An Amusing Analysis of Palantir Technologies
June 7, 2021
I find analyses of intelware/policeware companies fascinating. “Palantir DD If You Want to Understand Company and Its History Better” is based on research conducted since November 2020. The write up asserts that Palantir is three “companies”: The government software (what I call intelware/policeware), the adding sales professionals facet of the business, and “their actual like full AI for weaponization and war and defense for the government.”
I must admit my research team has characterized Palantir Technologies in a different way. Palantir has been in business for more than a decade. The company has become publicly traded, and the stock as of June 2, 2021, is trading at about $25 per share. The challenge for companies like Palantir are the same old set of hurdles that other search and content processing firms have to get over without tripping and hitting the cinders with their snoot; namely:
- Generating sustainable and growing revenue streams from a somewhat narrow slide of commercial, financial, and government prospects. Newcomers like DataWalk offer comparable if not better technology at what may be more acceptable price points.
- Balancing the cost of “renting” cloud computer processing centers against the risk of those cloud vendors raising prices and possibly offering the same or substantially the same services at a lower price. Palantir relies on Amazon AWS, and that creates an interesting risk for Palantir’s senior management. To ameliorate the risk of AWS raising prices, buying a Palantir competitor, or just rolling out an Amazon version of the Palantir search and content processing system, Palantir signed a deal with IBM. This deal is for a different slice of the market, but it remains to be seen if this play will pay off in a substantial way.
- Figuring out how to expand the firm’s services’ business without getting into the business of creating customized versions of the Analyst’s Notebook type of product that Palantir offers. Furthermore, exceptional revenues can be generated from consulting, and to keep clients happy, Palantir may find that it has to resell competitors’ products. In short, consulting looks super from one point of view. From another it can derail the original Palantir business model. Money talks, particularly when the company has to payback its investors, invest in new technology, and spend money to generate leads and close.
- The clients have to be happy. Anecdotal evidence exists that some Palantir customers are not in thrill city. I am not going to identify the firms which have stubbed their toes on Palantir’s approach and the system’s value. Some online searching yields helpful insights.
- The company has a history of walking a fine line between appropriate and inappropriate behavior. The litigation (now sealed) between Palantir and the original i2 Ltd., the company which developed to a large part the current approach to intelware/policeware is usually unknown or just ignored. That’s not helpful. Combine the i2 matter with Palantir’s method of providing its software to analysts in some battle zones reveals helpful nuances about the firm’s methods.
To sum up, the analysis — at least to me — was a hoot.
Stephen E Arnold, June 7, 2021
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