Autonomy: A Pretty Good Position
August 16, 2008
Analyst reports are often difficult to figure out. Take for example the write up by the London investment outfit Cazenove. The company issued report about Autonomy’s financial performance for the period ending June 30, 2008. I received a copy of this report from a Web log reader. My experience is that these are documents anyone can get if you have a big enough account with an investment bank or your financial manager is an individual with some clout. The wacky email address that sent me this July 23, 2008 Cazenove report “Autonomy” could be a signal to others in the enterprise search sector. I worked through the detailed analysis. You should read it as well.
On the whole,the document was stuffed full of useful data about Autonomy’s financial performance, which was quite good. Autonomy is on track to be close to or generate more than $300 million in revenue this year. Compared to most vendors of search and content processing, Autonomy is doing a good job. I compared their sales success to tuna fisherman who return to port with no fish. Autonomy’s vessel returns to port with its hold stuffed to the brim. Autonomy is at www.autonomy.com.
For me an interesting point in the Cazenove write up was this observation:
Autonomy management consistently mentioned the strength of its cash collection but we believe there is an issue related to cash conversion (i.e operating cash flow as a percentage of EBITDA). DSO’s (using trade receivables) decreased from 96 days to 91 and yet cash conversion did not improve. Autonomy provided some insight into the difference between commercial and government customers. For commercial accounts the DSO’s are around 30-40 days (and represents 75% of the revenue), which implies that for government customers DSO’s are c. 240 days (or c. 8 months).
As I stated, I have a tough time reading the tea leaves in this analyst’s report. Three thoughts went through my mind:
- The days sales outstanding was one of the factors that I had noticed in the 2007 Fast Search & Transfer financials. The growing days sales outstanding can contribute to a cash shortage. Money is not coming in but money keeps going out. A hitch in the git along can trigger a challenge at any company, even well managed ones.
- Autonomy has a number of lines of business. Some of these are search like the Web site or library search deals the company has landed and described in news releases. Other lines of business use Autonomy technology but are not “pure search”; for example, fraud detection or video management. Autonomy is growing larger and may be evolving into a more generalized software company. This means marketing and sales costs may be subject to greater pressure. Autonomy has done a good job managing costs, but if the controls slip, a cost surge could occur.
- Autonomy has been able to land a number of big deals. The company’s Web site does a great job of identifying these “big tuna” wins. The question I have is, “For a big deal, does the customer like a government agency or a big company pay up front?” In my experience, big companies pay some and then hang on to the bulk of the money until the system is up, certified, and operational. As a result, a big deal in a news release may not translate into an immediate cash injection. Autonomy appears to be able to get the cash or most of it before the system is up and running. This is a management capability that some Autonomy’s competitors cannot achieve.
Autonomy is definitely one of the high profile brands in search and content processing. I track more than 50 vendors of search, text processing, and content analytics. Only Google is in the same revenue sphere as Autonomy. The other vendors are far smaller, and if Autonomy can continue to grow, it may challenge Google and enterprise application vendors like Microsoft more sharply.
A happy quack to the Autonomy financial wizards.
Stephen Arnold, August 16, 2008
Wired Weighs in about Google and Privacy
August 16, 2008
Much of the information in the article by Ryan Singel in Wired here has been floating at conferences and in lunch conversations for almost a month. Mr. Singel in his “Google Privacy Practices Worse than ISP Snooping AT&T Charges” pulls together threads about AT&T’s view of Google here. You will want to read the article. For me, the most interesting point was this quote from the reassembling Ma Bell:
AT&T does not at this time engage in practices that allow it to track a consumer’s search and browsing activities across multiple unrelated websites for the purpose [of] developing a profile of a particular consumer’s online behavior.
Permit to offer several personal observations about the notion of monitoring by companies who intermediate digital flows:
- Monitoring can be narrowly defined or more broadly defined. The fact is that monitoring is performed at multiple points by multiple parties. Without precise definitions, assertions about what an intermediary does or does not do are subject to interpretations.
- Intermediaries want to know about users for the purpose of “owning” the customer. In the present environment, security and ad monitoring are “in addition to” not “instead of” a long standing characteristic of intermediaries to obtain information in order to “serve” customers better.
- Today any intermediary can use a variety of mechanisms to monitor, track, and use tracking data. These data can be fine grained; that is, about a specific user with a stateful session. Alternatively, an anonymous user can be placed in one or more clusters and then be “refined” as more data arrive.
Wired has taken an important step. More information about the data models in use for usage data are needed. More information about tracking and usage methods available to large intermediaries is also needed. Finally, with the emergence of “janitor” technology that can automatically clean up ambiguities, more information about this suggestive innovation is needed as well. I want more information, not just assertions.
Stephen Arnold, August 16, 2008
Google’s Acquisition Singularity
August 15, 2008
Farhad Manjoo’s “The Google Black Hole” in the August 13, 2008, Slate here is a quite interesting essay. The premise is simple: Google buys hot companies and fumbles the ball. Mr. Manjoo is more delicate, which is understandable because Slate is a real digital publication. My Web log is the work of an addled goose. For me the most interesting comment in the write up was this statement attributed to a Google employee: “It takes work to move a new company onto Google’s systems.” From this I conclude that Google is human, not a borg. The difficulty of integrating a third party innovation into Google plagues other companies. In my research, I identified several reasons for a Google acquisition. Let me highlight several not mentioned in Mr. Manjoo’s article:
- The buy is Googley; that is, someone in the company makes a compelling case to buy an “interesting company”. I think Dodgeball (the orphaned social game) falls in this category.
- Let’s beat a competitor to the punch. I think a good example of this is Google’s purchase of Keyhole, a vendor working with Microsoft prior to Google’s snapping up the company, beating Microsoft to the Web with geo-spatial imaging, and starting the “earth and map” push into the enterprise.
- Buy experts, know how, and leap frog technology. I would put Google’s purchase of Transformic in this category.
- Get content. Google bought Deja News for clicks and content.
- Get publishing and structured data functions. JotSpot falls into this category.
- Get an edge in ad matching. The purchase of Applied Semantics delivered in this category.
There are others, and I detail them in my various for fee studies from Infonortics and the Gilbane Group. You can see a partial list of Google acquisitions on Wikipedia here, but the list is not comprehensive. There is more to Google’s acquisitions than black holes. Think singularities that transform. A new for fee study on this subject will be available from IDC in the near future.
Stephen Arnold, August 15, 2008
Friday Whimsy: When Xooglers Return
August 15, 2008
A Xoogler is a Google employee who quits and takes a new job. Example: Benjamin Ling who went to Facebook about a year ago. (CNet has a useful write up here.) The return to the Googleplex of a former Google Jedi is a significant event, probably equivalent to Darth Vader’s going to the dark side. The problem is that I don’t have a suitable term for this event. I wish to submit some candidates:
- ReGoogle
- DeXoogle
- Google Loop
- ReGOOG
- Googley Go Round
Any ideas? Let me know. For now, my preference is ReGoogle. Example: Mr. Ling reGOOGed this week.
Stephen Arnold, August 15, 2008
Business Intelligence Vendors Are the Problem
August 15, 2008
Accountants, like lawyers, give me goose bumps. Once in a while, an accountant will come up with a good idea that makes sense and saves money. On August 14, 2008, Accounting Web published “Business Intelligence Round Up: Good or Bad for SMEs”. You can read the interesting article which is part commentary and part interview here.
For me the most interesting point in the write up was this statement by Gary Boddington, managing director, Alchemex, quoted by Accounting Web:
… The biggest problem with BI vendors has been the BI vendors themselves and their collective inaudibility to hear the market demands of an emergent client profile that differs to what had become accustomed and lives in a different market altogether. An outdated view is that that the end user in this new target market is simply too unsophisticated to understand the multitude of multi-letter acronyms required to successfully conclude a system integration, and therefore should be ignored because they simply never have, and never will grasp the concepts. Traditional BI vendors continue to apply big ticket thinking to small ticket business …
Similar statements have been made to me by those burned by some enterprise search installations that manifested some very bad manners.
Business intelligence is drawing some search and content vendors the way a Chicago’s crime light draws night creatures. If vendors are a “problem”, it follows that the potential pay off from a boom in analytics could go sour.
I received a question from one of my two or three readers of this Web log, asking me for the names of vendors who are revenue challenged. Specifics of this type are not appropriate for this addled goose’s Web log, but you can locate some candidates by considering these criteria:
- Sudden repositioning. One day the company does X, the next R. No obvious logic, just the logic of a 30 year old MBA
- No releases for a year or more. The delay may be a lack of money for creating new gizmos or a management team that’s complacent, keeping its head down, or riding out the storm until a new port comes in view.
- Tie ups that are not quite acquisitions. Two companies become one new one, often with no fungible evidence other than it seems like a good idea.
- Accepting cash infusions. Established companies that obtain cash infusions need money or at least more money than is available from normal operations.
- Redefining an old product as a new product when little has changed. I see this quite a bit. Some of the companies in my April 2008 Beyond Search study are expert in this tactic.
- New words, same old technology. I know where English majors go to practice their craft–the marketing departments of technology companies.
Many vendors are upfront, organized, and generally consistent in what generates revenue. With business intelligence once again becoming fashionable, could the vendors undermine a potentially significant revenue stream?
What do you think?
Stephen Arnold, August 15, 2008
Stephen Arnold, August 15, 2008
Mobile Choke: Google Breathing Apple iPhone Exhaust
August 15, 2008
I’m back in scenic Illinois, an hour out of Chicago without traffic. A day or two is the traffic is heavy. I had plenty of time to read about Apple’s market capitalization floating above Google’s. A useful take on this remarkable Apple surge is the ZDNet story “Apple Market Capitalization Tops Google” by Jason O’Grady here . I loved the last line of the article, “Take that Sergey and Brin.” [sic]
Gaffes aside, the market cap is a complement to the even bigger news that Android may become available in September 2008. I noticed this interesting story Google Android flaws pushing software firms awards iPhone by Aidan Malley for Apple Insider. The key point was this comment:
Google is not only perceived as driving developers away but of violating the open-source mantra it took on by creating a mobile operating system, shutting out many who could contribute to the development process. Some of these have since switched or expressed a desire to switch to iPhone development in retaliation for the seeming bias on Google’s part.
Now I don’t believe that developers are abandoning anything. Google is parsimonious with its pre release code. Without Android “in the wild”, there’s interest and possibly caution. How can a developer abandon something before it really arrives. Google’s perpetual betas and that legacy is quite real.
The more troubling fact is that Apple is selling a truck load of iPhones. The data seem solid, but when it comes to counting how many widgets actually sell, I’ve found that it’s wise to exercise caution. Nevertheless, the iPhone (which is certainly not without its share of problems) is leading to great PR for Taiwanese manufacturers working overtime to build the slick devices. Seeking Alpha has a representative approach to this “surge” of demand here.
My take on all this is typical of the addled goose at this Web log. Specifically, I think Google missed the window of opportunity to seize the advantage from Apple and other companies in the mobile hardware-software space.
Apple got there first, grabbed the lead in hot mobile devices, and follwed up with cloud services and downloadable applications.
Google has recruited an impressive cadre of sprinters, but it has not run the race yet. Google’s position in similar to a runner arriving at the venue a day after the race took place. The runner will get another chance, but that adds to the challenge.
Google is now in a position with which it is not familiar–behind..Apple’s speedy bunny is keeping ahead of mighty Googzilla.
Can Google catch up with Apple? Can Google dominate mobile hardware and software the way the company does in Web search and advertising? Can Apple lose its way, particularly if there are serious problems with the firmware in the Version 2.x iPhone or a change of management at Apple buffets the orchard?
The answer to each of these questions is, “Yes!”
But in my opinion I don’t think Google has much experience in addressing this type of challenge. The rocket boost for Web search was AltaVista.com engineers. The thruster for online ads was the GoTo/Overture model.
Google’s Jedi knights can be very clever. With time a critical factor, it will be interesting to me to see Google leverage its significant intellectual property in mobile services and search to leap frog Apple.
I have never seen Googzilla play leap fang. I want to see this happen.
Agree? Disagree?
Stephen Arnold, August 15, 2008
The Future of Search Layer Cake
August 14, 2008
Yesterday I contributed a short essay about the future of search. I thought I was being realistic for the readers of AltSearchEngines.com, a darn good Web log in my opinion. I wanted to be more frisky than the contributions from SearchEngineLand.com and Hakia.com too. I’m not an academic, and I’m not in the search engine business. I do competitive technical analysis for a living. Search is a side interest, and prior to my writing the Enterprise Search Report, no one had taken a comprehensive look at a couple dozen of the major vendors. I now have profiles on 52 companies, and I’m adding a new one in the next few days. I don’t pay much attention to the university information retrieval community because I’m not smart enough to figure out the equations any more.
From the number of positive and negative responses that have flowed to me, I know I wasn’t clear about my focus on behind the firewall search and Google’s enterprise activities. This short post is designed to put my “layer cake” image into context. If you want to read the original essay on AltSearchEngines.com, click here. To refresh your memory, here’s the diagram, which in one form or another I have been using in my lectures for more than a decade. I’m a lousy teacher, and I make mistakes. But I have a wealth of hands on experience, and I have the research under my belt from creating and maintaining the 52 profiles of companies that are engaged in commercial search, content processing, and text analytics.
I’ve been through many search revolutions, and this diagram explains how I perceive those innovations. Furthermore, the diagram makes clear a point that many people do not fully understand until the bills come in the mail. Over time search gets more expensive. A lot more expensive. The reason is that each “layer” is not necessarily a system from a single vendor. The layers show that an organization rarely rips and replaces existing search technology. So, no matter how lousy a system, there will be two or three or maybe a thousand people who love the old system. But there may be one person or 10,000 who want different functionality. The easy path for most organizations is to buy another search solution or buy an “add in” or “add on” that in theory brings the old system closer to the needs of new users or different business needs.
Daticon’s Invenio
August 14, 2008
eDiscovery continues to bubble despite the lousy economy in North America. Several weeks ago we started the update procedure for our eDiscovery vendors. I made a mental note to post a short item about Daticon, a company supporting organizations engaged in electronic discovery. You can learn more about this company here. What interests me is the firm’s search technology, called Invenio. The technology is based on a neural network, and when I reviewed the system, some of its features reminded me of an outfit called Dolphin Search, but I may be wrong on this point. If Invenio is Dolphin Search, let me know.
Invenio is integrated with Daticon’s management tools. These tools are among the most fine grained I have seen. Once deployed, a manager can track most of the metrics associated with processing, reviewing, and screening email, documents, and other content associated with eDiscovery processes.
Here’s a representative display of system metrics.
There are similarities between Daticon’s approach and that of other eDiscovery specialists such as Stratify and Zantaz. Daticon bundles eDiscovery with a work flow, data capture, metrics, and a range of content processing functions.
The search and content processing system support concept searching, duplicate detection and duplicate removal, email threading, non text objects, and case management tools. Essentially this is a case management function that allows analysis of activities associated with a matter.
The company makes an interesting series of demonstrations available. I did not have to register to get walk throughs of the Invenio system. Try them yourself by clicking here.
Stephen Arnold, August 14, 2008
Lexalytics and Infonic Go Beyond Sentiment and Get Hitched
August 14, 2008
I learned about Lexalytics when I was researching Fast Search & Technology. Fast Search introduced when I was writing the Enterprise Search Report a function that would report on the sentiment in documents or email. The idea is particularly important in customer support. A flow of email that turns sour can be identified by sentiment analysis software. Fast Search’s approach was interesting to me because it was able to use Fast Search’s alert feature.
Founded in 2000, Infonic here is a publicly traded company (previously named Corpora plc). Infonic is listed on the UK’s AiM Stock Exchange as LON:IFNC. The company offers geo-replication and document management solutions. The firm also develops text analytics and sentiment technology. The firm’s Geo-Replicator software uses data compression and synchronization technology to replicate data between servers and laptops and server to server. The firm’s Document Manager software permits scanning, search, and retrieval of processed content. The company’s text analytics software product is called Sentiment.
At the end of July 2008, the two companies announced that the sentiment units would be merged. The new unit will be based in the UK and named Lexalytics Limited. I profiled the company in my new study for the Gilbane Group here. Lexalytics software performs entity extraction, sentiment analysis, document summarization and thematic extraction. Information about Lexalytics is here.
According to the two companies,
The rationale behind combining the businesses is to pool the expertise and complementary products of the parties in this specialist area and to drive joint growth in sales, utilizing Infonic’s global sales capabilities.
The new company has a value estimated at $40 million. Jeff Caitlin, founder of Lexalytics, will be the managing director of the new company.
Sentiment analysis is moving to the mainstream. The addled goose wishes the new sentimental outfits good luck. Oh, one final point: watch for more consolidation in the text analytics space. The market is a frosty place for some search and content processing vendors at this time.
Stephen Arnold, August 14, 2008
Scaling SharePoint
August 14, 2008
We were looking for information about scaling SharePoint to handle a big job like the Olympics. One of my team called “Case Study: Using Microsoft Office SharePoint Server to Implement a Large-Scale Content Storage Scenario with Rapid Search Availability.” The authors are Paul J. Learning, Microsoft Consulting Services, Russ Houberg, KnowledgeLake, and Andy Hopkins, Microsoft. The download page is here. A PDF, DOC, and DOCX version are available. The document updated in June 2008 is over 100 pages in length, so summarizing it is not possible. The information is pertinent to most enterprise SharePoint installations.
For me, one of the most useful sections was the discussion of server topology, which begins on page 21. The design of the servers and the sheer horsepower recommended for the exemplary installation were, in my opinion, quite interesting. Brand name hardware and other high end infrastructure components underscore the need to have appropriate resources when scaling SharePoint. Here’s a representative server topology diagram that I think is first rate:
Page 34 from Case Study by Houberg, et al.
I also found interesting the paper’s discussion of SQL Server allocations on pages 41 and following stuffed full of useful data. Download the paper today. A happy quack to the Microsoft team for a job well done.
Stephen Arnold, August 14, 2008x
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