Brainware: Nailing a Big Deal

October 31, 2008

Brainware won’t reveal the name of its client, but the “diversified energy company” bought $2.6 million worth of Brainware technology in October 2007. Brainware explains that this is a “follow on contract”. This size of this deal moves Brainware into Autonomy and Endeca territory, two vendors noted for their ability to land large search and content processing deals. Brainware describes itself as a vendor of “intelligent data capture and enterprise search solutions.” The firm offers what is called “end to end” solutions. Like OpenText and ZyLab, Brainware can put in place scanning and content capture and conversion systems, indexing, content processing, and information access tools. The idea is that paper or digital information goes in at one end of the system and the user can access that content at the other. You can read an interview with one of the Brainware executives here. I profiled the company in Beyond Search, published by the Gilbane Group. More information about that study is here.

According to the Brainware news release here:

This private sector oil company is deploying Brainware Distiller as a front-end data capture solution in conjunction with its global ERP rollout. The Brainware Distiller solution will process millions of invoice pages per year from more than a hundred different countries through their shared services centers located across Europe and the U.S.

A happy quack to the Brainware team. Now, what’s next for the Ashburn, Virginia, company? If you haven’t sold Halliburton, maybe you should aim for Shell or BP next? I found the announcement interesting because Brainware is associated with eDiscovery, not enterprise search, in my mind. Like Recommind, Brainware seems to be making an effort to penetrate new markets with its patented technology for information processing.

Stephen Arnold, October 30, 2008

Google’s Patent Activity

October 31, 2008

Imagine my surprise when I returned from a meeting in a dark, wet central European city to find this headline in my newsreader: “Google’s Looming Patent Hammer in the Cloud.” The article, published by Sys-Con here was picked up by CNet here in the US and ended up in a city better suited for an Alan Furst novel than an addled goose. The hook for these stories is that Google keeps plugging away at what I have called “plumbing inventions.” The “plumbing” is better known as cloud computing, and companies from Rackspace to Intel have decided that the cloud is a major weather system. Thanks to both publications for mentioning me.

I wanted to pick up this theme and add several points that I have been tracking for the better part of seven years. The background and detail for these comments appears in The Google Legacy (2005) and Google Version 2.0 (2007). I recycled some of the information in my Bear Stearns’ Google analyses and for an Outsell report or two in 2007. I don’t have copies of these to distribute, but these writings provide information about what the Googlers are inventing outside the boundaries of online advertising.

First, Google’s emphasis on infrastructure has existed for a decade, maybe longer if you include BackRub. Now that the world and the media have discovered cloud computing, in my opinion, Google’s present lead in infrastructure is old news. The key point is that companies like IBM and Microsoft who want to catch up have to shift into hyperdrive. Google has been moving forward a step at a time without much fanfare. For some companies, Google’s infrastructure lead is measured in years, maybe three or more. That’s a big lead.

Second, Google’s approach has been to trot out the lava lamps and feed visitors gourmet food. The buzz about Google’s ad revenue keeps most analysts for asking the key question, “How does Google get stuff out the door so quickly and display results in less than a second for a user in an Internet cafe in Albania?”

Third, Google does not have as many patents as other companies. I recall that someone told me that IBM and Intel file thousands of patent applications each year. Google files hundreds. One of my duller pastimes is indexing and classifying Google technology. What I documented in Google Version 2.0 is that the company has some tidy clusters of innovation that are useful in understanding what the plumbing can do. In my new monograph about Google and publishing, I will describe some of the “in the wild” glimpses of this functionality. The key point is that Google patents significant inventions; that is, the company is not patent promiscuous, a charge that might be leveled at some other firms’ patent strategies. Therefore, knowing what Google puts in its patent documents is to me interesting. Your mileage may vary.

I am delighted that some of my research is garnering attention. For some of Google’s competitors, the information is arriving too late in my opinion.

Stephen Arnold, October 31, 2008

New Info Mix: Search and Enterprise Publishing

October 31, 2008

The 20-somethings who want to rescue enterprise search from the swamp in which it is lost have to look at another player in the enterprise information game. The technology in question focuses on printing “dead tree” documents. These documents are mailed to millions, often tens of millions of people. Here’s an example. You lease an automobile. Each month the financial institution or entity brokering the deal sends you a statement. The real estate on these paper documents can be put to better use that reminding you to pay within 20 days. The financial institutions want to remind you to refinance your house (there’s a great idea) or remind you to take the vehicle to so and so’s dealership for the 6,000 check up. Some financial institutions want to greet you personally, with a cheerful “Hello, Tabitha.”

Time Magazine, the Wall Street Journal and other “dead tree” experts have figured out how to personalize certain print runs of their publications. Print personalization in the regional editions of Time Magazine have been around longer than some of the snappy Web personalization services. Advertisers like the idea of buying a specific demographic. Financial institutions, electric utilities, health care insurers, and other firms that mass mail invoices to known customers want to personalize as well.

A Web content management system is a toy compared to the industrial strength systems required to crank out the personalized invoices for a company like Honda, Prudential, or one of the few remaining banks that can pay for postage. The systems to handle this procedure have to connect to various back office systems, provide graphic tools, offer work flow controls to move information object A to financial analyst B and then to invoice C. Mistakes when it comes to billing customers are not acceptable. Web content management systems are able to produce Web pages, but it takes a broader, more comprehensive system to perform industrial strength enterprise publishing.

Now here’s the surprise that most of the enterprise search companies are ignoring. These systems include search functions, but it is a utility within a broader, mission critical enterprise system. This is not the world of the marketing department or the Web specialists. These systems make the day for the organization’s chief financial officer, regulators, and attorneys.

typical output


One of the early players in this enterprise publishing game was Optio Software, which was acquired by Bottomline Technologies this year. Streamserve, a company based in Sweden, is a leader in this sector. IBM and Ricoh hooked up and created InfoPrint last year to pursue this market sector. Xerox has long been a player with its now-long-in-the-tooth “Docutech” systems. Exstream Software, headquartered in Lexington, Kentucky, sold to Hewlett Packard earlier this year for about $1.2 billion.

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Google Social Search Wiki Resurfaces

October 31, 2008

The social search “revolution” makes me nervous, but I am less shaky than those working at social search sites where business models that work may be in short supply. Google’s search wiki is described by Garett Rogers in his October 26, 2008, article “Google Readying Search Wiki?” You can read the full text here. The idea is that Google faithful will provide inputs to improve search results. I agree with Mr. Rogers, those most enthusiastic about providing input may be those SEO folks who want to boost certain hits in a result list. The new service is, according to AppScount here, “a bit Digg like.” You can get more information directly from Google here. Google’s push into this sector of search validates the importance user involvement in search results has. The Google service may also pose some challenges to companies in this niche such as Cha Cha and Mahalo.

Stephen Arnold, October 31, 2008

Sun Microsystems, Its Downturn, and Search

October 30, 2008

Sun Microsystems, according to MarketWatch’s Therese Poletti here, may be positioning itself for a sale. With earnings declining and the broader economic climate grim, the company may look to Lenovo, Dell, or another company to buy it. Sun Microsoft systems and search are not considered as inter related. When I was working on my 2005 The Google Legacy here, I heard that in the early days of Google, a number of former Sun engineers were working at the company. I also mentioned in one of my lectures that Sun took a stake in a search company that is now mostly forgotten, InfraSearch. Our original The Point (Top 5% of the Internet) ran on Sun servers, and many other pre-Linux revolution search systems depended on Sun gear. Ms. Poletti does a very good job of analyzing Sun’s challenges. If the company goes on the block, talented engineers may jump ship. The buyer gets Sun’s hardware business, but the Sun patent portfolio and its once promising InfraSearch may add additional value to the buyer. The days of search and content processing vendors building their business on Sun’s reliable, powerful hardware are behind us.

Stephen Arnold, October 30, 2008

VentureBeat: A Pep Talk for the Beaten

October 30, 2008

I enjoyed VentureBeat’s summary of the “downturn event” here. The piece by Dean Takahashi gave me useful information and a feel for the tenor of the attendees. Several points stuck in my mind, and I urge you to read the write up. Better yet, try to wrangle a seat in the audience. I am in Denmark and have to experience these events via Web posts. For me, the key take aways were:

  1. The magnitude of the crash. Forty percent of the world’s market value is history.
  2. VCs are still investing.
  3. The epicenter of the crash is not Silicon Valley.

My opinion is that the balance of capital is now shifting from the US to other countries. The mood in Copenhagen in the few meetings for which I have prepped seems more upbeat than in the US. There is a wealth of talent in the San Francisco – San Jose corridor. But I think the days of Silicon Valley’s perceived dominance may be waning. The “beaten” is broader than a couple of hundred start ups.

Stephen Arnold, October 30, 2008

Google Bashing: G Phone in the Barrel

October 30, 2008

I want a mobile phone to be a mobile phone. When I want more, I fire up my Asus eee gizmo so I have a fighting chance of reading what’s on the LCD. I looked a T Mobile Google phone in my local phone store. I concluded that it was clunkier than my colleague’s Apple iPhone, and I didn’t like the keyboard or the weird way I had to keep using the touch screen and the key pad to accomplish a task. I ran some queries and Google mobile search did what it did the way it performed on my old Treo 650 and my current BlackBerry 8320. Yawn.

But I am a dinosaur and proud of it. When I read Bonnie Cha and Nicole Lee’s “Google’s HTC Dream Phone. That’s It?” here, I knew that folks younger and me were annoyed with the GOOG. Ms. Cha and Lee were not overly thrilled with the device either. Scan their article and you will get more details than I was able to notice because their eyes were able to read the display and they were motivated. I was not. I’m not a phone guy. Ms. Cha and Lee give an exhaustive run down of the Google phone’s features, including a look at the applications for the device.

For me, the most interesting comment in their write up was:

It’s [the Google phone] not quite there yet, so for now, the G1 is best suited for early adopters and gadget hounds, rather than consumers and business users.

Microsoft usually gets a product right after three tries. Google has one strike. I will wait for the next couple of pitches before making up my mind. It’s a version 1.0 product, so there is room for improvement.

Stephen Arnold, October 30, 2008

Omniture Mercado

October 30, 2008

A reader provided me with a summary of a research report prepared on October 26, 2008, by a consultancy identified as IVC, which is an acronym for Israel Venture Capital. You can learn more about the firm here, and you can sign up for the company’s reports. The report was “Mercado Software Ltd. I worked through the document and I found it useful, but like most consultants’ reports, a number of questions went unanswered. Three points in the report caught my attention:

  1. After five years, Mercado seemed to hit a revenue ceiling of US$ 7.0 million.
  2. The purchase price paid by Omniture–if I am reading the summary¬† correctly–was about US$ 8.0 million, which is a modest premium over revenues for a company that went through several rounds of financing.
  3. The board of directors had one Mercado member, and the other five board members were financiers or lawyers.

Mercado competes with Endeca, SLI Systems in New Zealand, and Progress Software’s EasyAsk, among other ecommerce vendors. Mercade had a number of high profile accounts. I recall that one of its major account wins was at The company’s Web site here provides a list of customers.

Several observations are warranted:

First, the purchase price of $US 8.0 million, if that figure is accurate, may suggest that fire sale prices could be slapped on certain search, content processing, and text mining companies. Mercade has customers and cash flow, but the costs of maintaining and enhancing search systems can be significant. I think the investors punted.

Second,the ecommerce sector is one of those niche markets that on the surface seem attractive to search companies. Ecommerce may be attractive, but it’s clear from Mercado’s struggles that technology AND marketing are essential. Despite Mercado’s reasonably high profile, the company seemed to struggle to generate substantial new sales. I wonder if the licensing deals were too relaxed. Selling complex software at a low price may create cash flow pressures, not relieve them.

Third, will other players in the ecommerce sector run into similar problems? The number of options for a retailer seeking ecommerce systems is large. Older technology may find itself stretched to compete with newcomers, bundles from companies such as Oracle, and hosting vendors who offer an ecommerce solution as an add on to core data center services.

I will continue to track Mercado as it moves forward with a new owner, Omniture here, a firm that has a core competency in Web site metrics.

Stephen Arnold, October 28, 2008

Disturbing Data, Possible Parallel for Search

October 30, 2008

After wrapping up another section of my forthcoming monograph Google Publishing technology for Infonortics Ltd. in Tetbury, England, I scanned the content sucked in by my crawlers. Another odd duck greeted me with the off point headline “Outlook: Don’t Panic It’s Not 2001” here. (This is a wacky url so you may have to navigate to the parent site and hunt for the author Bolaji Ojo.

For me, one telling paragraph was:

In 2001, for instance, the wireline communications equipment market sank 18 percent to $69.6 billion, from $85.3 billion in the previous year. Semiconductor sales to the segment tumbled 37 percent on a combination of sagging demand and severe pricing declines. Seven years later, wired communications equipment sales have yet to recover to the 2000 level, and estimates indicate the market won’t bounce back fully until sometime in the next decade. ISuppli expects 2009 wired communications sales to be approximately $76.6 billion, improving from an estimated $72.5 billion in 2008, but still below the record 2000 figure of $85 billion.



Another interesting point was:

The entire semiconductor market wasn’t as fortunate. Chip sales plunged 43 percent in 2001, to $101.8 billion from $178.9 billion in 2000, according to the Semiconductor Industry Association. The industry resumed growth in 2002, but it wasn’t until 2004 before global sales finally crawled past the previous record. By then, dozens of semiconductor, passives, interconnect and electromechanical companies and electronic manufacturing services providers had disappeared, some merging with stronger rivals. A few others went under, unable to finance operations as customers froze purchases or exited the embattled networking equipment market.

What these data suggested to me was that the search, content processing, and search enabled application sectors may face significant revenue declines and could take years to recover. The loss of companies that have no revenue is understandable. Funding sources may dry up or cut off the flow of money. Large firms may shed staff, but these vendors will, for the most part, remain in business. The real pressure falls on what I call “tweeners”. Tweeners are organizations that are in growth mode but the broader downturn can reduce their sales and squeeze the companies’ available cash. Slow payment from customers adds to the problem.

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Dead Trees–Cracking and Falling

October 29, 2008

I commented on the deal between Google and publishers here. I won’t retrace my thoughts. I would like to point to two news stories that presage what will happen in what I fondly call the “dead tree” business. “Dead tree” equates with paper. The “dead tree” people are those who print information on paper. Whether a newspaper or a conference organizer or a magazine publisher, the “dead tree” business model is suffering an ecosystem collapse.

Now the two news stories:

  1. The New York Times,, and others reported that Time Inc. is reorganizing and chopping down 600 employees. Once getting a job at Time meant employment for a long time. Heck, the company has been trying to organize its photo collection for half a century. I think these layoffs will be little more than tender spring shoots in a riot of efflorescence. Summer, spring, then fall, if you get my metaphor.
  2. The Christian Science Monitor, according Business Week, the Washington Post, and others, is killing its daily print edition. I don’t recall a weekend edition, but I may be wrong. Whatever. The newspaper industry is waking up to the reality of the new era in publishing. I imagine the clay cuneiform crowd in Babylonia reacted the same way when folks turned up with papyrus scrolls. Goes with the territory in the information world.

Let me summarize several points that I have been dancing around in a goosey boogie:

First, the reason dead tree businesses are in trouble is that the business model no longer works. Costs are part of the problem. The Internet, as I wrote in my monograph “Publishing on the Internet: A New Medium for a New Millennium” (Infonortics Ltd., 1996), operates on different gears and levers than mashing ink on paper and selling ads. Alas, the monograph is no longer in print. It was one of my last dead tree studies. My new work is digital. I made the switch years ago.

Second, the demographics are against dead tree operations. I read books. I subscribe to four newspapers. I gave up on the Financial Times because the UK based outfit could not even mail the paper to me on a regular basis. The 12-year-old next door doesn’t look at newspapers. The junk mail and the newspapers go straight into la poubelle. Not a glace she gives them. Newspapers to her are the equivalent of baloney from charities, pizza delivery outfits, and yard service operators looking for work in Harrod’s Creek, Kentucky.

Third, the content is not longer intermediated by gatekeepers in New York, London, Madrid, and Paris. When Time nukes people, that action creates a number of new bloggers. The result is that there are more people motivated to generate content. We just tallied the numbers of Web logs, calculating about 120 million Web logs, with a confidence of 15 percent. Google alone has more than 80 Web logs. How can a handful of people keep pace with this outpouring of information in digital, crunchy formats. Dead trees don’t do audio and video. My neighbor’s daughter disposes of the newspapers with ear buds stuffed into her ears. The listings for Louisville have eviscerated the Courier Journal & Louisville Times where I once worked, quite happily until the take over by Gannett in 1986.

Bottomline: will the intellectual foresters who print fungible information products figure out how to save the rain forest, or will these folks like the deer and squirrels here in Kentucky rush across the interstate when “developers” run bulldozers over the land to make way for new condos. Man, there are a lot of dead squirrels and deer on the roads near my log cabin. I will wait and see and be very careful cross the road.

What’s this have to do with search? When I cross the road, I check my Google Maps. You can’t find much information using my high school library. I checked last time I was in central Illinois.

Stephen Arnold, October 29, 2008

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