Good morning, Data Sheet readers. A slightly belated happy birthday to Microsoft, which turned 40 on April 4. If you think that sounds old, consider this: it has just one year on long-time archrival Apple. Google Capital is leading a $60 million round in two-year-old startup ZenPayroll. Plus, business-to-business transactions will move online quickly over the next five years—reaching $1 trillion by 2020.
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TOP OF MIND
Microsoft is officially middle-aged. While you were running Saturday errands, the world’s biggest software company celebrated its 40th birthday. Yes, seriously.
In a letter sent to employees, co-founder Bill Gates (still a technical advisor) predicts computing will evolve more quickly over the next decade than ever but is still too far out of reach for many people.
“So I hope you will think about what you can do to make the power of technology accessible to everyone, to connect people to each other, and make personal computing available everywhere even as the very notion of what a PC delivers makes its way into all devices,” he wrote.
Of course, there are literally dozens if not hundreds of other companies—both large and small—that would love to solve that problem at Microsoft’s expense.
Mere toddlers like collaboration software upstart Slack, flirting with a $2 billion valuation, are challenging its dominance in productivity software. Twenty-something Amazon Web Services and teenager Google are making things tough in the data center realm. And despite its expensive Nokia investment, Microsoft can’t seem to get more people to trade in their Apple and Samsung smartphones.
As it enters its fifth decade, does Microsoft have the energy to combat competition on so many different fronts? That’s up to company’s third CEO, Satya Nadella. After spending his early days rightsizing the company (the last round of Microsoft’s biggest layoff ever was apparently completed last week), he is busy acting as different from his immediate predecessor, Steve Ballmer, as possible.
That’s evidenced in Microsoft’s relationship with Box. “We’re seeing a different Microsoft, and customers are seeking a different Microsoft,” Box CEO Aaron Levie said during Fortune’s Brainstorm Tech conference last July.
Nadella has already pulled off a few refreshing surprises. Consider the company’s $2.5 billion buyout of the wildly successful Minecraft developer last September or the January sneak peek at the company’s virtual reality interface, HoloLens.
Officially speaking, the upcoming Windows 10 launch, which will be sold under a new subscription mode, will be the first big test of Nadella’s leadership. But in my mind, attracting and retaining the talent to keep Microsoft relevant throughout its fifth decade could be his biggest challenge as CEO. There’s a reason so many people are interested in the new book from Google’s human resources chief.
Nadella’s misguided comments last fall about women in technology didn’t help. That’s why one of the most important strategic decisions early in his tenure came in November, when Nadella promoted Kathleen Hogan from a customer-facing role to run human resources.
Hogan’s resume includes leading the Microsoft services organization; she also was a developer at Oracle and a partner at consulting firm McKinsey. Her mandate: lead Microsoft’s cultural transformation and ensure “Microsoft remains the best, most inclusive place to work.”
$60 million for payroll software upstart. ZenPayroll aims to help small businesses pay their employees far more efficiently. The two-year-old company’s latest round is led by Google Capital and values the company around $560 million.
Dropbox has new service up its sleeve. Early details about Composer, an online word-processing application, surfaced accidentally late last week. Access to the site was since locked down, but the offering is akin to Google Docs and Evernote.
More female software developers than ever. An estimated 4 million women are involved in writing code, about 22.2% of app programmers. That’s more than any other time in the past 15 years. Another promising stat: their median age (34) is younger than their male counterparts (37).
What day is best for promoting mobile apps? During the typical week, most paid in-app updates happen on Sundays, according to a new study. The main exception: software intended for business productivity.
Where’s the $1 trillion action in e-commerce? Business to business
The underlying motivation for SAP’s $8.3 billion buyout late last year of Concur, the venerable online expense management system, just became a lot clearer. Brace for an explosion in online selling between businesses, motivated largely by operational efficiencies.
This year, $780 billion of all business-to-business (B2B) tractions—think trade between retailers and wholesalers, or professional services such as travel management—will flow through digital channels, according to a new forecast by Forrester Research. That’s about 9.3% of the anticipated total.
Five years from now, the share will be more than 12%, or $1.1 trillion annually.
Two industries will experience far higher penetration than that average by 2020: drugs and “druggist sundries,” and electrical and electronic goods will see 20% of all B2B sales go digital, Forrester predicts. Other sectors won’t hit that mark, but the electronic portion will grow fast—including automotive parts, machinery, and grocery goods.
“B2B buyers are now expecting [business-to-consumer]-like customer experiences online, and they’re growing increasingly impatient with B2B sellers that don’t provide it,” Forrester writes in its report. “They are also actively shifting their transaction volume from single channel offline environments to ‘omnichannel’ and online-only environments.” (Omnichannel is the industry jargon in technology circles used to describe sales models that include online and real-world activities.)
In many cases, the initial catalyst for digital initiatives is expense reduction. But Forrester’s research suggests they can also deepen relationships. “In fact, 60% of B2B companies report that their B2B buyers spend more overall when these customers interact with multiple channels,” the research firm reports.
Industrial supplier Grainger, which leads its sector on Fortune’s 2015 Most Admired Companies ranking, exemplifies this shift.
E-commerce accounted for almost all of its revenue growth in 2014 (94.3%), or $500 million of the $530 million that it managed to expand. B2B e-commerce accounted for 16.1% of overall revenue, or $3.6 billion.
This didn’t happen overnight: the company has invested in e-commerce systems since before 2000. In May 2013, Grainger disclosed plans to hire at least 300 specialists in Chicago. Later that year, it released its first iPad app.
“Every detail of the iPad app was designed with efficiency in mind, allowing our customers to quickly find what they need, order it and get back to the task at hand,” said Geoffrey Robertson, vice president of e-commerce strategy and planning at Grainger, when the mobile software was launched. “In addition, the app is part of our bigger enhanced eCommerce initiative, which provides our customers with a consistent multi-channel experience from desktop through mobile device.”
When SAP bought Concur in late 2014, the transaction was positioned as a strategic complement to Ariba, the commerce platform it bought for $4.3 billion back in 2012.
“If you look at any company today in any industry, they form these industry clusters. And these global networks are highly fragmented,” SAP CEO Bill McDermott told Fortune last fall. “It’s not like it used to be in the old days where I’m in New York, and all my partners are across the street, and we’re building stuff together. They’re accessing my materials and these services and these OEM relationships and third-party relationships from all over the world. That can only be conducted in a very agile business network where it’s totally digital, commerce is conducted in a global economy, and it happens at the speed of thought.”
ALSO WORTH SHARING
Can a former customer reenergize Jive Software? Former Yahoo marketing executive Elisa Steele, CEO since early February, is pleased with her company’s 95% customer renewal rate. Now, she needs to convince executives that collaboration isn’t a standalone software category. “Social business as a term shortchange what’s actually being done,” Steele told ZDNet.
No Apple Watch (yet) for Switzerland. The name of its wrist-worn wearable is apparently at odds with a Swiss patent law that expires in early December.
Bitcoin exchange plans shutdown. Buttercoin’s last day of trading will be April 10. Even though it is solvent, the startup was unable to raise more financing. Its initial $1.6 million in seed funding came from backers including Google Ventures and Y Combinator.
Small victory: Class action suit against Google dropped. The original complaint centered on bundling relationships that set Google’s own apps as the default on Android smartphones. A judged ruled that argument flimsy back in February. Now the claims have officially been withdrawn.
Digital scrapbooking company Pinterest just made another acquisition intended to shore up its mobile expertise.
MY FORTUNE BOOKMARKS
Ex-HP CEO calls Apple’s CEO a ‘hypocrite’ on gay rights by Philip Elmer-DeWitt
Anita Hill speaks: How to avoid the next Ellen Pao case by Anita Hill
GitHub triumphant over its ‘largest ever’ cyber pummeling by Robert Hackett
Why HBO is replying to tweets from three years ago by Benjamin Snyder
The discrimination debate: Why it hurt Starbucks, but worked for Apple by Nicholas Pearce
You’ve made a mistake at work. Now what? by Stacia Pierce
Apple and Samsun are rivals—except in this 1 way by Ben Geier
ONE MORE THING
MARK YOUR CALENDAR
Knowledge15: Automate IT services. (April 19 – 24; Las Vegas)
RSA Conference: The world talks security. (April 20 – 24; San Francisco)
Forrester’s Forum for Technology Leaders: Win in the age of the customer. (April 27 – 28; Orlando, Fla.)
MicrosoftIgnite: Business tech extravaganza. (May 4 – 8; Chicago)
NetSuite SuiteWorld: Cloud ERP strategy. (May 4 – 7; San Jose, California)
EMC World: Data strategy. (May 4 – 7; Las Vegas)
SAPPHIRE NOW: The SAP universe. (May 5 – 7; Orlando, Florida)
Gartner Digital Marketing Conference: Reach your destination faster. (May 5 – 7; San Diego)
Cornerstone Convergence: Connect, collaborate. (May 11 – 13; Los Angeles)
Annual Global Technology, Media and Telecom Conference: JP Morgan’s 43rd invite-only event. (May 18 – 20; Boston)
Signal: The modern communications conference. (May 19 – 20; San Francisco)
MuleSoft Connect: Tie together apps, data and devices. (May 27 – 29; San Francisco)
MongoDB World: Scale the universe. (June 1 – 2; New York)
HP Discover: Trends and technologies. (June 2 – 4; Las Vegas)
Hadoop Summit San Jose: Mainstreaming adoption. (June 9 – 11; San Jose, California)
Red Hat Summit: Energize your enterprise. (June 23 – 26; Boston)
Brainstorm Tech: Fortune’s invite-only gathering of thinkers, influencers and entrepreneurs. (July 13 – 15; Aspen, Colorado)
VMworld: The virtualization ecosystem. (Aug. 30 – Sept. 3, 2015; San Francisco)
Dreamforce: The Salesforce community. (Sept. 15 – 18; San Francisco)
BoxWorks 2015: Cloud collaboration solutions. (Sept. 28 – 30; San Francisco)
Workday Rising: Meet and share. (Sept. 28 – Oct. 1; Las Vegas)
HP Engage: Big data, big engagement. (Oct. 4 – 6; San Diego)
Gartner Symposium ITxpo: CIOs and senior IT executives. (Oct. 4 – 8; Orlando, Florida)
Oracle OpenWorld: Customer and partner conference. (Oct. 25 – 29; San Francisco)