Autonomy and OpenText: Equally Good Bellwethers
October 8, 2008
Last week, a Web log reader asked me, “How similar are Autonomy and OpenText?” I provided an answer after doing a bit of research, mostly digging through my own collectioin of search- and content processing-related information. I abandoned the Enterprise Search Report in February 2007 due to a health concern. I think that enterprise search is a sinking ship, so that was in retrospect a prescient decision. Nevertheless, I have software that keeps sucking in informatoin about 50 or so search vendors. It’s a trivial matter to scan the collected informatoin about vendors–in this case, Autonomy and OpenText–and provide a reasonably-informed opinion based on the data as I understand them.
But this question has gnawed on my left web foot for the last 72 hours. I jotted down my ideas and created this table–a very preliminary table–to guide my thinking.
Continue with this story after the jump for the table and other visuals.
| Category | Autonomy | OpenText |
| Search engines | IDOL, UltraSeek, Verity K2 | BASIS, BRS Search, Tim Bray’s SGML engine, Fulcrum |
| Content processed | Structured and unstructured | Structured and unstructured |
| Rich media | Virage | Artesia |
| Discovery (legal) | Cardiff, Meridio, Zantaz | Discovery Services built on LiveLink |
| Platform | Integrated Data Operating Layer | LiveLink |
| Revenue est 2008 | ~$450 million | ~$900 million |
| Acquisitions for growth | Yes | Yes |
| Publicly traded | LON:AU | TSE:OTC |
| Services business | Yes | Yes |
Apart from the top line revenue estimate for 2008, the two companies are similar. The difference is the positioning of the company. Autonomy leads with search, although the firm uses a number of phrases that emphasize the IDOL system’s ability to finagle meaning from unstructured text. OpenText, on the other hand, explains that it is a content management company.
I navigated to Google Trends to see which positioning was hotter as determned by the traffic on Google’s public Web search system. Here’s that chart and its surprising revelation:
You can run this query yourself for more up to date information by clicking this link.
Two observations seemed warranted by these Google data. First, enterprise search is a gone goose, no pun intended. Enterprise search has flatlined. (Was I a bright bird or not when I used my web feet to paddle away from the Enterprise Search Report?) Second, content management is in a nose dive. If the Google Trends date are accurate, CMS vendors are going to be scrambling as the eocnomy tanks, information technology budgets get the squeeze, and cloud computing starts to look pretty darn good, warts and wrinkles included.
What’s this mean for Autonomy and OpenText? I really don’t know. That’s what’s been chomping on my left web foot. The positioning that is based on a distinction between search and CMS may not make much difference to a customer who is equally dissatisfied with search and content management. This means that repositioning may be in the works for both companies in 2009. The other implication is that OpenText may have to think about buying a company of Autonomy’s magnitude to get revenue and customers who can be convinced to upgrade to LiveLink. I don’t think this type of deal will happen, however. There’s too much overlap, and the price tag for Autonomy is probably too rich for the OpenText digestive system. The thought that occurred to me is that perhaps both companies will be hit by the downturn. Both could be acquired by a ocmpany looking to get into the customer base of each firm and pitch a broader, higher value software and services product line. Who knows? I don’t.
One other factor may have an impact on both of these companies. Several big companies–EMC Corporation, IBM Corporation, and Microsoft Corportation–released a “Content Management Interoperability Services” standard. You can read a good summary of this initiative here. Open Text was a party to the standard as were Alfresco Softare, Oracle, SAP and some others. Here’s a diagram of the world accrding to the CMIS visioin:
Bits are bits. In this type of interoperable world, the lieklihood of an automobile industry play happens. In the auto industry, there are a handful of big players. If one of these big players offers a good enough deal, CMS becomes a utility. Search is becoing a commodity, available without charge, or just tossed into a higher value application as another feature on a checklist.
What are the implications for Autonomy and OpenText? Here’s my second very preliinary table:
| Impact | Autonomy | OpenText |
| Growth | Difficult | Difficult |
| Pricing | Mix of higher and lower prices | Commoditization and price pressure across the product line up |
| Positioning | Away from search | Away from content management |
| Innovation | Acquisitions and marketing | Acquisitions and marketing |
These tables capture my thinking that there are not significant differences between Autonomy and Open Text. Both firms will have to juice their acqusiition efforts to fuel growth. Both firms will face price competition. Both firms will have to be very clever in finding and monetizing successfully higher value services. Search and CMS are not exactly home run sectors if the Google Trend data are anywhere near the truth.
A castrated ram with its eyes closed.
If you have any thoughts about the environmental impacts of the present financial turmoil on thees firms, let me know. I thnk Autonomy and OIpen TExt are pretty good outfits. Now the firms have the added role of acting as bellwether for two gasping business sectors. (Oh, in case you don’t know the etymology of bewether, the meaning is anchored in putting a bell aroun the nexk of a castrated ram. The ram is a wether in some unused lanaguage.) Ding, ding, ding. Is the bell sounding for search, CMS, Autonomy, and OIpen Text? Share your ideas, please.
Stephen Arnold, October 8, 2008
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