Sequoia: When Big Wood Loses Fiber
October 9, 2008
GigaOM reported on October 8, 2008, “Sequoia Rings the Alarm Bell: Silicon Valley Is in Trouble” here. For me, the most interesting point in the write up was this statement:
“R.I.P. Good Times”
The second most interesting thing was the comments the article. Three postings I found telling were:
- I’m not going to lie, that is daunting and scary to hear it from Sequoia who clearly know what they’re talking about.–Zee
- In a forest fire lots of trees burn, but not all trees.–Robert Scoble
- This is a PR stunt.–Anonymous
The thought that occurred to me as I read the article and the posting was that we have to think about the venture capitalists. Forget the entrepreneurs. As difficult as life may be for a start up to suffer cash deprivation, what about the slick entitlement generation’s deal makers? These folks take money from pension funds, government-owned and backed banks, and really rich people. Pension fund managers will kick these folks’s tail in squash. The government-back outfits will fund a party similar to the one AIG held. But Rich people and their investment advisors expect returns. The venture firms have to produce. What’s less pleasant? Explaining to a rich person who runs a billion dollar gambling and garbage collection business that you blew his / her hard-earned money or having to go to a party?
In my experience, rich people want their money back and then some. Bad things come to VCs and their MBA wizards who don’t produce. The R.I.P. may be the marker for some of the venture firms themselves. This addled goose thinks that this Sequoia announcement is very similar to Leonidas’ telling the remaining Spartans to get ready for their last day. The good news is that as I recall, the battle was lost, but the Greeks eventually triumphed, helping to create the powerful economic model of modern Greece. See. There is a bright side.
Stephen Arnold, October 9, 2008
Microsoft Cloud OS: Strata
October 9, 2008
Microsoft Watch has an interesting post plus a graphic here. Joe Wilcox’s “Windows Strata: Microsoft’s Cloud OS” here is worth a look. The most interesting portion of the article is the list of eight sessions allegedly on deck for the developers’ conference. The sessions range from “A Day in the Life of a Cloud Service Developer” to “Scalable, Available Storage in the Cloud.” I hope developers flock to these sessions. My wife’s work email account is the new cloud version of Microsoft Outlook. The system would not allow bulk deletes of email, drag its feet when performing basic tasks like opening an email, and insisted on telling me that the forms function was not available when I tried the Control A key combination to select all emails in a window. The good news is that developers will be able to make incremental improvements and breakthroughs.
Stephen Arnold, October 9, 2008
Microsoft Search and Gartner Love
October 9, 2008
One major search engine vendor told me that Gartner was the backbone of their search marketing efforts. I have been receiving news releases from energetic PR wizards reminding me that such and such vendor was in the “hot dog” category of the new Gartner “magic quadrant”. What’s new this year, according to my sources, is that the companies in the quadrant have to have $12 million in “real” revenue. My informant did not know if the companies in the quadrant had to hire Gartner to analyze a listed vendor’s technology. My hunch is that there’s no money changing hands. Gartner probably operates exactly like Consumer Reports or Good Housekeeping magazine. (See, the goose is an optimist.)
Imagine the surprised honk when I read this headline: “Gartner Pegs Microsoft as Top Enterprise Search Leader.” You can read the full story by Kurt Mackie (Redmond Channel Partner) here. For me the most significant comment in the juicy story was:
The report cited Microsoft’s strengths in information access technology, particularly noting its acquisition of Norwegian company Fast Search & Transfer. Gartner called the Fast acquisition “a major transaction with far-reaching ramifications.” The Fast solution can juggle multiple user profiles, for instance. It can “index from a variety of content sources.” Microsoft’s technology can also handle “extremely large data sets.”
You can read more about the “magic quadrant” here.
Fast Search & Transfer has not been making headlines like Autonomy in the last six months. Autonomy has been winning the PR battle. In fact, I thought Fast Search was creating Web parts and shifting to become the R&D center for search. Maybe I’m missing something, but I heard that a number of accounts such as a major European telco, a major London based newspaper, and several US companies have shifted from Fast Search to other vendors’ solutions in the last four months. But my information may be incorrect. I live in Kentucky for goodness sake.
Congratulations to Microsoft for this impressive endorsement. I deleted the information I had been gathering about the confusion regarding Fast Search’s revenues and the shelved probe into the company by Norwegian authorities. Someone told me that customers were not paying their bills. Obviously that problem is not germane to Gartner’s evaluation and rating. A happy but confused quack to Microsoft, Fast Search, and Gartner for this game changing recognition. Google, Autonomy, better get organized. Microsoft is the big dog.
Stephen Arnold, October 9, 2008
Open Text: More SharePoint Love
October 9, 2008
Open Text is the Canadian conglomerate that has moved far beyond Tim Bray’s SGML database. I have met 20 somethings who did not know that Open Text used to offer a Web search system. You can refresh or refill your knowledge base here. The company has a flotilla of search systems. These range from the Information Dimensions’ BASIS system to the Fulcrum engine to various systems gathered when the company acquired such properties as IXOS. Unlike some Microsoft Certified Partners, Open Text is boosting its product offerings for SharePoint. IDG publications such as InfoAge in Australia have reported “Open Text Storage Services for SharePoint, the latest addition to the company’s Open Text Content Services product offerings. This new enterprise-class service lets customers store Microsoft Office SharePoint Server 2007 content in external storage devices, while at the same time reducing wasted space by automatically detecting multiple instances of the same content. The solution helps customers increase the scalability of their SharePoint solutions and reduce storage costs.” You can read the full story here. In my experience with the “new” Microsoft, the company is in flux. Will Microsoft offer substantially similar storage services? I don’t know. That’s a risk Open Text seems comfortable taking. If it works, Open Text could punch through the $1 billion ceiling in FY2009.
Stephen Arnold, October 9, 2008
Internet a Cesspool Says Google
October 9, 2008
Wired Magazine’s “Google’s CEO Calls Internet a Cesspool, Thinks Brands Are the Solution” by Meghan Keane is an interesting read here. For me, the most significant comment was:
Schmidt was trying to quell fears that Google is trying to take over the role of publishers and advertisers online, saying: “We don’t do content. You all create content. It’s a natural partnership.”
I chuckled. A year ago, maybe 18 months, I wrote a report for a third tier consulting firm. The report provided a summary of Google’s publishing technology. You may have heard about Knol. That’s a grassroots publishing and knowledge base combo from the GOOG. Oh, there are examples of Google encouraging certain YouTube.com video creators to do more videos. Both of these are examples of publishing, and I have not mentioned Blogger.com. Google can, with the flip of a bit, do more content quickly. I write studies. Google could take one of my new reports, advertise it, and offer me a piece of the revenue. I would take the deal in a heartbeat. A more popular writer might take the deal even faster. The reason? Google’s got marketing clout. Publishers are losing theirs.
What struck me is that Google is a brand. If the Internet is a cesspool, and a brand is important, could I conclude that Google wants to become the Internet? Let me answer this question. “Yes.” In my two Google reports for the late and lamented “we play bridge” outfit Bear Stearns, I reported about Google innovations that point to Google’s becoming the Internet. I can’t recycle that information here. The firm may be dead, but the lawyers live on.
I may be an addled goose, but the GOOG is on the path to become the Internet. The question is, “Can Google make progress toward such an outcome?” It’s too soon to tell if Googzilla can clean up the cesspool. The company has the technology to slap a digital reverse osmosis system on the bits flowing through the Googleplex.
Stephen Arnold, October 9, 2008
Data Mining: A Bad Report Card
October 9, 2008
Two readers sent me a link to reports about the National Research Council’s study findings about data mining. Declan McCullagh’s “Government Report: Data Mining Doesn’t Work Well” for CNet is here. BoingBoing’s most colorful write up of the report is here. The is certainly catchy, “Data Mining Sucks: Official Report.” The only problem with the study’s findings is that I don’t believe the results. I had a stake in a firm responsible for a crazy “red, yellow, green” flagging system for a Federal agency. The data mining system worked like a champ. What did not work was the government agency responsible for the program and the data stuffed into the system. Algorithms are numerical recipes. Some work better than others, but in most cases, the math in data mining is pretty standard. Sure there are some fancy tricks, but these are not the deep, dark secrets locked in Descartes’ secret notebooks. The math is taught in classes that dance majors and social science students never, ever consider taking. Cut through the math nerd fog, and the principles can be explained.
I am also suspicious that nothing reassures a gullible reader more than a statement that something is broken. I don’t think I am going to bite that worm nestled on a barbed hook. Clean data, off-the-shelf algorithms, reasonably competent management, and appropriate resources–data mining works. Period. Fumble the data, the management, and the resources–data mining outputs garbage. To get a glimpse of data mining that works, click here. Crazy stuff won’t work. Pragmatic stuff works really well. Keep that in mind after reading the NRC report.
Stephen Arnold, October 9, 2008
Search Meltdown at the Digital Studio 54
October 8, 2008
After a whirlwind series of meetings outside the U.S. I picked up information about growing problems in the enterprise search sector. Not surprisingly, my newsreader offered a trigger for this Web log post. Navigate to Dot.Life, one of the bewildering array of Web logs from the BBC, here. Rory Cellan-Jones, whom I have never met, wrote “Technology – The Party Really Is Over” on October 8, 2008. For me the most interesting point was this comment:
And, almost unnoticed, technology companies have been sucked into this vortex of gloom…. Autonomy, which specializes in search technology for big businesses, has recently entered the FTSE 100. But over the last week its shares have been tumbling as rapidly as the index as a whole. They started above £10, and last time I looked they were around £7.60. This despite a trading update in which the chief executive said Autonomy expected its third quarter results to be “significantly ahead of expectations”. The market has decided that the big enterprises which are Autonomy’s customers will be trimming their spending too.
Let’s step away from Autonomy and think about the mood at the Enterprise Search Summit held a fortnight ago in San Jose, California. Here are several “economic” observations that provide some color for my observations about what’s coming in search, content processing, and text mining:
- I learned of several executive shake ups. These have not been announced, but when heads roll at a major conference, I sense that sales performance may be triggering the game of musical chairs. As I visited vendor stands, I had to ask, “Didn’t you work at X?” Old faces in new booths were common enough for me to notice. (I was jet lagged and bored, so it took some effort to light up my radar.)
- I heard that one vendor pulled out at the last minute, deciding that waiting for prospects to walk by booth was less effective than making direct sales calls or working the email marketing system. I wondered why there were several yawning gaps amidst the exhibitors. Priorities or cash may have been the deciding factor.
- My hallway conversations with PR folks left me with a sense that this is not a good time to be in the buzz business. Several PR wizards told me that their clients wanted to get coverage on the hot Web logs. Too bad this Web log — Beyond Search — has only two or three readers. Corporate honchos and honchettes want their firm’s solutions on the major news aggregation sites and showing up on StumbleUpon.com and other trend makers. One person told me, “Web PR is tough.”
- Talk about Mercado and SurfRay suggested that both firms were trying to dog paddle in rough seas. The Mercado news, which I reported on this Web log, if true, may be ominous. SurfRay is best known for its Mondosoft SharePoint solution, and the financial reports from Denmark just arrived. Those documents may shed some light on that firm’s health, but two people asked me what I knew about the company.
Is the party really over? No, I don’t think so. There will be some severe dislocations and realignments. But in the search and closely related markets, the task of selling a complex system mean long sales cycles. With cash drying up, the sluggish sales and executive churn are symptoms of a disease that has been infecting silently for a long time. The good news is that once the system adapts, new opportunities will poke their noses from behind the CFOs’ locked doors.
Investment firms with money in search and content processing firms will demand more from their stable of search stallions. I think more focus will be brought to the sales process. A good example will be search firms who deliver solutions that work with a minimum of the three to six month set up period. Units with specific problems will license solutions from firms who can deliver a system that works, not a bunch of jargon about intelligent system, latent semantic indexing, and automatic taxonomy generation in real time.
The financial downturn will motivate customers to demand results and more for whatever the customer pays a vendor. The vendors will be working in a world “red in tooth and claw”. I for one will be delighted to cull down the list of 350 to 400 vendors who assert that their firm offers “enterprise search”. I don’t know what enterprise search means, and if some vendors are finding customers unwilling to write checks for their systems, I submit respectfully that the customers on a budget want to buy something that delivers a pay off, can be explained to its users, and solves a specific problem.
For these firms — what I call the vendors to watch in the Gilbane study — the party may just be beginning for a select few. For those who make the cut, the old world of Studio 54 will keep on trucking.
Stephen Arnold, October 8, 2008
September Means Falls Ahead
October 8, 2008
SAP stumbled. I first thought of the phrase “fell on its sword”. Either one may make the German software giant wince. After a fun day of meetings in the cold northern suburbs of Scarberia near Toronto, I had the misfortune to read some of the chilling stories about the maker of the world’s most exciting software system, R/3. For example, to catch up on the financial outlook, navigate to Dawn Kawamoto’s “Analysts Cut Google and SAP Price Targets and Earnings Estimates” here. SAP also kept its lederhosen muddy with its unresolved legal squabble with Oracle. If you need to catch up on the TomorrowNow issue, click here. To put a bit of excitement in the SAP world, I found the financial outlook for SAP a chop in the latissimus dorsi as well. You can get Bloomberg’s take on this self-inflicted wound by clicking here.
SAP has been taking hits because of a price hike. The company has been sending me fuzzy messages about its NetWeaver TREX search system, and I have yet to hear that its investments in other companies have been delivering significant revenues. These are anecdotal issues, however, and my concerns are broader than SAP:
- If other entgerprise software vendors are hit with a sales chop, what will happen to these cash hungry search and content processing companies? My hunch is that the type of shut downs I documented with mini cases of Entopia, Delphes, and a couple of other outfits may become more common.
- SAP customers will do what when their present systems go south? The notion of ringing up SAP and getting a deal will be shortlived. A company searching for revenue will allow some other fees to drift skyward. I anticipate some cranky enterprise customers in the next three months.
- Who will swoop in to snatch low hanging fruit? Will high priced vendors get the nod? I don’t think so. My opinion is that SAP licensees will go shopping and confine their buys products and services that fit within a constrained budget.
What’s this mean? I am hopeful that SAP’s problem is isolated. However, if the problems are exacerbated by slicing oneself with one’s own sword, I think a bigger problem will arise. Is Mercado mired in an SAP type of problem? I heard about two high profile search companies who suffered very anemic sales over the last 12 weeks. I want to track incidents of self injury in an unsettled market. Add your anecdotes and examples, please.
Stephen Arnold, October 8, 2008
Google and Customer Service
October 8, 2008
Google favors engineers. Engineers engineer. Engineers don’t talk on the phone to people not smart enough to work at Google. That, as I read The Consumerist’s “GMail’s Achilles Heel: Terrible Customer Service”, is a bit of a problem. You can read the essay, complete with Googley quotations, here. I have a GMail account, but I don’t use it for much except testing Google services. If you are cranky with Google, read this justified criticism of the GOOG. I wonder if these “issues” such as customer service, the Yahoo deal, and the effort to make America green might become “problems” for the company? I hope not. I’m working on a new Google study, and I don’t want to write an outfit that goes the way of Bear Stearns.
Stephen Arnold, October 8, 2008
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.
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