The Bloor Perspective: Mobile Linux, crazy CEOs and an ASP success story

Mobile Linux is an OS for diskless mobile systems. It is ROM-based, with a low memory footprint and claims to have innovative power management features. It is Linus Torvalds' new baby and you might like to think of it as Linus' answer to Windows CE.

Transmeta - a company in which Torvalds has a major interest - is releasing Mobile Linux to the open source community and, as chips are its main business focus, it has no stated intention of setting up an end-user support business on the back of it. Unless Transmeta gets competitive in the area of Linux distribution, the other Linux players may well be pleased by this development. Some of them may be able to add their specific value proposition (office suites, development tools or whatever) to the Transmeta distribution on an OEM basis. Additionally, the fact that Torvalds is still working on Linux is good publicity for Linux and will help to keep the Linux juggernaut rolling forward.

However, the most interesting aspect of all this is that Linux has now stepped forward into the mobile world in a very meaningful way. What we see happening with Transmeta is the birth of a company that could easily become one of the major players in the revolution that mobile technology is going to create. It might even be the case that this is the next Wintel, all bottled up in a single company. We'll be keeping an eye on Transmeta.

*Talking ebusiness in Davos*

One of the sessions at last week's World Economic Forum in Davos, Switzerland, featured a discussion on the Internet and ebusiness, and included input from Michael Capellas of Compaq, Michael Dell of Dell Computer and Masayoshi Son of Softbank. These were the highlights of their presentations:

Michael Capellas said: "Four basic principles determine a successful ebusiness strategy. First, companies should remember that the Web is a primary marketing tool and build their businesses around this philosophy. Second, the Web will dramatically transform traditional business methods. Examples include the creation of hybrid distribution channels and a cannibalization of a company's product lines. Third, the availability of technology will help in building new infrastructure which will lead to an exponential growth in warehouse storage capacity. Finally, education (of managers, the supply base, customers and workers) is the key to improving knowledge and awareness about ebusiness."

Michael Dell stated his belief that the Internet has the potential to reduce friction dramatically by reducing costs, accelerating cycle times and easing distribution. He also said: "The cultural challenge for many companies is this: will hybrid models work? Will companies do old things using a new medium like the Internet or create completely new things for this new medium?" He also offered the view that existing businesses such as retail would not fade away. Instead they would figure out new ways of adding value.

Masayoshi Son said he divided CEOs of traditional businesses into four categories. The first category is the "average CEO" who decides to stay out of ebusiness because Internet stocks are trading at high multiples of revenues. The second category is the "good CEO", who strikes a balance between traditional and future businesses. The third category is the "better CEO", who completely shifts the emphasis of the company from the past to future businesses. The final category is the "crazy CEO" who "will tell his managers: forget about the businesses we own". He sets up a separate unit with a simple objective - to kill the company's traditional business.

Summing up, he said, in the best traditions of Zen, that "the best ebusiness strategy is to look forward and think back".

These all attempt to deal with the difficult problem of transforming a company from a traditional business into a business that properly utilises the Web. The problem that all traditional businesses are faced with is that their current business models are becoming invalid because of the impact of the Web, but it is by no means clear which business model will work. This is why Masayoshi Son's "crazy CEO" may also be the "best CEO" in many circumstances.

* SOS on the Mfour *

We rarely report success stories per se. However, we find the SOS story difficult to ignore, because it combines three hot topics into one: ebusiness, business-to-business procurement and the ASP (application service provider) model. SOS stands for Systemcare Outhosting Solutions and it was among the first UK ISVs (independent software vendor) to adopt the ASP model.

First the success: since April 1999, SOS has deployed over 2,000 ASP seats - that means 2,000 users using the SOS MFour procurement package. It is expecting to have 10,000 user by the end of June and if this happens then it can claim to be the largest ASP in the world.

Now the reason why: the SOS offering, MFour, is supply chain management software all written in the Progress 4GL and it contains a particularly versatile procurement package. When SOS became the first of the Progress ISVs to move to an ASP model, it also set up a Web site, http://www.requisitions.com, which made its software usable directly over the Web. It thus made it possible for both parties in a procurement transaction to use the Web for the whole transaction. SOS estimates that its ASP service reduces the costs of a business running a package inhouse by around 40 per cent. However, by doing procurement through Requisitions.com, the actual reduction in the cost of procurement is far greater than the savings made by outhosting the application.

And the future: SOS already has a very impressive customer list, and according to Mark Armstrong, business development director at SOS, it will be adding to this in the near future.

He said: "We are already preparing to go international. It isn't so much that we are anxious to expand abroad, but that one or two of our customers want to deploy this system in Europe and North America and servicing our customers is what we are about."

* For more analysis, see http://www.it-director .