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IBM and the Functioning Assumption

February 26, 2015

I read “Could IBM Really Function with Tens of thousands Fewer Staff?” I think this is an interesting headline. It contains an assumption that IBM is indeed functioning with its present staffing levels.

The write up moves blithely forward offering up:

According to a recent report from India, IBM reduced its India-based workforce from about 165,000 in 2011 to 113,000 in 2014. The report quoted sources close to IBM’s plans who said this number will fall to 100,000 in 2015. The introduction of modern technologies that make services less labor-intensive is reducing the need for staff in lower-cost locations. At the same time, IBM, like much of the industry, is trying to move away from linear business models based on the provision of full-time equivalents. And talk of IBM cutting swathes of staff is nothing new. In 2010 a senior HR executive at the company told Computer Weekly’s then sister publication, Personnel Today, that IBM was looking into the possibility of cutting its workforce by almost 300,000. He said the strategy would involve making people redundant and rehiring them on a project-by-project basis. It would have reduced IBM’s 399,000 workforce to 100,000 by 2017.

Bloomberg reported:

IBM’s global employee count fell for the second year in a row, the first two year decline since 1993-1994. Even before the 2015 firings, IBM reported 379,592 employees at year end 2014, down 12% year on year (3.9% excluding divestitures). But there are allegedly 15,000 job openings, IBM claims.

Lots of figures. Lots of people. But let me go back to the word “functioning.” IBM, like HP, has been around a long time. The company’s notion of agility is to market wild and crazy ideas with zest. I see Watson as an example of the new IBM. Open source technology and home brew code. The search system is presented as a “basket brand” into which many different and discrete products and services have been gathered.

The challenge remains. The company has to generate sustainable revenue that yields a profit. So far that seems to be very difficult. I struggle with the “functional” assumption. Perhaps Watson has the answer?

Stephen E Arnold, February 26, 2015

Hewlett Packard: More Misfires

February 25, 2015

I am no financial whiz kid. I read “Hewlett Packard Shares Take a Beating on Poor Sales.” Even I was able to figure out that “HP’s corporate business struggled in the first quarter, dragging down overall revenue.”

What’s the fix? Splitting the company, getting a windfall, and retiring? Chasing Autonomy’s founder with more enthusiasm? Promising big revenue from a future German deal?

My hunch is that HP is struggling with three issues for which there is no silver bullet solution. First, the company just looks as if it is going through management motions without generating the payoffs MBAs are so darned confident that are a natural consequence of their thinking.

Second, HP is a big company with considerable friction. Good ideas are difficult to pursue with alacrity. Compared to other behemoths like GE, HP looks sluggish. A corporate couch potato perhaps?

Third, the notion that nifty new technologies are in HP’s bag of tricks is silly. When I run a query for Autonomy, for example, I see numerous appeals for consultants to tackle projects. You can track this yourself on my Overflight page for Autonomy.


For my CyberOSINT monograph, I asked one of the law librarians assisting me with research to send the draft to HP’s designated contact point for comments and suggestions. Guess what? No one responded. No easy fix when people designated as a contact point do not respond to an inquiry. Nuff said. (Notice that I don’t think the value of the dollar is a root issue.)

Stephen E Arnold, February 25, 2015

Watson and Toys: The Next Pet Rock?

February 17, 2015

If I were working, I would try to hit my goals. One of the takeaways from my years at Halliburton Nuclear Services was that selling big deals was generally preferable to selling little deals.

IBM seems to have a deal scale problem with Watson. Here’s a possible illustration of what I call “spreadsheet fever.”

Navigate to “Elemental Path Debuts The First Toys Powered By IBM Watson.” The article explains that an IBM partner is using Watson make toys smarter. I recall the toys I had as a child: a wooden car, a ball, and eventually a cheapo chemistry set. (I was able to use the chemistry set to create some wonderful, persistent odors until my mother nudged me toward physics and math.)

The write up points out that “none of the co-founders have kids themselves, they believed in this idea of “connected” toys to both entertain and educate children.”

Okay, no problem.

My reaction to this effort is that it is a good PR generator. A spreadsheet jockey can set up a model that makes clear how much money will flow from a pet rock or beanie baby type hit.

For me, I fear that Watson is unlikely to generate sufficient revenue to sustain the financial hopes and dreams of IBM.

Here’s a statement from an Alliance@IBM contributor:

I’ve decided to RA IBM! Yes, you read that right. Henceforth, in every case and every way, I’m going to RA IBM. That means whenever there’s an opportunity to weigh in on whether products and/or services should be from IBM or anyone else, I will vote for the anyone else. And when IBM products and/or services are already entrenched in my environment, I will do everything in my power to convince any powers that be that they could – and should – be doing better with solutions other than IBM’s. In other words, I will be rating IBM a 3 or less everywhere I go, and RA’ing their backside. Why? Well, first off, their products and/or services *are* 3-(or worse)-worthy. As a former IBMer, I have inside information on how poorly they treat their employees, and there’s just no way that people being treated thusly could produce goods and/or services of the quality and commitment to every customer’s success that happy employees elsewhere could. As a matter of fact, I wouldn’t blame IBM employees for intentionally sabotaging IBMs plans, albeit in subtle ways that slowly ground their operation to a halt. Surely, hell hath no fury like the employee scorned. But there’s another reason: IBM is *old*. Yes, I’ve decided to discriminate against IBM based on age. “What’s good for the goose..”, right?

That may be a question for Watson. Just access Watson via the Cognitoy product of your choice. I quite like the green ones. That’s “green” for the oodles of revenue Watson will generate from toys, tamarind barbeque sauce, and, of course, curing cancer.

Isn’t Lucene, home grown scripts, and some IBM magic a rocket fuel for revenue? Watson, would you answer?

Stephen E Arnold, February 17, 2015

Will Google Be Forced to Downsize?

February 15, 2015

With the founders cashing in some of their shares, I am sensitive to allegedly accurate information about the future of the GOOG. I read “Google Layoffs Inevitable.” The write up references a third party, so the info may not be spot on. I noted this passage:

With ad revenues leveling off and expenses skyrocketing (G&A has quadrupled in 5 years), Google is headed for a financial meltdown, and when it happens, the company will need to shave $2 billion a year off its $16 billion/yr in R&D and G&A costs, which means, if we count the fully burdened cost of a Google employee at $200K per year, it needs to On a percent-of-income basis, Google outspends Apple on R&D six-to-one. Where is that money going? Driverless cars, Google Glass, body odor patents. Stuff that doesn’t have a chance in hell of generating revenue any time soon. On the one hand, Google is to be credited with thinking long-term, something American companies don’t tend to do very well, but on the other hand, Google needs to execute well on the revenue side. Right now, most of its revenue is tied to search ads, which are receding in relevance. It competes, in the cloud space, with Amazon (which no one should have to do). Will that save the company? No. It would have, already, if it were going to shave 10,000 jobs.

Then there was some information about the fuzzywuzzy research investments. I highlighted:

On a percent-of-income basis, Google outspends Apple on R&D six-to-one. Where is that money going? Driverless cars, Google Glass, body odor patents. Stuff that doesn’t have a chance in hell of generating revenue any time soon. On the one hand, Google is to be credited with thinking long-term, something American companies don’t tend to do very well, but on the other hand, Google needs to execute well on the revenue side. Right now, most of its revenue is tied to search ads, which are receding in relevance. It competes, in the cloud space, with Amazon (which no one should have to do). Will that save the company? No. It would have, already, if it were going to.

I find these negative Google analyses interesting. Keep in mind that I don’t have a dog in this fight. I find the Yandex, iSite, and Ixquick search systems increasingly useful. I do love the strapping teenager with the dinosaur on its campus. Even though Apple is allegedly developing a vehicle, it seems that Apple may hit a financial high water mark which Google cannot achieve as the mobile revolution spawns new, competitive life forms. Is that frost on the Google dinosaur’s snout this morning?

Stephen E Arnold, February 15, 2015

A Newspaper Asserts Content Worthless

February 13, 2015

I recall paying for a copy of the Guardian newspaper when I was in the UK a couple of years ago. My hunch is that the newspaper is still for sale. I encountered a link on a UK headline site to “The iPod Effect: How Near Limitless Storage Made Content Worthless.”

The idea that an MP3 player devalued content was interesting. I thought that newspaper entitles like quality oriented Murdoch operations blamed Google for devaluing content. I have heard speakers at conferences point the finger of blame at education’s failure to produce book readers. A consulting firm expert opined that it was the acceleration of life that nuked magazines and newspapers and reading in general.

According to the Guardian, which embraces some open source (free) technology:

If we continue to cultivate a society where even the most crafted and artisan digital items are throwaway flash sale detritus, how can we expect to continue enjoying the talented minds that create them?

Armageddon arrives and the warriors are Taylor Swift and iPhone toting troops.

I learned:

As a whole, we humans aren’t great at moderating our own consumption. As each scarce resource in human life has become more and more available, we’ve gorged ourselves until popular sentiment realizes it’s time to rebalance. Just as we hit that wall with nutrition and energy consumption, I think we’re getting there with the value of art in ubiquitous digital form. But while we adjust, we’re relying on brave creators to treat us mean and keep us keen so when we return to tough decisions, we know they’re too good to lose.

Oh, maybe this article is only about music and not newspapers. Wow, that had me frightened.

Stephen E Arnold, February 13, 2015

Coveo Asserts Record Growth and Improved Relevance

February 12, 2015

Proprietary enterprise search is one reason DARPA has made noise about a new threat center. The idea is that cyber intelligence is a hot issue. Without repeating the information in CyberOSINT, suffice it to say that keyword search is not up to the findability tasks in today’s world. For more on the threat center integration, you may want to review “New Threat Center to Integrate Cyber Intelligence.”

In this context, I read “Coveo Announces Record Growth in 2014.” The company was founded in 2005 in Canada. The the last nine years, according to Crunchbase, the company has ingested $34.7 million from eight investors. The most recent funding round was in December 2012 when the company obtained an additional $18 million. Let’s assume the data are accurate.

In the “record growth” announcement, the company states:

Coveo today announced accelerated growth in 2014 via strong demand for its enterprise search-based applications that help employees upskill as they work, and driven in large part by its continued strategic partnerships with leading organizations such as Salesforce. The year was also marked by the best quarter in the history of the company and the 1,000th enterprise activation of its software, with new customer Sonus Networks.

The “record growth” news story omits an important data point: Financial results with numbers. Coveo is a privately held company and under no obligation to provide any hard numbers. In lieu of metrics, the story provides this interesting item: Enhanced relevance tuning. After nearly nine years in the enterprise market, I had assumed that Coveo had figured out relevance.

Coveo, like its fellow travelers in the keyword search sector Attivio and BA Insight, is recognized in different “expert” advisory firms’ lists of important companies. Also, each of these three keyword search companies are working overtime to generate revenues that enable them to generate Autonomy or Endeca scale revenues. The three keyword search vendors have to differentiate themselves as the US Department of Defense are actively seeks next generation approaches. The sunny days of Autonomy and Endeca have been hit by climate change even as they recline in the shelter of Hewlett Packard and Oracle, their new owners.

My hunch is that if the financials back up the assertions in the “record growth” story, stakeholders will be happy campers. On the other hand, if those funding traditional search systems relying on proprietary code do not see a solid payback, dreary days may be ahead.

For functional information retrieval, many large companies—including the firms developing next generation information access systems—ignore proprietary search solutions. The open source software deliver a lower cost, license fee free commodity function.

Did anyone bring umbrellas? In the hay days of enterprise search, vendors gave away bumbershoots with logos affixed. These may be needed because the search climate has changed with heavier rainfall predicted.

Stephen E Arnold, February 12, 2015

IBM Layoffs or Resource Action Numbers

February 11, 2015

I keep looking for information about Watson. That’s the super smart search system pegged to generate a billion in revenue in a year or so. I came across a fascinating analysis of IBM’s layoff in my quest for Watson info. The article is “Which IBM Layoff Numbers Add Up?” The write up is a collection of estimates about how many IBM professionals and contractors have an opportunity to find their future elsewhere.

One comment jumped out for me:

63,000: The number of current employees in excess of what IBM’s business model can sustain, according to an analysis by David Ing, a former president of the International Society for the Systems Sciences (and former IBMer)posted here. IBM today should have about 350,000 workers; it’s current staff numbers are at about 413,000.

It looks to me as if this “expert” suggests that IBM has 63,000 people which the company cannot keep in the flock.

Watson, what’s your analysis? The Business News Network offers a possible response to this question. How does financial engineering sound? I think the phrase was “total disaster.”

Stephen E Arnold, February 11, 2015

LucidWorks (Really?) Defines, Redefines Startup

February 2, 2015

I received one of those off the wall LinkedIn requests. Years ago the original LucidWorks (Really?) was a client of my advisory services. Marc Krellenstein, who left the company in an interesting, mysterious, and wave generating founder escape, mentioned me to another LucidWorks (Really?) employee. (Note: Dr. Krellenstein is now the senior vice president of technology development at Decision Resources.)

In the beginning, there was the dream of becoming the next RedHat of the enterprise search world.

Flash forward through two presidents and a legion of leaders to the departure of Paul Doscher, once involved with Exalead and Jaspersoft. Eric Gries left his CEO role after the first Lucene Revolution Conference. Yep, revolution. A new platoon of Horse Artillery arrived. I lost interest in the outfit.

Then the company morphed into a vendor who sold consulting that actually worked, often a rarity in the world of information access.

About half way through the almost eight year journey, Lucid Imagination morphed into LucidWorks (Really?). The company flip flopped from a consulting firm selling Lucene/Solr engineering into a Big Data company. The move was sparked by the company’s inability to generate a payback on the $40 million in venture capital pumped into the company since it opened for business in 2007.

Now the company has an off kilter logo in two shades of red and a lower case “w.” Marketing genius illuminates this substantive typographical maneuver. My goodness, the shift from blue to red is something I would associate with Dr. Einstein’s analysis of Brownian motion or Dr. Jon Kleinberg’s CLEVER algorithm or Dr. Jeffrey Dean’s work on Google Chubby.

The way I do math reveals that LucidWorks (Really?) is a seven year old company. The burn rate works out to about $6 million in venture funding plus whatever revenues the company has been able to generate on its 84 month journey. When LucidWorks (Really?)  with Krellenstein on board set up shop Bill Cowher resigned as head coach of the Pittsburgh Steelers and started his journey to seemingly low key Time Warner pitchman. Also in 2007 the Indianapolis Colts beat the the Chicago Bears to win the super bowl. The first episode of Mad Men ran on a US pay for view channel. The number one song in 2007 was Beyonce’s “Irreplaceable.” Is this the tune Elasticsearch plays as it wins clients from LucidWorks (Really?)?

Now to the LinkedIn email:

A LucidWorks (Really?) employee wanted me to know that he was previously employed by Raritan, a connector and consulting company specializing in “federated search.” This person wanted to be my LinkedIn “amigo,” “BBF,” “Robin,” or who knows what else.

I pointed out that I did not want to be a LinkedIn friend with an outfit that may be the object of considerable attention from Granite Ventures, Shasta Ventures, Walden International, and In-Q-Tel, an outfit known for investments based on the US government’s curiosity, not payback.

My former Raritan federated search expert read my “no” and sent me this message:

Fair enough – we are after all a startup for chrissakes! I just published a blog on our Lucidworks site -( lower case ‘w’ please dude! that was from our Marketing Guys) called The Well Tempered Search Application – Prelude. Fusion 1.1 has a lot of gaps to fill – I have trying to help our whizz kids realize that this is somewhat wheel-reinvention … I would be interested in your thoughts on my blog/rant because you are one of my heroes: a real dyed in the wool crusty curmudgeon if you will (that is meant as a compliment!)

Okay, I took away a couple of factoids from this email: Cursing is a Sillycon Valley convention. I live in rural Kentucky where there are Baptists and others who get frisky when curse words are tossed around the Speedy Mart. Another factoid is that LucidWorks (Really?) is a startup.  But now to the big deal at LucidWorks (Really?): Lucidworks with a lower case “w.” I had to reach for my blood pressure medicine. A lower case “w”. Oy vay. LucidWorks (Really?) has hit upon a significant and brilliant move. A. Lower. Case. W. I have to take a couple of deep breaths.

I pointed out that a seven year old company is not a startup as much as the marketing “guys” want it to be. I then learned this from my correspondent:

Point taken what I meant was that we are still VC funded. We have undergone a lot of transformation in the last year so your criticisms are totally valid say up to 2013, but we are working hard to redress these as we speak. So stay tuned sir, hope that we can make a convert but to be clear, I am NOT a sales or marketing guy thank you very much. But whatever the case, I share your cynicism in general – I have been doing this for about 15 years now – so I have seen hype cycles like Big Data come and go – FWIW our earlier claims for Big Data were BS but the re-tooling that we are doing now will hopefully change your mind somewhat. [emphasis added]

Fascinating is the phrase “still VC funded.” In my mind this begs the question, “After seven years of trying to generate revenue, when will LucidWorks (Really?) start to fund itself, pay back its stakeholders, and generate sufficient surplus to invest in research to deal with the demons of Big Data?”

Maybe LucidWorks (Really?) should update its information in stories like this: “Trouble at LucidWorks: Lawsuits, Lost Deals, & Layoffs Plague the Search Startup Despite Funding.” Isn’t the Big Data drum becoming noise; for example, “The Promise of Big Data Still Looms, but Execution Lags.”

Looking back over seven years, LucidWorks (Really?) has an intriguing pattern of hiring people, engaging in litigation, getting more venture funding, and repositioning itself. How many repackagers of Lucene/Solr does the world’s appetite demand.

Based on my monograph about open source search, the winner in the keyword search solutions is Elasticsearch. In terms of venture funding, staff stability, and developer support—Elasticsearch is the winner in this game.

LucidWorks (Really?) will have to do more than tell me that it is not a start up after telling me it is a startup, flip-flopping its value proposition, making substantive changes like the use of a lower case “w”, and asking me to give the company a hunting license for my LinkedIn contacts.

In short, as the revenue pressure mounts, I look forward to more amusing antics. I particularly like the slang phrase “We are after all a startup for chrissakes!”

No, dear LucidWorks (Really?), you are not a start up and you are not a player in the next generation information access market. If I were more like my old Halliburton/Booz Allen self, I would try to sell a briefing to your venture funding outfits. Now it is not my problem. l

Enjoy your meetings to review your lower case “w” quarterly revenues. And, please, do not tell me that you cannot afford my CyberOSINT: Next Generation Information Access study. That’s okay. I cannot afford a McLaren P1. No one cares, including me. I prefer products that work, really.

Stephen E Arnold, February 2, 2015

Google: Is the One Trick Pony Limping?

January 30, 2015

You should work through the Googley report about the GOOG’s financial results. I would suggest purging your mind of thoughts about Apple’s revenue and Google’s involvement with the Apple Board of Directors. I would also suggest sponging the data about Amazon’s cloud and prime gains, not to mention the world’s smartest man’s delivering a profit.

Properly prepared, now we can consider “Google Inc. Announces Fourth Quarter and Fiscal Year 2014 Results.” There are two attachments, which you may want to peruse as well. For me the key point in the write up was this passage:

Other Revenues – Other revenues were $1.95 billion, or 11% of total revenues, in the fourth quarter of 2014.  This represents a 19% increase over fourth quarter 2013 other revenues of $1.65 billion.

The way I interpret this sentence is that after a decade of real effort, Google has been able to generate a couple of billion dollars in revenue from non-ad, non-search, and non-network related activities. In the early days, Google earned zero money from anything. Then the company stumbled upon in a moment of inspiration the methods of GoTo, Overture, and Yahoo. After a legal flap, Google emerged with a business model; that is, pay to play for traffic and traffic.

Several thoughts:

  1. Google is a money machine. The company has to find a way to generate more of the stuff in order to maintain its reputation as Googzilla. In my view, Loon balloons and related initiatives are the supporting cast. Another Broadway hit or three are needed.
  2. The financials do not touch upon the management and interpersonal storms buffeting the company. One Google professional was the focal point of a TV news program involving yachts, alcohol, a person without a degree from Cal Tech or INSEAD, and interestingly enough a banned substance. There was the dust up about Glass, inter company extracurricular activities involving a high profile Googler, and the departure of a nano-tech whiz to Amazon’s digital jungle. Then there were management changes. So much in just 12 months.
  3. Finally, there was the company’s business decisions that roiled the Google Earth world, the procedural shifts for APIs, and rise of irrelevancy in search results. The grand and glorious visio0n of “the world’s information” dimmed as book scanning seemed to fizzle. Somewhere I have a list of orphaned services. I will start a new list for fiscal 2015-2016 and use a bigger note card.

I find Google fascinating. I began work on The Google Legacy in 2003, Google Version 2.0 in 2005 when the company was approaching its miracle year, and Google: The Digital Gutenberg in 2008. [Alas, the unstable finances of the publisher of these still useful analyses put these volumes out of print. Publishers are also fascinating, almost like Oedipus.] After these three monographs, I was able to state with some conviction that Google had to find a way to monetize mobile at the same profit level as old school desktop search or find new revenue streams. It was obvious that the Google Search Appliance was not going to be a big winner.

Google remains an important company. Many MBAs live and die by Google’s apparent dominance of all things nifty. For me these financial results suggest that Google may need an overhaul in its senior management. The vision thing is just not ringing my bells.

I no longer can do a query on Google to answer this question, “What’s next for Google?” I think I know after 15 years of watching. More ads, more thrashing, and more Loon balloons. I sort of miss getting those nifty tsotchkes at conferences. My LED illuminated Google pin has gone dim. My Google mousepad has worn out. My Google T Shirt has faded.

Mobile online access has arrived, and it is more of a threat than desktop searchers realize.

Stephen E Arnold, January 30, 2015

Dataiku: Former Exalead Wizard Strikes Big Data Fire

January 24, 2015

I read “Big Data : Le Français Dataiku Lève 3 millions d’Euros.” The recipient of the cash infusion is Dataiku. Founded by former Exalead wizard Florian Douetteau, Dataiku offers:

a software platform that aggregates all the steps and big data tools necessary to get from raw data to production ready applications. It shortens the load-prepare-test-deploy cycles required to create data driven applications.

The company’s approach is to reduce the complexity of Big Data app construction. The company’s algorithms support predictive analytics. A community edition download is available at

Dataiku plans to open an office in the US in 2015.

Information about Dataiku is at

Stephen E Arnold, January 24, 2015

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