November 26, 2015
Google has been around 15 years, more if you count Backrub. In that time, Google has managed to generate about 95 percent of its revenue from online advertising. I am not to fond of projections, but if one plots the percentage of revenue Google receives from ads and from other sources, the “other sources” are consistently modest. In short, Google has been and remains a one trick revenue pony. I recall that Steve Ballmer, now an owner of an NBA team and veteran of the wonderful Microsoft management training program. Usually I am skeptical of MBAs who jump from high tech to professional sports, but in this case, Mr. Ballmer seems to be correct.
Nevertheless, I read in “Google Aims to Be ‘Cloud Company’ by 2020, Predicts More Revenue from Cloud Platform Than Ads”:
Urs Hölze, Google’s senior vice president of technical infrastructure, predicts that within the next five years, Google’s Cloud Platform revenues could surpass its advertising revenue. “The goal is for us to talk about Google as a cloud company by 2020,” Holze said.
Let’s see. It is Monday. What companies this week have informed me directly or indirectly that each will generate lots of revenue from the cloud? Answer: Amazon, IBM, and a handful of other outfits. Oh, right Microsoft.
When it comes to revenue diversification, the proof is in the numbers. When I examine a company’s financials, I take a look at what the company has done over the previous years. For example, when a search vendor like Endeca gets stuck in the $150 million range for several years, I think it is unlikely that Endeca will jump to be a $1.0 billion dollar outfit. Google has a history of being unable to diversify its revenue. Maybe one can interpret a subscription to YouTube as a new revenue stream. I am willing to go along with that, but quite a few outfits want to do the cloud thing.
Google wants to do science projects, solve death, launch Loon balloons, and make Glass into a fashionable product. Talk is easy. Revenue from non ad sources may be a little more difficult.
Stephen E Arnold, November 26, 2015
November 20, 2015
I read a spider friendly, link baitable article in a UK newspaper. You love these folks because each page view downloads lots and lots of code, ads, trackers, etc.
The story was “Can’t Believe It’s Almost Christmas? Technology Is Speeding Up Our Perception of Time, Researchers Say.” Heck of a title in my opinion.
The main point is captured in this quote from Wizard McLoughlin:
long monologue from a ‘real’ book.
‘It’s almost as though we’re trying to emulate the technology and be speedier and more efficient. It seems like there’s something about technology itself that primes us to increase that pacemaker inside of us that measures the passing of time.”
The “it” I assume means the way the modern world works.
I think the idea is valid. A good example is the behavior of search and content processing companies. Although many companies evidence the behaviors I want to identity, these quirks are most evident among the search and content processing outfits which have ingested tens of millions in venture funding.
The time pressure comes from the thought process like this statement which I recall from my reading of Samuel Johnson:
Nothing focuses the mind like a hanging.
The search and processing vendors under the most pressure appear to be taking the following actions. These comments apply to Attivio, BA Insight ,Coveo, and Lucidworks-type companies. The craziness of IBM Watson and HP Autonomy in the cloud may have other protein triggers.
Here we go:
- Big data. How can outfits which struggle to update indexes and process new and changed content handle Big Data? It is just trendy to call a company like Vivisimo a Big Data firm than try to explain that key word search has “real” value.
- Customer support. I don’t know about you, but I avoid customer support. Customer support means stupid telephone selections, dorky music, reminders that the call is being monitored for “quality purposes”, and other cost cutting, don’t-bother-us approaches. Where search and content processing fits in has little to do with customer service and everything about cost reduction.
- Analytics. Yep, indexing systems can output a list of the number of times a word appears in a document, a batch, or a time period. These items can be counted and converted to a graph. But I do not think that enterprise search systems are analytics systems. Again. If it helps close a deal, go with it.
- Business intelligence. I like this one. The idea that a person can look for the name of a person, place, or thing provides intelligence is laughable. I also get a kick out selective dissemination functions or standing queries presented as a magical window on real time data. Baloney. Intelligence is not a variation of search and content processing. Search and content processing are utility functions within a larger more comprehensive systems. Check out NetReveal and let me know how close an enterprise search vendor comes to this BAE Systems’ service.
When will enterprise search and content processing vendors alter their marketing?
Not until their stakeholders are able to sell these outfits and move on to less crazy investments.
The craziness will persist because the time available to hit their numbers is dwindling. Fiddling with mobile devices and getting distracted by shiny bits just makes the silliness more likely.
Have you purchased a gift using Watson’s app? Have you added a Watson recipe to your holiday menu? Have you used a metasearch system like Vivisimo to solve your Big Data problems? Have you embraced Solr as a way to make Hadoop data repositories cornucopias of wisdom?
Right. The stuff may not work as one hopes. Time is running out. Quickly in real time and in imagined time.
Stephen E Arnold, November 20, 2015
November 19, 2015
Lucidworks (a eight year old “start up” founded in 2007) has raised an additional $21 million in funding. According to Crunchbase, the total funds injected into the open source centric company is now $53 million.
The news release “Lucidworks Announces $21 Million in Series D Funding” states:
Lucidworks, the chosen search solution for leading brands and organizations around the world, today announced $21 million in new financing. Allegis Capital led the round with participation from existing investors Shasta Ventures and Granite Ventures. Lucidworks will use the funds to accelerate its product-focused mission enabling companies to translate massive amounts of data into actionable business intelligence.
The statement included this observation attributed to Spencer Tail, Allegis Capital:
Lucidworks has proven itself, not only by providing the software and solutions that businesses need to benefit from Lucene/Solr search, but also by expanding its vision with new products like Fusion that give companies the ability to fully harness search technology suiting their particular customers. We fully support Lucidworks, not only for what it has achieved to date — disruptive search solutions that offer real, immediate benefits to businesses — but for the promising future of its product technology.
Lucidworks, formerly Lucid Imagination, competes with Elastic. Companies from IBM to OpenSearchServer offer solutions which compete in the same market sector. Elastic’s funding is in the $104 million range.
The horses are away from the starting gate. And the winner will be a steed with the best jockey? Stay tuned because the track is muddy.
Stephen E Arnold, November 19, 2015
November 18, 2015
Patent information is available to peruse via the USPTO Web site and Google has an accurate patent search (that is significantly easier to use than USPTO’s search), but this does not tell the complete story of US patents. GCN announced that the USPTO plans to remedy missing patent information in the article, “USPTO Opens The Door To Four Decades Of Patent Data.”
With the help of the Center of Science and Innovation Policy (CSSIP), the USPTO launched the new tool PatentsView:
“The new tool allows individuals to explore data on patenting activity in the United States dating back to 1976. Users can search patent titles, types, inventors, assignees, patent classes, locations and dates. The data also displays visualizations on trends and patent activity. In addition, searches include graphic illustrations and charts.”
People will be able to conduct the equivalent of an “advanced search” option of Google or an academic database. PatentsView allows people to identify trends, what technology is one the rise or dropping, search a company’s specific patents, and flexible application programming interface to search patent information.
The USPTO wants people to access and use important patent and trademark data. It faces the issue that many organizations are dealing with that they have the data available and even with the bonus of it being digital, but its user interface is not user-friendly and no one knows it is there. Borrowing a page from marketing, the USPTO is using PatentsView to rebrand itself and advertise its offerings. Shiny graphics are one way to reach people.
Whitney Grace, November 18, 2015
November 15, 2015
Here in Harrod’s Creek, Kentucky, the mist is rising from the mine drainage ditch. Value is calculated in a couple of easy ways. Here are two concrete examples:
One of my neighbors buys my collection of used auto parts. Before he puts the parts in his truck, a 1950 Chevrolet, he pays me cash money. Once I count the money, I help him load the parts and watch him drive away in a haze of Volkswagen type emissions.
A person calls me and wants to talk with me about enterprise search and content processing. I explain that I don’t “talk” for free. If the caller transfers cash money to my PayPal account, then I call the person and answer questions. The time buys minutes. When the minutes are consumed, I hang up.
The notion of value, therefore, is focused on cash, not feeling good, having a nice day, or winning an election as the friendliest retired consultant in Harrod’s Creek.
Now navigate to “What Is the Value of Big Data to Your Business?” There is a gap between my definition of value and the definition of value set forth in this write up.
Here’s an example of Big Data value:
Big data and how it shapes your company
Big data is at the center of many decisions in any company. It will allow your company to:
Reduce and manage risk
Without data, organizations are vulnerable to many risks. Big data allows financial institutions to profile their customers when giving them credit facilities. Insurance companies can also create risk profiles which will allow them to set appropriate premiums for different customers. Agricultural enterprises as well, can use data on weather and food pricing to control production.
Better decision making
Collecting data on employees’ interests, behavior, interactions, work time, resource use and resource allocation can be very instrumental in creating better structures, improving the flow of information, increasing inter-departmental cooperation, increasing efficiency, saving time and saving resources.
Get a competitive edge
Monitoring competitor products, marketing activities, sales and pricing will help you to respond urgently with your own counter measures. If you are selling your products on a platform like Amazon, you can keep an eye on your biggest competitors and respond accordingly when they seem to be outselling you.
News flash. None of these listicle items deliver value from my point of view. Like other buzzwords and whizzy concepts, backfilling with generalizations is not going to convince me that Big Data has “value” unless the situation is linked to cash money.
Call me old fashioned, but this approach to value is one reason many companies are struggling to generate revenue from their search and content processing efforts.
Stephen E Arnold, November 15, 2015
November 15, 2015
I read a wonky financial review of Lexmark. You know Lexmark. It was a unit of IBM which manufactured or assembled printers and sold ink. Ink is almost expensive as movie popcorn.
The write up is “Sunday Update for Lexmark international Incorporated.” If you are fortunate to have an unfiltered Internet connection, you may be able to view the write up. If not, buzz your financial advisor. These folks work on Sundays.
The main point of the write up is that the data in this chart provide a glimpse of the challenges Lexmark, owner of the ISYS Search Software, face. ISYS was crafted in the late 1980s, and it provides the basics of information access. The problem is that open source options and baked in search solutions make search and retrieval a utility, not a key feature.
Here’s the chart, which suggests that the August 2015 dip may be the new normal for the company.
Does this remind you of a profile of Table Mountain? I see some parallels. Sharp drop, big job to get back on top.
More interesting is that the summary of analysts expectations is that only two analysts have an opinion. One rates Lexmark as a hold. The other? Strong sell.
The write up points out that Lexmark is in the buzzword business; for example:
The Company operates in the office printing and imaging, enterprise content management (ECM), business process management (BPM), document output management (DOM), intelligent data capture and search software markets. Lexmark’s products include laser printers and multifunction devices, dot matrix printers and the associated supplies/solutions/services, as well as ECM, BPM, DOM, intelligent data capture, search and Web-based document imaging and workflow software solutions and services.
Maybe acronyms are not selling? I hope they do. Lexmark is based about one hour from the hollow in which I reside in rural Kentucky. A healthy Lexmark keeps the trailers in my trailer park rented. Perceptive, right?
Stephen E Arnold, November 15, 2015
November 13, 2015
Dassault Systèmes owns Exalead, one of the search companies forged in the white hot crucibles of the late 1990s. I did a quick check on the fortunes of Exalead, which was purchased by Dassault in 2010. I don’t hear much about Exalead, which had at the time of its acquisition some interesting technology.
What I learned in my quick check was two things. Both struck me as interesting.
First, in “Dassault Systemes Receives Consensus Rating of “Hold” from Brokerages,” I noted the “hold.” That’s one way of saying, “Yikes, we need to watch this outfit.” Some might argue that this is a vote of confidence. I, on the other hand, believe that this is one more signal that companies which have bet big on search are going to face some lean times in the months ahead. I noted this passage in the write up:
Berenberg Bank reissued a “sell” rating on shares of Dassault Systèmes in a report on Friday, September 25th. Credit Suisse restated an “outperform” rating on shares of Dassault Systèmes in a research report on Monday, September 21st. Finally, Zacks cut shares of Dassault Systèmes from a “buy” rating to a “hold” rating in a research report on Tuesday.
Second, Dassault is doing what Thomson Reuters did; that is, morph into foundationville. I am not sure what the tax advantages of this are and I am not too curious. I read in “La Fondation” that:
La Fondation Dassault Systèmes will provide grants, digital content and skill sets in virtual technologies to education and research initiatives at forward-thinking academic institutions, research institutes, museums, associations, cultural centers and other general interest organizations throughout the European Union. This support will provide greater access to 3D content, technology and simulation applications that have long been used by industry for the design, engineering and manufacturing of most of the products society relies on today. Such access can help create new learning experiences and encourage greater interest in science, math, engineering and technology disciplines among students.
From my crumbling office in rural Kentucky, this looks like a reprise of the “old” Lexis effort of providing “free access” to the Lexis online system in the hopes that future attorneys will continue to use Lexis. The free stuff goes away when the aspiring lawyer or future Uber driver passes the bar. How is that free stuff working out?
My thought is that neither of these news items does much to boost my confidence that Exalead is becoming a big revenue player at the upscaliest of the upscale French corporations.
The Exalead folks did know how to provide a great box lunch before the acquisition.
Stephen E Arnold, November 13, 2015
November 13, 2015
I read an item produced by a research outfit called Edison. What’s interesting is that the “news” refers to SLI Systems, a New Zealand based outfit which sells eCommerce search software. The company has been going through some choppy water and has two new executives. One is a president, Chris Brennan. The more recent appointment is Martin Onofrio’s taking the job of Chief Revenue Officer. Prior to joining SLI, Mr. Onofrio was, according to the Edison news item, the chief revenue officer at Attensity. That’s one of the sentiment oriented content processing outfits. (Attensity has been a low profile outfit for a while.)
In that “report” from Edison which you can read at this link, I noted a reference to H116 revenue. The report did not explain what this type of revenue is. I did a quick search and learned that H116 does not seem to be a major revenue type. H116 is a type of aluminum, a motorized stepper, and a string of characters used by a number of different manufacturers.
After some thinking whilst listening to the Jive Five, I realized that Edison and SLI Systems are using H116 as a token for “revenues for the first half of fiscal 2016.” There you go.
Another write up adds this color, which I think the Edison experts could have recycled when they made clear what H116 means:
Revenue is forecast to rise to $17.3 million in the six months ending December 31 from $13.6 million a year earlier when sales accelerated at a 27% pace, the Christchurch-based company said in a statement.
Here’s the important part in my view:
The software developer missed its sales forecast for the second half of the 2015 year, and has hired Martin Onofrio as its new chief revenue officer to drive revenue growth.
A couple of quick thoughts before I go watch the mist rise from the mine drainage pond:
- SLI might want to make sure that its experts output “news” which is easy to understand
- Inclusion of revenue challenges is probably as important, if not more important, than opining about the future. The future is not yet here, so, like picking the winner of the Kentucky Derby, touts are different from which nag crosses the finish line first.
- Attensity, in my opinion, has faced its own revenue head winds. I wonder if a chief revenue officer can generate revenue in a world in which there are open source and low cost eCommerce search systems?
A word to Edison: Please, do not write to complain about my nagging about the H116 thing. You offer a two page report which is one page. What’s up with that? Friday the 13th bad luck or a standard work product?
Stephen E Arnold, November 13, 2015
November 10, 2015
One of my two or three readers sent me a link described as a “Unicorn Club wall graphic.” I located this diagram, the product of an outfit called CB Insights, at this link. Here’s a tiny version of the list of unicorns artfully arrayed on a time line spanning 36 months:
The message of the graphic is the blur created with the jammed names and logos of companies in the Jan 2015 and later portion of the chart. Here’s a snippet:
The number of unicorns has increased. On the list are MarkLogic, an XML centric data management outfit, and BuzzFeed, the maker of listicles.
I find this graphic interesting. Many of the companies on the graphic are ones about which I know zero and probably never will; for example, Thumbtack and some about which I know a little bit like MarkLogic.
A couple of thoughts crossed my mind as I marveled at the number of big bets made in 2015; here are three:
- Quite a few investors have bet big money on outfits because there is a belief that these companies will make big revenues. Hope springs eternal, of course. Customers and sustainable revenue may be a more limited resource.
- Is the economy more robust than the information available to me suggests?
- The likelihood of froth seems high. Are there empty store fronts in your area? Are most businesses thriving?
The diagram suggests that there will be some financial excitement ahead. The question is, “What type of excitement?” An XML data management company? Lists of factoids?
The business of some of these outfits is raising money, not generating sustainable organic revenues. Unicorns like raising money. The revenue part is not so much fun to do. Thinking about revenues is more enjoyable and easier.
Stephen E Arnold, November 10, 2015
November 9, 2015
Cryptocurrency has come a long way, and now big banks are taking the technology behind Bitcoin very seriously, we learn in “Nine of the World’s Biggest Banks Form Blockchain Partnership” at Re/code. Led by financial technology firm R3, banks are signing on to apply blockchain tech to the financial markets. A few of the banks involved so far include Goldman Sacks, Barclays, JP Morgan, Royal Bank of Scotland, Credit Suisse, and Commonwealth Bank of Australia. The article notes:
“The blockchain works as a huge, decentralized ledger of every bitcoin transaction ever made that is verified and shared by a global network of computers and therefore is virtually tamper-proof. The Bank of England has a team dedicated to it and calls it a ‘key technological innovation.’ The data that can be secured using the technology is not restricted to bitcoin transactions. Two parties could use it to exchange any other information, within minutes and with no need for a third party to verify it. [R3 CEO David] Rutter said the initial focus would be to agree on an underlying architecture, but it had not yet been decided whether that would be underpinned by bitcoin’s blockchain or another one, such as one being built by Ethereum, which offers more features than the original bitcoin technology.”
Rutter did mention he expects this tech to be used post-trade, not directly in exchange or OTC trading, at least not soon. It is hoped the use of blockchain technology will increase security while reducing security and errors.
Cynthia Murrell, November 9, 2015