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Palantir Sucks in More Dinero

July 24, 2015

I am all for keeping the companies involved with law enforcement and intelligence entities out of the public eye. The hoo hah about Hacking Team is a grim reminder of what happened to Gamma Group and FinFisher when information about their services and products hit the “real” journalists’ radar.

I want to point you to “Confirmed. Palantir Raise a Huge $450 Million Investment.” The write up points out:

This [more cash investments] confirms a report last month that the company was raising up to $500 million at a valuation of $20 billion – making it the third most valuable “startup” on the Valley scene. (If you can call a 16-year-old company that reportedly generates millions in revenue a “startup.”)

Palantir is a unicorn wearing an invisibility saddle, tack, and saddle blanket. That’s okay with me. My observation is that Palantir has technology which is intended to prevent untoward acts. Are these untoward acts being prevented? I will let you answer that question.

I have no comment on whether the Palantir technology works. Even court documents related to Palantir’s dust up with i2 Group Ltd (a former client of mine) are not public. Why would i2, the pioneer in Palantir’s software segment, get involved with legal eagles?

Perhaps someone will have an answer some day. For now, I will ignore the partially invisible unicorn. The company has plenty of stakeholders who are trying to figure out Palantir so my efforts are redundant.

Stephen E Arnold, July 24, 2015

Lexmark: The Former IBM Printer Unit Prints Pink Slips

July 22, 2015

I live in rural Kentucky. Hopefully the layoffs at Lexmark will not cause new trailers to appear adjacent my property and my spiffy Clayton mobile castle.

I read “Lexmark Announces 500 Layoffs Worldwide as Revenue, Earnings Are Flat.” I know that the Lexington, Kentucky based company is trying. The firm is nosing into healthcare. The company is building facilities to cater to the new work force.

Lexmark is even nosing into the search and content processing sector which interests me. I don’t pay much attention to printers. My Lexmark laser went to the local thrift shop a decade ago. Come to think of it. I just create PDFs. I assume that other people find that printers are no longer must-have devices.

Lexmark splashed some cash for search and content processing companies. The firm bought the quite wrinkled and aged search technology founded by Ian Davies in 1988. That works out to more than a quarter century ago. Lexmark bought the Brainware technology, which is based on a rather nifty concept of trigrams. When content is processed with the trigram numerical sausage machine, it becomes easy to match the patterns. The higher the pattern overlap percentage, the more likely the documents are about the same thing. At least, that’s the idea as I understand the explanation given to me face to face before the deal went down. Lexmark also snagged Kofax, which itself had purchased Kapow, an outfit into the normalization of content and some other “interesting” functions.

Lexmark is a sponsor of the Bluegrass Disc Golf Association competition to be held in August 2015. This is an event of note in these here parts.

When I learned about these deals in 2012 and the 2015 Kofax purchase, I realized that Lexmark was emulating the thinking at two other companies. Hewlett Packard bought Autonomy in the hopes of riding a revenue rocket. I still marvel at the shallowness of HP’s understanding of how Autonomy grew to $700 million in revenue in 15 agonizing years of effort and perspiration. But HP caught spreadsheet fever and has not yet recovered. IBM allegedly bet $1 billion that Lucene, home grown code, and acquired technology could create a computing revolution. IBM touts the cognitive revolution at the same time it reports its 13th quarterly decline in revenues. I learned today that IBM is pushing the cooking angle via a partnership with Welltok.

Lexmark, I submit, did the same thing: Looked at search and decided, “Our management team can make more money that these acquired outfits ever did.” The result is that Lexmark is probably: [a] Doomed to suffer cash outlays in order to keep the search and content processing systems current with alternative software; [b] going to struggle to develop organic revenue streams which deliver profits to stakeholders, and [c] reposition itself the way Sprylogics has. As you may know, Sprylogics shifted from an intelligence oriented content processing system to a mobile fantasy sports app.

I have to stop now. I hear the sound of a four wheel drive’s wheels slipping. Yikes. Someone is putting a 2006 Fleetwood 14×70 across the pond from my Clayton. One of the people is wearing what looks like a Lexmark disc golf logo on a T shirt.

Stephen E Arnold, July 23, 2015

Words to Note: HP Autonomy Disastrous Deal

July 21, 2015

I tucked this into my “Quotes” file. The source is Courthouse News Service and a story named “Pensioners Get $100M for HP’s Takeover Flop.” I lingered for a moment on the word “flop” but plunged into the write with modest expectations.

Here’s the sentence that I highlighted with my Japanese style wide tip Sharpie:

A federal judge tentatively approved a $100 million settlement between a Dutch pension fund and Hewlett-Packard over its disastrous $10.3 billion purchase of Autonomy Corp.

The word “flop” was interesting but the use of the word “disastrous” is a reminder of what happens when MBAs catch spreadsheet fever and buy search-centric companies.

I also highlighted this statement:

HP ended up taking an $8.8 billion hit on the botched acquisition and blamed former Autonomy executives for misrepresenting its revenue projections two years before the deal.

What happens when spreadsheet fever mingles with sales oriented folks suffering from drinking too much of their own Kool-Aid? Answer: An opportunity to spend quality time with attorneys. Definitely a summer bummer.

Stephen E Arnold, July 21, 2015

IBM: Watson Cook Book Revenues Disappoint

July 21, 2015

IBM is now at a baker’s dozen: 13 quarters of revenue decline. I scanned a number of write ups about IBM’s most recent quarterly report. I plucked “IBM Blames Almost Everything on Bad Quarterly Earnings” as a representative report.

The main point is that revenues were down:

International Business Machines Corp. (NYSE: IBM) released its second quarter financial results after markets closed on Monday. Big Blue had $3.84 in earnings per share on $20.8 billion in revenue compared to Thomson Reuters consensus estimates of $3.78 in EPS on $20.95 billion in revenue. The same period from last year had $4.43 in EPS on $24.36 billion in revenue.

Segment results were interesting. The good old mainframe business is still truckin’. Software revenues were juicy but down, which is a bummer.

Now I monitor the Watson products and services because I am interested in search. Based on the financial summaries I have scanned, there were no references to Watson cook book sales. I assumed that Watson cook book sales would boost the company’s revenues.

Disappointed. Yes, I was.

I assume IBM will rely on Watson to assist the firm in making better decisions. What if Watson were making the decisions. Disappointed. You bet. On the bright side, a used copy is available for less than $10 on Amazon.

Stephen E Arnold, July 21, 2015

When Today Is Not As Good As Yesterday: Two Google Signals

July 21, 2015

Two Google items snagged my attention. The first is the new that a Xoogler has returned to Googzilla’s nest. The story was “The Soul of Google’: What the Return of Omid Kordestani Says About the Mountain View Monolith.” I interpreted this to suggest that Google has been operating without “soul” for five years.

According to the write up:

A year ago last week, CEO Larry Page brought him back to the position he birthed at Google, installing him permanently in October. Kordestani had come back to a very different Google. Revenue growth, once soaring, had started to flatten, and Google had suffered some embarrassing product setbacks. Wall Street was drumming louder about wasted funds on so-called moon shot projects such as Project Loon — its Internet-giving balloons — and Glass. More critically, Google faced rising criticism that its bloated size and insular leadership was stifling its ability to innovate. It risked becoming Microsoft.

Google is not Microsoft. Microsoft has its own demons and a unique fingerprint. Microsoft generates revenue from several different product and service lines. Google has one source of revenue: online advertising. Big difference in my opinion. The monoculture thing can endanger bananas and the GOOG. Charm may not work when parasites chip away at a monoculture.

The second item was “Silicon Valley’s Biggest Companies Take Samsung’s Side in Apple Patent Fight.” When you cannot innovate, litigate. I heard that mantra a number of times before I retired to my rocking chair in rural Kentucky.

For me these two stories point to a significant challenge Google faces. The company is fresh from a Wall Street home run. But are Wall Street home runs a one in four play? Google is not batting 1000 in the diversification of revenue department. The idea that a number of big companies are ganging up on the much loved, though slightly off center Apple outfit strikes me as a sign of weakness, not strength. What MMA fighter sends a lawyer into the octagon.

The message of Thomas Wolfe’s novel written in the 1930s seems clear, no matter what that wild and crazy Dr. Ed Chapman told me and my classmates: There is hope when you return home.

I am not so sure. Home and a return home are two different things. The return occurs with a flock of legal eagles and a vastly different online landscape. Search is different too. Relevance is still on vacation.

Stephen E Arnold, July 21, 2015

US Government and Proprietary Databases: Will Procurement Roadblocks Get Set Up before October 1, 2015?

July 20, 2015

I don’t do the government work stuff anymore. Too old. But some outfits depend on the US government for revenue. I should write “Depend a lot.”

I read “Why Government Needs Open Source Databases.” The article is one of those which is easily overlooked. With the excitement changing like a heartbeat, “database” and “government” are not likely to capture the attention of the iPhone and Android crowd.

I found the article interesting. I learned:

Open source solutions offer greater flexibility in pricing models as well. In some cases, vendors offering open source  databases price on a subscription-based model that eliminates the licensing fees common to large proprietary systems. An important element to a subscription is that it qualifies as an operating expense versus a more complex capital expenditure. Thus, deploying open source and open source-based databases become a simpler process and can cost 80 to 90 percent less than traditional solutions. This allows agencies to refocus these resources on innovation and key organizational drivers.

Wow, cheaper. Maybe better? Maybe faster?

The article raises an interesting topic—security. I assumed that the US government was “into” security. Each time I read disinformation about the loss of personnel data or a misplaced laptop with secret information on its storage device, I am a doubter.

But the article informs me:

Data security has always been and will continue to remain a major priority for government agencies,  given the sensitive and business-critical nature of the information they collect. Some IT departments may be skeptical of the security capabilities of open source solutions. Gartner’s 2014 Magic Quadrant for Operational Database Management Systems showed that open source database solutions are being used successfully in mission-critical applications in a large number of organizations. In addition, mature open source solutions today implement the same, if not better, security capabilities of traditional infrastructures. This includes SQL injection prevention, tools for replication and failover, server-side code protections, row-level security and enhanced auditing features, to name a few. Furthermore, as open source technology, in general, becomes more widely accepted across the public sector – intelligence, civilian and defense agencies across the federal government have adopted open source – database solutions are also growing with specific government mandates, regulations and requirements.

I knew it. Security is job one, well, maybe job two after cost controls. No, no, cost controls and government activities do not compute in my experience.

Open source database technology may be the horse the government knights can ride to the senior executive service. If open source data management systems get procurement love, what does that mean for IBM and Oracle database license fees?

Not much. The revenue comes from services, particularly when things go south. The license fees are malleable, often negotiable. The fees for service continue to honk like golden geese.

Net net: Money will remain the same, just be taken from a different category of expense. In short, the write up is a good effort, but offers little in the way of bad news for the big database vendors. On October 1, 2015, not much change in the flowing river of government expenditures which just keep rising like the pond filled with mine drainage near my hovel in Kentucky.

Stephen E Arnold, July 20, 2015

Google: The Forever Rising Revenue Starship

July 18, 2015

I read “Google Adds a Record $60 Billion to Its Stock in One Day.” According to this write up and dozens of others, the GOOG has broken a barrier. The company is, like a deep space probe of money, into the Forever Rising.

I read:

Google Inc. just gave its investors the biggest present ever. The search-engine giant added $65 billion to its market capitalization today, more than the size of Hewlett-Packard Co. The surge, following earnings that topped analyst estimates, is the biggest one-day gain in value ever for a U.S. company, according to data compiled by S&P Dow Jones Indices. Apple Inc. held the previous record, with a $46.4 billion surge in April 2012.

Will legal hassles, cost cutting, the surge in mobile usage, and the challenges of making money in China and Russia slow the Forever Rising, the new monetary interstellar vehicle?

Absolutely not. Lawyers, even countries, cannot exert sufficient gravitational pull to cause the money craft to veer from its trajectory.

Diamonds Are Forever. Oh, that’s the movie thing.

Stephen E Arnold, July 18, 2015

Google Revenue Tweaks: Mobilegeddon the New Beginning

July 16, 2015

I read “Google’s Mobilegeddon Moves Hitting Marketers, Sites.” The write up reports an action by Google that I had not considered. The ballyhooed mobilegeddon hit my radar months ago.

Here’s the big news, according to ZDNet:

there’s a 25 percent gap between what they pay for clicks vs. what they get. “Parity or click through rates are growing faster than cost per clicks,” said Gaffney [presumably an Adobe principal wizard]. “We’re not even close right now. To see the gap widening is troubling.”

My view: Get used to it, gentle reader. The GOOG has a number of strings, but some of the chunkiest and most curvaceous in terms of revenue have been on “The Biggest Loser.”

As a result, the revenue mavens at the Google are beefing up other revenue streams.

Adobe is cheerleading for Facebook, but seems to be quite placid when the Zuck wants Flash to be disappeared.

Google, Zuck, Adobe: What’s this mean pour vous. Spend more, get less. Enjoy the excitement of the new feature “World That Click Streams Abandoned.”

Stephen E Arnold, July 16, 2015

Google, Its Strategy, and Cost Cutting: Excitement Looms

July 15, 2015

I will not mention Loon balloons. I promise.

Navigate to “Google Product Strategy: Make Two of Everything.” The write up points out that Google’s strategy is a variation on the Doublemint twins trope. If one is good, two are better. More better. Just like Vonage.

The write up points out:

The company’s actions have shown it doesn’t really believe in focusing on a single solution to a problem, regardless of how much easier that would make things for users. It has to deal with external competitors in all sorts of areas, and Google seems to see no reason why competition can’t also come from within—Google products competing with other Google products.

Internal competition good. Revenue? Well, now that is the one point I found lacking in the write up. Doublemint twins are expensive. Imagine being a frat rat trying to woo both of the Doublemint twins. Twice the cost. Exponentiate the management hassles. Yikes. Talk about complexity between classes and on weekends. I stayed in the library. A simple college life for me.

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Google has for more than a decade done many things. The Googlers have many interests. I understand. I have many interests, but I have learned at age 70 that one must bring discipline to make any progress.

After many years of effort, Google’s business model is based on the GoTo/Overture pay-to-play approach to traffic. Google, if I recall the Yahoo settlement regarding GoTo/Overture methods, did not invent its approach to online advertising.

What has played out over the last decade has been online advertising generating 90 to 95 percent of Google’s revenue.

The wild and crazy stuff has not, in my opinion, has not altered Google’s dependence on the online advertising business model.

How much more profitable would Google have been if it did not do the two of everything method? How much money would the company generate for stakeholders if some of the moon shots were put back in the hanger and the lights turned out.

Solving death. Great idea. Live forever. Well, maybe. Frittering away dough on YouTube and creating a mass of unfindable and often forgettable video content.

The write up mentions Android and Chrome. Google Glass and the wonky Google watch warrant a mention. The author identifies more than 10 additional duplications.

In my opinion, the big message is a lack of discipline. Now there is a new CFO who wants to cut costs. See “The five things Wall Street Wants from Google’s new CFO.” The write up also misses the mark.

Wall Street wants the revenues from the good old days. Go back to the hockey stick financials from 2004 to 2007. The company is, as Steve Ballmer said, a one-trick pony.

Google might consider taking a gander at the Sakai’s concept of bunsha. Those Xooglers are cranking out innovative outfits once they leave the GOOG. Some of these are going to do the hockey stick thing. (Sorry, no company names in a free blog, gentle reader.)

What’s happening is that Google is embracing the procedures of a high school math club. Now you can ponder the Loon balloons, elevators to space, etc. etc.

Stephen E Arnold, July 15, 2015

Algorithms: Bias and Shoes for the Shoemaker

July 13, 2015

I read the Slashdot item “CSTA: Google Surveying Educators on Unconscious Biases of Students, Parents.” Interesting, but I think there are biases in curricula, textbooks, and instructors. My hunch is that some schools have biases baked into the walls like the odor of grade school hall at 10 am on a snowy day in November.

I thought of a shoemaker whose children had lousy shoes. Did the family focus its attention on meeting the needs of customers? Did the family just forget that the children’s shoes might help sell more shoes if those shoes were collectible sneaks with the image of a basketball star on them?

I thought about this item from the gray lady: “When Algorithms Discriminate.” You may have to pay for this gem. Don’t hassle me if the link goes dead. Collar a New York Times’ executive and express your opinion about disappeared content, pay walls, and the weird blend of blog and “real” content. I don’t care.

The gray lady’s write up points out that

Google’s online advertising system, for instance, showed an ad for high-income jobs to men much more often than it showed the ad to women, a new study by Carnegie Mellon University researchers found.

So the idea is that Google’s algorithms discriminate because humans wrote the code?

Will Google (the shoemaker) turn its attention to its children’s shoes?

I include in my forthcoming column for Information Today “The Bing Summer Fling” that Bing also fiddles search results.

I know search systems are their human side. Perhaps Microsoft and Google can cooperate to determine how much discrimination surfaces in their next generation, state of the art, smart, objective, super duper systems?

My hunch is that the financial requirements may make such introspection unpopular. That’s why it is far safer to research students and parents. Who wants to look closely at his and her shoes?

Stephen E Arnold, July 13, 2015

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