force of good or evil? What can we do to truly improve the lives of everyone?

Developing your metaverse and digital business strategy
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Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF format, please contact Sales.

Disclosures

Contact the Sales team to purchase this report on a a la carte basis or join the Constellation Executive Network

News Analysis: IBM and AWS Crank Up Their Partnership Up A Notch With AWS Marketplace

rwang0 — Sun, 11 Dec 2022 03:27:17 +0000

News Analysis: IBM and AWS Crank Up Their Partnership Up A Notch With AWS Marketplace rwang0 Sat, 12/10/2022 - 19:27

This year's Amazon Web Services reInvent brought over 55,000 attendees to one of the premier tech industry events. The obvious and noticeable change in this year's event was an overemphasis on partnerships and alliances. The AWS leadership team made it clear that partners were more than welcomed. IBM's presence as the Global Partner of the year did not go unnoticed by the attendees and of course the other public cloud vendors who have not yet had the courage to host in-person events at scale.

reInventing Partnerships With Public Cloud Vendors

IBM’s transformative journey with AWS as a partner began earlier in 2022 when IBM Software became available as-a-Service on IBM Cloud. The partnership gave customers the ability to access IBM software that runs cloud-native on AWS. The partnership has three key components:

Honoring customer cloud commitment spending. Resell partners can apply clients committed spend with AWS against IBM products from the AWS Markeplace.
Driving co-sell programs. Partners can sell offerings from IBM, Red Hat, and AWS solutions in the marketplace. Since May, products such as IBM API Connect, IBM Db2, IBM Maximo Application Suite, IBM Security, Verify, and IBM Watson Orchestrate have been available on the AWS Marketplace. At this year’s reinvent, IBM added Envizi ESG, IBM Planning Analytics with Watson, IBM Content Services and IBM App Connect Enterprise running as-a-service on AWS.
Leveraging the AWS’ ecosystem. In addition, ISVs can now purchase IBM software offerings from the AWS Marketplace with similar benefits as an IBM partner.

Meet Customers Where They Are At

IBMs revitalized strategy takes a customer-centric approach – “The client is at the center of everything IBM does,” noted IBM’s worldwide channel chief Kate Woolley in many keynotes and interviews. This better together strategy enables clients to make the most out of the joint IBM – AWS relationship. Further, as more IBM offerings are added to the AWS Marketplace customers can purchase and consume their offerings with more flexibility. Both customers and partners can expect more offerings in the AI portfolio and the Embeddable AI portfolio to be added to the AWS Marketplace.

Modernize Compute Power With Cloud And Mainframe

IBM’s revamped public cloud strategy is a full 180 turn from former CEO and Chairman of IBM’s head on, belligerent approach to public cloud vendors such as Amazon. This coincides with a strategic push to focus on high value workloads versus commoditized Infrastructure as a Service (IaaS) workloads. The hybrid cloud and Multicloud models now form the heart of IBM’s strategy and the AWS partnerships is proof of this strategic shift that greatly benefits IBM, AWS, and customers.

Starting with mainframe DevOps, IBM and AWS announced the IBM Z and Cloud Modernization Stack availability in the AWS Marketplace. Developers will receive key tooling for public cloud platforms and support the modernization of applications. Astute clients may even take advantage of IBM Z’s confidential computing capabilities to encrypt data in and out for additional security. Constellation believes this expanded pool of developers and tools, will enrich the overall ecosystem and enable customers to match the right work loads with the right compute power, with the right security model, at the right performance/value ratio.

Gain and Streamline Enterprise Class Security

Whether it be in AWS or hybrid cloud environments, IBM’s Security offering includes consulting, systems integration, technology, and managed security services on AWS. IBM has received a Level 1 MSSP Competency Partnership endorsement along with Premier Consulting Partner, Advanced Technology Competency Partner and ISV Accelerate Partner.

The Bottom Line: IBM's AWS Relationship Provides A Win-Win For Both Customers and Partners

Customers are already benefiting from the IBM relationship. In one case, FinnAir migrated 70 apps on 400 servers to AWS in partnership with IBM. Many customers are moving on-premises applications such as SAP into AWS. Moreover, customers and partners now have an access to IBM offerings on AWS via the AWS Marketplace.

Having the IBM software and services portfolio accessible to the AWS ecosystem gives stakeholders access to IBM automation. IBM Data and AI, IBM Sustainability Software, IBM Security Software, IBM Security Services, and IBM Storage. This shift in strategy provides both a customer and partner centric approach that will help accelerate cloud migration and acceleration.

Your POV

Are you both an IBM and AWS customer? Do you see this as a win-win? Will you be more likley to choose AWS because of the IBM relationship?

Developing your metaverse and digital business strategy
Connecting with other pioneers
Sharing best practices
Vendor selection
Implementation partner selection
Providing contract negotiations and software licensing support
Demystifying software licensing

Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF format, please contact Sales.

Disclosures

Contact the Sales team to purchase this report on a a la carte basis or join the Constellation Executive Network

News Analysis: FTC's Lina Khan Blocks $69 Billion Microsoft - Activision Acquisition

rwang0 — Fri, 09 Dec 2022 12:47:19 +0000

News Analysis: FTC's Lina Khan Blocks $69 Billion Microsoft - Activision Acquisition rwang0 Fri, 12/09/2022 - 04:47

Microsoft Faces Its Biggest Challenge Despite Its "Social" Standing

"This is a battle for the future delivery of gaming and gaming platforms," R "Ray" Wang at @constellationr explains as the FTC puts the brakes on Microsoft’s $75bn deal to buy Activision Blizzard. #CallofDuty #MSFT pic.twitter.com/2gvYQHIG1X
— Dan Murphy (@dan_murphy) December 9, 2022

Microsoft's CEO Satya Nadella’s and Vice Chair and President Brad Smith face their toughest challenge. There was always the belief that so long Microsoft acted like a “good citizen” on social issues they would be immune to anti-trust. That myth has been burst. The FTC has filed a lawsuit and a judge must decide if the case is strong enough to block the $69 billion deal. To be blunt, the FTC fears Microsoft will not provide titles for other platforms. Other headwinds include 16 countries that will have to approve the mega deal. China will probably block the deal to protect TenCent's position. Tencent also owns 5% of Activision.

Digital Giants Operate On A Different Dimension And Playbook

Should the deal be completed, Microsoft will become the third largest gaming player by revenue as they reach 3 billion users behind Tencent (#1) and Sony (#2). Activision brings 31 million monthly active users (MAUs). Xbox gaming brings 20 million users to the mix. At the surface, Microsoft's argument about industry competition makes sense for the $200 billion gaming market. However, digital giants are collapsing industries into value chains. A software company, gaming company, telecom company, and entertainment have collapsed value chains along four common elements:

Content - titles, movies, software
Network - monthly active users and subscribers
Distributions channels - stores, cloud (Azure), internet, consoles
Tech platforms - gaming platforms, consoles, marketplaces

Moreover, a concentration of competitors who have integrated content, network, distribution channels, and technology platform could stifle competition. This argument should be the heart of the FTC's argument around digital giant dominance and future digital giant dominance.

Perceived Past History Haunts Microsoft's Argument

Activision has blockbuster titles such as Overwatch, Call of Duty, Diablo, Warcraft, and Candy Crush Saga. The FTC's argument primarily rests on how Microsoft allegedly failed to keep its word on more open distribution of its titles post acquisition when it acquired Zenimax. The FTC claimed that Bethesda titles Starfeld and Redfall were not available on other platforms.

Microsoft disputes the terms of the agreement by stating that "“Future decisions on whether to distribute ZeniMax games for other consoles will be made on a case-by-case basis, taking into account player demand and sentiment. Factors that will inform Microsoft’s decision-making on future games include consumer demand and preference and the willingness of third parties to work with Microsoft to launch games for their devices.”

Despite the apparent confusion and displeasure by the FTC, labor unions such as the Communication Workers of America (CWA) are in favor of the deal. While Microsoft's gaming head Phil Spencer has offered Activision's blockbuster title Call of Duty, (a $1 billion dollar franchise) for 10 years to both Sony and Nintendo, this may not have been enough for the FTC to back off.

The Bottom Line - Microsoft - Activision Will Become A Landmark Case In Antitrust

Tech companies who thought they could be immune by taking positions on social issues have now realized they are not immune to government interference. At the heart of this case will be how to define the current markets versus the future markets in anti-competitive activity and anti-trust. Dominance in content, network, distribution channels, and tech platforms will eventually become the standard, once this has been identified by the FTC. For now, this is really about the FTC and Lina Khan needing a win as time is ticking for the current administration to make their point.

In the larger picture, a key factor should be how the innovation lifecycle plays a role in innovation. Startups and mid-size companies need exits to fund new innovation. Large digital giants often can not innovate fast enough, attract enough talent, and reach new markets without mergers and acquisitions. Over regulation on M&A will stifle market innovation. Yet, not understanding the dynamics of how digital giants operate in dominating markets will harm consumers in the long run. These factors make this deal a landmark case for the future and may also pave the way for the Metaverse ambitions of Microsoft.

Your POV

Should Microsoft complete their acquisition of Activision? Will the FTC go too far to stifle innovation? What should anti-trust rules be in the digital world?

Developing your metaverse and digital business strategy
Connecting with other pioneers
Sharing best practices
Vendor selection
Implementation partner selection
Providing contract negotiations and software licensing support
Demystifying software licensing

Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF format, please contact Sales.

Disclosures

Contact the Sales team to purchase this report on a a la carte basis or join the Constellation Executive Network

News Analysis: Bear Market or Tectonic Shift?

rwang0 — Sun, 13 Nov 2022 18:49:29 +0000

News Analysis: Bear Market or Tectonic Shift? rwang0 Sun, 11/13/2022 - 10:49

Best Two-Day Rally Since 2008

The NASDAQ Composite closed out the week with its biggest two-day rally since 2008. CPI numbers hinted that inflation was subsiding and hope sprung that the Fed would take a less severe stance. Should the Fed hiking slow down from 75 basis points to 50 basis points, market watchers remain hopeful and some took advantage of the early signals of slowing inflation.

As many astute readers know, the general progression of recession comes down to five major stages:

Stage 1: Valuation cuts
Stage 2: Earnings misses
Stage 3: Credit and liquidity crunches
Stage 4: Unemployment increases
Stage 5: Real estate crashes

We've only hit the first stage, while a minority of tech companies have hit the second stage. In fact, the NASDAQ 100 enterprise value to sales ratios dropped from 5.40 in January 2022 to currently at 3.71. Over the past 10 years, that average ratio was at 3.35. As cost of capital continues to drive investors to alternatives other than growth stocks, the market is moving towards more fixed income and energy in this shift. The 10 year Treasury si now at 3.628 giving folks an alternative to risk assets and growth stocks. Many feel we are at a tectonic shift on tech stocks, yet this is not yet the case.

Why?

For a tectonic shift to occur, massive disruptions at the first principle level must occur. To date, no new disruptive technologies have emerged to displace incumbents. No new business models have been applied unevenly in the market. Moreover, the market has not only been consolidating, the market dynamics have led to less competition. In fact, there are only two to three major competitors in each market segment vying for customer budgets. Subsequently, this leads to not a tectonic shift, but a mini bear market rally. To be clear, this is not a recovery at all in the tech market.

The Bottom Line: More Bear Market Rally Than Tectonic Shift, Bet On MATANA and Dividend Payers

That being said, not all tech stocks are created equal. The MATANA super set of stocks show resilience. As investors shift from FAANG to Microsoft, Apple, Tesla, Alphabet, Nvidia, and Amazon, these big bets rest on 5 key elements:

Building the largest networks - connecting billions of users, devices, or networks.
Disintermediation of customer account control - aggregating networks onto a single platform, portal, or user experience.
Compete on data - bringing together the objects, context, actions, and insights into the largest business graph
Earn revenue on multiple digital monetization models - monetizing ads, search, goods, services, memberships, and subscriptions
Follow a long term mindset - abiding by the rule of 40 and investing for escape velocity

The technology stocks that don't follow these five key elements of digital giants will continue to wither. Consequently, Facebook and Netflix no longer qualify to win as digital giants. Alibaba would meet many of these requirements but the CCP China infiltration hampers their ability to win.

One other key category of stocks are the dividend paying tech stocks. Here's five that meet the MATANA profile.

Apple
IBM
Intel
Microsoft
Oracle

Your POV

Do you see this as a shift or bear market rally? Make your case? Will Cloud stocks in the enterprise lead their way?

Developing your metaverse and digital business strategy
Connecting with other pioneers
Sharing best practices
Vendor selection
Implementation partner selection
Providing contract negotiations and software licensing support
Demystifying software licensing

Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF format, please contact Sales.

Disclosures

Contact the Sales team to purchase this report on a a la carte basis or join the Constellation Executive Network