MSFT is a rare bird, a company formerly swimming against the current that has (at least to this point) successfully made the difficult choice to sacrifice short-term results for long term opportunity and righted the ship. When I think about the reasons why MSFT was able to make this shift work, a few things stand out
1) An excellent cashflow profile — MSFT has thrown off ~$30B in operating cash each of the last flow years, that kind of money has enabled it to not only tolerate failed product launches, but more importantly to pay the kind of talent needed to engineer such a turnaround
2) A competitive product suite — while MSFT missed the mobile wave, it still has an enviable portfolio of software assets that allowed it to force a mass transition on customers, customers still need these products
3) An effective CEO — You speak to this in your post, but I think the importance of having Satya at the helm cannot be overstated. His combination of vision and ability to articulate that vision to both employees and investors has been invaluable
Great post Blaine. The optics seem pretty important here. Even if self-driving trains are dramatically safer that human-operated trains, the reassuring visual of having a human onboard will go a long way to assuage passenger concerns about safety. I think it is critical that Siemens assume a thought-leadership role and work in partnership with municipal clients to get ahead of the PR narrative on safety, that will go a long way to ensure that this technology gets the distribution it deserves
I agree that Cisco faces a challenging situation as it tries to innovate away from an immensely lucrative but secularly declining core business. One thing that Cisco should tackle head on is the rise of virtualized networking, where providers such as VMWare or Facebook provide software for clients to manage a network of commodity routers and switches as opposed to investing in the traditional, Cisco-dominated, network of relatively high-margin hardware with built-in software. While this would provide a short-term hit to revenue and margins, it is necessary to ensure that Cisco is able to compete in the next frontier of enterprise IT
Great post Matt. I think one key factor that Nervana (and by extension) IBM have to think through is how they will relate to the open source ecosystem. As many of the larger pioneers of Deep Neural Nets achieve research breakthroughs, they are beginning to open-source not only their NN training libraries (e.g., Google Tensor Flow  ) but also their custom-built ASIC designs (e.g., Google TPU’s  ). While this still does not solve the talent-shortage associated with implementing these methods, it does raise the question as to how defensible it will be to sell implementation of analytical techniques that can now be accessed through turnkey libraries and run on specialized processors that could easily be available as part of a cloud infrastructure stack.
Amazon definitely is levered to “digital trends” in many ways, but I think that perhaps the most important digital initiative in Amazon’s corner is AWS. The growth of IoT has spawned a rapid increase in amount of data being generated by customers, and that data needs to be stored somewhere, particularly the cloud. As the market leader with a 31% share in cloud computing, AWS is in a prime position to continue its >50% annual growth. Additionally, given the slim margins of the Amazon retail business, AWS’s higher margins make it the crown jewel.
I think solar provides a great opportunity to overcome often lower-quality electricity grids in Africa with localized generation, and it seems like SunCulture is well positioned to capitalize on the positive secular trends you mentioned. I agree with you that the main question is scale, but I am concerned that the difficulty of distributing and installing comparatively sophisticated infrastructure on a continent with limited transport infrastructure could be a very difficult obstacle to overcome. How SunCulture positions their product, as a sustainability play which could come off as frivolous to subsistence farmers or as an tool to enhance agricultural efficiency with a clear value proposition, will also be critical.
I share the cynicism of the earlier commenters. It is easy to lobby for a carbon tax when you have a large quantity of captive reserves that can be accessed quite inexpensively (https://www.ft.com/content/ca7bb39a-6dd9-11e6-a0c9-1365ce54b926 — Statoil’s most recent major development project has a $25/bbl breakeven). I wonder if Statoil would be as progressive if it had a less impregnable competitive position and had to manage the needs of a more fragmented and more short-term focused shareholder base
This has always amazed me, especially given that data centers are the ideal utility customers with long term fixed power needs and could likely drive a hard bargain with local utilities to ensure the cleanliness of their power supply. I think AWS, with its relentless focus on cost, may be later than most IT providers to realize the need to be good stewards of the environment, even if it costs a little more.
Great post Hugo. My main concern with any regulated infrastructure asset is how the owner can articulate a case for upfront investment in a political/shareholder environment that is often quite reactive vs proactive. I think there could be a way to align the financial reality of needing to invest on a consistent basis with the randomness with climate events, perhaps by investing in catastrophe bonds or catastrophe reinsurance to provide sharp cash inflows during times of crisis to offset steady investment outflows. This could help make a utility’s cash balance more “climate neutral” and make the case for investment easier for both shareholders and regulators
Great post. I think the feed/water sensitivity issue is a great point and an underrated area of sensitivity that Dean has to climate change. I think there are two things that Dean could do to mitigate this. First, I wonder to what extent Dean can influence their suppliers to consider tweaking their feed mix to include less “thirsty” plant inputs. While it may result in higher input costs in what is essentially a commodity product, Dean could have the clout to cause an industry shift a la IKEA. Second, given that climate change has lead to increased precipitation in certain parts of the US, Dean could consider shifting its supply chain to focus more on dairy farmers located in areas with lower drought risk.