Another Extract from the Harmann-Communicatie Interview
August 24, 2008
I received a couple of requests for additional extracts from my interview with Eric Hartmann, who is sponsoring a conference about content management and content processing in Utrecht in September 2008. You can obtain more information about the program here. Here are three more snippets from the interview. The question is in bold. My response is in normal weight.
Everybody who’s talking about search has Google on his mind. Is that good or bad?
I have written two detailed studies of Google, The Google Legacy in 2005 and Google Version 2.0 in 2007. Google is an important company because it legitimized an alternative to desktop applications and on premises enterprise solutions. Along the way, Google changed the Web search landscape, dominated online advertising, and pushed its snout into telephony, online payments, publishing, and several other major non-search market sectors.
Google now has 70 percent of search traffic in North America. In Denmark and Germany, Google’s share of the search market is over 90 percent.
There’s a lot of talk about Google, but there is not much understanding of how the company’s strategy of disruption works, its business model options, or its potential to move into non search markets without warning.
Google’s also important because innovators are learning from the Google model. People who quit Google to start a new company—what are called Xooglers—build on the ideas made concrete by Google. As a result, Google the company could go out of business. But Google the model will have a continuing impact for many years.
On the hot seat.
After several take-overs, the market of enterprise search parties has somewhat shrunk. What’s your view on the investment and revenue opportunities?
That’s a good question. On the surface, it looks as if search companies are selling out. For example, Lexalytics has fused with a UK company. Powerset sold out to Microsoft. Fast Search also accepted a Microsoft offer. SAS Institute bought Teragram. Business Objects (now part of SAP) purchased Inxight Software.
However, there’s investment as well. Intel and SAP pumped $14 million in Endeca. I have worked on a couple of investments in search and content processing systems not yet announced to the public.
In my files I have the names of more than 300 companies engaged in search, text analytics, and content processing. The search sector is quite active even in the present economic climate.
The reason is that many people think, “If Google did it, so can we”. I don’t see any let up in search activity for the foreseeable future. Most search systems are not so good; therefore, there’s a big payday in the enterprise market. There’s a growing suspicion that Google may not be everyone’s idea of “My Favorite Monopoly”.
The search space is still like two or three interacting magnetic fields. It’s dynamic, unpredictable, and exciting to some.
What can we expect from Google, Microsoft, Autonomy and other parties?
There companies are good at keeping secrets and each is willing to sue anyone who provides highly specific information about what’s next from their creative ovens. I can offer some high level opinions with the caveat that my hunches may not be what these outfits actually do.
Autonomy. This company is morphing from search into a different type of information solutions company. When I look at the range of products on offer, I see a mini solutions conglomerate, not a search or content processing company. For example, fraud detection may or may not involve words. Fraud detection focuses on patterns in data, not search. Another example, is the company’s video solutions. Search plays a part, but Autonomy offers a more robust way for an organization to manipulate its rich content. On the strength of its non search businesses, Autonomy seems poised to grow to $300 million or more in revenue. This is a great achievement, but it is not a pure search play.
Google is a bit of a mystery to me. The company has some interesting patent documents and fascinating demonstration services. Google is content to collect billions from online advertising and sit on its hands as Amazon, Salesforce.com, and other companies push aggressively into cloud services. Google makes money from ads, but I am reluctant to say, “Google is a search company.” Google is an applications platform. Search and advertising are a couple of popular applications, not the whole company.
Microsoft is quite interesting to me. I think the fate of Microsoft will be to end up as an applications company, a game company, and a server company. Microsoft wants to have an online company like Google, but I don’t think it can achieve this unless it shatters itself and then starts online without the baggage from the past. In terms of search, Microsoft is a me-too squared company. Google is deeply duplicative of AltaVista.com, Overture.com, and Microsoft.com. Microsoft, oddly enough, is trying to duplicate Google which has duplicated part of Microsoft. Copies of copies get blurry, so Microsoft lacks focus in its search efforts across its very different business units. The Microsoft money comes from upgrades to operating systems and applications. I think the company has a struggle for the foreseeable future.
Stephen Arnold, August 24, 2008
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