Rain on the Search Parade
March 14, 2008
The storm warnings flash across the sky. This morning (Mrch 14, 2008) BearStearns is rumored to face a Carlyle-like liquidity crisis.
But so far no lightning has hit the search lightening rods. In fact, the unsettled financial weather has had no visible effects. The Google – DoubleClick deal is done. The Microsoft – Fast Search tie up is nearing port. Yahoo says that it is embracing the Semantic Web whatever that means (semantically, of course). France funds a Google killer. Radar’s Twine spools out. Business as usual in the search sector. But still we have no “real” solution to the “problem” of Intranet search, what I call behind-the-firewall search. The marketing razzle dazzle can’t mask the pain begging for lidocaine.
The turmoil in the financial market, the degrading dollar, and the $1,000 per ounce gold price seem to have little impact on search and retrieval so far. Anyone who suggests that a problem looms or that an actual panic could occur is an alarmist. I don’t want to sound any alarms.
InfoWorld‘s Web log contained a post that has to make search vendors’ pant with revenue lust. Jon Williams wrote here on March 13, 2008:
Every system we build has a search function built into it, usually hand-crafted (proprietary). Why? … Search on the internet, whether it be google, youtube, facebook, amazon, ebay, or linkedin, is solved for me, I always find what I need. And I believe the same is true for most consumers. But why not in the enterprise? Seems like a solution waiting to happen.
Spot on, Mr. Willliams. Spot on. This unanswered need is why you won’t hear gloom and doom from me. Search often sucks, and whoever solves this problem can make their investors happy in our down market.
An Entrepreneur’s Concern
At dinner yesterday evening (March 13, 2008) in Palo Alto’s noisy Fish Market, I showed the president of a hosted application my current list of 150 next-generation search and content processing companies. Most of the outfits on this list won’t resonate with you. Bitext operates from Madrid, Spain. Thetus has offices near Microsoft’s stomping grounds. PolySpot is tucked away in Paris, France. He had heard of none of these companies or most of the others on my list.
He said, “There are so many on this list unknown to me.” Not unusual. He then asked me, “How can these companies survive so much competition? I think the market downturn will make it very hard for these companies.
Right?”
I said, “Yep, tough sector. But no one has the one right answer. Not Google. Not IBM. Not the seven score newcomers on my list.”
The search market remains a triathlon, one of those “iron” versions that require competitors to climb mountains, swim rapids, and bicycle from Burlingame to Boise. But there are some formidable hurdles search vendors must overcome; namely:
Oversupply. Without rehashing dear old Samuelson’s Economics (now in its 18th edition I think), you have an embarrassment of riches for search. You have high-profile, publicly-traded “brands” like Autonomy. You have market-leading companies like Endeca. You have up-and-coming vendors like Coveo, Exalead, ISYS Search Software, and Vivisimo. You have state-of-the-art deep extraction providers like Attensity and Exegy (bet you never heard of Exegy, right?). You have free search software such as Lucene and Flax. You have such super-platforms as IBM, Microsoft, Oracle, and SAP including search with every enterprise applications licensed. You have specialists in entity extraction (Inxight / Business Objects), semantics (Siderean), ANSI standard controlled terms (Access Innovations). You get the idea. Can the market support hundreds of vendors of search and content processing?
Confusion. You don’t want me to belabor this point. There’s a great deal of confusion about search, content processing, text mining, and related disciplines. The easiest way to illustrate this is to provide you with a handful of the buzz words that I have collected in the last two weeks. How many of these can you define? How many of these do you use in your discourse with colleagues? Here are the “Cs” through the “Ks” only:
Collective knowledge systems
Community portals
Composite applications
Conferencing
Context aware games
Context aware mobile search
Context aware search
Context search
Faceted search
Folksomony
Formal language
Geospatial search
Glass boxes
Instant messaging
Intelligent agents
Knowledge base
Knowledge computing
Knowledge management
Knowledge spaces
Confused buyers often drag their heels as they try to decipher the nuances of search-speak.
Skepticism. Some vendors have told me that potential customers are skeptical about some search features and functions. For example, on a telephone call with a non-U.S. search system vendor, a principal in the company told me, “The nest has been fouled. Two prospects told me today that our two to five day deployment time was impossible. Their incumbent system took more than a month to get installed and another two months of effort before deployment.” As organizations get more behind-the-firewall search experience, those organization’s employees know that some vendor claims may be a blend of wishful thinking and science fiction.
Over confidence. I don’t have much to say about this human failing. Most chief technical officers over estimate what they know about search and retrieval. Most of the Intranet search problems problems have their roots anchored in the licensees’ assumptions about what their systems can do, their knowledge of search systems, and their ability to figure out software. I get my Greek myths mixed up, but there were, as I recall, quite a few stories about the nasty effects of pride. “Flame out” and Icarus resonate with me.
Loosey goosey pricing. In the course of the research for my new study Beyond Search, I encountered one vendor who refused to give me a starting price for its system. The president refused. I said, “Take your total revenue, divide it by the number of customers you have, and I will use that number as the average price.” He sputtered in anger. Let’s face it. Unless something is free, most search software comes with a price tag. Even a free system such as Lucene costs money because someone who gets a salary has to babysit the Lucene system. More and more vendors are tap dancing on the cost of their licenses, services, and support. I suspect that these vendors want to hold out to get the best possible price. Maybe these vendors don’t want other customers to know that a price is rising or falling?
Adam Smith’s “invisible hand” will reach out to strangle me. Economics in March 2008, however, continues to surprise the Wall Street set. Last time I checked the super-secret Carlyle Group did not expect fellow bankers to demand cash.
How untoward!
But if some of the best-known financial services companies are in the doo-doo, what will become of the more 300 firms engaged in search and retrieval? Even the Teflon-coated Google has drawn criticism. Today (March 14, 2008) Google’s share price will open at $443, down from its 52-week high of $747. Microsoft will pay $1.2 billion for a chance at bat to hit a search home run. That’s a pricey swing methinks. In my conversations at conferences, I detect a note of concern about making numbers. Entrepreneurs are thoughtful.
Wrap Up
To wrap up, I believe the search landscape will be pockmarked with Entopia-like shut downs. I also anticipate more strident marketing. Sigh. There will be some buy outs, but there will be some firms that cannot sell out. One reader of this Web log wondered if Autonomy was an example of company that many look at but none has carried over the threshold. Maybe the right suitor has not come forward? I believe that some countries will intervene in order to keep certain search firms in business. Anyone think that the French government has this as a motive for the funding of its Google killer? Other companies will give away search software and try to make money via services and consulting. And don’t forget the bundling option. Every time I buy an IBM server, I get Lotus Notes. Perhaps the same approach will be used by Microsoft and Oracle to “lock in” customers with this tactic.
The big concern I have is that search’s “bird flu” will land. The weaker firms will die after a tough fight. The stronger firms will capture a larger share of the market. Instead of the surfeit of choices we have today, we may end up with fewer choices, higher prices, and a stifling of innovation. What do you think? End or beginning for behind-the-firewall search?
Stephen Arnold, March 14, 2008
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