But I am reminded that it’s not just the titillating stuff that’s of interest. CA is still one of the Big 4 and up until a couple of years ago making headlines with some major and strategic purchases in our space – such as buying Concord for its e-Health software in 2005 and Wily Technology in 2006.

I recently ran across a 451 Group report, “CA: ghosts of deals past” by Brenon Daly (if you haven’t read one of his takes on the M&A market, you don’t know what you’re missing) that showed quantitatively just how much the acquisitions had slowed down.

2003 – 4

2004 – 3

2005 – 6

2006 – 6

2007 – 0

2008 – 0 (so far)

Two or three years ago (I still have the slide in our presentations), it seemed like you couldn’t go a month or two without hearing about the latest acquisition by the Big 4 – to either fill gaps in their monolithic portfolios or take out a growing threat, which had built some good technology. This should sound very familiar to anyone (like me) who rubbed up against WorldCom. Growth (in revenue and technology) by acquisition. Buy your own revenue and don’t worry about the niggling details like integration.

But we’ve certainly seen the acquisition trend slow across the board. HP, after its mega-purchase of Mercury Interactive in 2005 for $4.5 billion, for example, went relatively silent on the acquisition front in our space. Perhaps, as it turns out, because they were too busy preparing for the even bigger purchase of EDS for $13.9 billion (and the layoffs, 24,600 and counting, which in this worsening economy are probably just starting).

One of the main problems in counterterrorism today is that there are so many people and vehicles, and so much data and material, moving through globalization's myriad networks that it seems virtually impossible to track it all effectively. Nowhere has this problem been more acute than on the high seas.

In 2006, Adm. Harry Ulrich, then U.S. commander of NATO Naval Forces Europe, decided to do something about it. Despite having virtually no resources, his dream was to transpose the global air-traffic control system onto sea traffic.

Worldwide, aircraft are transparent, because they're all required to carry an identification beacon that allows them to be tracked leaving and entering airports, and monitored between airports, by a global network of sensors. Act suspiciously and somebody's fighter aircraft will soon be on your tail.

No such pervasive system currently exists globally for maritime traffic. While bigger ships carry an ID beacon similar to aircraft, without a shared monitoring network, that's like tracking only selected commercial jets and giving everyone else a pass.
So Ulrich, upon taking command, asked a simple question: "If we can do that in the air, why can't we do it on the sea?" He made a point of pioneering his sea-traffic-control effort first inside the Mediterranean, where NATO's southern naval forces have historically been concentrated, but his real target was waters off Africa -- the most ungoverned maritime space in the world.

Ulrich knew the U. S. Navy couldn't do it alone, much less bring Africa's meager coast-guard-like navies up to snuff so they could do it on their own. So he quickly created a network of assets -- both public and private -- to manage that space, modeling his monitoring system on international air-traffic control.

Ulrich began stitching together a network of shore-based sensors ringing the Mediterranean. His naval command then began initial monitoring by tapping into the International Maritime Organization's existing Automated Identification System, transforming NATO's ability to track ship traffic in the Med.

Almost overnight, NATO went from tracking dozens of ships on the Mediterranean to thousands, and instead of getting the data sometimes up to 72 hours late, now the contacts were being tracked in one to five minutes -- to an accuracy within 50 feet on the earth's surface.

When the classic big-firm systems integrators told Ulrich it would be too costly to pull it off, the admiral turned to the Volpe Center in Cambridge, Massachusetts, a U.S. Department of Transportation research center. Instead of hundreds of millions of dollars, Ulrich's initial network cost $900,000. The shore-based receivers are small, roughly the size of a radar dish you might find on a pleasure craft.

The strength of the system is a function of its reach: the more countries join, the larger the shared operational picture. By the time Ulrich retired at the end of 2007, he had enlisted 32 countries throughout the Mediterranean, the North Atlantic, along the west coast of Africa, around the Black Sea, and in the Pacific. Today, the network continues to spread around the planet.

With Ulrich's system in place, local police, coast guards, and border patrols catch most bad guys, obviating American military responses. As Harry told me for an article I wrote about his work in a fall 2007 issue of Esquire, "I don't do defense; I do security. When you talk defense, you talk containment and mutually assured destruction. When you talk security, you talk collaboration and networking. This is the future."

The admiral's legacy program, the Maritime Safety and Security Information System, earned the Volpe Center a prestigious "Innovations in American Government" award this month from Harvard University's Ash Institute for Democratic Governance and Innovation.

Interop NY 2008 was up considerably in size from the show in 2007.  According to Lenny Heymann, the GM of Interop, this is a trend that they expect to continue.  My personal experience was that the size of the vendors was also up this year.  I think there were so few startups that “Startup City” was pulled from the show completely.  In any case, the show floor was full and there was plenty of attendee traffic to go around.

Definitely helping out from a traffic and draw perspective was the addition of the Web 2.0 Expo - Interop was co-located with both Mobile Business Expo and the Web 2.0 show. It seems like that buzzword still hasn’t lost most of its luster.

From the InteropNet perspective, the main feeling was one of being rushed.  With the show only lasting two days, and the InteropNet team only having a couple of days of ramp up time, everything was compressed into a much shorter period than in Las Vegas.  While this would normally be a challenge, it’s an even bigger challenge at the Javits where the InteropNet team was allowed to do almost nothing ourselves because of union rules.  You’d be surprised how frustrated you can make a network guy who’s told that he has to stand there and watch the electrician plug things in, rather than just doing it himself.  The only thing faster than the InteropNet team getting the Interop NY network up, was my pedicab ride to the InteropNet Booze Cruise.

In any case, everything came off without a hitch, and EM7 performed flawlessly catching a couple of power outages that last day and alerting everyone before the batteries on the UPSes had a chance to run down.

Over the next couple of weeks I’ll analyze the data from the show to see how many tickets were handled, amount of bandwidth consumed, etc and we’ll do a comparison to Interop Las Vegas.

We’re (both ScienceLogic and me personally) looking forward to Interop 2009.

John talked about Microsoft’s mission, his perspectives on key industry trends and market opportunity; he touched on Cloud Computing and Virtualization and took some Q&A from the audience of Managed Service Provider executives.

One of his first proclamations - Microsoft has really embraced the heterogeneous environment. Really? How in the world is Microsoft going to help convince IT line managers, or mid level managers to believe this statement? I think they have a long way to go to achieve this vision with any credibility in the marketplace.  I do know that they are making small strides.

Microsoft has been widely credited with some very good blogs that are self critical and introspective. They have also been quite active in the standards boards within DMTF and many others such as Open WSMAN and CIMON (Open Pegasus). Microsoft in February published 30,000 pages detailed technical specifications – protocol documentation for Exchange, since that time they have published another 15,000 pages. They have had over 224,000 downloads since February 21, 2008. Thus they are trying to be more open by making some of these secret sauce protocol resources directly available on the web.

So for now, I will take a very cautious wait and see approach to this proclamation. Time will tell.

Trends

• Rapid growth continues
• Hosting Competition has a new face
  • Platform gorillas (amazooglesoft)
  • Ad supported Web 2.0 hosters (Google, Facebook,)
• Utility Cloud Computing models are expanding to non-traditional hosting companies
  • Wells Fargo vSafe - hard to believe that a big bank would start to offer a SaaS offering
  • New tools and markets digital ribbon, CohesiveIT

IDC Data shows that growth of SaaS ISV’s is the biggest layer of growth. The fastest growing services are complex, custom applications. IDC says this area will be bigger than the hosting area in the next 5 years. John said that Microsoft is spending a lot of time, money and energy on this right now.

John said:

“when Microsoft thinks about the building blocks that make-up the cloud, virtualization is a core piece of the puzzle. However you also need also identity services, Operating system with standard set of libraries to tap into… or remote storage that application developers will tap into.. Developers will consume these set of services, but you will also need a set of tools to manage your physical, virtual and geographically distributed datacenter infrastructure.” (that is where ScienceLogic comes in!!)

He went on to say,

“In some ways, virtualization enables decentralization – allows you to move from data centers, enables fast scaling out, business to move from on premise to the cloud and off again…. Automation is very important – this will help you scale your business – this is core to your future success.”

He talked about a new breed of knowledge worker: He called them Digital Natives (compared to grey haired guys like me who are left out of this category).

Definition of a Digital natives? A young adult who has grown up with cellphone, web based applications, Facebook account, as their primary mode of communications.

John commented that we are 5 years into a 10 year journey. Only 12% of all servers in the world are virtualized today… in the next 4 years it will double to 25%. This is the time to think through how this business will affect you.

‘Virtualization without good management is more dangerous than not using virtualization in the first place.” Thomas Bittman, Analyst Gartner

Patching and provisioning nightmare – no scalable administration – sprawl chaos.

John posed a question to the audience: How do you partner to provide the ISV support in application development with specific market needs… partner by keeping the hosting to SaaS solution providers up and running and provide the quality of service that their customers expect…. Complimentary services of storage and backup is a big win with a huge market-upside over the next 5 years..

John said that Microsoft continues to make  huge investments with Managed Service Providers.

• Investing in the windows hosting platform
• Hyper V and SQL2008 GoLive program - getting beta code out to service provides to find as many bugs as early as possible.
• Software + Services (S+S) incubation center program
• Partnering for cloud platform market offers
• Cloud platform guidance and best practices

During the Q&A, David Burns from Cincinnati Bell asked the very best question… “when are you going to make it easier for the Service Provider market to deal with the Microsoft Service Provider Licensing Agreement (SPLA) quarterly statistics pull and change the SPLA pricing to be more efficient and creative for the new Virtualization and Cloud offerings you have talked about?”

John’s response: “We hear your frustrations loud and clear and are working on some new ideas for the future version of SPLA.” My interpretation – “Dear Service Providers don’t expect anything new or easier to deal with in the next 6 months!”

His closing remarks: “Cloud is evolving = very early stages, lots of hype, but think of how this evolution will effect your business and how you can plug into it.”

I think a good litmus test of the mental and moral quality at any large institution [with significant derivatives exposure] would be to ask them, "Do you really understand your derivatives book?" Anyone who says yes is either crazy or lying.

It is crazy to allow things to get too big to fail, run with knavery. As an industry, there is a crazy culture of greed and overreaching and overconfidence trading algorithms. It is demented to allow derivative trading such that clearance risks are embedded in system. Assets are all “good until reached for” on balance sheets. We had $400m of that at general re, “good until reached for”. In drug business you must prove it is good. It is a crazy culture, and to some extent an evil culture. Accounting people really failed us. Accounting standards ought to be dealt with like engineering standards.

There are distinct parallels between phishing / retail payments, and the bigger investment mess. In both cases, banks would argue these are core business. In both cases, they have applied risk-based security models, and accepted some loss. In both cases, they have the ability to apply substantial experience to the monitoring, allocating and absorbing risks and losses.

In both cases, they watched and did nothing as the risks started from low, and migrated upwards. Are we at the point where regulation has killed the ability of banks to apply their (arguable) one core skill, to whit, risk-based analysis? Are banks that far out of banking that they no longer have it?

Why? Because renewable energy technologies — what I call “E.T.” — are going to constitute the next great global industry. They will rival and probably surpass “I.T.” — information technology. The country that spawns the most E.T. companies will enjoy more economic power, strategic advantage and rising standards of living. We need to make sure that is America. Big oil and OPEC want to make sure it is not.