Industry Clusters – What’s Microsoft up to?

A few weeks ago, I received an invite by email to a local AIIA (Australian Information Industy Association) event. The event was for the launch of SouthAustralia.NET.

The following is the introductory paragraph: "AIIA together with Microsoft and the Government of South Australia is pleased to announce the launch of South Australia.NET (SA.NET) Industry Development Cluster.  SA.NET is primarily designed to bring together local ICT organisations and promote South Australia as a world class location for software development. ".

I thought the sentiment regarding "world class location for software development" was excellent but had a niggling suspicion that this might have been standard copy used in the other announcements interstate. However, for those of us focused on Open Standards based software development, we were immediately concerned at the message this was sending regarding Microsoft in our state at the exclusion of other technology.

For those that don’t know me, I’m also completely Microsoft Free, and have given up on using all their software (blog entry here on the experience).

A few persons and organisations locally, have seen this impartiality towards Microsoft by the SA Government and the AIIA. Now we are starting to organise ourselves and do something about it. It has been proposed that we establish our own Industy Cluster, with the current proposed name of joltSA (Java and Other Leading Technologies South Australia). You can’t call something like this, everything but Microsoft technology, but that’s what it appears to be (I’ll write in another post at a later date why I think there is so much perceived Microsoft mindshare in our geographic area).

But more importantly, I’ve started asking myself the question – "what is an Industry Cluster?". The classic wikipedia definition is related to associated businesses that are working together in a geographic area to effectively create a better supply chain. In the software industry, the most famous one of the past has been Silicon Valley. In this case, it brought together startups, techos and venture capitalists into closer geographic proximity to each other.

Thinking through this, it sounded like a term that was used to describe something that was successful in the past. So there must be alternatives that take into account what current technology can facilitate. In the wikipedia article one was suggested, being Hubs and Nodes – "is a geographic model, explaining how linked regions can cooperate to fulfill elements of an industry’s value chain, and collectively gain sufficient mass to drive innovation growth." But the most important point I think from the definition is "The model of hubs and nodes builds on Porter’s cluster model which served well in the past, but as businesses and regions around the world have adjusted to the realities of globalization, the concept of clusters is becoming outdated.".

You wouldn’t think that Microsoft would be promoting an outdated concept, such as an Industry Cluster would you? So what were Microsoft really up to?

I went back to the Launch Event email and thought a little more about "Guest speaker Peter Watson, Director – Software + Services, Microsoft Australia, will give you a taste of the next wave from Microsoft, the exciting future ahead and derive early competitive advantage.".  Ah ha, this is about rallying the troops towards the future Microsoft Azure platform I thought. Low and behold the AIIA and Microsoft apparently were also promoting Microsoft BizSpark (hadn’t heard of this before) at the event, which is targeted at startups. Now this made more sense, Microsoft sold this very well to the different audiences with the safe and warm language that each different type of audience wanted to hear.

I read the terms of the Microsoft BizSpark program and you need to be a startup less then 3 years old, that doesn’t host its own service to be a member. A smile crossed my face, as I understood what they are doing. Have you worked it out yet?

If the future is the cloud, as promoted by Ray Ozzie, they need applications that can run on it. Deriving innovation internally in large corporates has increasingly become more difficult, thus the need for external organisations (startups with the innovation, that lack the culture that stifles it) to provide that organic innovation to allow growth. However unless they capture this innovation, and tie it in to run on their platform, they will have a bunch of expensive cloud infrastructure services sitting there, that in essence is not providing much real value to the End User consumers.

So now that we have been nicely distracted, its time to come out of the clouds. Its time to create larger mind share about other technologies that will be still provisioned on-premise (it pays the bills, well tries to) at this time and off-premise in the future. How to do so, is what I spend a lot of time thinking about.

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