September 20, 2014
I read an interesting article about IBM. “IBM – A New Behemoth, or a Wounded Beast?” I noted that IBM is continuing to rely on Big Iron for some revenue. The write up reported:
IBM is pushing the mainframe as a Linux engine. Sales of the mainframe continue to be strong, and the majority of sales now include Linux capabilities. Although the mainframe is not an engine for everyone, it shows no sign of fading away, and will remain a core part of IBM’s future.
The argument in the article is less on IBM as either a behemoth or a beast. The article suggests that it has a flawed strategy with regard to Intel x86 systems.
IBM faces some significant growth hurdles, and the company has not formulated a winning strategy for its cloud solutions as Amazon, Google, and Microsoft take aim at IBM’s approach to enterprise cloud computing.
Furthermore, IBM is betting on Watson to generate billions in revenue. Is there a strategic vision behind Watson or the allied Cognos-SPSS-i2 lines of business.
What this article does is make very clear that IBM has some significant issues with regard to its corporate strategy. Both HP and IBM are increasingly vulnerable in multiple lines of business. Maybe enterprise apps will generate the types of revenue lift IBM enjoyed in its salad days? But then, maybe not?
Stephen E Arnold, September 20, 2014
September 19, 2014
I read “Looking Past the Search Results: Google 2.0 Will Build Airports and Cities Says Report.” The “report” appears to be the work of an outfit doing business as “The Information.” The founder of The Information is Jessica E. Lessin. She was a Wall Street Journal reporter. She morphed into a “reportrepreneur.” (See About the Information for more about the company.)
The “report” costs money. The Independent’s summary of the main idea reveals:
Larry Page has set up a ‘company within a company’ dubbed ‘Google 2.0’ that will look at the tech giant’s long-term future – presumably for when advertising revenue from search traffic (inevitably) dries up.
The “report” suggests that Google may build airports and cities. I assume these will complement the Loon, Glass, Death, and other moon shot projects.
The Independent reports that Google may form Google Y Labs. No word on Google Z.
I must admit that when I saw the headline, someone had stumbled across my 2007 monograph published by a now defunct UK outfit. That monograph was called “Google Version 2.0.”
I was wrong. The 2014 version 2.0 moves into far more speculative realms than my modest effort to explore some of Google’s technical plumbing. That’s why there are no big thinkers in rural Kentucky. Better to be a big thinker, reportrepreneur.
My view is that Google faces some significant challenges; for example, the company has yet to find a fast ramp solution to the difference between old style online advertising based on the Yahoo/Overture/GoTo model for desktop computers and the new, limited screen real estate of mobile devices. Google has demonstrated that it is vulnerable to regulators in Europe. Google has lagged Amazon in the cloud market and most recently in buying a top level domain. Now Apple is probing Google in terms of its apparent willingness to trade on customer content. There are some other issues. Some are big like the management structure at Google. Some are small like the interpersonal interactions of a Google manager, a colleague, and the surprising departure of a wizard to Amazon.
Google is interesting because it seems to have fulfilled Steve Ballmer’s prophecy of the GOOG as a one trick pony. I think Google 3.0 may be a better name for the new “report.”
Stephen E Arnold, September 19, 2014
September 19, 2014
Perish the thought. I am confident that Google is the lean, mean money making machine with the swiftness of Hermes (the Greek god, not the maker of the parfum Eau des Merveilles).
Amazon somehow ended up with a video service of people watching video games. I read that the profit free digital WalMart snagged the top level domain dot Buy.
Amazon beat Google, Donuts and Famous Four Media in the auction. PVT Registry did not participate. Only two bidders bid above $1.5 million.
The likelihood of a Google-Zon emerging seems to have diminished a bit.
Who will win the next sprint? Mr. Bezos or the dynamic duo of Messrs. Brin and Page.
Stephen E Arnold, September 19, 2014
September 17, 2014
Navigate to “History of Misses for Radio Shack.” Hurry. I have no idea how long the source document will remain online. The write up is a business school type paper that explains why Radio Shack is essential running out of oxygen.
Here’s the quote I noted:
RadioShack tried many paths. But going in all directions without a full commitment is not enough, particularly when the core brand is not sustained. RadioShack has branded itself well but it led itself too far from its strengths.
Remind you of any large companies in the online business? If you buy enough race horses, one of them is going to win. At least that’s the theory that motivates some folks.
Stephen E Arnold, September 17, 2014
September 15, 2014
Short honk: Navigate to “How Google’s Autonomous Car Passed the First U.S. State Self-Driving Test.” Do you find this statement interesting?
Google chose the test route and set limits on the road and weather conditions that the vehicle could encounter, and that its engineers had to take control of the car twice during the drive.
I do. With intervention it is much easier to pass a test. The same method of shaping characterizes Google’s approach to modeling for “nowcasting.” I discuss this hand crafting of methods to deliver an acceptable result in my next KMWorld article.
Stephen E Arnold, September 15, 2014
September 13, 2014
Try as I might, I cannot avoid learning about Hewlett Packard. For a $100 billion outfit, the flow of information is not overwhelmingly positive.
Earlier today, I worked through several stories. Perhaps you have absorbed their contents? If not, here’s my take.
First, several years ago I saw a document describing Autonomy’s business. The link to the “Autonomy Overview,” dated January 2011 is at http://bit.ly/1tNtn5H. The link to a second document is at http://bit.ly/1uMLmKg. (A happy quack to Oracle for keeping these useful documents online and available.) One of the most important factoids in the two documents is that there appeared with the Qatalyst Partners logo. Quatalyst is associated in my mind with Frank Quattrone, a person of interest for his financial wizardry.
The write up “Exclusive: HP Exploring Sale of Photo Sharing Service Snapfish – Source” may be off center. I did note this this statement in the write up:
Shutterfly hired Frank Quattrone’s Qatalyst Partners over the summer to find a buyer, and is expected wrap up its process in the next several weeks, people familiar with the matter have said previously.
Perhaps HP’s sale of Snapfish will demonstrate that Mr. Quattrone will be bested in this minor joust. HP’s encounter with Mr. Quattrone’s analysis of Autonomy seems to have dazzled the printer ink company to some degree.
Second, “HP Pleads Guilty to Bribery and Is Fined $108” asserts that HP fought the law and the law won. I learned:
In a statement, the US Department of Justice (DoJ) said HP Russia admitted that its executives paid bribes to officials of the Office of the Prosecutor General of the Russian Federation to win a large technology contract in 1999, and continued making illegal payments for more than a decade. “[HP] subsidiaries, co-conspirators or intermediaries created a slush fund for bribe payments, set up an intricate web of shell companies and bank accounts to launder money, employed two sets of books to track bribe recipients, and used anonymous email accounts and prepaid mobile telephones to arrange covert meetings to hand over bags of cash,” said DoJ deputy assistant attorney general Bruce Schwartz.
Fascinating when I put this business approach in the context of HP’s actions related to Autonomy.
Third, I read “Former Autonomy Execs Turning to Unusual Strategy in Fight with Hewlett-Packard.” The article reports that Autonomy asserts that “HP grossly overvalued their firm.” That makes sense to me. HP appears to have been bitten by the Big Data, predictive analytics and search bug. Like Ebola, the infection can lead to some challenging problems.
Also, I read “HP: We Will Eradicate the Color Grey from Our Market.” HP seems to have some folks who are selling HP products around the formal partner procedures. The article reports:
Alex Tatham, MD at HP distributor Westcoast, said he is “delighted” that HP is tackling a market that has the potential to suck profits from the authorised channel. “All vendors need to police the grey market; it is their responsibility to create as level a playing field as possible for resellers,” he told us. Some in the industry will say that the grey market is, at least, partly fuelled by the vendors themselves, whether it be leaky supply chains or the temptation to sell to brokers to make kit disappear amid slow sales.
Net net: HP is a company able to capture headlines. I wonder if Kim Kardashian’s media impact has inspired the $100 billion company?
Stephen E Arnold, September 13, 2014
September 9, 2014
I read “New IBM Study Reveals 3 Key Characteristics of the Most Successful Companies.” Like most big company research that finds its way into content marketing programs, the information is a rah rah for IBM.
I noted that one of the study’s allegedly objective findings may suggest a rather ominous factoid for purveyors of fancy analytics systems.
Here’s the statement from the article I noted:
The study found that nearly 90 percent of the more than 1,400 respondents have mature big data and analytics capabilities, while 60 percent plan to increase investment in this area by 10 percent or more over the next two years. Additionally, nearly seven out of 10 pacesetter organizations make analytical insights a significant part of their decision-making process.
For vendors, if the 90 percent number for having mature Big Data and analytics capabilities is on the money, revenue will flow from swap outs, upgrades, and services. The flood of analytics start ups may find that their revenue goals are going to be difficult to meet. Furthermore, consolidation is not just likely. Consolidation is inevitable.
Another point that struck me is that 70 percent of the IBM sample already rely on fancy math to help managers make decisions. From my vantage point, the thrust of many management decisions boil down to cost cutting and acquisitions. Does this mean that the marketing is approaching saturation?
Innovation seems to be ripping along, but the velocity comes from shorter product cycles, non repairable products, and services that change with each marketing brochure rewrite.
Check out the study. Draw your own conclusions.
For me, the search vendors pitching information retrieval systems that tame Big Data and eliminate the hassle of traditional analytics via queries may be late to the party. If a vendor is already at the party, growth becomes a challenge unless search and content processing vendors become consulting and service firms. Proprietary software vendors may find themselves forced to embrace the open source approach to software and hope their sales professionals can generate sufficient revenues to pay the bills, pay back investors, and generate a profit. The US economy is in recovery mode, according to some, which search and content processing vendors will break out of the findability herd?
Stephen E Arnold, September 9, 2014
September 9, 2014
In early September 2014, Hewlett Packard announced its hackathons. These are designed to “unleash developer creativity.” The hacks will demonstrate the power of [the] IDOL OnDemand platform.
HP has lined up events at DataWeek and API World, Legal Hackers, HackMIT Hackathon, and TCO14. The most interesting comment in the announcement is this statement attributed to the IDOL OnDemand “evangelist”:
IDOL OnDemand is the ideal platform for today’s developer looking to build amazing applications in the mobile, big data world. The hackathons are terrific opportunities for developers to engage with their peers and the IDOL OnDemand platform, and are always a lot of fun too.
For me, the most fun I have is watching Hewlett Packard sling mud at Autonomy, Deloitte, and former Autonomy employees.
The idea informing these hackathons appears to be building apps for HP’s Autonomy IDOL in the cloud initiative. Compared to ElasticSearch, HP is putting quite a bit of effort into this program. ElasticSearch, on the other hand, announces a developer training session and the developers show up.
Perhaps HP’s struggles with IDOL have something to do with one or more of these factors:
- Open source options / alternatives to proprietary information retrieval systems
- HP’s history of management turnover
- HP’s on again and off again approach to certain business initiatives
- The public relations stemming from the Autonomy litigation.
Did I omit a factor or two? Use the comments section to set me straight.
Stephen E Arnold, September 9, 2014
September 2, 2014
Could someone please explain why it is a good idea to pay old debt off with new debt? While there might be a lower interest rate or more time to pay off the loans, it seems Altegrity needs to cut its losses before things get worse for it. BizJournals.com describes Altegrity’s financial state in the article, “Altegrity, USIS’ parent, Remains Buried In Billions In Debt” (sic).
You might recognize Altegrity as the parent company of USIS, which performs background checks for the federal government and is currently under a fraud investigation. The fraud tied with debt places the company in a bad spotlight. According to Standards and Poor’s Financial Services, LLC anyone who gives them a loan only stands to recover 10 percent of the funds if they are lucky.
This does not sound good either:
“And while extending the debt maturities provides ‘a modestly improved capital structure and liquidity profile,’ Altegrity remains on shaky ground to S&P. Its corporate rating of ‘CCC+’ from the ratings agency means it has “very weak financial security characteristics, and is dependent on favorable business conditions to meet financial commitments.” That mirrors the Caa2 rating from Moody’s Investors Service Inc., which a month ago called Altegrity’s debt profile ‘unsustainable.’”
Even worse is that the US government has Altegrity’s fate in its hands. The only news for Altegrity is bad. While we do not give financial advice, in this case, do not invest with this company. Next year does not look good for them at all.
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