Microsoft Cloud Economics
August 17, 2008
Richi Jennings is an independent consultant and writer, specializing in email, spam, blogging, and Linux. His article “On Microsoft Online Services” is worth reading. You can find it here. His assertion is that Microsoft’s pricing for its online services will weaken the service. Mr. Jennings identifies information technology managers’ lack of knowledge about the cost of running machines and software on premises. He notes:
vendors would tell potential purchasers that they [the vendors] could provide the service for less money than it was currently costing to run it in-house, but when it came time to actually quote for the service, most IT managers simply didn’t believe it cost them that much.
The point is that basic knowledge of what enterprise software costs may be a factor in the success or failure of cloud services. He contrasts Microsoft’s online service pricing with Google’s. Google is less expensive. A happy quack to Mr. Jennings for this analysis.
Stephen Arnold, August 17, 2008
Android: More Than Mobile
August 16, 2008
Venture Beat has an interesting article “Android Wants to Be on Any Device, Not Just Your Phone.” The premise of the write up is that Android may be a cog in a larger operating system initiative. For me, the most interesting statement in this write up by Eric Eldon and Matthaus Krzykowski is
The blogosphere hasn’t treated Android well — the SDK has taken many months to get to this stage since it was announced last year. The anti-Android trend will likely continue as commentators compare the HTC and the iPhone (the iPhone is better), and also say the U.S. T-Mobile network is bad (it is).
I agree that Android is part of a larger push by Google What struck me when reading Google’s technical papers is that the company seems to be considering an approach that puts some functions in the cloud and others in devices. When the two are hooked together, a different type of computing environment becomes possible.
Stephen Arnold, August 16, 2008
RSSMicro: News and Newsfeed Search and Retrieval
August 16, 2008
I
received a thoughtful email mentioning RSSMicro, a company with a different and potentially significant approach to search and retrieval. You can learn about the company here. The company says:
RSSMicro was formed to explore new search capabilities where the web contents become extremely dynamic and grow exponentially. This behavior, along with higher user expectations, creates a dilemma that requires a search service whose capabilities go beyond the limits of conventional search engines. Without new data formats or attached date and time to the content, there will be no reliable search service or product that can efficiently index and make the content available for search. RSSMicro is building and exploring a new search service which balances the freshness, relevance, and reliability of the search results along with a substantial gain in search performance and efficiency.
The company focuses on RSS (Really Simple Syndication) feeds, not a general Web crawl. Among the system’s features are:
- Indexing more than 5,400 news sources and about 3.2 million RSS feeds
- Search in news, blogs, press releases, forums, discussion boards, articles, and potentially anything that can be published in RSS/Atom format
- Search suggestions
- Result clustering.
I have added this company to my watch list. Check it out here. A happy quack to the person who called this interesting service to my attention.
Stephen Arnold, August 16, 2008
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.
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