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Microsoft’s Vietnam: Search

What an interesting idea. ZDNet posted a short item that caught my attention on this 95 degree Sunday in rural Kentucky. Larry Dignan’s “Microsoft’s Search Ambitions Are Its Vietnam” appeared on the ZDNet Web logs on July 18, 2008. I suggest you read the item here. Mr. Dignan has opened a new line of analysis about the Microsoft - Google face off.

The key point in the piece for me was:

The online services business lost $1.23 billion for the fiscal year ending June 30. I [Mr. Dignan] quipped that it’s no wonder that Microsoft is so hot for Yahoo. Something has to save this online business. And what’s startling about that figure is that Microsoft only lost $732 million in 2007. Microsoft’s online services business was actually profitable in 2005.

Mr. Digan is spot on. One point warrants further comment, however. The cost of catching Google may be beyond Microsoft’s reach. Here’s why?

• Google continues to press forward and Microsoft’s efforts to catch Google seem to be focused on where Google was in late 2006 or early 2007. A leap not a catch up is needed.
• Time is working for Google and against Microsoft. Each month Google continues to increase its lead in Web search. At some point, Google will dominate the market, which means that the race may be over for Web queries and online advertising.
• Google is “seeping” into the enterprise. Microsoft seems confident that its three big revenue producers will fund the online battle with Google. I think the complexity of products like SharePoint will open the door to newcomers, not necessarily Google, by the way. Any revenue loss increases Microsoft’s vulnerability.

Agree? Disagree? Let me know your thoughts.

Stephen Arnold, July 21, 2008

Adea Introduces Connector for GSA for SAP

Did the acronyms baffle you? GSA is the Google Search Appliance. SAP is the ubiquitous vendor of expensive enterprise software. Adea, a consulting firm, has created an adaptor to “hook” the GSA into an SAP environment. The idea is that instead of the expensive SAP search solutions (TREX and Endeca, for instance), you can buy Google boxes.

The product is Ocelli. The software makes it possible to search SAP data in a simpler way than SAP provides in its default environment. Among the Ocelli functions is support for role-based searches and results display.

For more information about Adea, click here. The Ocelli product information page is here. I don’t have current pricing information at this time.

As Google’s enterprise team gets pulled into more opportunities, companies such as Adea will find it worth their while to create custom software. Google itself seems willing at this time to let its partners carry the ball for integration and customer support in some accounts.

Microsoft started its partner program in a benign way as well.

Stephen Arnold, July 21, 2008

Google and the M Word

I try to avoid the “m word”–monopoly. Jason Lee Miller at WebProNews.com, another Kentucky outfit, does a very good job exploring this point. His “What Percent Makes a Monopoly?” is a must read. You can access the full text here. The essay contains a wealth of data about market share. The most important point in the essay concerns the duopoly that exists with Google and Microsoft as the two duopolists. Mr. Miller says, “we know from experience with telcos and cable that the government doesn’t really mind those so much.” I agree.

The one point that warrants a comment is the notion of a barrier to entry. Online services have barriers that are difficult to quantify until you have to write checks. Google and Microsoft are building infrastructures that can support cloud services. The part that’s tough to grasp is the continuing investment in innovation necessary to keep these giant data Hummers in top form.

Stephen Arnold, July 20, 2008

Google and Mass Transit

I wrote about Google’s routing patent document in my KMWorld column several months ago. The patent application is US20060149461, and you can get a copy here. Tim Doulin (The Columbus Dispatch) wrote “COTA Riders Get Help from Google in Planning Trips.” (COTA is an acronym for Central Ohio Transit Authority.)

The idea is that a person wanting to ride a bus can navigate to the COTA home page and use Google’s technology to as a trip planner. “More than 50 transit agencies around the world,” writes Mr. Doulin, “offer it.” You can read Mr. Doulin’s well written essay here.

For me this is an important news item. The “transportation” invention is a deeper function than showing bus routes and pick up times. US20060149461 allows a transit authority to shift from published routes to floating routes. Riders, according to the invention, can send a request to Google, receive a pick up time and location, and make use of individual buses that follow dynamic routes.

Once Google achieves critical mass with its “plain vanilla” route service, the company may be pulled into a cloud based routing service. The benefits of the Google invention include reduced wait times, flexible routing around traffic jams, and reduced fuel consumption.

Google and mass transportation. I recall mentioning this function in a briefing last year and I was greeted with head shaking and snorts of disbelief. Might it not be time to start watching Google and learning about the company’s “search without search” methods. Could Google become a cloud based services provider in public transportation?

Google is an application platform, not an ad agency, dear readers.

Stephen Arnold, July 20, 2008

Something Big in Google ig

On Friday, July 18, 2008, after most right coasters left their desks, Google posted “Google’s Services Converge in the New iGoogle or “ig”. You can sign up for this service here. Note that the new service is not available to every Google “ig” user, just some lucky beta testers and developers. Bloggle also has some information available here.

ReadWriteWeb has reported on this technology as well. You can read that post here.

The most noticeable change is the addition of full screen components, which makes it easier on the addled goose’s aging eyeballs.

You may be able to access this steroid-charged service by following the directions here (but no guarantees):

I have put in bold and dark red what you must copy and paste. First, navigate to google.com/ig. Then paste this string into the address bar: javascript:_dlsetp(’v2=1′);

Here’s a sample display provided by Google here:

The principal differences are:

• An iGoogle feed is available in what Google calls “canvas view”, which is a more Gmail style layout
• A new Gmail gadget that delivers most of the features of Gmail from within iGoogle
• Gmail Chat implemented in iGoogle’s sidebar.

In my opinion this change to iGoogle is quite important. These frames look like the little boxes found on many modern Web pages. Don’t be fooled. Each “frame” is a “container”. From what I can tell by trying to make sense of Google’s prose in its technical documents, a “container” is a virtual machine. Instead of looking at a Web page with content, Google is using a virtual machine to provide content and functionality. One of my colleagues told me, “No big deal Microsoft and Yahoo do this as well.” I agree. One difference, which I noticed, is that when iGoogle is implemented on a mobile device, the mobile device’s display is a baby virtual machine–a personalized baby virtual machine able to predict what you need before you know you need the information or the service.

The big question is, “Will this container technology work on a mobile device?” The first step will be to test the functions of the “new” iGoogle or “ig” and see if the technology is sufficiently stable, latency free, and useful. Some of Google’s new services appear and then are left behind by other innovations.

The new iGoogle warrants a test drive if you can get it to work. If you have information about Google’s container technology, please, share it with the two or three other people who read this Beyond Search Web log.

Stephen Arnold, July 20, 2008

Ben Franklin and Google Truncation Fixed

I have fixed the truncation of the Ben Franklin and Google essay here. I am not sure why the full essay did not appear on the continuation page. My apologies.

Stephen Arnold, July 19, 2008

Google Learns about Ben Franklin’s Maxims

This is an opinion piece.

My 7th-grade teacher, Miss Soapes, was a Ben Franklin groupie. Of course, Mr. Franklin departed early life in 1790, and I was in the 7th-grade in 1957. To Ms. Soapes, Mr. Franklin was at hand. Her favorite Ben-ism was:

There are no gains without pains.

Google certainly understands the meaning of Mr. Franklin’s insight. After a decade of effort, Google has arrived at the summit of the Web search and online advertising mountain.

The Google brand is one of the most recognized in the world even though most people who use Google every day don’t know that the company’s name is a corruption of googol, a number that is equal to the digit one followed by 100 zeros.

Google accounts for about 70 percent of the Web searches in North America and even more in Denmark and Germany where Google enjoys an 80 percent or more share of the Web search traffic. Only China (www.baidu.com) and Russia (www.yandex.com) resist the charms of the GOOG.

In a miserable economy, Google’s second quarter revenue missed Wall Street’s estimate by a few pennies. Within moments, Google was a loser. I was shocked by the negative turn, but my surprise was nothing to shareholders who watch the Google share price drop below $490 in after hours trading right after the results came out. Financial success in today’s high-technology sector is rare indeed. But Wall Street wizards have come to expect stellar performance from the Mountain View, California, company.

The company has been somewhat less successful with its non-search and non-ad initiatives. But the lack of success is a function of comparing Google’s ad revenues with revenues from its other units. For example, in FY2007, Google reported less than $200 million in revenues from its much-watched enterprise search and services unit.

However, when I worked through Google’s financials and their less-than-helpful revenue breakouts, I identified revenue from Google geospatial services, Google’s educational sales, and fees paid by developers. After fooling with assumptions and a quite bout of spreadsheet fever, I estimated that Google’s non-search earnings that could be viewed as enterprise-centric could have been as much as $400 million. Compared to Google’s FY2007 revenue of $16.6 billion, the $400 million is larger than Autonomy (about $300 million), Endeca (about $110 million) and Fast Search & Transfer (about $70 million but subject to change) in the same 12 month period. The acquisition of Postini is likely bump these revenues upward in FY2008.

Read more

Business Week Sees through the Clouds

Sarah Lacy, Valley Girl, wrote “On Demand Computing: A Brutal Slog”. You can read the full text of her essay here. The story carries a date of July 18, 2008, so the text should be available for a short period of time. I know that I have been frustrated trying to locate Business Week stories in the past, so hopefully the site’s retention policy is more in step with my research needs and yours.

Business Week occupies a middle ground between the Harvard Business Review type of story (case examples, charts, checklists, and chatty case studies) and the Economist’s pro-business, pro-catty writing that combines odd ball statistics with “isn’t that obvious” types of juxtapositions.

Sarah Lacy’s look at cloud computing–also known as on demand computing, software as a service, and a dozen other acronyms–was interesting to me. First she hits the point that it can be tough to get revenue and expenses in line. Her phrase, which I well may appropriate in some future writing, is, “It’s [the Web] just as good at displacing revenue as it is in generation sources of it.” Dead on.

Also, she hits two often ignored “costs” associated with the cloud computing razzmatazz: [a] the difficulty of selling cloud services to prospects who don’t get it or just don’t trust it and [b] the tendency of certain high tech markets to become monopolies.

You will want to check out Nick Carr’s analysis of this topic here. Mr. Carr does not disagree with Ms. Lacy’s analysis. However, as nifty as Ms. Lacy’s essay is, there are two related points upon which I wish to comment:

First, Google’s approach to cloud computing is what I call “pull marketing”. Salesforce.com, Microsoft.com, and most of the organizations Ms. Lacey mentions in her essay, engage in “push marketing”. A sales professional makes a call and tries to close a deal. Not only is this grossly inefficient and expensive, it quickly exhausts the sales team and the sales and marketing budget. Google, on the other hand, rides in Salesforce.com’s car and occasionally waves its pom poms. Google also works to reach those in university programs who will enter the work place in a couple of years. The idea is that these individuals will want to use Google at work. So, Google once again gets a free ride into an organization. The approach is indirect and inefficient unless you have another source of revenue and are not in a particular hurry. Oracle, Microsoft, and other vendors appear to be shifting from pure push marketing to “buy” marketing. The idea is to make it financially attractive for a prospect to shift to cloud computing. Once hooked, I suppose, the vendor has got the fish in the basket.

Second, the success of cloud computing depends on a vendor’s ability to build a big, fast, redundant supercomputer that is reliable. Anyone with a credit card and an email can set up a baby cloud service on a low cost services provider or more upscale to the Amazon Web services system. There’s not much of a barrier to entry, but as the number of users climbs, then real engineering has to be in place. There was a reason why prior to the break up AT&T was a monopoly. AT&T had to do a lot of engineering, research, and guaranteeing to become a monopoly. The second and third tier players in the pre break up telco world were doomed to be niche players. So, consolidation is only part of the story. The rest of the story will be brand identify and really serious engineering for scale. The winner in cloud computing will be the present day’s equivalent of AT&T in the 1950s. Ms. Lacy is writing about border skirmishes. The real battle will be fought on many fronts in a global theater. Furthermore, the shoot out will take place regardless of the economy, regulations, and business school pronouncements. Engineering, not marketing, may be the deciding factor. A touch of creative destruction may add zest as well.

Based on my research, the winner in cloud computing will replicate the type of computing an individual has with a powerful device, pounded flat like a tortilla, and filled with applications, services, and functions. Cloud computing is a big digital burrito stuffed with the goodies organizations crave but have to deal with as individual ingredients. So my take, cloud computing is a convenience food in digital form, perfect for the young at heart and those who want to do computing on the run. For a drawing of a digital burrito, check out The Google Legacy here.

Stephen Arnold, July 18, 2008

Google: More Low Blows

The economy is sinking. Most companies are trying to cut costs and boost profitability or just stay out of the red. Google has been taking some low blows in the wake of its 2nd quarter 2008 revenue report. Stephen Shankland “Live Blog: Google Roses Loses Bloom Again” provides a good summary of what’s right and what’s wrong for Google with its financial results. You can read his essay here.

The best way to summarize what Google did is to show you this chart, which was included with Mr. Shankland’s essay:

The gross revenues are rising. The profit was $1.25 but less than the Wall Street mavens wanted. The result is that Google gets sucker punched.

You can find dozens of stories on this theme on news aggregation services.

My view is that Google is no longer the under dog. No matter what the company does, Google will be punched, kicked, and jabbed. As Google grows larger, the zippy percentage gains in previous years are harder to replicate. The GOOG is closing in on $20 billion in annual revenue.

Largely ignored is Google’s ability to tweak payouts for AdSense. None of the folks covering Google has talked with large AdSense customers about their smaller Google checks in the run up to this quarter. But I think Googzilla can withstand the abuse and no one is likely to probe how Google can twiddle the knobs to hit whatever numbers it wants to hit.

Stephen Arnold, July 18, 2008

Google: A Digital Ceramic Brake Pad

TechCrunchIT is one of my favorite Web information services. I read Nik Cubrilovic’s July 16, 2008, analysis “Why Google Slows own Acquired Companies”. You will want to read the full text of the essay here. In addition to offering a compelling array of data to support his assertion that Google hobbles its acquired companies, he includes a snapshot of the Google Technology Stack. I have a different view of the technology stack in use at Google, but it contains more layers and includes such exotica as Google janitor bot engine, Haskell, and other nerd-xotica. You will also pick up some useful insights to the perils of a once-limber start up struggling like a Marine recruit on a double time run through the desert whilst taking fire. That’s a hurry up, lay down, hide, rest, run like the devil, and duck down process. A 1,000 meter stretch can take quite a bit of time to traverse. No one is shooting live rounds at the GOOG, but lawyers, being transparent, and planning a space flight have much the same effect.

However, I think there are several other factors that one must consider when thinking about the fate of Google acquisitions. These ideas are developed more fully in my 2007 study, Google Version 2.0 here. Let me highlight three and, as always, invite your comments.

1. Google buys companies for people, not technology, business models, or traffic. The need for talent, particularly in math, physics, and engineering is tough for Google to satisfy with traditional recruiting techniques. This is the “just buy ‘em and put ‘em to work” motivation for an acquisition.
2. Google buys companies because the company is cool. I have identified several acquisitions that fit into this category. Nothing happens with the company and the founders often leave, annoyed that Google handled the acquisition as if it were a toy in Google’s flak-attracting day care center.
3. Google buys companies and keeps it secret if possible. I have identified one such acquisition. The technology is quite important to Google, and the company goes to great lengths to minimize outsiders’ awareness of the purpose of the technology and the identity of the individuals working on some of these crucial areas.
4. Google buys a company and converts or modifies the technology to fit into a larger Google service. The rework may be done in a matter of weeks or it can take longer. The rework time is not important. The key factor is when Google wants to slipstream the building block into a larger service.

You can find a reasonably complete list of Google acquisitions here. In Google Version 2.0 I plot most acquisitions by year and I discuss a handful of the more important buy outs prior to 2007 when my study was published. I have updated the material, but this is available as part of my for-fee work. One acquisition is the subject of a for-fee report by one of the world’s best known research firms. The announcement of this report will come from that company. My agreement with the firm prevents me from providing specifics.

Stephen Arnold, July 17, 2008

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  Stephen E. Arnold monitors search, content processing, text mining and related topics from his high-tech nerve center in rural Kentucky. He tries to winnow the goose feathers from the giblets. He works with colleages worldwide to make this Web log useful to those who want to go "beyond search". Contact him at sa [at] arnoldit.com. His Web site with additional information about search is arnoldit.com.
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