Pi in the Sky: HP and IBM Race to Catch Up with NGIA Leaders
December 7, 2014
I read “HP Takes Analytics to the Cloud in Comeback to IBM’s Watson.” The write up is darned interesting. Working through the analysis reminded me that HP does not realized that Autonomy’s 1999 customer BAE Systems has been working with analytics from the cloud for—what?—15 years? What about Recorded Future, SAIC, and dozens of other companies running successful businesses with this strategy?
The article points out that two large and somewhat pressured $100 billion companies are innovating like all get out. I learned:
Although it [Hewlett Packard] may not win any trivia contests in the foreseeable future, the hardware maker’s entry into the world of end-of-end analytics does hold up to Watson where the rubber meets the road in the enterprise…But the true equalizer for the company is IDOL, the natural language processing and search it obtained through the $11.7 billion acquisition of Autonomy Corp. PLC in 2011, which reduces the gap between human and machine interaction in a similar fashion to IBM’s cognitive computing platform.
Okay. IBM offers Watson, which was supposed to generate a billion or more by 2015 and then surge to $10 billion in revenue in another four or five years. What is Watson? As I understand it, Watson is open source code, some bits and pieces from IBM’s research labs, and wrappers that convert search into a towering giant of artificial intelligence. Why doesn’t IBM focus on its next generation information access units that are exciting and delivering services that customers want. i2 does not produce recipes incorporating tamarind. Cybertap does not help sick teenagers.
HP, on the other hand, owns the Autonomy Digital Reasoning Engine and the Integrated Data Operating Layer. These incorporate numerical recipes based on the work of Bayes, LaPlace, and Markov, among others. The technology is not open source. Instead, IDOL is a black box. HP spent $11 billion for Autonomy, figured out that it overpaid, wrote off $5 billion or so, and launched a global scorched earth policy for its management methods. Recently, HP has migrated DRE and IDOL to the cloud. Okay, but HP is putting more effort into accusing Autonomy of fooling HP. Didn’t HP buy Autonomy after experts reviewed the deal, the technology, and the financial statements? HP has lost years in an attempt to redress a perceived wrong. But HP decided to buy Autonomy.
These two companies have been pumping PR into willing ears of “real” journalists, courting the former English majors now working as “experts” at mid tier consulting firms, and painting word pictures of the billions that will flow from Watson and IDOL. This type of revenue acrobatics make Odell Beckham Jr.’s one handed football look mundane.
I call this type of business cheerleading “Pi in the sky.”
The reality is that HP and IBM are chasing the same market for the same billions in revenue. But the Watson/IDOL market sectors already have capable incumbents. Maybe IBM and HP should form a joint and buy Knowlesys and KnightXPlus? There are next generation information access opportunities in the marketplace. Are these HP and IBM offerings NGIAs or just repackaging of technology that has been available and in use for many years?
The reality is that these two companies have set themselves a very high hurdle to get over: Billions from analytics as NGIA purveyors. These companies are not elephants; both are kissing cousins of the Dreadnoughtus schrani, which I dub the HIMP Bosauri, and their descendants, IBM and HP.
In today’s business climate, will HP and IBM generate enough momentum to blast their way to billions in revenue? I don’t think so. I do not think these companies are offering billion-dollar scale products.
My hunch is that the HIMP Bosauri will go where they want to go. Will they survive during their vision quest? I think both these behemoths will have dramatic, brutal change forced upon them by the business environment. In short, the HIMP Bosauri have started a long trek toward becoming sparrows.
Stephen E Arnold, December 7, 2014
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