Intel’s Best Customer in 2013
October 27, 2008
I am not sure whether to believe this or dismiss it. You will have to judge for yourself. The Stackelberg Follower reported on October 27, 2008, here that Google will buy one third of Intel’s processors. You can read “Economics of Intel” at http://stackelbergfollower.blogspot.com/2008/10/economics-of-intel.html. Other interesting items from this Stackelberg Follower post were:
- AMD buys expertise from IBM
- AMD’s last profitable quarters were directly attributable to chip orders from the Google
- Amazon and Google buy “basic products”. Google refers to these as commodity chips.
One of my sources told me that Google had in early 2007 about 950,000 servers. These machines were allocated to different tasks. If the Google buys one third of Intel’s processors in 2013, my question is, “How many CPUs will Intel make?” The Stackelberg number sounds impressive assuming Intel does not make nine chips in 2013.
Stephen Arnold, October 31, 2008
The Metabolism Metaphor
October 27, 2008
The New York Times’ article “To Survive, Net Start Ups Slow Their Metabolism” is one of those news stories that summarize a trend and give us a metaphor to guide our thinking. You can read for a while the full text of the story here. NYT’s articles may require registration or a fee to view after a story’s initial publication. The author is Brad Stone with assistance from Claire Cain Miller. For me, the most important item in the article is the metaphor of slashing staff in order to slow down a new venture. Almost as interesting to me was this comment:
The only certainty in Silicon Valley is that survival is quickly becoming more challenging. The growth in online display advertising, which helps fuel the new Internet ecosystem, is declining. Venture capitalists and other investors in start-ups, like hedge funds, are cutting back. The market for initial public offerings remains closed and potential acquirers — Google, Yahoo and the rest — are deep in their own problems. Many entrepreneurs and deal makers agree that a shake-out is indeed coming. Venture capitalists have begun preaching frugality, urging the start-ups they have invested in to cut costs and get profitable. Their advice shares themes: cut employees, do not count on raising more money and move quickly.
These actions have been well document. The Yahoo staff reduction made headlines when it was a rumor not a fact. The Hewlett Packard job chop is in the neighborhood of 20,000, but it hasn’t had the visibility of Yahoo’s retrenchment.
Do we need reminding that cutting funds, reducing staff, and spending less is prudent when credit is not readily available? The New York Times thinks we do need reminding. Judging from the flurry of comments about this article, many other people agree. We have a new metaphor, and I want to jot down my thoughts before they slip away:
- I am troubled by the metabolism metaphor. Without sufficient nourishment, perhaps weaker organizations will die. In the Darwinian environment of information, perhaps this is a good thing. Certainly the individuals affected are adversely affected. The larger benefit is that the survivors survive. I need to think about this more because the speed with which an organization fails may not change its chances for survival.
- The euphoria of the early years of the Internet fizzled when business models were in short supply in the 2000-2001 period. Exogenous shocks accelerated the thinning of the herd. Companies surviving included Amazon and Google. Now another round of thinning seems to be underway. The metaphor of metabolism does not stretch to cover this winnowing and no belt tightening will slow what seems to be happening to good ideas that can’t generate cash.
- Metabolism strikes me as an organic process. The problems of GM and Chrysler have broader economic implications than cut backs in smaller firms with little or no footprint outside of their investors’ sneakers. GM and Chrysler face problems that defies a metaphor. In my opinion, I think that Microsoft’s online initiative to “catch” Google and Yahoo’s decline present challenges for which we need a different metaphor.
I am no poet, and I don’t have an easy way to relate the problems facing information centric companies with a clever analogy. When I think about the dominance of Google, my hunch is that the companies facing metabolic problems may be saddled with a flawed business model and technology (in its broadest sense) that is out of step with the opportunities that do exist.
The problem for me is that the type of shift that Google represents has not been fully understood and internalized by organizations within the content processing sector and outside of that sector. The basic management policy of reducing transaction costs and making rapid innovation a matter of low incremental cost with short product and service release cycles is lacking. In the emergent commercial world, companies lacking this management philosophy cannot be saved by a metabolism change. The companies need something more significant, perhaps the management equivalent of genetic engineering?
Stephen Arnold, October 27, 2008
Google: Supranational Company, Emerging Nation State
October 27, 2008
A very amused and cheerful quack to the reader in the Eastern Mediterranean who sent me some useful snippets about Russia and online. I want to capture these before my flakey email system nukes the information. Gentle reader, you may want to go elsewhere if you loathe Russia or simply don’t care much about the policies of nation states. Keep in mind that this Web log is a diary and opinion drop point for me. Let me run down the items provided by my sun baked correspondent and then conclude with some comments, again designed for me to capture my thoughts on October 26, 2008.
Set Up
In Google Version 2.0 I expanded on the argument I introduced in my 2005 study The Google Legacy. In a nutshell, I presented information to support my notion that Google was not perceived correctly by competitors or regulators. The kindergarten colors and lava lamps filed down the claws of the company’s technological trajectory. Heck, Google is about Web search and online advertising. The general consensus was in 2005, “What me worry?” Flash forward to October 2008, and I think we see that publishers, telephony companies, and enterprise software vendors understand that Google is exerting some “strange force”. Most executives can’t put their finger on what Google is doing. The view is that Google is just too darned diffused, chaotic, and unbusiness like to figure out. A recent book characterizes Google as a planet. I don’t think that’s a useful analogy. The metaphor connotes bigness, but it misses the organic nature of how Google is a transformative entity. It’s not a planet; Google is an information applications platform that could alter how traditional businesses operate. Moving operations out of a location and into a barge holding servers outside the three mile limit poses some interesting challenges for Google’s competitors and opponents.
The metaphor that comes to mind is a mesh that wraps the earth. The mesh is a meta layer that puts competitors inside a planet sized drift net. Competitors can’t get away from Google. Competitors–even countries–are within Google. I see this as a Google mesh, something like this:
Source: http://publib.boulder.ibm.com/infocenter/db2luw/v9/topic/com.ibm.db2.udb.spatial.doc/g7nation.gif
There is now a general discomfort triggered by Google’s trajectory is causing regulators to dig in their boot heels. The messages sent by different regulatory groups are confused, almost on again and off again. Google continues to do what it wants. The company appears to be tolerating regulatory and legal issues, but in general the company continues to move forward like gas diffusing through a closed space. You can’t pin down where the molecules are going, but the molecules are distributing themselves and each continues to wag its tail and do interesting things.
I am now thinking about Google’s buying a jet fighter. Information is here.
Insight into Why Google Wants to Acquire In Country Operations
My questions to myself are: “Does this allow a new loophole for Google in China after the acquisition of Yahoo? And is this the strategy behind the attempt to acquire Begun in Russia?” These were stimulated by Lindsay Eastwood’s “Don’t Be Evil: Google Faces the Chinese Internet Market and the Global Online Freedom Act of 2007” in the Minnesota Journal of Law, Science & Technology This is an academic write up and you can read it here. For me, the key passage was:
“…many U.S. Internet companies do not own their Chinese counterparts, but operate through local owners. One of the four main targets of the legislation, Yahoo! Inc., runs its China operations through Alibaba.com, of which it owns only a 40% stake. As a result, Yahoo! could find itself unaffected by the Act and its work in China immune from liability. Google operates its Google.cn business under a license owned by a local company, Ganji.com, but the precise nature of the relationship between the two entities has not been made public.”
My thought is that this in-country strategy may be a way to deal with certain business barriers to expansion inside of other countries.
- Two further quotes from Eastwood demonstrate intent and ethical confusion in equally opposite ethical directions:
“Choosing to ignore U.S. Internet speech violations while enacting legislation that would target similar activities abroad may seem overly hypocritical” (p.311) - “…The vast majority of Internet searches in China are for local Chinese content such as local news, local businesses, weather, games and entertainment, travel information,blogs, etc.—Google, Inc. determined that the ethical balance tipped in favor of the introduction of the new [censored or filtered ]site. Indeed, Schrage testified that Google estimated that fewer than 2% of all queries in China would result in pages from which search results would be unavailable due to filtering [out results].” (p.303)
Google’s Eric Schmidt Doesn’t Want Government Job
October 27, 2008
WebProNews.com reported on October 22, 2008, here that “Google CEO Denies Interest in Government Job.” Jason Lee Miller points out that Eric Schmidt, Google’s chief executive officer, has campaigned for Barack Obama. A rumor flared that Mr. Schmidt sought a permanent position with Mr. Obama if the democrat’s campaign for president were successful. According to Mr. Miller:
But Schmidt says he’s not interested. “I’ll put an ‘N’ and an ‘O’ and circle around it, if that would be helpful,” CBS News quotes Schmidt as saying. He has a multinational corporation to run. Of course, Obama, like so many others before him, once wasn’t interested in running for President. Sometimes being asked makes all the difference.
If one were to speculate on other potential technology advisors, Vint Cerf, also a Googler might make the short list. With Google’s increasing sophistication in the ways of Washington, DC, a touch of Potomac fever is understandable. In my opinion, until the election has been decided either by the electoral college or a group of supreme court worthies, the issue is silly. What is significant is that Google’s growing troubles with anti monopolistic issues in the US and Russia may make a political route increasingly attractive. When politics and technology mix, it is tough to predict what will happen. The bottom line for Google is revenue. Whatever it takes, I suppose, will be explored.
Stephen Arnold, October 27, 2008
Mahalo: Pulling Out the Stops to Pump Usage
October 27, 2008
Social search site Mahalo.com has added an incentive program to pump up page views. MicrosoftPersuasion.com’s “Mahalo Launches Incentive Program to Spur Use” reported on October 26, 2008:
Mahalo, a hybrid web directory/zeitgeist/search engine with wiki capabilities, has quietly added a Loyalty Program that tracks the number of pages people view and rewards the most loyal visitors with prizes.
You can read the full text of this story here. The Mahalo page explaining the move is here. Mahalo recently trimmed its staff. Now it looks to me as if the company is shifting down a gear. In my experience, incentivizing yields some short term gains. These taper off over time. Sites that draw traffic are magnetic and don’t need tricks. Microsoft has an incentive program in place, yet the Redmond giant finds itself unable to close the gap between Google and Live.com.
What’s next for Mahalo.com? A gentle stasis until the company needs a cash infusion. Then management will have to paint a bright picture or face further constraints. Social search is one of those “sounds great, less filling” approaches to search and retrieval. The reality is less filling than one expects.
Stephen Arnold, October 27, 2008
Arista Lands Sun’s Bechtolsheim
October 27, 2008
TheStreet.com reported on October 23, 2008, Andy Bechtolsheim, co-founder and chief architect, will reduce his role at Sun Microsystems “to help build network switch startup Arista Networks.” You can read the full story here. Sun Microsystems has fallen on hard times. Tech wizards can engineer the pants off the Bach statue in Eisenach, but so far the Stanford University Network crowd has not been able to pump revenue into the company. The deal, if I understand the news reports, is that Mr. Bechtolsheim will become Arista’s chairman and chief development officer. In addition, he will continue to contribute to Sun.
What’s an Arista Networks? According to TheStreet:
“Arista is touting high-speed 10-Gigabit Ethernet switches and is clearly aiming to challenge Cisco in the data center networking niche.”
The problem with high speed switches is that these gizmos are like potato chips. You can’t get by with just one. Unlike the Dlink and Netgear devices, wavelength and optical solutions are exotic, expensive, and in demand. Outfits like Microsoft and Yahoo are building data centers designed to handles 50,000, 100,000, or more servers. Servers are useless unless telecommunication pipes can get data into the data center and from the data center to the servers. Arista Networks wants to play in this fast growing segment. Mr. Bechtolsheim is a savvy technology wizards, and he knows an opportunity for an upside when he sees one. The Arista play is not without risk which may explain that Mr. Bechtolsheim is working two jobs at least for now.
Arista gizmos. The 7124s is a 24-port 10GbE switch with 480 Gbps of bandwidth costs about $150 per port or about $3,600. Pricing data are hard to get, so if you want to buy a couple dozen of these gizmos, contact the company.
Arista’s angle, based on information available to me, is to offer high throughput at a more compelling per port price than other vendors such as Cisco. The Arista secret sauce is a combination of smart software and less expensive components. The combination of computational intelligence and more commoditized pieces translates to a high performance device at a price the Microsofts, Yahoos, Amazons, and Equinixes of the world will find attractive.
Microsoft DevLabs
October 26, 2008
A new developer Web site is available from Microsoft. You will need Silverlight to access the site, its tools, and code samples. You can find the DevLabs’ site at http://msdn.microsoft.com/en-us/devlabs/default.aspx. Microsoft’s explanation for the site is:
Any truly remarkable software innovation that introduces a paradigm shift is based on solid inventive ideas. But it also needs discussion, trial, collaboration, and a critical eye. Explore the projects that we are experimenting with in our labs, and let us know if they inspire you.
You can find the DevLabs site on Google.com by entering the search word “devlabs”. You cannot find the site on Microsoft’s Live.com search at 9 22 pm on October 26, 2008. I asked myself when I discovered this, “Is Microsoft going to get its act together in Web search?” What’s more interesting is that DevLabs will be rolled out at the developers’ conference during the week of October 27, 2008, and the Web site is already indexed by the GOOG. I use Google.com’s Microsoft subset, which you can find here, to locate information on Microsoft’s own Web sites.
Stephen Arnold, October 26, 2008
Not HAL: Computational Intelligence at Google
October 26, 2008
“Thinking Ahead with Google” by Elise Ackerman and Scott Harris is a very good article about a subject near and dear to some Googlers’ hearts–computational intelligence. You must read the full text here. The old term “artificial intelligence” or AI is not too popular. AI is science fiction. Computational intelligence is pragmatic. The story opens with a reference to a 2002 comment by Sergey Brin about the future of search. The analogy was to the HAL computer in “2001: A Space Odyssey”. HAL, as you may recall, went off his rocker. Accordingly, Google is the “borg,” shorthand for cyborg. The subject of “smart software” is not one that turns up in daily newspapers. I commend the San Jose Mercury News for tackling the subject.
Ms Ackerman and Mr. Harris report that Google will support the “Singularity University” announced at a conference called Singularity Summit. The idea is that “smart computing” is important and needs a focal point. The most important comment in the article for me was this:
The meeting was reported by technology writer Nicholas Carr in his blog Rough Type, after one of the participants blogged about it. But don’t look for the item on Google; organizers requested the information be taken down.
My recollection is that Mr. Brin delivered a talk at a Google developer conference in 2007. That talk did not become available on Google’s YouTube.com. Apparently, the support for a better HAL does not extend to making in depth information available. In my opinion, Google is the computational intelligence singularity. Google’s patent documents are chock full of references to smart software; for example, US20070198481 has little smart fellows named janitors running around autonomously. The janitors clean up data and resolve ambiguities in certain procedures. Check out the San Jose Mercury News story and take a peek at how janitors get smart. Like I said, the computational singularity is Google. I’m fuzzy with regards to “Singularity University”. It might be another Google recruiting method. If you are somewhat paranoid, don’t read Kevin Kelly’s “Evidence of a Global SuperOrganism” here. The creature is wearing one of those flashing Google lapel pins.
Stephen Arnold, October 26, 2008
Big-ERP Vulnerable to Search Enabled, Agile Applications
October 26, 2008
CIOL (India) published “What Lies in Store for Small ERP Vendors,” by Pratima Harigunani. I was going to click right past the document, but my dunce cap monitoring tools insisted I would be interested in this article. I dived in and discovered that my software was actually right for once. The key point in the article is that big ERP or enterprise resource planning vendors are in for a tough time. In today’s economic environment, that is not news. I learned from CiOL that:
Says Sanjay Mehta, CEO, MAIA Intelligence that has recorded 91 per cent growth with 47 large corporate using its solution. “One of our OEM partners – Udyog Software India (Ltd.) offers solutions in Excise software with our 1KEY bundles for analytics and reporting. In this way the Indian ERP companies can create a niche for themselves, at the same time offer an unique proposition to its customers by offering a reporting and analytical tool. Bigger players do not cater to this combined solutions.
I had not heard of MAIA Intelligence. Check out the company here. What I found intriguing is that this search-enabled application has found a market despite the strong grip of such companies as Business Objects, IBM Cognos, and Oracle. MAIA is more agile and bundles some high value features in a “zero footprint deployment”; for example, dead simple data cube to chart formatting and data transformation tools.
Acquisition anyone?
Stephen Arnold, October 26, 2008
Google and Putin: A Game of Chess
October 26, 2008
Garett Rogers’ “Russia Tells Google to Try Again.” You can read his October 24, 2008, article here. The point of the story is that Google’s attempt to buy Begun, a Russian search and advertising outfit, hit a road block. The problem, according to Mr. Rogers, may be more complex that regulatory procedures. He writes:
It appears that Russian Prime Minister Vladimir Putin isn’t too fond of Google — he has expressed his dissatisfaction with the proposed deal made by the company, and by the sound of it, that’s probably all it’s going to take to prevent the deal from happening at all.
The Google play for Begun might not be dead. After I read this story, I asked myself, “Will Mr. Putin’s alleged lack of fondness for Google cancel Mr. Brin’s ticket for a space ride?” I think of different ways to look at this news report. One angle is that Mr. Putin may be playing chess. Mr. Brin wants to buy Begun. Mr. Brin wants to ride into space. What does Mr. Putin want? Google has an operation in Moscow, maybe more since I was last in the country. My hunch is that there is more to this story than fondness. Any ideas, gentle readers?
Stephen Arnold, October 25, 2008
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