Plenty of challenges in post-PC era

Paul Muckleston - Managing Director Microsoft New Zealand. Photo / Supplied

The post-PC era will lead to fundamental changes in how we use information technology and how we do business, writes Juha Saarinen

Many of us already use "cloud" computing, with applications and storage hosted in data centres locally and overseas. The computing heavy lifting is being done there, with the results delivered over the internet to mobile, very personal devices such as tablets or smartphones.

Music, video and other forms of entertainment are also starting be delivered over the internet - from a cloud somewhere.

This very different IT landscape has evolved rapidly over the past decade and large multinational companies dominate it. Where should the average New Zealand businesses, as well as our start-ups, focus their efforts?

Paul Muckleston, managing director of Microsoft's NZ office, is clear on one thing: if you aim to compete head-on with similar offerings to those of the multinational giants, you probably "have rocks in your head".

Muckleston, who will give an overview of New Zealand's technology environment at the Technology Trade and Investment Forum in Auckland today, says he doesn't think there will be much demand for traditional, low-value IT tasks as done now. With millions of servers, the likes of Google, Amazon, Facebook, Apple and Microsoft can do everything local companies can, cheaper and with far more resources. New Zealand companies should look at developing and dominating niche markets worldwide by using the cheap, abundant computing resources the new era brings.

Mobile and cloud computing has forced Microsoft to radically transform itself too. The company grew into a global colossus on the back of the personal computer revolution of the late eighties but over the past five years has seen its market dominance threatened as IT has become mobile and networked.

A resurgent Apple has redefined the smartphone market with the iPhone, leaving Microsoft's Windows Mobile devices to wither on the vine.

And while Microsoft pioneered computing slates or tablets, it was Apple that created the mass-market for them. Its hugely successful iPad offerings attract buyers through ease of use and their vast number of cheap to buy applications.

At the enterprise end of the market, Microsoft is being squeezed by companies such as Google and Amazon, which have been successful in enticing organisations of all sizes with their internet cloud applications and storage products and services.

But Microsoft isn't taking the challenge lying down, and is banking on new products such as the new Windows Phones, and Windows 8 operating system which will run low-power mobile devices as well as traditional desktops and laptops. For New Zealand developers, the new mobile devices and Windows 8 offer big opportunities according to Muckleston. It's "super easy to develop apps," for them he says.

The big draw for local developers however is being in an App Store that reaches half a billion potential customers worldwide by dint of being installed on their devices with Windows 8. It means working with foreign multinational companies on their terms and shifting some things that would've been done in New Zealand overseas. This means menial tasks are likely to go, but it can also mean reaping huge rewards as Dave Frampton, the Wellington-based developer has with his Chopper game for Apple devices.

In the cloud, Microsoft hopes its Office 365 suite of productivity applications will appeal to New Zealand customers instead of similar offers from rivals such as Google. Depending on the level of support and applications needed, Office 365 starts at $9.25 a month a person for the small business variant, going to $43 a month for the full enterprise one.

Office 365 and Microsoft's Azure cloud computing solutions are not hosted in New Zealand, but in Singapore. That's a considerable distance from New Zealand, one that could potentially affect cloud-hosted application performance and responsiveness. Muckleston however insists the effects of long-distance hosting are negligible, especially if you consider cost savings and productivity benefits.

Data sovereignty is another concept New Zealand business and entrepreneurs will have to think about, in conjunction with computational loads and information storage overseas. Keeping data safe and protecting customer privacy is paramount. As Muckleston puts it, "nobody wants their health records on Wikileaks".

Here, Muckleston points to an industry initiative, a Cloud Computing Code of Conduct, as a world first. This aims to address concerns around keeping data and processing it overseas, ensuring it isn't personally identifiable, yet allows companies and government to take advantage of cheap and powerful cloud computing resources.

Nevertheless, shouldn't New Zealand be part of the global cloud infrastructure somehow?

Muckleston doesn't think New Zealand will get a data centre at a Singapore scale any time soon. However, as the cloud networks expand and become meshed with each other, he sees a possibility that we will have smaller data centres, aimed at specific tasks or placed here to improve responsiveness.

As part of the move to cloud computing, Microsoft is supporting the Government's Ultra-Fast Broadband project, which will provide speedy fibre-optic connections to schools, business and homes for three-quarters of New Zealanders by 2019. Microsoft is also supportive of the second overseas data cable for New Zealand, Pacific Fibre, expected to be constructed in 2014, Muckleston says.

The post-PC and cloud computing era promises plenty of challenges and changes the local ICT industry will need to adapt to. Muckleston is positive about the future though, and believes we can prosper despite being a relative minnow compared to multinational companies, some of which have market capitalisation several times bigger than New Zealand's GDP.

"It's not all good, but not all bad either, and it depends on where in the eco-system you are how well you will do," Muckleston says. Fingers crossed, we will end up in the right bit of the eco-system.

CRADLE-TO-THE-GRAVE

We're used to hearing that New Zealand has fallen behind its competitors in every respect, so it may come as a surprise that Paul Muckleston disagrees with that statement.

"We are being too pessimistic ... Why should we try to catch up with Australia; theirs is an entirely different economy, one that's based on minerals and other natural resources."

New Zealand is actually doing pretty well, according to Muckleston. We could however do better and need to think 20 years' ahead and ask what can we do to ensure New Zealand is a place where the best and brightest not just want to stay but also come to.

Muckleston echoes top scientist Sir Paul Callaghan's point about the primary produce and tourism industries not being sufficient to propel us forward. "In tourism for instance, many work for the minimum wage. This is fine if you own the tourism company in question, but not terribly good if you're an employee of it."

In comparison, intellectual property-based companies have average salaries of over $100,000 year. In essence, we need 10 new Aptimize or Orion Healths over the next 20 years, but how do we get there?

Muckleston says New Zealand has many good programmes and initiatives to promote intellectual property-based business, but they are fragmented. He says what's missing is a value-chain analysis of the different programmes, so as to create a cradle-to-the-grave pathway young students and entrepreneurs can follow. This would work out where resources are best deployed, and also remove duplicated effort, to ensure more people come in and go out of the programmes.

Connecting the programmes is also important. As an example, Muckleston says the Microsoft-sponsored Imagine Cup attracts about 300 teams from New Zealand. However, only one university is involved, and the next step should be to get all of the universities on board. "Academia can be too purist too, in keeping industry at an arm's length," Muckleston says. "In Silicon Valley, people move freely between industry and academia."

Degrees may need some fine-tuning too, Muckleston thinks. "Nobody teaches an intensive, six-month course in how to sell to international companies, and how to open a branch office on the West Coast of the US, all critical skills if you want to succeed."