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CloudAve Launched – and Thank You, Harry

(OK, I sinned. Mea Culpa.  I’ve just cross-posted an entire article, which is not the best behavior. But it’s not every day that I launch a new group blog – so consider this my shameless self-plug, and please subscribe to the feed.smile_wink)

We must be a crazy bunch on a suicide mission.  Why else would we launch a new blog focused on Cloud Computing and Business, when it’s just a fad that will collapse in two years?

Harry Debes, CEO of Lawson Software is a respected Enterprise Software industry veteran, but I’m afraid for all his achievements he’ll go down in history as the man who grabbed headlines with a fatally wrong call.  Of course not all wrong calls hurt one’s reputation: IBM’s Thomas Watson is still an industry legend despite the famous quote incorrectly attributed to him:

” I think there is a world market for maybe five computers“

The small difference is that what Thomas Watson could not fathom in 1943 ended up putting IBM on an amazing growth trajectory,  while Harry Debes’s view may just turn out to be fatal for Lawson – or to quote my Enterprise Irregular friend, Vinnie Mirchandani:

“That’s what American and Delta said about SW. And GM and Ford said about Japanese cars. And Sears and Wards said about WalMart.”

Another quote by Vinnie, closer to our industry:

“Dun & Bradstreet, which GEAC acquired for a song, was one of the most spectacular slides in the software market. In less than 5 years it went from dominant position to a distress sale as it missed the client/server wave in early 90s.”

I’ve seen that one close, fortunately for me from SAP’s side – the winner in that round.  We’re witnessing another tidal wave now, the shift to Cloud Computing.  It won’t happen overnight, but those who completely ignore it will vanish.  Some of my fellow Enterprise Irregulars elaborate more:

  • Vinnie Mirchandani points out that SaaS is what more and more customers want, and those who stop listening to customers inevitably hit the wall sooner or later.  Need proof?  How about this 100% SaaS customer, showcased at the recent Office 2.0 conference?
  • Jim Berkowitz  of CRM Mastery fame agrees,  adding that calling people, potential customers “stupid” never leads to any good.
  • Bob Warfield makes the case that even if we ignore what customers want and only consider profitabilty, Debes is wrong, Salesforce.com is almost as profitable as Lawson, but grows much faster, while Conquer, another SaaS success story is actually more profitable than Lawson is.
  • Jason Corsello adds that Lawson actually launched a SaaS offering last year, but experienced lackluster customer response largely to pricing and deployment issues … so now that they couldn’t pull it off, the declare the entire market doomed.
  • Josh Greenbaum concludes: “SaaS isn’t collapsing, it’s only just getting started“.

I can live with that… it’s only starting… so we’re not a suicidal bunch, after all.smile_wink But thank you, Harry Debes, for sparking a great discussion.

If you read just the few articles I’ve quoted above, you get a fairly good picture of the many benefits the Software as a Service model offers.  Let me add a few of my personal favorites:

  • Extended reach – small businesses can now have business functionality previously only available and affordable for large enterprises.
  • Commoditization of the software market – commoditization hurts most companies, except the few who drive it, but guess what – it’s great for customers.
  • End of Bloatware  – for the first time SaaS vendors can run stats and observe what features are actually used by customers, so they can cut out the fat and enhance the in-demand features.
  • New Business Models, like benchmarking – based on anonym aggregate data provide your customers with performance metrics.  Even newer business models we have not even imagined yet.
  • Dramatically changed Sales and Marketing model: pull vs. push.  Instead of the traditional sales model it’s all about transparency, information, letting informed customers find you.  The Product sells itself and your Customers are your Marketing team.

We’ll be writing about these and more. I’m a “business application guy”, so I mostly talk about SaaS – but our name is Cloud Avenue, not SaaS Avenue, for good reason: fellow blogger Krish will talk about it soon.  By the way, Krish and I got to know each other through our blogs – just like my fellow Editor, Ben Kepes, and just about all other contributors. We also have our CloudLab – for product / service reviews.  Yes, we will report on products, but do not strive to be a mini-TechCrunch: we have no intention to report about everything new.  We’re not a news-blog.  We’d rather sit back, analyze a market, find key players, then produce a series of reviews / comparative analysis.  Quality before quantity or urgency.

We’re believers in Cloud Computing, but  not over-zealous cheerleaders.  Just as I’m finishing this post, another SaaS debate erupted, which prompted Anshu Sharma to note: “there must be a Sky is Falling Support Group“.  The really notable part of the Cloud-Filled Debate @Forbes is Nick Carr’s responses: not because of the Big Switch author’s unquestionable “cloud-bias”, but because of how realistic he is:

Forbes.com: Is cloud computing over-hyped?
Nicholas Carr: At the moment, yes, and that’s typical for technological advances.

What’s your imagined time line of the adoption of cloud computing? Will it take years? Decades?
If you’re talking about big companies, I would say it will be a slow, steady process lasting maybe 15 to 20 years.

On what Gartner Research analysts call “the cycle of hype and gloom,” where do you think cloud computing is currently positioned?
It’s definitely near the peak of its hype. The doom period, when the media and IT managers realize the challenges ahead, is likely coming soon. But regardless of hype or gloom, the technology will only keep progressing.

Overhyped, slow process, doom is coming… has Nick Carr switched sides?  No, he is just being realistic – and that’s what we need to do here  @CloudAve, too. We will talk about integration problems, security issues, privacy concerns, even legal ramifications – many of these I don’t claim to know much about, which is why it’s great to have a diverse team of authors with complementary areas of expertise. And our door is never closed: we welcome guest posts, and who knows, you may feel inclined to join us as as a regular writer…

Finally, we could not afford to bring you CloudAve without sponsorship.  My regular readers know I’ve been an advisor to Zoho for years now – I’ve found them to be a showcase for a lot of my ideals.  Zoho stepped up as exclusive sponsor of CloudAve.  This does not make us a Zoho PR outlet, in fact they can expect less coverage here than they got on my personal blog.  We enjoy complete editorial independence.

What we do not have, and will not have is any form of advertising.  None of those flashy banners, boxes, making the site close to unreadable. Just pure content.  And since we are not dependent on page views, we can afford to offer our content under a Creative Commons licence.  Yes, it’s all yours, take it – just don’t forget attribution.

So here we are – welcome to CloudAve. We hope you will follow us.   And once again, thank you, Harry, for all the attention to Cloud Computing.smile_wink

P.S.  The CloudAve platform  is not exactly in nice order yet. It’s work-in-progress.

So for now, all I can do is apologize for the shabby appearance, like I did at a previous move – that one turned out quite well, didn’t it?

And talk about move – I am not abandoning this blog either, so I hope you continue to follow me both here and on CloudAve.

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SaaS and the Commoditization of the Software Market

Office 2007 Reaches a New Low – reports Joe Wilcox @eWeek.  He means low prices:  while Office Standard is still above $300, the Home and Student Edition can be purchased for as little as $89.99.

He then speculates on the reasons for this “Crazy Eddie”  pricing, with percentage of likelihood:

  • It’s end of the back-to-school buying season, when Microsoft and retailers often discount consumer Office (50 percent).
  • Microsoft is seeding the consumer market with the Home and Student Trojan horse for supporting Web services such as Office Live Workspace (25 percent).
  • The low pricing is way of psychologically preparing the consumer market for $69.95 Office Equipt, which packs 12-month subscription versions of Office 2007 Home and Student Edition, Windows Live OneCare, Mail, Messenger and Photo Gallery. (20 percent).
  • Microsoft is shoring up marketshare as proactive response to freebees like Google Docs. (5 percent).”

I strongly believe in the last one, which is way underrated at 5%.  With freely available OpenOffice, Google Docs and the Zoho Suite, people have little reason left to purchasing Microsoft Office.  I’ve said this before, while discussing the perfectly rightful clampdown on piracy:

The danger for Microsoft is not the direct financial impact of these users turning away from their product, since the never paid in the first place. It’s losing their grip; the behavioral, cultural change, the very fact that millions of people – students, freelancers, moonlighters, small business workers,  unemployed – realize that they no longer need a Microsoft product to work with MS file formats.  Microsoft shows these non-customer users the door, and they won’t come back – not even tomorrow when they are IT consultants, corporate managers, executives.  That’s Microsoft’s real loss.

But this post is about commoditization, and there’s more to it than putting price-pressure on Microsoft. Yes, SaaS disrupts the traditional software market, but there’s another equally important trend happening: some of the early pioneers who evangelized SaaS but retained a 1.0 business model are being squeezed by more nimble competitors. 

Days after my post on SaaS and the Shifting Software Business Model I received an email from Salesforce.com, announcing new, promotional pricing for Salesforce Group Edition.  The promo was supposed to end July 31st, but I suspected this would become a permanent price cut.  Why?  Group Edition is where Salesforce.com feels intense price pressure – see the comparative matrix here.  Today I checked again, and what a surprise (not really) –  the promo deadline is now gone, Salesforce.com silently turned the promotion into a permanent price-cut

No wonder there wasn’t much fanfare: price cuts are a red flag for the Street.  Commoditization can be a death-spiral to businesses – except for the few that drive it. But it is beneficial to customers, and in the end, that’s what matters.

(Disclaimer: I am an advisor to Zoho, the company with a mission of Deflating IT).

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SaaS is an Ancient Model

Lots of talk today about how the SaaS market will ‘collapse’ in two years.  I don’t get it: if it survived 40 years, why would it collapse now?  Yes, that’s right, SaaS has been a successful model for 4 decades now. Need proof?   Check out Technorati linking to my post on the NetSuite IPO 11119 days ago.  That’s 38 and a half years, give and take a few weeks. smile_nerd

Oh, well, that was the fun part, for real analysis check out my fellow Enterprise Irregulars:

Jason Corsello, Anshu Sharma, Vinnie Mirchandani, Bob Warfield, Josh Greenbaum.

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Project Management 2.0 – What’s Wrong With 1.0?

Let me quickly state that I don’t really know what the consensus definition of PM 2.0 is, but I do have a feeling based on my very 1.0-style experience.

In the 90’s I worked on a number of fairly large scale SAP Projects in a variety of roles, including Project Manager, and supervisor of several other projects.  The standard tool was Microsoft Project.  It was used for:

  • Planning a Project (initial Scoping)
  • Selling it
  • Periodic reporting to Steering Committee during the actual projects

What’s missing from the above?   Well, how about using it to help the actual daily work of project team members?

Project  team members did not even have access to MS Project, it only existed in a few copies on the PM and Team Lead’s computers.  Information-flow was one-way: feed the beast to be able to occasionally print charts that look impressive (scary) enough that Steering Committee members won’t question it.

Ok, I am admittedly sarcastic, but the point is:  PM 1.0 was all about planning, reporting and it served Management but did not help actual Project Execution.

My expectation of PM 2.0 would be that it helps all team members involved who can share information, collaborate on it and actually get clues from the system on where they are, where they should be, what their next step is, instead of just feeding the beast.

Is this the real promise of Project Management 2.0?   I hope to find out from an excellent set of panelists that I have the honor of moderating at the Office 2.0 Conference next week:

  • Andrew Filev (Wrike)
  • Bruce Henry (LiquidPlanner)
  • Mark Mader (Smartsheet.com)
  • Guy Shani (Clarizen)
  • Dean Carlson (Viewpath)

Of course this is just one of many exciting sessions – if you haven’t registered yet, you can grab a $100 discount by registering here.   Oh, and don’t forget to visit us at the Zoho Party – the address is #1 Cloud Avenue. smile_regular

(This article is cross-posted at the Office 2.0 Conference Blog)

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Office 2.0, a Most Irregular Conference – Get Your Discount Here

Nothing about the Office 2.0 Conference is even remotely ordinary.

Start with the organizer, Ismael Ghalimi, CEO of a VC-funded startup, Intalio.  That’s normally a full-time job – not when it comes to Ismael: he is also a scuba-diving instructor, a pilot, launched Monolab|Workspace, (is that Incubator 2.0?), launched the Extreme Productivity Seminar series, oh, and have I mentioned the annual Office 2.0 Conference?  ( I actually know his secret, he has two body doubles, I just haven’t been able to prove it yetsmile_wink)

Pressed for time he is turning a necessity into a virtue: year by year the Conference is a showcase of creating a successful event out of nothing in only two months. I remember the first event in 2006, when a couple of us Enterprise Irregulars were helping him plan the sessions only weeks away from the start.  A few days and a few blog posts later Ismael got flooded with request for sponsor and speaking slots.  This year history repeats itself: just a month ago the conference site was a placeholder and one could only wonder if … then a new site was born overnight, based on Jive Software’s excellent ClearSpace platform, and now it’s alive with user participation, sponsors, registration..etc.

What’s a Web-focused Conference without wi-fi?   It’s a joke that in 2008 conferences, including brands like Web 2.0, Gnomedex …etc.  still fail to provide sufficient connection.  Ismael’s solution includes laser beams to the top of the building, another one down to a terrace, then inside – making it happen with Swisscom was quite a project in itself.  Office 2.0 set the standard once and for all, anything less at major conferences is a failure.

Then there’s the issue of The Gadget.  I believe the iPod at the first conference was just more-then-generous swag.  The iPhones handed out at the second conference had an integral part at the event: several applications released specifically for Office 2.0 allowed participants to interact with each other, navigate the schedule and find sessions.  This time all paid participants will receive a the HP 2133 Mini-Note PC.

Yes, the conference swag is not pens, stickers or t-shirts: it’s a mini-computer, which cost about half the registration fee.  It will clearly raise eyebrows, and many would prefer to skip the gadget and pay reduced fees.  I think handing out such an expensive gadget will have an interesting effect on the conference demographic: we’ll likely see an increase of corporate employees, who can expense the entire conference and are less price-sensitive than startups and freelancers – the original Office 2.0 crowd.

But that may very well be what the conference needs.   There’s a reason why this year’s theme is Enterprise Adoption.  The Office 2.0 movement wouldn’t go very far with only the early pioneers, evangelists talking to themselves, dissmissing enterprise requirements.  For the principles to become practice in business, we need a more balanced mix, and in a twisted way the gadget may just help achieve that.

Those who can’t afford the full registration are not entirely locked out: Socialtext CEO and top evangelist Ross Mayfield will facilitate Un-Conference 2.0 the day before the official conference, at a cost of $50.

Finally, startups have a chance to present the attending VCs, media, bloggers at  LaunchPad – Ismael announced this event over the weekend, and already has 10 particpants – get in there while you can.  Note to my (numerous) VC readers: I hope you will be there, too.

If you’re still hesitating, check out the Agenda, the list of SpeakersMedia representatives,  and if you haven’t done so, register now.

I’ve saved the best for last: don’t use the standard registration, save $100 by registering here.

Update: while I was typing here, fellow Enterprise Irregular Dennis Howlett explained why this is an Irregular (pun intended) Conference in more than one way.  Update to the update: see Susan’s excellent summary.

(cross-posted on the Conference Blog)

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Benchmarking the Benchmarkers

I’ve repeatedly praised Web-based Invoicing service FreshBooks for being innovators, unveiling the hidden business model enabled by SaaS: benchmarking.   But who’s benchmarking the benchmarkers?

Competitor Xero has just issued a call looking for benchmarking partners comparing metrics like:

  • Customer acquisition rates
  • Teaming model and allocation of spend
  • Sales and marketing spend
  • Sales quotas
  • Google spend
  • Pipeline conversion

CEO Rod Drury is looking for 5-10 partners, communicating either directly, or through a trusted third party.  Either way, its quite a challenge, as unlike the aggregate anonymous data Freshbooks provides to their customers, this level of sharing requires quite a level of trust.

Interestingly I contemplated similar ideas just a few days ago when Zoho CEO Sridhar Vembu published his margin analysis of Google, SAP, Oracle, Microsoft and a few others.  He drew a conclusion that since Google’s current revenue and profit per employee metrics were much higher than even the best players in the application space, Google has little incentive to move into this space forcefully. (He then followed up with a What’s in it for Zoho? post)

Specific conclusions aside, I thought it would really be interesting to expand this spreadsheet buy including Zoho and comparable companies as well as additional metrics.  Needless to say I ran into a similar dilemma that Xero is facing now: these are private companies that don’t typically publish their financial results, to get them participate we would need a relatively larger sample and it would still require a leap of faith.

Rest assured I’ll be watching Xero’s experiment with great interest.

Related posts:

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What Are a Million Users Worth? Zoho Thinks a Lot.

The first time I wrote about Zoho – the “Safer Office” they had less than 50 thousand users – not a lot for a web service. Today they announced having a million users – and that’s just direct Zoho users, not including those served by Baihui in China, or any other white label providers.  Back then they had 3 products: Writer, Sheet and CRM – today the list includes 17 Applications, 5 Add-ons and 4 Utilities.

The chart below shows steady growth in monthly new registrations – the sudden spike in May is the effect of opening Zoho Apps to users with Google and Yahoo accounts.

Now, you may ask, what are a million users worth in the world of freebies?   Web startups do go out of business not being able to monetize their popularity.  Zoho’s story has been that Adventnet, the parent company with “boring” but reliable, cash-cow network management products is financing the “Zoho experience”.  Well, here’s an update to that story: the Zoho brand itself has been self-sustaining for a while now.

While Zoho does not disclose numbers – it’s their prerogative, being a closely held private company – they apparently have paying users.  The number one revenue generator is Zoho CRM, that they were asked to abandon in order to be allowed to join Salesforce.com’s  Appexchange.  Apparently they made the right decision, and instead of being relegated to providing an Office Suite only, they keep on adding business applications like Projects, Invoice, People, Meeting..etc.  Incidentally, these apps are where Zoho makes their money.

The free Office and other apps with the million-or-so users are Zoho’s main marketing vehicle.  As we often discussed here, they don’t have a Sales force, in fact they don’t “sell” as such: the products sell themselves.  This trend will likely increase as Zoho now increasingly focuses on integrating existing services rather then just pumping out new ones.

That is not to say that the Office Suite can’t became a source of significant revenue, but perhaps from a less expected source: while Zoho strives to become the outsourced IT department for small businesses (SMB) they have seen a flurry of large enterprise inquiries recently.  I am aware of ongoing projects with customers that even enterprise software giants SAP or Oracle would consider strategic, key accounts – let alone Microsoft. smile_wink

As for the one millionth user: Zoho CRM user Dean Detton of Prestige Automation Inc has been invited to celebrate at the Zoho Party during the Office 2.0 Conference on September 4th.

The address for the party is: 1 Cloud Avenue.  See you there! martini

(Disclaimer: I am an Advisor to Zoho)

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CherryPal: Green Cloud-Computer (Almost)

CherryPal™ is trying to change the world one computer at a time. We’ve created the most affordable, easiest to use and greenest desktop computer available.

That’s the statement from the company’s website. I buy the the greenest argument, not so sure about the others.  These are the specs of the new $249 tiny PC announced today:

  • Freescale’s MPC5121e mobileGT processor, 800 MIPS (400 MHz) of processing
  • 256 MB of DDR2 DRAM
  • 4GB NAND Flash-based solid state drive
  • WiFi 802.11b/g Wi-Fi
  • Two USB 2.0 ports
  • One 10/100 Ethernet with RJ-45 jack
  • One VGA DB-15 display out jack
  • Headphone level stereo audio out 3.5mm jack
  • 9vDC 2.5mm 10 watt AC-DC adapter power supply
  • Weighs 10 ounces
  • 1.3” high, 5.8” x 4.2” wide

It is indeed very small, the size of an average paperback, and the power consumption is an amazing 2W only.  That is, until you start using it – presumably you’d like to see what you’re doing and will need to attach a monitor.  Which brings us to the issue of price. It’s really hard to find an LCD display for $150 or less, even if you go down to the 15″ range – add a keyboard and mouse, and you’re likely in the $450 range, which puts the Cherry in the range of several low end desktops, even sub-notebooks.   Of course none will be as green and few as silent as the CherryPal.

CherryPal is positioned as a Cloud-PC, and it comes with 50G of free online storage, dubbed the CherryPal Cloud. Does this sound like a familiar combo?  Zonbu, the $99 Green PC that Cost You $249 is quite comparable, although they charge a subscription fee, while the Cherry-Cloud is free. How can they afford it?   The company says they will play ads when you start the applications.

Now, let’s go back to why I think it’s *almost* a Cloud Computer: it still has heavyweight desktop software. OpenOffice is a popular MS Office alternative, and is free, but is known as a resource hog. It’s not going to be fun on a 256MB computer.  If the Cheery Pal is a Cloud PC, why not go all the way: forget desktop software, just bring up the browser and make Zoho or Google Apps the homepage.

Update: CherryPal is alive, on Twitter and lives on Jelly Bellies🙂

Update# 2: TechCrunch wants to build a $200 Web Tablet. Is this real or a joke? 🙂

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Swisscom Selects Zoho for Business SaaS Offering

If the second largest Swiss telco partnered with Google for email, then who would the #1 select for business applications?   You guessed right (I hope):  it’s Zoho. smile_wink

Swisscom, Switzerland’s leading telco has for a while need piloting Teamnet, a business collaboration portal, which includes a customized version of Zoho Business, with Zoho Writer, Sheet, Show, Notebook, Meeting and other tools.

 

This comes on the heels of another, larger scale Zoho partnership with Baihui in China. 

Zoho Business, also offered of course directly by Zoho is currently in private beta, which typically means by invitation – but here’s a secret (don’t tell anyone!smile_wink) : it’s actually open for use.  

Zoho has a few similar deals in the works, and they also have white-label partnerships with fairly large corporate customers.  The latter is probably the less-known side of the Zoho Story, but the one that allows them to offer their services free to individual users.

As a side-note, Swisscom certainly does not operate only in Switzerland: they were the team that outfitted last years Office 2.0 conference with excellent wi-fi – quite a story in itself.

Related posts at: Between the Lines, CenterNetworks,

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DocSyncer Dead. Too Bad.

Cliff Shaw is a serial SaaS entrepreneur who keeps on coming up with really useful services that just don’t make it as a business.

ProtectMyPhotos was my favorite photo backup and synchronization service. Unlike Flickr, Photobucket, Zooomr and just about all the photo site focusing on sharing your photos, this one did not require manual uploads. In fact the best feature was that after initial setup, you could completely forgot about it. Just like Mozy, the general-purpose online backup service, ProtectMyPhotos worked away in the background, non-intrusively, throttling back at times of heavier computer use. With added bells & whistles (online view & edit, sync between online and several offline versions..etc) it was a perfect service – for free, that is. Apparently it failed to attract enough paying customers, so eventually it shut down.

It did not completely die though: Cliff Shaw’s next startup, DocSyncer clearly showed signs of it’s “parent”: the UI was quite similar to ProtectMyPhotos, and they leveraged a lot from the core synchronization engine of the previous product. It looked like a perfectly executed turnaround: the existing technology found new purpose. DocSyncer filled a void left by the web-office providers: it synchronized desktop documents with Google Apps. I was quite certain they would have a short life-span, but this time with a happy ending, Google taking them out. Since the acquisition did not materialize, I can only assume either they could not come to terms or Google is already working on their own solution.

DocSyncer is about to shut down. Quote from the website:

We’ve figured out in a very short amount of time that DocSyncer is a cool tool – but not a business.

I really hate to see it go. No transition to web-based applications is complete unless we can bring our old baggage, i.e. transfer existing desktop documents to the online service. I see evidence of interest day by day, in the 100K or so hits my two “import your history to gmail” guides received. DocSyncer did better then import, it offered true synchronization, but I’d be quite satisfied just to see one-way batch import tools to Google Docs and Zoho, the two leading service providers.

The DocSyncer site says:

Until we meet again, good luck and thank you for the support!

“Meet again”: Cliff does not talk about his next gig yet, but his LinkedIn profile lists him as CEO of Picstreem. His profile also reveals four startup gigs in the past, two of which getting sold. He is a comeback guy, I am looking forward to seeing Picstreem.

In the meantime let’s hope that Google and Zoho will soon offer mass migration, perhaps synchronization.

Update (6/17/08): Wow, it’s amazing how many blogs picked up the story, all without a single bit of accreditation.  Thanks, gals and guys! smile_angry

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