August 30, 2014
Hewlett Packard fatigue is nibbling at my consciousness. I read “Hewlett-Packard Plans to Sue Deloitte’s UK Arm over Autonomy Audit.” HP appears to find others to blame for its decision to purchase Autonomy. The write up says:
Hewlett-Packard plans to sue the UK arm of accountancy firm Deloitte over its role in auditing Autonomy, the software company HP acquired but later accused of inflating financial figures, a lawyer for the US company said in court on Monday.
The Autonomy matter does keep HP in the news. However, the steady background hum of allegations about impropriety at Autonomy are like white noise. After a short time, the sound fades away.
The Autonomy matter, like the Fast Search & Technology financial restatement, suggests that search is a tough business to make into a massive, sustainable revenue stream.
Buying search technology appears to deliver headaches to those involved. Do the Autonomy and Fast Search issues suggest that content processing is easy to talk about and tough to turn into solutions that make everyone involved happy. Ooops. One group is very happy: the lawyers.
Stephen E Arnold, August 30, 2014
August 20, 2014
Bubble? What bubble? ZDNet informs us that “Salesforce Acquired Big Data Startup RelateIQ” for a sum approaching $400 million. The deal will be Salesforce’s second-largest acquisition, following their purchase of “marketing cloud” outfit ExactTarget last year for $2.5 billion. Reporter Natalie Gagliordi writes:
“According to a document filed Friday with the Securities and Exchange Commission, Salesforce will pay up to $390 million for the Palo Alto, California-based startup, which provides relationship intelligence via data science and machine learning. RelateIQ will become a Salesforce subsidiary, the filing says.
“On its website, RelateIQ says it’s built ‘the world’s first Relationship Intelligence platform’ that redefines the world of CRM. In a nutshell, the platform captures sales data from email, calendars and smartphone calls and social media to provide insights in real time.”
Relationship intelligence, eh? That’s indeed a new one (outside the discipline of sociology, anyway). RelateIQ launched in 2011, based out of Palo Alto. In nearby San Francisco, Salesforce was launched in 1999 by a former Oracle exec, Now, their success in cloud-based customer-relationship-management solutions has them operating offices around the world. Will their spending spree pay off?
Cynthia Murrell, August 20, 2014
August 16, 2014
I read “Hewlett-Packard Allegations: Autonomy Founder Mike Lynch Tries to Clear Name.” The British “real” newspaper focuses on Mike Lynch, the founder of Autonomy. I am convinced that Autonomy pitched the value of its company to a number of firms. I know that Hewlett Packard bought Autonomy. I assume that spending $11 billion was not a K Mart blue light special impulse purchase. I know that HP has had what the MBAs call “governance challenges.” These range from allegations of getting frisky with folks to management churn. I know that for me, the HP of electronic devices yielded to the HP of the ink cartridges.
Here’s a point I highlighted in the Guardian’s write up:
Meanwhile, lawyers on all sides are using legal privilege to sling mud. Lynch says it is not only his name that has been stained, but that of the British technology industry. Autonomy’s accounting and marketing methods had attracted criticism before the HP acquisition, but Lynch was also a poster child for the achievements of Cambridge’s Silicon Fen. The Autonomy affair casts a shadow, and a conclusion from the SFO is overdue.
I have a slightly different view of the dust up. Folks want to believe that information retrieval will generate another Google. Because of those expectations, executives whose expertise in search extends to running a Google search on a mobile device assume they know about content processing.
When buyers get excited about a purchase, some people buy Bugatti Veyrons and spring for gold iPhones. Others snap up search companies and expect the money to roll in like the oohs and aahs at the golf club when the Veyron rolls up.
Wrong. The dust up between HP and Autonomy is an illustration of what happens when folks without too much understanding of content processing’s complexities covet a home run. The impact does affect Mike Lynch, a Cambridge PhD and real live inventor.
The collateral damage is on the buyers of search companies who toss millions at a sector without understanding how difficult it is to create a search company that is not selling ads or living exclusively on Department of Defense largesse.
HP bought a company with a strong brand, customers, and technology that when properly resourced works. HP did not buy a Google scale money stream, a Palantir clinging to the US government, or a break even metasearch system.
The impact on the reputation of Autonomy professionals is significant. What does this dispute do to other search and content processing companies? Search is tough enough without having a megaton dispute played out in the datasphere.
HP did not have to buy Autonomy. Microsoft passed. Oracle passed. HP bought. HP had time and resources to dig through Autonomy. If it did not, then HP created its own problem. If it did, HP created its own problem. Autonomy, with 15 years of history, was looking for a buyer. My hunch is that HP was looking for a Google and bought a different business because HP convinced itself it could generate more money than Autonomy could. HP found out that it could not match Autonomy’s revenues. Whom does any self respecting MBA or lawyer blame? The other guy.
This hassle says much about HP. Sadly it affects other search and content processing companies as well.
Stephen E Arnold, August 16, 2014
August 5, 2014
I read “HP and Autonomy Bitter Battle.” I found the write up interesting, but I remember my high school Latin teacher offering some phrases to learn. One of them was caveat emptor. According to the Cornell Law Web site, the catchphrase put shoppers on alert when prowling the more interesting shops in 2nd century BCE Rome. The translation which even aspiring and real lawyers learn is:
Let the buyer beware.
The BBC article is less evocative than Milton’s reference to a blue mantle, but it did contain one quote to note for my collection. After explaining the $11 billion deal, the story offers:
The two sides have been at war since HP had to write off most of the purchase price in what now looks like one of the worst deals in corporate history.
I fancy the superlative. The BBC’s position is clearly stated:
What is far from clear amidst the claim and counter claim is whether Autonomy did break any accounting rules in the run up to its sale to HP – and if so, why that was not spotted in the process of due diligence which is a key part of any such deal.
There was one Autonomy when the deal was closed. Prior to the purchase, there were many HP directors, officers, and accountants going over the deal.
I know that Mike Lynch is a pretty bright guy, but was he smart enough to outwit so many folks with green eyeshades, MBAs, and HP calculators?
I have a modest question racing through my mind:
Who was on the HP Board of Directors when the deal was approved?
I may look up the names of this roster of business and technical luminaries some day. I wonder if Meg Whitman recalls who gave the green light for the biggest deal in enterprise search and content processing history?
Even the relatively swift Microsoft paid $1.2 billion for a search company that subsequently was found to have done some fancy dancing with its revenues. HP’s team paid 10 times as much and has become a business school case study for “what now looks like one of the worst deals in corporate history.”
Yikes. Enron displaced?
Stephen E Arnold, August 5, 2014
June 12, 2014
With its purchase of Yammer two years ago, Microsoft made a public statement that they were increasing social integration within its SharePoint platform. Now, two years into the process, integration has deepened through SharePoint Online and OneDrive for Business. Read all about it in the CRN article, “Microsoft Deepens Yammer Integration With SharePoint Online, OneDrive For Business.”
The article begins:
“Microsoft, which bundled Yammer with Office 365 last November, has taken another big step toward integrating the social networking technology with SharePoint Online and OneDrive for Business. Microsoft Tuesday unveiled a new feature called Document Conversations, which adds Yammer conversations to more than 30 different file types, including Office documents, images and videos.”
Stephen E. Arnold has covered SharePoint for many years on his information service, ArnoldIT.com. He found that many users wanted better social integration before the release of SharePoint 2013, so with the announcement of Yammer’s purchase, users were looking forward to seeing the social aspect of SharePoint move forward. Arnold provides good coverage on his SharePoint feed and SharePoint users and managers can look there for the latest news, tips, and tricks.
Emily Rae Aldridge, June 12, 2014
May 20, 2014
I wanted to associate Cognos with Cognea. Two different things. IBM’s Watson unit, according to “IBM Watson Acquires Artificial Intelligence Startup Cognea,” is beefing up its artificial intelligence capabilities. Facebook, Google, and other outfits are embracing the dreams of artificial intelligence like it is 1981 when Marvin Weinberger was giving talks about AI’s revolutionizing information processing. I have lost track of Marvin, although I recall his impassioned polemics, 30 years after hearing him lecture. Unfortunately I remain skeptical about “artificial intelligence” because Watson, as I understood the pitch after Jeopardy, was already super smart. I suppose Cognea can add some marketing credibility to Watson. That system is curing disease and performing wonders for the insurance industry, if I embrace the IBM public relations’ flow.
In my lectures about the Big O problem, I point out that many of today’s smartest systems (for example, Search2, to name one) implements clever methods to make well known numerical recipes run like a teenager who just gulped three cans of Jolt Cola followed by a Red Bull energy drink.
The reality is that there are more sophisticated mathematical tools available. The problem is that the systems available cannot exploit these algorithmic methods. I am pretty confident that Cognea tells a great story. I am even more confident that IBM will do the “Vivisimo” thing with whatever technology Cognea actually has. Without a concrete demo, benchmarks, and independent evaluations, I will remain skeptical about “a cognitive computing and conversational artificial intelligence platform.”
I am far more interested in the Cybertap technology that IBM acquired and seems to be keeping under wraps. Cybertap works. Artificial intelligence, well, it depends on how one defines “artificial” and “intelligence” doesn’t it?
Stephen E Arnold, May 20, 2014
May 8, 2014
I read “Yahoo Spent More Than Anyone on Acquisitions in 2013, but Why?” At dinner tonight several colleagues and I discussed Yahoo’s buying spree. The article surmises:
There has to be rhyme and reason for Yahoo to have picked up these companies, even if it was just to keep talent from the likes of Google or Facebook. In the continued push for Yahoo to be more mobile and contextual, we should look forward to a Yahoo stacked with both talent and money in 2014.
That’s a positive view. The thoughts of the ArnoldIT conversation drifted a different direction; for example:
- Yahoo is taking advantage of the “bet on a bunch of horses.” The notion is that one or more will be winners
- Yahoo is just doing stuff to demonstrate that it has direction, intent, and purpose. In short, the deals are Wall Street theatre, just way off Broadway
- The Silicon bubble is a habitat that encourages gorging.
Financial results may shine a light on the actions.
Stephen E Arnold, May 8, 2014
April 29, 2014
I read “Consolidation Looms in Business Intelligence, as Tibco Buys Jaspersoft for $185M.” The write up is interesting, but not exactly congruent with my views. May I explain?
The article points out:
Enterprise software vendor TIBCO has acquired Jaspersoft, an open source business intelligence company, for approximately $185 million. It’s not an earth-shaking deal, but it could be a sign of things to come in an analytics software market full of companies and products that have a hard time standing out from the crowd.
MBAs will drooling at the thought of business intelligence deal making if the article’s premise is correct.
But there are several other angles in this Tibco Jaspersoft tie up.
First, check out the list of open source “leaders.” Jaspersoft appears in the list, but with its number six on the “Top of Mind Emerging Companies in Data Discovery Chart,” the response to this deal might be “Who?” The other factoid I gleaned from the Gigaom Research chart was who the heck are SiSense, Logi Analytics, and Roambi. I can only wonder at what firms account for the “other” category. Tibco bought an open source analytics company that is one of those “we’re open source but commercial too” outfits. The purchase price, compared to the deal for Autonomy, is a rounding error in the Autonomy transaction. I find this interesting because Autonomy IDOL does business intelligence, visualization, and a number of other enterprise software functions as well. My take. Why is an open source business intelligence deal going for what seems to be a bargain price?
Second, Tibco did not buy a search company. Jaspersoft is a business intelligence outfit. But what does “business intelligence” mean? A review of Jaspersoft’s products and services points to analytics; that is to say, math. The cloud angle is interesting, but I am not sure how Tibco will convert open source into a hefty chunk of the astronomical $50 billion market the Gigaom research is available for the taking. Is analytics business intelligence? At least, I can sort of define “analytics.” I am not so confident about “business intelligence.”
Third, the implications for search and retrieval are not particularly positive. Search vendors with odd ball product line ups are saying, “We are a business intelligence company.” Maybe so. Without a definition of “business intelligence”, search vendors can say almost anything and be “accurate.” For me, search is clearly a marginalized sector. IBM bought Vivisimo and, as one of my editors, discovered promptly discarded Vivisimo’s roots in clustering and metasearch for the foggy description of “information management.” I wonder if some search vendors are in the undefined Gigaom “other” category.
In my view, search and possibly some “business intelligence” vendors may be dismayed by Tibco’s deal. Can investors recoup their funding for their business intelligence bets? There is a big difference between the estimated $20 million IBM paid for the struggling Vivisimo and the $185 million Tibco paid for Jaspersoft when compared to the $1 billion Oracle paid for the aging Endeca technology. I don’t see consolidation. I see “everything must go” opportunities.
Stephen E Arnold, April 29, 2014
March 17, 2014
We have reported on Ray Kurzweil’s uncanny psychic powers before (really, he is just has the notorious ability to predict future technology trends) and according to The Guardian article “Are The Robots About To Rise? Google’s New Director Of Engineering Thinks So” he thinks that robots are going to out think humans by 2029. It is not a farfetched idea, considering that technology is getting more advanced every year. Google hired Kurzweil to be its new engineering director, the first job he’s ever held. Google has also been snapping up artificial intelligence companies and researchers to build a new robotics division:
“And those are just the big deals. It also bought Bot & Dolly, Meka Robotics, Holomni, Redwood Robotics and Schaft, and another AI startup, DNNresearch. It hired Geoff Hinton, a British computer scientist who’s probably the world’s leading expert on neural networks. And it has embarked upon what one DeepMind investor told the technology publication Re/code two weeks ago was “a Manhattan project of AI”. If artificial intelligence was really possible, and if anybody could do it, he said, “this will be the team”. The future, in ways we can’t even begin to imagine, will be Google’s.”
This is starting to sound like every science-fiction story set in the near future. Kurzweil does not want robotic technology to overtake our lives, instead he wants it to augment our reality. He has his critics who point out not all of his predictions have been true. He does have the human fallacy. If we go back to the science-fiction genre, this is going to be the time romanticized by future authors.
February 21, 2014
Last week, two of the senior ArnoldIT professionals delivered a one hour lecture to a select group of executives. The topic was related to our work in locating high-value information using open source content sources.
Shortly after our presentation I read “Google Was Willing to Beat Facebook’s $19B Offer for WhatsApp.” Quite a windfall for WhatsApp.
The thought that struck me was the way the deal illuminated a comment made by an investment banker attending out lecture last week. The former consultant told me:
We focus on innovation. We are looking in high tech sectors.
The statement is a bit of misdirection. The investment firm wants to find companies, inject cash, and then do a deal like the WhatsApp anomaly. The user of the word “innovation” is an audible pause. Like the person who uses “so” or “um” in conversation, the individual talking about innovation is not interested in innovation.
From my perspective, brokering a big deal is not innovation. The company WhatsApp may be described as an innovator. The question is, “Did Facebook buy innovation?”
If WhatsApp was an innovation, why did Google step away from the deal?
The current economic environment is looking for blockbusters, home runs, and slam dunk content winners.
Innovation is related to cash. Without funding, most start ups struggle. Without cash, start ups are the raw material for the near-monopolies that the US tech landscape is husbanding.
In my series of search vendor profiles, a surprising trend is evident. In the search and content processing sector, innovation has stalled. Instead of breakthroughs, there are optimizing and bundling plays. Instead of light bulbs, I see recycled plastic.
Paying $19 billion is an indication that a blend of desperation and arrogance is filling the coffee shops in some locales.
Stephen E Arnold, February 21, 2014