Google and IBM: Revenue and Profit Honks Sounded

April 17, 2014

At my age, I don’t own stocks. I don’t own anything because life in rural Kentucky is simple. The news about Google’s and IBM’s most recent financial results struck me as an MBA discussion group problem.

IBM issued “IBM Reports 2014 First Quarter Results.” What surprises did the $100 billion giant sprint on me? In a nutshell, declining revenues and profits. The bright spots were IBM’s consulting revenues and the company’s cloud computing. Other parts of the business were less robust. Overall IBM faces major challenges in hardware where no easy fix seems evident. Search as manifested in the Watson initiative will have to deliver.

In “Google Inc. Announces First Quarter 2014 Results” made clear that the Google was able to pump up its revenue. I noted the word “great” as Google’s way of describing the last 12 weeks’ financial performance. I noted that profit was down. Explanations included accountants being accountants and acquisitions. For me, the shift to mobile and the now-familiar dependence on one major revenue stream were important. Google may have to do more to keep up the appearance that it is the same super star that burst upon the scene more than a decade ago. Aging pro athletes and Hollywood starlets know the drill well. More effort goes into staying young at an increasingly higher cost. Is search as Google defines it up to the task of paying for personal trainers and plastic surgeons?

Could this be a group activity for tomorrow’s future business leaders? Here’s a question I know I would struggle to address:

What steps would your team recommend to generate more revenue and increase profit over the next quarter? The next nine months? Identify key assumptions for the cost benefit of your recommendations.

Identifying options that address a looming crunch in operational costs is easy. Implementing actions is likely to be more difficult. Pro athletes slow down. Hollywood stars age. Time and cost are challenges in the near term and the future.

Will MBAs and management work their magic? I suppose executives at each company can query their firms’ respective search engines for answers. Google’s information will be sponsored, and IBM’s will be a game show winner.

Stephen E Arnold, April 17, 2014

MarkLogic: Poised for Growth after 13 Years

March 27, 2014

I believe that MarkLogic opened for business in 2001. One of the founders was involved with Ultraseek, a search engine that eventually ended up in the hands of HP Autonomy. In case you did not recall Ultraseek, that product dates from the mid 1990s.

Why’s is this relevant to MarkLogic, a company offering an XML database?

I read “MarkLogic Poised for Continued Growth as the Industry Leader in NoSQL Marketplace.” The write up states:

growth in new markets including Japan and Europe, steady customer acquisition, strategic partner relationships and industry recognition, has further propelled the company into the leadership position within the NoSQL database market.

The company points to the release of MarkLogic, Version 7, which works out to one release every two years. The company “introduced new pricing and packaging, a free developer license, and cloud ready hourly pricing for Amazon Web services.” No details on the pricing were in the story. No information about MarkLogic’s revenues were included. After the last shift in senior management, MarkLogic seemed to be nosing toward $60 million in revenues in 2011, based on our estimates. Now three years later, the company is showing renewed press release activity, but I would have preferred some hard numbers. In those three years, MarkLogic has suggested that its XML database can work as an information retrieval system, a platform for conducting intelligence, and providing print publishers with a useful content processing system. In this 36 month period, open source solutions, JSON, and competitors have been moving in similar directions. Choice, at least in data management, abounds.

MarkLogic, since 2001, according to  Crunchbase, has ingested $73.6 million in funding with the last cash infusion coming in 2013 from Sequoia Capital, Tenaya Capital, Northgate Capital, and Gary Bloom, who is, according to Businessweek, the chief executive Officer, President, and Director of MarkLogic.

The news release points out:

MarkLogic received many industry accolades during the last year. The company was favorably positioned in Gartner’s “Magic Quadrant for Operational Database Management Systems,” published in October 2013. In addition, MarkLogic was the only enterprise NoSQL database vendor featured in the report that integrates search and application services. The company was also recognized in the April 2013 “Gartner Magic Quadrant for Enterprise Search,”- the only company to have the same product featured on both reports. Other accolades include the 2013 Computerworld Honors Laureate, by IDG’s Computerworld Honors Program. The annual award program honors visionary applications of information technology promoting positive social, economic, and educational change. Furthermore, MarkLogic was selected as one of the 2013 Red Herring 100 Global Winners – recognized as a leading global private company and an innovator in the technology industry.

These types of awards are not identified as “content marketing” or pay-to-play studies. I assume these accolades are objective and based on the cited firms’ deep experience with Extensible Markup Language and its applications. Anything less would be suspect in my way of looking at the world of databases, semantics, search systems, and business intelligence solutions.

With fast moving deals for outfits like Oculus Rift, the surging growth of Elasticsearch among developers, and almost frantic efforts of some MarkLogic competitors to find a way to generate revenue growth and profits—MarkLogic appears in the news release to be showing signs of revivification.

My view is that investors may be looking some return on the money pumped into MarkLogic. Assuming that patience is a virtue, I wonder if this 2001 start up is ready to deliver a big pay day to its stakeholders. WhatsApp, founded in 2009, was a home run for its stakeholders. Cloudera seems to be on a similar trajectory.

MarkLogic is 13 years old and proving to be like a teen in a fancy private school. Money is needed periodically. Do teens repay their parents? My teens did not. Investors may not have the appetite for underwriting without a return that I did as a happy parent.

Stephen E Arnold, March 27, 2014

Inflation or Desperation: Pricing Free Online Services

March 14, 2014

Yep, it’s illogical. How can a free online service get a price tag. Easy as Amazon’s boosting the fee for Prime and Facebook’s cooking up whizzy new types of advertising. But the big news is tucked between the lines of “Desktop Search to Decline $1.4 Billion as Google Users Shift to Mobile.”

Here’s a tasty factoid:

In the scope of Google’s overall ad revenues, mobile search is gaining significant share. Up from 19.4% in 2013, mobile search will comprise an estimated 26.7% of the company’s total ad revenues this year. Desktop search declined to 63.0% of Google’s ad revenues in 2013, having already fallen from 72.7% in 2012.

You may have noticed how lousy the search results are from Bing, Google, and Yahoo. Even the metasearch engines are struggling. Just run some queries on or and do some results comparisons.

Because most of the world’s Internet users rely on Google to deliver comprehensive and accurate results, users are unaware of the information that is not easily findable. Investigators and professional researchers are increasingly aware that finding information is getting harder, a log harder if our research is on the beam.

As users shift from desktops to mobile the GoTo/Overture advertising model loses efficiency. There are a number of reasons, including the difficulty of entering queries while riding a crowded bus to the small screens to the dorky big type interfaces that are gaining popularity to the need to provide a brain dead single / limited function app to help a person locate pizza.

For Google and other desktop centric companies, the shift has implications for advertising revenue. Smaller screens and changing behavior means the old GoTo / Overture model won’t work. The impact on traditional Web sites is not good. Here’s a report for a company that did the search engine optimization thing, the redesign thing, and the new marketing “experts” thing. Looks grim, doesn’t it.


I won’t name the owner of this set of red arrows, but you can check out your own Web site and blog usage stats and compare your “performance” to this outfit’s.

Read more

Oracle Reduces Students’ Nonpayments

March 3, 2014

Usually when money and students are mentioned in headlines, it is about student debt and the rising cost of tuition. Oracle has a more positive headline about this topic: “Metropolitan State University Reduces Students’ Nonpayments From US$4 Million To US$700,000 Per Year.”

Metropolitan State University is based in Minnesota. The college was experiencing a $4 million loss in students not paying their tuition. The solution was to deploy Oracle RightNow to improve communication channels with students and establish a student-relationship system to keep track of conversations.

After deploying Oracle RightNow, the immediate problems were resolved. It provided a centralized system that sent quick and individualized responses, improved efficiency, reduced application tracking, and most importantly send out trigger messages to students reducing student nonpayments from $4 million to $700,000 a year.

Metro State selected Oracle, because:

“ ‘We chose Oracle RightNow for its extensive reporting and analytics capabilities, which are far better than any other higher education customer relationship management tool on the market. Having the ability to easily put rich data in the hands of our advisors has really propelled us to the next level,’ said Andrew Melendres, vice president, student affairs and enrollment management, Metropolitan State University.”

Universities are slashing budgets left and right. Gaining several million in revenue from unpaid student tuition boosted Metro State’s budget and made them an example for other schools. We would expect that Harvard, Yale, and Stanford will follow Metro State’s lead.

Whitney Grace, March 03, 2014
Sponsored by, developer of Augmentext

News: Try and Find It

February 25, 2014

There are dozens of news sites. These range from the little known among “experts” like Big Project to almost anonymous services like The hurried Web user can consume headlines at or My local newspaper offers news but begs for dollars. News appears to be everywhere.

I read “Local Newspapers and TV Stations Are building Their Own Private Ad Exchange with Google.” Ah, how times have changed according to the article. Here’s a passage I noted:

Today, the Consortium is taking a step towards fulfilling its promise of increased revenue through a new partnership with Google. The deal is supposed to strengthen Google’s relationship with local publishers by “turbo charging” the online news business via “growing budgets” for programmatic buying, according to a company blog post by Laurent Cordier.

Google is a force to channeled. Most of the news professionals I know tell me that they are good researchers and that they use Google. That’s good for Google.

But what about the flow of news? Newspapers and magazines need ad revenues, and in my research, I found that Google can deliver traffic. With traffic comes money. With the money comes dependence.

For Google that’s very good. For those who become dependent on Google, the consequences are cash. If there are other issues, will the dependent executives assert, “We understand the situation. We can deal with whatever comes down the road.”

These folks believe these words. I am suspicious of deals that refer to turbocharging.

And what about coverage of events? Our work continues to reveal that it is more difficult to:

  • Locate timely news online
  • Verify stories propagated by certain sources
  • Find backfiles
  • Figure out what’s filtered in and out, when, and why
  • Access information on certain topics
  • Get timely updates online from certain governmental organizations
  • Keep track of content that disappears.

Perhaps those Google bucks will improve coverage of local activities, expand backfiles, and increase the flow of verified, original reporting?

I will have to wait and see. But is information the purpose of those in the deal with Google or is the goal cash. As George Bush once said about support for those affected by the crisis in Haiti, “Just send cash.”

Stephen E Arnold, February 25, 2014

The Cost of Innovation: Apple Data Lights the Path for Search Vendors and Their Research Costs

February 13, 2014

I have an iPod and an iPad kicking around. We even have a Mac computer. My wife has an iPhone. The gizmo provides her iPhone equipped friends with myriad opportunities to look at baby pictures, check lunch dates on their calendars, and make phone calls. None of the gizmos is without flaws. The Apple product line up is premium priced and designed to meet the perceived needs of semi-affluent or pretend-affluent customers.

I read “A Look at Apple’s R&D Expenditures from 1995-2013.” I urge you to read the story but the main point is the diagram showing Apple’s spending for research and development. I translate “research and development” to “innovation” but you may have a different way to define the phrase. I have snipped a small segment of the chart to illustrate what has happened to Apple, based on the data presented in the write up.


Look at that ramp up. What is fascinating is that the scale in 2013 noses into the $4 billion range. The take away is that the amount of money Apple is spending is rising pretty quickly. Apple has money in the bank and some products that continue to sell well.

Apple is able to invest increasing amounts of money in innovation because it has money.

Search vendors face innovation problems. The chatter on LinkedIn and in the write ups for conferences that flood my email talk around innovation. The discussion pivots on some well worn themes, only tangentially related to information retrieval.

Innovation in search has stalled. Apple is spending aggressively to help ensure its innovation flow.

But what happens when a search vendor with far less money has to innovate. DARPA will award a handful of contracts. Venture funding sources will want a pay off.

The net net is that the cost of innovation in search is not that different in its need for financial investment. Apple can write the checks. Most search vendors—despite the flashy webinars and mindless news releases—cannot.

Stephen E Arnold

AddSearch Scores $650K in Seed Funding

January 28, 2014

Finland’s AddSearch has picked up a hefty investment. A press release over at PRWeb reports, “AddSearch, Instant Search Tool for Websites, Announces $650k Seed Investment and Imminent Launch.” Founded last April, the company has set out to fix what is broken in site search. The write-up tells us:

“AddSearch is a lightning fast hosted search tool for any website, offering instant and accurate search results after the first keypress. AddSearch works across all devices, gives website owners complete control over their search results and is very easy to install….

“‘Website search is broken’, commented Pasi Ilola, AddSearch co-founder and CEO. ‘Existing search solutions for websites offer a very poor and slow user experience, often failing to provide the most relevant search result. Building and maintaining your own search functionality is highly expensive and time-consuming. That is why we created AddSearch – it is easy to set up for the website owners and it just works.’”

We really look forward to site search that functions well and is a pleasure to use, because existing systems really are terrible. Does AddSearch hold the key? The company is based in Helsinki, and is now (I imagine) pleased to be financially backed by Vision+ and Tekes.

Cynthia Murrell, January 28, 2014

Sponsored by, developer of Augmentext

Praise and Funding for Talend

January 19, 2014

Talend is a favored maker for XML data processing software and recently we read about “XML Data Processing Using Talent Open Studio” on Rohit Menon’s blog. Manon was working on a Netflix search engine project called Flicksery. He pulls his data from the Netflix catalog XML file and Talend Open Studio helps him analyze the data embedded in the file. In his post he explains how he used the software to pull the data and what neat features it has.

Talend also rounded up $40 million in funding from Bpifrance and Iris Capital. The news comes from IT Business Edge in the article, “Talend Lands $40 Million In Funding.” Bpifrance is the French government’s investment branch and they are the main initiator for the funding. A large portion of the funding is supposed to push Talend further into big data market.

Mike Tuchen, Talend CEO, said about the funding efforts:

“ ‘They [French government] look for innovative high growth companies with a strong presence in France, especially ones in targeted areas were they see huge opportunity like Big Data,” Tuchen said. “With this in mind Talend was a perfect fit, so it’s not surprising that they found us.’ ”

We have known that Talend was trying to promote its name in big data for a while. Projects like Flicksery demonstrates its software’s capabilities and we think it is just the beginning of something bigger.

Whitney Grace, January 19, 2014

Sponsored by, developer of Augmentext

Xooglers and Management Expertise

January 16, 2014

Two items warranted posting on my white board.

The first was the somewhat ungainly local news service Patch. I noted this version of the action: “AOL Gives Up Control of Money-Losing Patch as Shares Rise.” Patch was invented by Tim Armstrong. AOL then bought Patch and hired Mr. Armstrong, a Xoogler. Or, maybe it was hired Mr. Armstrong and then bought Patch? Either way, the trajectory of Patch made clear that getting hired at Google and then becoming a real manager at a powerhouse like AOL were not congruent. Patch, according to Bloomberg, was “a pet project.” I assume it was like one of the old-school 20 percent free time projects except this one had an appetite for cash and served as a trigger for quite a bit of corporate explaining.

The second was the item I saw regarding another Xoogler’s management acumen: “He Was Fired: Here’s Marissa Mayer’s de Castro Buh-Bye Memo to Yahoo Staff.” Make that two Xooglers: the boss Xoogler at Yahoo Marissa Mayer and the number two at Yahoo, Henrique De Castro. I noted this passage:

During my own reflection, I made the difficult decision that our COO, Henrique de Castro, should leave the company. I appreciate Henrique’s contributions and wish him the best in his future endeavors.

Mr. de Castro will need a pick up truck to haul off his severance pay which is in the millions of dollars. Not bad for less than two years work.

The point is that some folks see getting hired by Google, flourishing in the Google greenhouse, and getting high praise from Googlers as the equivalent of management and operational expertise in the “real” world.

These two articles contain information that folks are mistaking Google employees with Google’s success. I would point to online advertising based on approaches developed by outfits like Overture as slightly more important.

My hunch is that AOL and Yahoo will generate further evidence about the management insights of Xooglers. Why are these Xooglers former Googlers anyway? Too bad I don’t have the energy to dig into the human resources angle. There are many azure chip consultants who can explain the why’s and wherefore’s.

Stephen E Arnold, January 16, 2014

Datameer Rakes in Funding

January 9, 2014

Right now, Datameer is happily positioned at the intersection of preparation and opportunity, we learn from “Datameer Picks Up $19M to Help Companies Do Analytics Along with Hadoop” at VentureBeat. The use of Hadoop has been soaring, and Datameer is perfectly poised to rise with it. As more companies implement the open-source database framework, Datameer is seeing more demand for its help making sense of it all. It doesn’t hurt that the data-analysis firm built its solutions with Hadoop in mind from the start—any IT professional knows that can mean the difference between headache-free implementation and long hours trying to force applications to play well together.

Investors have taken notice of Datameer’s advantages. Writer Jordan Novet relates:

“‘You’re actually seeing Datameer being purchased almost at the same time as Hadoop itself, at the same time as the distribution,’ Ben Fu, a partner at Next World Capital, said in an interview with VentureBeat. Next World led the latest round of funding for the company, bringing its total funding to $36.8 million. Datameer’s large contracts from customers such as British Telecom, Sears, and Visa, also made the company interesting, Fu said….

Next World Capital’s Fu is joining Datameer’s board. Alongside Next World, Kleiner Perkins Caufield & Byers and Redpoint Ventures also joined the round. The new money will provide Datameer with the firepower to sign up new customers, especially in Europe, where Next World has a program to put startups in touch with executives at enterprises from around the continent.”

Novet notes the funding can also allow Datameer to take advantage of further Hadoop advances, as well as respond to competition. Datameer was begun in 2009 by some of the original Hadoop contributors. Headquartered in San Mateo, California, the company also has offices in New York City and in Halle, Germany. In related and possibly helpful news, Datameer is hiring for several positions as of this writing.

Cynthia Murrell, January 09, 2014

Sponsored by, developer of Augmentext

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