The Perks and Pitfalls of a Yahoo/ AOL merger
August 1, 2014
An article on re/code titled Two Years and Still Stuck in a Revenue Rut, Will Yahoo’s Mayer Bite the AOL Bullet? attempts to separate fact from fiction when it comes to the possible merger. The sight of Mayer and AOL’s Armstrong chatting during the Allen & Co. conferences in Sun Valley proved too exciting for some reporters, who jumped to the conclusion that the two old friends were making a deal. While making it very clear that the merger is entirely hypothetical at this point, this article makes an argument for the perks of getting Yahoo and AOL together. The article states,
“AOL and Yahoo have very similar businesses and could easily combine them…Internally at both companies, this is not seen as a completely bad idea — both share numerous advertising overlaps, content overlaps, video overlaps and too many employees doing the same thing. In addition, Mayer could certainly use a decent exec she actually knows well like Armstrong at the top (presumably, him CEO, her chairman).”
However, the article also points out some hedging by Mayer who has made some comments about the possible merger being boring and “backward-looking.” On the other hand, if Mayer wants the Huffington Post, she may have to take AOL along with it. So the article is inconclusive. Will AOL and Yahoo finally get married? Can two Xooglers (former Googlers) make one scion named Revenue?
Chelsea Kerwin, August 01, 2014
Sponsored by ArnoldIT.com, developer of Augmentext
IHS Enterprise Search: Semantic Concept Lenses Are Here
July 29, 2014
I pointed out in http://bit.ly/X9d219 that IDC, a mid tier consulting firm that has marketed my information without permission on Amazon of all places, has rolled out a new report about content processing. The academic sounding title is “The Knowledge Quotient: Unlocking the Hidden Value of Information.” Conflating knowledge and information is not logically satisfying to me. But you may find the two words dusted with “value” just the ticket to career success.
I have not read the report, but I did see a list of the “sponsors” of the study. The list, as I pointed out, was an eclectic group, including huge firms struggling for credibility (HP and IBM) down to consulting firms offering push ups for indexers.
One company on my list caused me to go back through my archive of search information. The firm that sparked my interest is Information Handling Services or IHS or Information Handling Service. The company is publicly traded and turning a decent profit. The revenue of IHS has moved toward $2 billion. If the global economy perks up and the defense sector is funded at pre-drawdown levels, IHS could become a $2 billion company.
IHS is a company with an interesting history and extensive experience with structured and unstructured search. Few of those with whom I interacted when I was working full time considered IHS a competitor to the likes of Autonomy, Endeca, and Funnelback.
In the 2013 10-K on page 20, IHS presents its “cumulative total return” in this way:
The green line looks like money. Another slant on the company’s performance can be seen in a chart available from Google Finance.
The Google chart shows that revenue is moving upwards, but operating margins are drifting downward and operating income is suppressed. Like Amazon, the costs for operating and information centric company are difficult to control. Amazon seems to have thrown in the towel. IHS is managing like the Dickens to maintain a profit for its stakeholders. For stakeholders, is the hope is that hefty profits will be forthcoming?
Source: Google Finance
My initial reaction was, “Is IHS trying to find new ways to generate higher margin revenue?”
Like Thomson Reuters and Reed Elsevier, IHS required different types of content processing plumbing to deliver its commercial databases. Technical librarians and the competitive intelligence professionals monitoring the defense sector are likely to know about IHS different products. The company provides access to standards documents, regulatory information, and Jane’s military hardware information services. (Yep, Jane’s still has access to retired naval officers with mutton chop whiskers and interesting tweed outfits. I observed these experts when I visited the company in England prior to IHS’s purchase of the outfit.)
The standard descriptions of IHS peg the company’s roots with a trade magazine outfit called Rogers Publishing. My former boss at Booz, Allen & Hamilton loved some of the IHS technical services. He was, prior to joining Booz, Allen the head of research at Martin Marietta, an IHS customer in the 1970s. Few remember that IHS was once tied in with Thyssen Bornemisza. (For those with an interest in history, there are some reports about the Baron that are difficult to believe. See http://bit.ly/1qIylne.)
Large professional publishing companies were early, if somewhat reluctant, supporters of SGML and XML. Running a query against a large collection of structured textual information could be painfully slow when one relied on traditional relational database management systems in the late 1980s. Without SGML/XML, repurposing content required humans. With scripts hammering on SGML/XML, creating new information products like directories and reports eliminated the expensive humans for the most part. Fewer expensive humans in the professional publishing business reduces costs…for a while at least.
IHS climbed on the SGML/XML diesel engine and began working to deliver snappy online search results. As profit margins for professional publishers were pressured by increasing marketing and technology costs, IHS followed the path of other information centric companies. IHS began buying content and services companies that, in theory, would give the professional publishing company a way to roll out new, higher margin products. Even secondary players in the professional publishing sector like Ebsco Electronic Publishing wanted to become billion dollar operations and then get even bigger. Rah, rah.
These growth dreams electrify many information company’s executives. The thought that every professional publishing company and every search vendor are chasing finite or constrained markets does not get much attention. Moving from dreams to dollars is getting more difficult, particularly in professional publishing and content processing businesses.
My view is that packaging up IHS content and content processing technology got a boost when IHS purchased the Invention Machine in mid 2012.
Years ago I attended a briefing by the founders of the Invention Machine. The company demonstrated that an engineer looking for a way to solve a problem could use the Invention Machine search system to identify candidate systems and methods from the processed content. I recall that the original demonstration data set was US patents and patent applications. My thought was that an engineer looking for a way to implement a particular function for a system could — if the Invention Machine system worked as presented — could present a patent result set. That result set could be scanned to eliminate any patents still in force. The resulting set of patents might yield a procedure that the person looking for a method could implement without having to worry about an infringement allegation. The original demonstration was okay, but like most “new” search technologies, Invention Machine faced funding, marketing, and performance challenges. IHS acquired Invention Machine, its technologies, its Eastern European developers, and embraced the tagging, searching, and reporting capabilities of the Invention Machine.
The Goldfire idea is that an IHS client can license certain IHS databases (called “knowledge collections”) and then use Goldfire / Invention Machine search and analytic tools to get the knowledge “nuggets” needed to procure a missile guidance component.
The jargon for this finding function is “semantic concept lenses.” If the licensee has content in a form supported by Goldfire, the licensee can search and analyze IHS information along with information the client has from its own sources. A bit more color is available at http://bit.ly/WLA2Dp.
The IHS search system is described in terms familiar to a librarian and a technical analyst; for example, here’s the attributes for Goldfire “cloud” from an IHS 2013 news release:
- “Patented semantic search technology providing precise access to answers in documents. [Note: IHS has numerous patents but it is not clear what specific inventions or assigned inventions apply directly to the search and retrieval solution(s)]
- Access to more than 90 million scientific and technical “must have” documents curated by IHS. This aggregated, pre-indexed collection spans patents, premium IHS content sources, trusted third-party content providers, and the Deep Web.
- The ability to semantically index and research across any desired web-accessible information such as competitive or supplier websites, social media platforms and RSS feeds – turning these into strategic knowledge assets.
- More than 70 concept lenses that promote rapid research, browsing and filtering of related results sets thus enabling engineers to explore a concept’s definitions, applications, advantages, disadvantages and more.
- Insights into consumer sentiment giving strategy, product management and marketing teams the ability to recognize customer opinions, perceptions, attitudes, habits and expectations – relative to their own brands and to those of their partners’ and competitors’ – as expressed in social media and on the Web.”
Most of these will resonate with those familiar with the assertions of enterprise search and content processing vendors. The spin, which I find notable, is that IHS delivers both content and information retrieval. Most enterprise search vendors provide technology for finding and analyzing data. The licensee has to provide the content unless the enterprise search vendor crawls the Web or other sources, creates an archive or a basic index, and then provides an interface that is usually positioned as indexing “all content” for the user.
According to Virtual Strategy Magazine (which presumably does not cover “real” strategy), I learned that US 8666730:
covers the semantic concept “lenses” that IHS Goldfire uses to accelerate research. The lenses correlate with the human knowledge system, organizing and presenting answers to engineers’ or scientists’ questions – even questions they did not think to ask. These lenses surface concepts in documents’ text, enabling users to rapidly explore a concept’s definitions, applications, advantages, disadvantages and more.
The key differentiator is claimed to move IHS Goldfire up a notch. The write up states:
Unlike today’s textual, question-answering technologies, which work as meta-search engines to search for text fragments by keyword and then try to extract answers similar to the text fragment, the IHS Goldfire approach is entirely unique – providing relevant answers, not lists of largely irrelevant documents. With IHS Goldfire, hundreds of different document types can be parsed by a semantic processor to extract semantic relationships like subject-action-object, cause-and-effect and dozens more. Answer-extraction patterns are then applied on top of the semantic data extracted from documents and answers are saved to a searchable database.
According to Igor Sovpel, IHS Goldfire:
“Today’s engineers and technical professionals are underserved by traditional Internet and enterprise search applications, which help them find only the documents they already know exist,” said Igor Sovpel, chief scientist for IHS Goldfire. “With this patent, only IHS Goldfire gives users the ability to quickly synthesize optimal answers to a variety of complex challenges.”
Is IHS’ new marketing push in “knowledge” and related fields likely to have an immediate and direct impact on the enterprise search market? Perhaps.
There are several observations that occurred to me as I flipped through my archive of IHS, Thyssen, and Invention Machine information.
First, IHS has strong brand recognition in what I would call the librarian and technical analyst for engineering demographic. Outside of lucrative but quite niche markets for petrochemical information or silhouettes and specifications for the SU 35, IHS suffers the same problem of Thomson Reuters and Wolters Kluwer. Most senior managers are not familiar with the company or its many brands. Positioning Goldfire as an enterprise search or enterprise technical documentation/data analysis tool will require a heck of a lot of effective marketing. Will positioning IHS cheek by jowl with IBM and a consulting firm that teaches indexing address this visibility problem? The odds could be long.
Second, search engine optimization folks can seize on the name Goldfire and create some dissonance for IHS in the public Web search indexes. I know that companies like Attivio and Microsoft use the phrase “beyond search” to attract traffic to their Web sites. I can see the same thing happening. IHS competes with other professional publishing companies looking for a way to address their own marketing problems. A good SEO name like “Goldfire” could come under attack and quickly. I can envision lesser competitors usurping IHS’ value claims which may delay some sales or further confuse an already uncertain prospect.
Third, enterprise search and enterprise content analytics is proving to be a difficult market from which to wring profitable, sustainable revenue. If IHS is successful, the third party licensees of IHS data who resell that information to their online customers might take steps to renegotiate contracts for revenue sharing. IHS will then have to ramp up its enterprise search revenues to keep or outpace revenues from third party licensees. Addressing this problem can be interesting for those managers responsible for the negotiations.
Finally, enterprise search has a lot of companies planning on generating millions or billions from search. There can be only one prom queen and a small number of “close but no cigar” runner ups. Which company will snatch the crown?
This IHS search initiative will be interesting to watch.
Stephen E Arnold, July 29, 2014
Surprising Sponsored Search Report and Content Marketing
July 28, 2014
Content marketing hath embraced the mid tier consulting firms. IDC, an outfit that used my information without my permission from 2012 until July 2014, has published a study about “knowledge.” I was not able to view the entire report, but the executive summary was available for download at http://bit.ly/1l10sGH. (Verified at 11 am, July 25, 2014) If you have some extra money, you may want to pay an IDC scale fee to learned about “the knowledge quotient.”
I am looking forward to the full IDC report, which promises to be as amusing as a recent Gartner report about search. The idea of rigorous, original research and an endorsement from a company like McKinsey or Boston Consulting Group is a Holy Grail of marketing. McKinsey and BCG (what I call blue chip firms), while not perfect, are produce client smiles for most of their engagements.
Consulting, however, does not have an American Bar Association or other certification process to “certify” a professional’s capabilities. In fact, at Booz, Allen I learned that Halliburton NUS, a nuclear consulting and services shop, was in the eyes of Booz, Allen a “grateful C.” Booz, Allen, like Bain and SRI, were grade A firms. I figured if I were hired at Booz, Allen I could pick up some A-level attributes. Consultants not trained by one of the blue chip firms had to work harder, smarter, and more effectively. Slack off and the consulting firms lower on the totem pole were unlikely to claw their way to the top. When a consulting firm has been a grade C for decades, it is highly unlikely that the blue chip outfits will worry too much about these competitors.
This IDC particular report 249643ES is funded by whom? The fact that I was able to download the report from one of the companies listed as a “sponsor” suggests that Smartlogic and nine other companies were underwriting the rigorous research. You can download the report (verified at 2 30 pm, July 25, 2014) at this link. Hasten to do it, please.
In the consulting arena, multi-client studies come in different flavors or variants. At Booz, Allen & Hamilton, the 1976 Study of World Economic Change was paid for by a number of large banks. We did not write about these banks. We delivered previously uncollected information in a Booz, Allen package. The boss was William Simon, former secretary of the US treasury. He brought a certain mindset and credibility to our project.
The authors of the IDC report are Dave Schubmehl and Dan Vesset. Frankly I don’t known enough about these “experts” to compare them to William Simon. My hunch is that Mr. Simon’s credentials might have had a bit more credibility. We supplemented the Booz, Allen team with specialists from Claremont College, where Peter Drucker was grooming some quite bright business analysts. In short, the high caliber Booz, Allen professionals, the Claremont College whiz kids, and William Simon combined to generate a report with a substantive information payload.
Based on my review of the Executive Summary of “The Knowledge Quotient,” direct comparisons with the Booz, Allen report or even reports from some of the mid tier firms’ analyses in my files are difficult to make. I can, however, highlight a handful of issues that warrant further consideration. Let’s look at three areas where the information highway may be melting in the summer heat.
1. A Focus on Knowledge and the Notion of a Quotient
I do a for fee column for Knowledge Management Magazine. I want to be candid. I am not sure that I have a solid understanding of what the heck “knowledge” is. I know that a quotient is the result obtained by dividing one number by another number. I am not able to accept that an intangible like “knowledge” can be converted to a numeric output. Lard on some other abstractions like “value” and the entire premise of the report is difficult to take seriously.
Well, quite a few companies did take the idea seriously, and we need to look at the IDC material to get a feel for the results based on a survey of 2,155 organizations and in depth interviews with 11 organizations “discovered.” The fact that there are 11 sponsors and 11 in depth interviews suggests that the sample is not an objective one as far as the interviews are concerned. But I may be wrong. Is that a signal that this IDC report is a marketing exercise dressed up as an objective report?
2. The Old Chestnut Makes an Appearance
A second clue is the inclusion of a matrix that reminded me of an unimaginative variation on the 1970 Boston Consulting Group’s tool. The BCG approach used market share or similar “hard” data about products and business units. A version of the BCG quadrant appears below:
IDC’s “experts” may be able to apply numbers to nebulous concepts. I would not want to try and pull off this legerdemain. The Schubmehl and Vesset version for IDC strikes me a somewhat spongy; for example, how does one create a quotient for knowledge when parameterizing “socialization” or “culture.” Is the association with New Age and pop culture intentional?
3. The Sponsors: An Eclectic Group United by Sponsoring IDC?
The third tip off to the focus of the report are the sponsors themselves. The 11 companies are an eclectic group, including a giant computer services firm (IBM) a handful of small companies with little or no corporate profile, and an indexing company that delivers training, services, and advice.
4. A Glimpse of the Takeaways
Fourth, the Executive Summary highlights what appear to be important takeaways from the year long research effort. For example, KQ leaders have their expectations exceeded presumably because these KQ savvy outfits have licensed one or more of the study sponsors’ products. The Executive Summary references a number of case studies. As you may know, positive case studies about search and content processing are not readily available. IDC promises a clutch of cases.
And IDC on pages iv and v of the Executive Summary uses a bullet list and some jargon to give a glimpse of high KQ outfits’ best practices. The idea is that if content is indexed and searchable, there are some benefits to the companies.
After 50 years, I assume IDC has this type of work nailed. I would point out that IDC used my information in its for fee reports from August 2012 until July 2014. My attorney was successful in getting IDC to stop connecting my name and that of my researchers with one of IDC’s top billing analysts. I find surfing on my content and name untoward. But again there are substantive differences between blue chip consulting firms and those lower on the for fee services totem pole.
I wonder if the full report will contain positive profiles of the sponsoring organizations. Be prepared to pay a lot for this “knowledge quotient” report. On the other hand, some of the sponsors may provide you with a copy if you have a gnawing curiosity about the buzzwords and jargon the report embraces; for example, analytics,
Some potential reader will have to write a big check. For example, to get one of the IDC reports with my name on it from 2012 to July 2014, the per report price was $3,500. I would not be surprised if the sticker for this KQ report is even higher. Based on the Executive Summary, KQ looks like a content marketing play. The “inclusions” are the profiles of the sponsors.
I will scout around for the Full Monty, and I hope it is fully clothed and buttoned up. Does IDC have a William Simon to ride herd on its “experts”? From my experience, IDC’s rigorousness is quite different. For example, IDC’s Dave Schubmehl used my information and attached himself to my name. Is this the behavior of a blue chip?
Stephen E Arnold, July 28, 2014
Pre Oracle InQuira: A Leader in Knowledge Assessment?
July 28, 2014
Oracle purchased InQuira in 2011. One of the writers for Beyond Search reminded me that Beyond Search covered the InQuira knowledge assessment marketing ploy in 2009. You can find that original article at http://bit.ly/WYYvF7.
InQuira’s technology is an option in the Oracle RightNow customer support system. RightNow was purchased by Oracle in 2001. For those who are the baseball card collectors of enterprise search, you know that RightNow purchased Q-Go technology to make its customer support system more intuitive, intelligent, and easier to use. (Information about Q-Go is at http://bit.ly/1nvyW8G.)
InQuira’s technology is not cut from a single chunk of Styrofoam. InQuira was formed in 2002 by fusing the Answerfriend, Inc. and Electric Knowledge, Inc. systems. InQuira was positioned as a question answering system. For years, Yahoo relied on InQuira to deliver answers to Yahooligans seeking help with Yahoo’s services. InQuira also provided the plumbing to www.honda.com. InQuira hopped on the natural language processing bandwagon and beat the drum until it layered on “knowledge” as a core functionality. The InQuira technology was packaged as a “semantic processing engine.”
InQuira used its somewhat ponderous technology along with AskJeeves’ type short cuts to improve the performance of its system. The company narrowed its focus from “boil the ocean search” to a niche focus. InQuira wanted to become the go to system for help desk applications.
InQuira’s approach involved vocabularies. These were similar to the “knowledge bases” included with some versions of Convera. InQuira, according to my files, used the phrase “loop of incompetence.” I think the idea was that traditional search systems did not allow a customer support professional to provide an answer that would make customers happy the majority of the time. InQuira before Oracle emphasized that its system would provide answers, not a list of Google style hits.
The InQuira system can be set up to display a page of answers in the form of sentences snipped from relevant documents. The idea is that the InQuira system eliminates the need for a user to review a laundry list of links.
The word lists and knowledge bases require maintenance. Some tasks can be turned over to scripts, but other tasks require the ministrations of a human who is a subject matter expert or a trained indexer. The InQuira concept knowledge bases also requires care and feeding to deliver on point results. I would point out that this type of knowledge care is more expensive than a nursing home for a 90 year old parent. A failure to maintain the knowledge bases usually results in indexing drift and frustrated users. In short, the systems are perceived as not working “like Google.”
Why is this nitty gritty important? InQuira shifted from fancy buzzwords as the sharp end of its marketing spear to the more fuzzy notion of knowledge. The company, beginning in late 2008, put knowledge first and the complex, somewhat baffling technology second. To generate sales leads, InQuira’s marketers hit on the idea of a “knowledge assessment.”
The outcome of the knowledge marketing effort was the sale of the company to Oracle in mid 2011. At the time of the sale, InQuira had an adaptor for Oracle Siebel. Oracle appears to have had a grand plan to acquire key customer support search and retrieval functionality. Armed with technology that was arguably better than the ageing Oracle SES system, Oracle could create a slam dunk solution for customer support applications.
Since the application, many search vendors have realized that some companies were not ready to write a Moby Dick sized check for customer support search. Search vendors adopted the lingo of InQuira and set out to make sales to organizations eager to reduce the cost of customer support and avoid the hefty license fees some vendors levied.
What I find important about InQuira are:
- It is one of the first search engines to be created by fusing two companies that were individually not able to generate sustainable revenue
- InQuira’s tactic to focus on customer support and then add other niche markets brought more discipline to the company’s message than the “one size fits all” that was popular with Autonomy and Fast Search.
- InQuira figured out that search was not a magnetic concept. The company was one of the first to explain its technology, benefits, and approach in terms of a nebulous concept; that is, knowledge. Who knows what knowledge is, but it does seem important, right?
- The outcome of InQuira’s efforts made it possible for stakeholders to sell the company to Oracle. Presumably this exist was a “success” for those who divided up Oracle’s money.
Net net: Shifting search and content processing to knowledge is a marketing tactic. Will it work in 2014 when search means Google? Some search vendors who have sold their soul to venture capitalists in exchange for millions of jump start dollars hope so.
My thought is that knowledge won’t sell information retrieval. Once a company installs a search systems, users can find what they need or not. Fuzzy does not cut it when users refuse to use a system, scream for a Google Search Appliance, or create a work around for a doggy system.
Stephen E Arnold, July 28, 2014
IDC and Reports by Schubmehl
July 25, 2014
I wanted to nail down a handful of facts.
First, IDC published without a contract four reports in 2012. These reports were disseminated via the IDC Web site, various communications, and via Amazon’s eCommerce site. These reports were:
- Attivio 236514
- Elasticsearch 237410
- Lucid Imagination / Works 236086
- Polyspot 236511
Each report was $3,500. One report about Attivio was sold on Amazon until July 17, 2014.
The “authors” of these IDC reports included:
- Susan Feldman, a former IDC professional positioned as a “search expert”. Only Attivio.
- David Schubmehl, a former OpenText and Janya (no longer in business) “professional” and heir to Ms Feldman as IDC’s search expert who has jumped from my Attivio information into a consulting relationship with that company founded by former Fast Search & Transfer executives. See this link. Dave Schubmehl’s name appears on each of the four published reports using information from my team and me.
- Constance Ard, MLS, who was at this time the coordinator of my research projects
- Dr. Tyra Oldham, one of the 2012 members of my research team
- Stephen E Arnold, me. I have pointed to a biography on my Web site set up to promote the deal I had with IDC to publish an open source search monograph containing profiles of more than a dozen companies in 2012.
So what’s the big deal? Let me highlight the reason I will be taking a look at some of the IDC expertise in the future.
First, Ms. Feldman and I worked on projects that originated at Manning & Napier, then an investment services company. I was happy to cooperate with her when she joined IDC as the head of the IDC search practice. However, under circumstances I don’t understand, Ms. Feldman left IDC and the area of her responsibility was snagged by David Schubmehl. Without Ms. Feldman at IDC, I made numerous efforts to get a contract, get information about sales, find out where the 13 profiles provided by me and my team were at IDC, and, of course, get paid. Ms. Feldman made administrative procedures work. Mr. Schubmehl took a different approach from where I sat.
Second, Mr. Schubmehl made certain his name appeared on the reports published and sold by IDC without written permission from me to use my material or to stake a claim on the work. Furthermore, the source material we provided contained certain information that was in 2012 not widely known. Significant information about the companies we analyzed were not included in the IDC reports. As a result, the IDC reports using my material were not in line with my thinking. One example of Mr. Schubmehl’s thinking is this tweet:
According to LinkedIn, IDC’s analyst profile, and various biographies charting his work career, he is an expert in Enterprise Search, Text Analytics, Customer Relations, Consultancy, Document Management, Enterprise Content Management, Business Intelligence, Information Management, Intellectual Property, Litigation Support, Enterprise Software, SaaS, Product Management, Cloud Computing, Analytics, Go-to-market Strategy, Knowledge Management, Software Development, and Enterprise Architecture. This impressive list begs one simple question: “If one is so expert, why is it necessary to use without permission and payment the work of others?”
Third, my attorney sought information about sales and finally pressed IDC to stop selling reports with my name and David Schubmehl’s on them. One fix was for IDC to roll Lucid information into a separate report. IDC stopped selling the four reports identified above in early 2014. IDC continued to sell the Attivio report on Amazon until July 17, 2014. IDC is no longer selling reports with my name on them. This is a modest victory, but it leaves the question hanging, “What motivates a large and presumably well regarded consulting firm to trample over basic business procedures?” I don’t have an answer. I do believe IDC is perhaps not quite so confident of its “experts’” expertise, particularly with regard to search and content processing.
Net net: IDC used my name without my permission. IDC published my research material without issuing a contract for work for hire. IDC took possession of detailed, high value information and permitted that information to “inform” David Schubmehl to further his impact as a sales person and “expert” at IDC like Mr. Schubmehl, a “long suffering Buffalo Bills fan and reformed youth soccer referee.”
The next time you read an IDC report, please, consider these questions:
- Who is the “expert”? The contributors or the IDC person who piggybacks on the names of others with particular expertise?
- Is $3,500 for a rehash of other people’s work a wise use of scarce resources?
- Why does a large company fail to follow standard business practices such as issuing contracts, observing contracts, providing sales reports, and compensating those who actually performed original work?
Stephen E Arnold, July 25, 2014
What SEO, Google, and Marketing Hath Wrought
July 24, 2014
“Myths and Misreporting About Malaysia Airlines Flight 17” is an interesting article. I found the examples of misinformation, disinformation, and reformation thought provoking. The write up spotlights a few examples of fake or distorted information about an airline’s doomed flight.
As i considered the article and its appearance in a number of news alerting services, I shifted from the cleverness of the content to a larger and more interesting issue. From the revelations about software that can alter inputs to an online survey (see this link) to fake out “real” news, determining what’s sort of accurate from what’s totally bogus is becoming more and more difficult. I have professional researchers, librarians, and paralegals at my disposal. Most people do not. No longer surprising to me is the email from one of the editors working to fact check my for fee columns. The questions range from “Did IBM Watson invent a recipe with tamarind in its sauce?” to “Do you have a source for the purchase price of Vivisimo?” Now I include online links for the facts and let the editors look up my source without the intermediating email. Even then, there is a sense of wonderment when an editor expresses surmise that what he or she believed is, in fact, either partially true, bogus, or unexpected. Example: “Why do French search vendors feel compelled to throw themselves at the US market despite the historically low success rates?” The answer is anchored in [a] French tax regulations, [b] French culture, particularly when a scruffy entrepreneur from the wrong side of the educational tracks tries to connect with a French money source from the right side of the educational tracks, [c] the lousy financial environment for certain high technology endeavors, and [d] selling to the big US markets looks like a slam dunk, at least for a while.
The reason for the disconnect between factoids and information manipulation boils down to a handful of factors. Let me highlight several:
First, the need for traffic to Web sites (desktop, mobile, app instances, etc.) is climbing up the hierarchy of business / personal needs. You want traffic today? The choices are limited. Pay Google $25,000 or more a month. Pay an SEO (search engine optimization “expert” whatever you can negotiate. Create content, do traditional marketing, and trust that the traffic follows the “if you build it they will come” pipedream. Most folks just whack at getting traffic and use increasingly SEOized headlines as a low cost way of attracting attention. Think headlines from the National Enquirer in the 1980s.
Second, Google has to pump lots of money into plumbing, infrastructure, moon shots, operational costs (three months at the Stanford Psych unit, anyone?) At the same time, mobile is getting hot. Two problems plague the sunny world of the GOOG. [a] Revenue from mobile ads is less than from traditional ads. Therefore, Google has to find a way to keep that 2006 style revenue flowing. Because there is a systemic shift, the GOOG needs money. One way to get it is to think about Adwords as a machine that needs tweaking. How does one sell Adwords to those who do not buy enough today? You ponder the question, but it involves traffic to a Web site. [b] Google gets bigger so the “think cheap” days of yore are easier to talk about than deliver. A 15 year old company is getting more and more expensive to run. The upcoming battles with Amazon and Samsung will not be cheap. The housing developments, the Loon balloons, and the jet fleet, smart people, and other oddments of the company—money pits. If the British government can fiddle traffic, is it possible that others have this capability too?
Third, marketing, an easy whipping boy or girl as the case may be. After spending lots and lots on Web sites and apps, some outfits’ CFOs are asking, “What do we get for this spending?” In order to “prove” their worth and stop the whipping, marketers have kicked into overdrive. Baloney, specious, half baked, crazy, and recycled content is generated by the terabyte drive. The old fashioned ideas about verification, accuracy, and provenance are kicked to the side of the road.
Net net: running a query on a search engine, accepting the veracity of a long form article, or just finding out what happened at an event is very difficult. The fixes are not palatable to some people. Others are content to believe that their Internet or Internet search engine dispenses wisdom like the oracle at Delphi. Who knew the “oracles” relied on confusing entrances, various substances, and stage tricks to get their story across.
We now consult digital Delphis. How is that working out when you search for information to address a business problem, find a person who can use finger manipulation to relax a horse’s muscle, or determine if a company is what its Web site says it is?
Stephen E Arnold, July 24, 2014
HP, Autonomy, the Vatican: Business Process Case Example
July 21, 2014
On Saturday (July 20, 2014) I read “Exclusive: Vatican Dispute Sheds Light on HP Case in Troubled Autonomy Deal.” The story notes that Reuters saw “a letter.” Because there was no link to the letter, I decided to wait and see how other “real” journalists reacted to the story.
I found “HP Autonomy Legal Case Takes Religious Twist with Vatican Deal Mystery” interesting. The article does a good job of summarizing Reuters’ recounting of Autonomy selling software to a reseller. Autonomy booked the revenue. The reseller in the US assumed the job of bundling up the software and services and collecting from the Vatican.
Several questions crossed my mind as I through about the original story and the rehash from the V3.co.uk Web site:
- Is this process different from the one used for selling or leasing an automobile through the value chain at a local Lexus dealership?
- From where did the copies of the source documents come? Under what circumstances? Why? How?
- Are other enterprise software vendors using different financial transaction methods? What are some examples germane to the HP Autonomy Vatican case example?
In my experience, there are many ways to sell or license software and services. These range from the open source or freeware approach to the pay for to get a license to use the proprietary deliverable (whether tangible or intangible). Vendors and customers choose an approach that meets the needs of the parties to the deal.
I ask myself, “Is this case example information, reformation, disinformation, misinformation?”
Stephen E Arnold, July 21, 2014
What Most Search Vendors Cannot Pull Off
July 19, 2014
I recently submitted an Information Today column that reported about Antidot’s tactical play to enter the US market. One of the fact checkers for the write up alerted me that most of the companies I identified were unknown to US readers. Test yourself. How many of these firms do you recognize? How many of them provide information retrieval services?
- A2ia
- Albert (originally AMI Albert and AMI does not mean friend)
- Dassault Exalead
- Datops
- EZ2Find
- Kartoo
- Lingway
- LUT Technologies
- Pertimm
- Polyspot
- Quaero
- Questel
- Sinequa
How did you do? The point is that French vendors of information retrieval and content processing technology find themselves in a crowded boat. Most of the enterprise search vendors have flamed out or resigned themselves to pitching to venture capitalist that their technology is the Next Big Thing. A lucky few sell out and cash in; for example Datops. Others are ignored or forgotten.
The same situation exists for vendors of search technology in other countries. Search is a tough business. And when former Googlers like Marissa Meyer was the boss when Yahoo’s share of the Web search market sagged below 10 percent. In the same time period, Microsoft increased Bing’s share to about 14 percent. Google dogpaddled and held steady. Other Web search providers make up the balance of the market players. Business Insider reported:
This is a big problem for Yahoo since its search business is lucrative. While Yahoo’s display ad business fell 7% last quarter, revenue from search was up 6% on a year-over-year basis. Revenue from search was $428 million compared to $436 million from its display ad business.
Now enterprise search vendors have been trying to use verbal magic to unlock consistently growing revenue. So far only two vendors have been able to find a way to open the revenue vault’s lock. Autonomy tallied more than $800 million in revenue at the time of its sale to Hewlett Packard. The outcome of that deal was a multi-billion dollar write off and many legal accusations. One thing is clear through the murky rhetoric the deal produced. Hewlett Packard had zero understanding of search and has been looking for a scapegoat to slaughter for its corporate decision. This is not helping the search vendors chasing deals.
Google converted Web search into a $60 billion revenue stream. The fact that the core idea for online advertising originated with the pay-to-play company GoTo which then morphed into Overture which THEN was acquired by Yahoo. Think of the irony. Yahoo has the technology that makes Google a one trick, but very lucrative revenue pony. But, to be fair, Google Web search is not the enterprise search needed to locate a factoid for a marketing assistant. Feed this query “how me the versions of the marketing VP’s last product road map” to a Google appliance and check the results. The human has to do some old fashioned human-type work. To find this information with a Google Search Appliance or any other information retrieval engine for that matter is tricky. Basic indexing cannot do the job, so most marketing assistants hunt manually through files, folders, and hard copies looking for the Easter egg.
Many of the pioneering search engines tried explaining their products and services using euphemisms. There was question answering, content intelligence, smart content, predictive retrieval, entity extraction, and dozens and dozens of phrases that sound fine but are very difficult to define; for example, knowledge management and the phrase “enterprise search” itself or “image recognition” or “predictive analytics”, among others.
I had a hearty chuckle when I read “Don’t Sell a Product, Sell a Whole New Way of Thinking.” Search has been available for at least 50 years. Think RECON, Orbit, Fulcrum Technologies, BASIS, Teratext, and other artifacts of search and retrieval. Smart folks cooked up even the computationally challenged Delphes system, the metasearch system Vivisimo, and the essentially unknown Quertle.
A romp through these firm’s marketing collateral, PowerPoints, and PDFs makes clear that no buzzword has been left untried. Buyers did and do not know what the systems actually delivered. This is evidence that search vendors have not been able to “sell a whole new way of thinking.”
No kidding. The synonyms search marketers have used in order to generate interest and hopefully a sale are a catalog of information technology jargon. Here is a short list of some of the terms from the 1990s:
- Business intelligence
- Competitive intelligence
- Content governance
- Content management
- Customer support then customer relationship management.
- Knowledge management
- Neurodynamics
- Text analytics
If I accept the Harvard analysis, the failing of enterprise search is not financial fiddling and jargon. As you may recall, Microsoft paid $1.2 billion for Fast Search & Transfer. The investigation into allegations of financial fancy dancing were resolved recently with one executive facing a possible jail term and employment restrictions. There are other companies that tried to blend search with content only to find that the combination was not quite like peanut butter and jelly. Do you use Factiva or Ebsco? Did I hear a “what?’ Other companies embraced slick visualizations to communicate key information at a glance. Do you remember Grokker? There was semantic search. Do you recollect Siderean Software.
One success story was Oingo, renamed Applied Semantics. Google understood the value of mapping words to ads and purchased the company to further its non search goals of generating ad revenue.
According to the HBR:
To find the shift, ask yourself a few questions. What was the original insight that led to the innovation? Where do you feel people “don’t get it” about your solution? What is the “aha” moment when someone turns from disinterested to enthusiastic?
Those who code up search systems are quite bright. Is this pat formula of shifting thinking the solution to the business challenges these firms face:
Attivio. Founded by Fast Search & Transfer alums, the company has ingested more than $35 million in venture funding. The company’s positioning is “an actionable 360 degree view of anything you need.” Okay. Dassault Exalead used the same line several years.
Coveo. The company has tapped venture firms for more than $30 million since the firm’s founding in 2004, Coveo uses the phrase “enterprise search” and wraps it in knowledge workers, custom service, engineering, and CRM. The idea is that Coveo delivers solutions tailored to a specific business functions and employee roles.
SRCH2. This is a Xoogler founded company that like Perfect Search before emphasizes speed. The alternative is better than open source search solutions.
Lucid Works. Like Vivisimo, Lucid Works has embraced Big Data and the cloud. The only slow downs Lucid has encountered has been turnover in CEOs, marketing, and engineering professionals. The most recent hurdle to trip up Lucid is the interest in ElasticSearch, fat with almost $100 million in venture funding and developers from the open source community.
IBM Watson. Based on open source and home grown technology, IBM’s marketers have showcased Watson on Jeopardy and garnered headlines for the $1 billion investment IBM is making in its “smart” information processing system. The most recent demonstration of Watson was producing a recipe for Bon Appetit readers.
Amazon’s search approach is to provide it as a service to those using Amazon Web services. Search is, in my mind, just a utility for Amazon. Amazon’s search system on its eCommerce site is not particularly good. Want to NOT out books not yet available on the system. Well, good luck with that query.
After I stopped chuckling, I realized that the Harvard article is less concerned with precision and recall than advocating deception, maybe cleverness. No enterprise search vendor has approached Autonomy’s revenues with the sole exception of Google’s licensing of the wildly expensive Google Search Appliance. At the time of its sale to Oracle, Endeca was chugging along at an estimated $150 million in revenue. Oracle paid about $1 billion for Endeca. With that benchmark, name another enterprise search vendor or eCommerce search vendor that has raced past Endeca. For the majority of enterprise search vendors, revenues of $3 to $10 million represent very significant achievements.
An MBA who takes over an enterprise search company may believe that wordsmithing will make sales. Sure, some sales may result but will the revenue be sustainable. Most enterprise search sales are a knee jerk to problems with the incumbent search system.
Without concrete positive case studies, talking about search is sophistry. There are comparatively few, specific, return on investment analyses for enterprise seach installations. I provided a link to a struggling LinkedIn person about an Italian library’s shift from the 1960s BASIS system to a Google Search Appliance.
Is enterprise search an anomaly in business software. Will the investment firms get their money back from their investments in search and retrieval?
Ask a Harvard MBA steeped in the lore of selling a whole new way of thinking. Ignore 50 years of search history. Success in search is difficult to achieve. Duplicity won’t do the job.
Stephen E Arnold, July 19, 2014
Google and Microsoft Shuffle the Deck
July 18, 2014
Each company is using different card tricks.
I see a common theme in the termination of employees at Microsoft and the management redeal at Google.
I read “Beyond 12,500 Former Nokia Employees, Who Else Is Microsoft Laying Off?” I am okay with a Microsoft watcher point out that not just Nokia staff getting the axe. The comment that caught my attention reveals how serious a problem Microsoft faces. Here’s the passage I noted:
Under the new structure, a number of Windows engineers, primarily dedicated testers, will no longer be needed….Instead, program managers and development engineers will be taking on new responsibilities, such as testing hypotheses. The goal is to make the OS team work more like lean startups than a more regimented and plodding one adhering two- to three-year planning, development, testing cycles.
As I understand this, a company almost four decades into its life cycle wants to be “like lean start ups”. I am not sure if my experience is similar to that of other professionals, but working with fewer people does not equal a start up. In a start up, life is pretty crazy. Need a purchase order? Well, someone has to work up that system. Need to get reimbursed for that trade show party? No problem we’ll get a check cut. Over time, humans get tired of crazy and set up routines, systems, and procedures. The thrill of a start up is going to be difficult to emulate at Microsoft.
That’s the core problem. Microsoft has missed or just plain failed with Internet search, unified experiences across devices, online advertising, enterprise search, and improving is core applications. Adding features that a small percentage of users try is not innovation. Microsoft is no longer a start up and firing people will not make it one. Microsoft is an aircraft carrier that takes a long time to turn, to stop, and redirect. Microsoft has to demonstrate to its stakeholders that it is taking purposeful action. Firing thousands of people makes headlines. It does not create new products, services, or meaningful innovations. IBM has decided that throwing billions of dollars at project that “could” deliver big revenue is almost as wild and wooly.
Now to Google. The company reported its quarterly earnings. Cheerleaders for the company point to growth in ad revenue. The New York Times states:
Google’s revenue for the quarter was $15.96 billion, an increase of 22 percent over the year-ago quarter.
Tucked into the article were several comments I marked as indicators of the friction Google faces:
ITEM: “The price that advertisers pay each time someone clicks on an ad — or “cost per click,” in Google talk — dropped 6 percent from the year-ago quarter, largely because of the shift to increased mobile advertising.”
ITEM: “Mobile, however, is something that Facebook seems to have cracked. The social media giant accounted for almost 16 percent of mobile advertising dollars spent around the world last year, eMarketer estimates, up from 9 percent in 2012. Google dropped to a 41.5 percent share of the mobile ad market last year, down from 49.8 percent in 2012.”
ITEM: ““There’s a little bit of concern in the markets that there’s some drunken spending going on,” said Mark Mahaney, an Internet analyst with RBC Capital Markets.”
The New York Times’ article omitted one point I found interesting:
Excluding its cost of revenue, Google’s core expenses in the second quarter jumped 26 percent from last year. Source: http://bit.ly/Uf8JPM.
The Google “core expenses” are creeping up. Amazon has this problem as well. Is there a reason to worry about the online ad giant? Not for me. But the “drunken spending” comments, while clever, have the ring of truth. Then the swift departure of Glass director Babak Parviz (Amir Parviz, Amirparviz, or Parvis) suggests disenchantment somewhere between the self assembly wizard and Goggle management. After a decade of effort, Google has yet to demonstrate that it can create a no advertising revenue stream of significant magnitude for a $60 billion a year company.
Microsoft’s and Google’s recent actions make clear that both companies are trying to adapt to realities of today’s market. Both companies are under increasing pressure to “just make it work.” Three card Monte
Stephen E Arnold, July 18, 2014
Xoogler Under Pressure: The Yahoo Soap Opera Renews for Another Quarter
July 16, 2014
When Chris Kitze and I started The Point (Top 5% of the Internet), we admired the Yahoo Directory. Our goal was much narrowed than Yahoo’s. We focused on putting Web sites in the Point directory that meet our criteria for family friendly and young student friendly sites. That was in 1993 or 1994. The site was a hit and we sold the company to CMGI, and the Point ended up at Lycos. That deal was pretty successful for me, and I learned three things in the wild and wooly, pre crash Internet era 20 years ago.
First, selling ads was difficult. In the early days, there were no solid guidelines for how big an ad could be. Blinking and flashing were annoying, but there was not user backlash with these lame attempts to attract attention. Proving from log data who clicked and other details required scripts and machine resources to grind through the huge files our Sparcs happily pumped out. I learned that ads were indeed good money. But the 1993 Internet required our team to be the digital equivalent of Roman trireme rowers. I don’t recall much time off, and it was hard work.
Selling ads is hard work. The landscape is altered by the process. There’s no guarantee there’s gold in them thar riverbeds. Source: http://bit.ly/1wuH5ef
Second, advertisers were reluctant to pay up front. A problem Google solved with its “account” method. We were stupid. We sent an invoice, the usage data, and waited for the check to come in the mail. Basic lesson: collecting for any online service can be difficult. When times are tough, advertisers shuffle priorities and our invoices filtered to the bottom of the stack. Collections were painful.
Third, making pages in 1993 was a time consuming affair. We experimented with many technologies, toolkits, and even systems like the incredibly sluggish Cold Fusion were tested in 1995. We learned that the best way to create Web pages in the early 90s was to code ‘em up, shake ‘em out, and let ‘em loose. I repeatedly asked myself, “Why did I agree to put resources into a family friendly online service?”
I read two “real” news stories this morning. Neither has been connected in the blog posts and news streams flowing into my Oversight service. Let me point to each and then offer a handful of observations. I would suggest you keep the three factoids I learned from the Point (Top 5% of the Internet) start up.
The first item is “Yahoo Misses In Q2 With Revenue Of $1.04B, EPS Of $0.37.” At a time when newspapers and magazines are gasping for oxygen, Yahoo seems to have no turbocharger to activate. One Alibaba follows its dream, Yahoo has only its in hand properties and acquisition opportunities to produce another Klondike Gold Rush. The write up said:
Yahoo reported its second-quarter financial performance, including revenue (excluding traffic acquisition costs, or TAC) of $1.04 billion and non-GAAP earnings per share of $0.37. Revenue including TAC was $1.08. Analysts had expected the company to earn $0.38 on revenue of ex-TAC of $1.08 billion.
The quote to note about Yahoo earnings is:
The company stated in its release that revenue growth is its “top priority,” and that it is “not satisfied with [its] Q2 results” in that context.
The second reports presents some good news for Microsoft. True, the write up does not mention the impending layoffs or the dismal device market share that this former monopoly now has. “Microsoft to Surpass Yahoo in Global Digital Ad Market Share This Year.”
Unlike some “experts” I view information about online advertising with considerable skepticism. I don’t think the individual numbers presented an “facts” are important. What struck me as important is this statement:
Yahoo’s push to maintain its position as a top global ad seller will take another hit in 2014, according to new projections from eMarketer. Though Yahoo’s ad revenues will be back in the black this year, increasing its global digital ad revenues by 2.7% after a decline of 2.1% in 2013 to reach $3.53 billion, the company’s share of the $140.15 billion digital advertising market will fall from 2.86% to 2.52%.
Microsoft—believe it or not—appears to be doing better than Yahoo in the ad battle.
The big point in my opinion is that Yahoo has racked up falling ad revenue and will continue to lost online advertising market share, not because other vendors like Microsoft are doing a bang up job. I seem to recall that the Xoogler running Yahoo saw only happy faces in the revenue a few months ago. Like IBM’s slowing arcing down numbers, Yahoo appears to be riding a fading wave.
Several observations:
- Xooglers do not automatically generate money. In fact, Google’s revenue comes from its magical online search results ad system. (Anyone remember GoTo.com and Overture?) I bet Yahoo does.
- Selling online advertising is as difficult today as it was in the era of The Point (Top 5% of the Internet). Google’s approach relies on advertisers who will deposit money to be spent, so some of the collection hassle is ameliorated.
- Yahoo has been in turn around mode for a long time. Maybe AOL and Yahoo should get married and produce fat, happy revenue.
Now about the Yahoo search system. I find the results less than satisfying. I can’t figure out how to look at Louisville-related news. I continue to have difficulty logging into my for fee Yahoo mail account when I am out of the country. I suppose I am the Lone Ranger in my view of Yahoo. That’s okay but I see declines as due to more users than myself.
Stephen E Arnold, July 16, 2014
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