A TechCrunch MSFT Analysis: Nicely Done
January 24, 2009
Erick Schonfeld’s “Microsoft Lost Nearly $500 Million on the Web Last Quarter” here elicited a happy quack from us in rural Kentucky. The article includes a snippet of Microsoft’s financial report. With two red lines, TechCrunch makes clear the challenges that Microsoft faces in the Web search and advertising sector. Forget the fancy wordsmithing in Microsoft’s announcement. The numbers are clear. In the three months ended in December 2007, Microsoft lost $247 million on revenues of $863 million. In the three months ended in December 2008, Microsoft losses rose to $471 million on revenues of $866 million. Microsoft lost more and lost market share. Remarkable. Google, on the other hand, increased its lead in Web search and reported an increase in revenues, but a slight drop in profitability. Can Microsoft close the gap? In my opinion, which I expressed to a crowd of unbelievers at a pretty small search conference in the fall, it’s game over. These numbers support my assertion.
Stephen Arnold, January 24, 2009
Ah, Ha, Guha: Semantics Are Coming
January 23, 2009
One of my three or four readers pointed out that Google Watch here ran “Google CEO Hints at Semantic, Contextual Search” here. What’s interesting is that the pundits and mavens are finally realizing that the GOOG wants to be the Semantic Web. It is old news. The core technology was disclosed by Google in February 2007. I covered it in detail in Google Version 2.0. And in 2007 BearStearns’ recycled some of my information in an analyst’s note that dived into the financial implications of the Google Semantic Web play. If you want to know the nitty gritty of the Google Semantic Web play, snag a copy of Google Version 2.0 here. The study, published in mid 2007, remains timely. There’s a reason I chose this cover for the monograph. That’s a black panther that’s tough to see clearly. Apt metaphor for Google’s play in the Semantic Web space in my opinion.,
Stephen Arnold, January 23, 2009
Fast Changes: Ancient Norse Myth Becomes Reality
January 23, 2009
Fast Search & Transfer was the “Google of Scandinavia.” Its engineers–among the best in the world. The leader, Dr. John Lervik, ranked as an equal to the wizards at Autonomy, Endeca, Google, and Yahoo. He was–metaphorically speaking–a modern day version of the Norse god Thor.
Thor was the god of thunder. As a god, Thor was pretty impressive. His mistress carried an iron cutlass and was skilled in karate. Thor’s eyes (which I think meant vision and understanding) flashed lighting, er, allegedly flashed lightning since I have never seen Thor to check this out myself. Thor had everything going for him until he set out from his house in Thrudheim (maybe today’s Trondheim, the legendary place of might) to kill Jormungand, the Midgard Serpent. I think the idea is that the snake is a bad guy and Thor has to kill this creature. Short version: snake wins.
Is this Norse myth about to be reenacted? When I was in high school, I wondered how the weird stuff in myths could have been true. Now, the resignation of John Lervik (the Thor of search), may be off on a mission to kill his own Midgard Serpent. I wish him luck. I think myths have corollaries in our world.
Thor prepping for his battle with the Midgard Serpent. Source: Linsdomain.com
Mr. Lervik appears to have exited the company with which he has been closely identified for more than a decade. That’s a long time in the real world. It’s the same time that Google has been around. As Google rose after yesterday’s financial results, Microsoft Fast’s prospects appear to have dipped down.
I wonder, “Is their a connection between these two opposing curves?” What are the reasons for the departure of a high profile search wizard like Mr. Lervik? Here are my thoughts, gathered as I gaze across the murky pool of mine run off and snow melt here in Harrod’s Creek, Kentucky, half a world away from the land of Thor and the Midgard Serpent.
Reasons I thought of include:
- The police curiosity about Fast Search & Transfer’s math skills appears to be one factor.
- The realization that Fast Search & Transfer’s technology was not the answer to some of Microsoft SharePoint search’s woes was another, making it desirable for executives to leave after a specified period of time.
- Then there’s the Microsoft’s own financial performance, which looks anemic next to Google’s on some yardsticks’.
- Autonomy’s surgical acquisition of Interwoven, yet another example of Autonomy out flanking Fast Search.
Maybe, maybe, maybe.
I remember Mr. Lervik as the person who sold Fast Search’s advertising business to Yahoo to make Fast Search one of the leading players in enterprise search. When this decision was made, Google moved the opposite direction; namely, let’s do online advertising. The Google revenue trajectory has been up. The Norwegian search company’s revenue trajectory has been down relative to Google’s. Now, with this shift in leadership in my opinion Fast Search may have reached its nadir.
You can read Digi.no’s take on this here. My Norwegian is not so hot, but I think the headline runs along the line that “Lervik Throws in the Towel.” The pundits and teenage search mavens are starting to jump on this interesting development. The new boss is Bjørn Olstad, a Fast executive who is a Microsoft Distinguished Engineer. The chairman of Fast Search, according to the article, is Keith Dolliver, whom I don’t know. Another take on this executive shake up is here.
Google Dethroned: Okay, Right after the Next Financial Report
January 23, 2009
Sarah Lacy who has a sketch of a stylish woman as a logo wrote “Google Dethroned?” here. Notice that the Beyond Search Web log has an image of a pest-infested goose as a logo. You can probably figure out that Beyond Search’s analyses are somewhat different from Sarah Lacy’s.
Before I read her interesting article, I looked at the news about Google’s financial results here. The CNNMoney.com headline is more explicit here: “Google Sales Jump 18%”. I am no Ivy League sophisticate. I swim in mine run off in Harrod’s Creek, Kentucky, for goodness sakes. The addled goose figured out that Google cranked over $5 billion in revenue and operating income of about 33 percent. As I read this summary, I thought about the GOOG’s having somewhere between 70 and 75 percent share of the Web search market. I also keep hearing about Google. There is a certain media fascination with what is generally perceived as a Web search and advertising company. That is a false impression in my opinion. Quack.
Ms. Lacy’s view, if I understand her as she intended, Google has been on top and is now in the process of falling to the rocks below the top of the hill. She identifies some signs of Google losing its Web supremacy. I can’t reproduce her list without spoiling your fun. I will mention one example: Hulu. The idea is that YouTube.com is facing tough competition from Hulu. Hulu’s video search is better. For me, the most interesting comment in her write up was:
The last three times I’ve looked for a video clip, I’ve spent half an hour scouring Google and YouTube only to get a flood of inaccurate results. Each time, I’ve tried Hulu as a last result, and found the clips within minutes. Hulu has better fields, parameters and user interface for searching videos than Google, which still appears to search for video the way it would for text. Hulu won its own game (content) and shockingly in video beat Google at its own game (search).
I have been involved in search for a long time. Could Ms. Lacy’s failure be related to her query itself? My hunch is that formulating the appropriate query may have more to do with finding what’s needed than the search system. I find the vendors’ video search systems less useful their than text search systems. However, when I watch the Beyond Search goslings looking for video using an Apple TV and a Mac Mini, I don’t recall any problems in findability for young goslings. I think my Beyond Search goslings have video search whipped. Maybe it’s age? Maybe it’s search query formulation? Maybe it’s what the user is seeking. Monday I asked about Johnny Cash and within seconds I was asked, “Do you want Hurt? Something from his days on the road with Elvis?” I made a chance comment and the YouTube system reacted faster than my addled goose brain. The results were spot on.
I do want to state that I don’t think any company can remain “on top” forever. Check out GM. There’s a good example of how long a former giant can exist even though it is irrelevant to me.
I think the flaw in Ms. Lacy’s and her informant’s argument is the assumption that Google is a Web company.
Wrongo. (That’s goose talk for really off base.)
Google has more in common with the pre break up AT&T than Netscape. Mavens who keep thinking of Google as a search and advertising outfit are in for a really big surprise. You can get more color on this surprise in my forthcoming Google: The Digital Gutenberg (Infonortics, Spring 2009). In the meantime, take arguments like those articulated in “Google Dethroned” as received wisdom that may not be 100 percent in line with reality.
Stephen Arnold, January 23, 2009
Microsoft-Nortel Parallel
January 23, 2009
Matthew Nickasch’s “Could Microsoft Become Another Nortel?” here is an article that would not have occurred to us in Harrod’s Creek, Kentucky. We don’t think too much about non search vendors and Nortel is not a player in the space we monitor. Microsoft is a search vendor. The company has Web search, various test search systems which you can follow here, Powerset (based on long standing Xerox technology), Fast Search & Transfer (a Web search company that morphed into enterprise search then publishing systems and now into conference management).
Mr. Nickasch picks up the theme of the layoffs at Microsoft that were triggered by the firm’s financial results reported in January 2009. For me, the most interesting comment in the article was:
Many large companies have much to learn from the recent events of Nortel, who filed for bankruptcy protection last week. Organizations with disjunct structures and complexly-integrated business functions need to critically evaluate their overall business structure.
I am not a fan of MBA speak, but I absolutely agreed with the use of the word “disjunct”. That is a very nice way of saying disorganized, confused, and addled (just like the goose writing this Web log). Nortel, once a giant, is now a mouse. A mouse in debt at that.
Three notions were triggered by Mr. Nickasch’s apt juxtaposition.
First, could this be the start of a more serious effort to break up Microsoft? Unlike Nortel (Canadian debt, government involvement, global competition), Microsoft could be segmented easily. Shareholders would get a boost from a break up in my view.
Second, what happens to orphans like big dollar acquisitions that have modest profile into today’s competitive enterprise market. I hear about SharePoint. I hear about Silverlight. I even hear about Windows Mobile. I don’t hear about ESP. In case you have forgotten, that’s not paranormal insight; that’s enterprise search platform.
Third, what’s the positioning of on premises software versus cloud software. Microsoft has quite a few brands and is at risk in terms of making clear what tool, system, service, and feature is associated with what product line.
In my opinion, I think Mr. Nickasch has forged a brilliant pairing. A happy quack to him.
Stephen Arnold, January 23, 2009
EntropySoft Adds Connector
January 23, 2009
EntropySoft has added another connector to its collection; this one is a Documentum eRoom connector. It enables read and write access to content stored in the EMC Documentum eRoom , a a complex application for dealing with unstructured content. EntropySoft’s goal with every connector — there are more than 30 — is to facilitate content access and interoperability, which facilitates search. I’ve written about them a couple times before, check out the Beyond Search archive. Taking the Documentum connector idea a step further, EntropySoft just inked a deal with Image Integration Systems to integrate its connectors into Image Integration’s DocuSphere line of business process management products. Using existing Image Integration contracts with enterprise content managers (Microsoft SharePoint, OpenText LiveLink, EMC Documentum, among others), EntropySoft will expand its opportunities for connector business. If you want to keep track of developments and connectors, EntropySoft has a newsletter. You can subscribe here. We do.
Jessica W. Bratcher, Jan. 22, 2009
Beyond Search, Public Relations, and News
January 22, 2009
One of my neighbors has been trying out her .60 GE M134 Predator. I don’t think she had depleted uranium bullets, and I haven’t seen squirrels or my neighbors’ dogs since her fusillade. My publisher of my forthcoming Google monograph sent me a joke germane to the weird world I inhabit with this Web log. Disclaimer and editorial policy for the Web log is here in case you are not familiar with the addled goose’s approach.
First, the joke, translated by my demanding, time obsessed editor whom I have known for more than 25 years. We’re still not pals, which provides some insight to my inherent likeability. He’s a gem, of course.
Joke: Consultants, PR People, SEO Mavens Embraced
A shepherd was guarding his flock in the middle of the countryside when, in a cloud of dust, he spied a Range Rover coming towards him. The driver — a young man in an Armani suit, Gucci shoes, Ray Ban sunglasses and Hermés tie — lowered his window and said to the shepherd: “If I can tell you exactly how many sheep there are in your flock, will you give me one of them?”
The shepherd looked at the young man and replied: “Certainly”.
The man parked his car, fired up his laptop computer, connected it to his mobile phone, surfed the Web to the NASA page, communicated with a satellite navigation system, surveyed the region, opened a database and thirty or so Excel sheets with complex formulae. Finally, he printed off a detailed report of around ten pages on his miniature printer and told the shepherd: “You have exactly 1,586 sheep in your flock”.
“That is accurate,” said the shepherd. “As agreed, please take one”.
He watched the young man make his choice and install the animal in the back of his car, then he added: “If I can guess your profession correctly, may I have my animal back?” “Why not?” replied the young man.
“You are a high-powered information consultant”, said the shepherd. “Absolutely correct,” came the reply. “How did you know that?”
“It’s easy. You arrive without having been asked. You want to be paid to answer a question to which I already knew the answer and, quite evidently, you know nothing at all about my business. Now, please give me back my dog”. (Translated by Harry Collier, Infonortics, Ltd. 2009)
If you didn’t “get” the joke. Here’s a visual aid, needed because 20 percent of the US doesn’t read at the high school level and most professionals under the age of 30 (what I call the trophy generation) are often happier with a YouTube.com video than a verbal challenge-response approach to a topic.
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Tip: the sheep is white. The dog who is ArnoldIT.com’s marketing consultant, is the caramel color animal. Both have similar ears which may confuse some of the trophy generation who think I am a publishing company.
Printed Blogs: Windfall or Pitfall
January 22, 2009
The New York Times “Publisher Rethinks the Daily: It’s Free and Printed and Has Blogs All Over” is available online here. I am looking at my dead tree version (business section, page B 3, January 22, 2009) that arrived at 8 30 am Eastern and contains the news from the last printed edition available in New York yesterday. The paper was in an annoying blue bag because the delivery service will not use the newspaper receptacle in front of my log cabin. The paper was wet because the delivery person thoughtfully dropped the paper in the polluted Bear Grass Creek that runs next to the road. But Claire Cain Miller and the New York Times’s editorial team thinks there is a future for traditional newspapers. Let’s recap:
- I am a paying subscriber and I don’t get access to the online service without jumping through hoops
- The paper is a day old
- The paper is wet.
A free newspaper adds one advantage: I can pick it up. I don’t have to get it from the creek.
Okay, now let’s look at the argument in Claire Cain Miller’s write up. If you want good news about the dead tree crowd, just stop reading. Claire Cain Miller is not just off base, Claire Cain Miller (whose name I put on a macro) is writing about a world that exists in the editorial and management meetings of dead tree outfits.
The angle is a start up called the Printed Blog. The founder, Joshua Karp, wants to reprint stories from Web logs and put them in paper form. For me the most important point was:
Advertisers will like the Printed Blog, Mar Karp said, because is its hyper local.
I agree that the notion of “hyper local” is a good idea. To Claire Cain Miller’s credit, there is a reference to the demised of free papers.
Now, let’s think about the economics of this venture:
First, the idea of using Web log content is not a new one. The twist is to put it on paper. Here are the costs of this idea: The decision to use a medium that uses paper (getting more expensive), requires physical distribution (labor and fuel costs are rising too), and has to be sold to advertisers wanting to hold on to what cash is in their pockets (expensive and possibly long sales cycle). Mr. Karp will have to be a very savvy manager to deal with these cost issues.
Second, putting a Web log post on paper is not much different from my printing out a Web log story via the Web. The advantage is that I have a fungible copy (maybe good for an attorney looking to chase an ambulance) but not much use to me. I have a netbook with WiFi and a lousy Verizon wireless card. These are better than dealing with paper.
Third, free on the Web versus free in paper makes more sense to me. First, I put AdSense on my Web log and get a few pennies from the GOOG every month or so. Free in paper contributes to trash and papers left on subways. Louisville has two free papers: LEO and one created in a me-too knee jerk by the Courier-Journal (owned by Gannett). Each issue gets smaller, and I find it incredible that restaurants tolerate the piles of free papers stacked in waiting areas for patrons to browse and discard.
Now let’s assume that The Printed Blog takes off. In a city like Chicago, how many free newspapers filled with Web logs will advertisers support? Don’t know. Well, no one knows. My hunch is that as soon as a me-too outfit jumps into this arena, the window of opportunity will slam shut. Costs are the killer. To get reach means more printing. More printing means more cost. More cost means higher ad rates. With Google creating a New York City service, how tough will it be for Google to slice out blogs about New York City and add them to its new service. If you don’t know about this new Google service, click here. So who will have lower hyper local costs. Google or The Printed Blog? (You could have read about this new Google service by browsing the Overflight service which is free, has ads, and is available in electronic form.)
Print media, like clay tablets, will exist. But like clay tables, I find them at flea markets and craft fairs with messages like “Home Sweet Home” and “In my kitchen, I’m the boss”. That may be where most dead tree publishers find their market in the 21st century.
Stephen Arnold, January 22, 2009
Google Leaves Sinking Newspaper Ship
January 22, 2009
Dozens of stories about Google’s killing its print ad resale business are buzzing around my newsreader. Like flies in Canberra, these stories won’t go away. I like Brian Womack’s “Google to Stop Selling Print Advertising Next Month” and you can read his run down here. For me one key factoid was that Google had signed up 800 newspapers. I didn’t know there were that many newspapers left in the US. Another comment I noted was:
Google said today it will continue to devote a team to newspaper companies, seeking ways to help them make money online.
Now that will work pretty well. I don’t think that there are too many Googley folks at the newspapers these days. Maybe this Google team will do what others have been unable to do; that is, revivify an industry’s business model that’s been unchanged since the first broadsheet appeared in London a couple hundred years ago. Googlers are good, but I don’t think Googlers are that good.
The Google role model?
My take is that Google is in a good position to cherry pick. And what will Googlers select at the newspaper bargain sale? I tackle this issue in my forthcoming Google and publishing study. Some preliminary information is here. I am not sure Google is a digital Mother Teresa, however. What do you think?
Stephen Arnold, January 21, 2009
Clearwell Systems: Going Mobile
January 22, 2009
Clearwell Systems will be adding new processing and management capabilities to its updated E-Discovery Platform. It will be announced at LegalTech NY on February 2, 2009. The “Mobile Clearwell” appliance will help companies at the enterprise level deal with varied legal, regulatory and investigative matters with a single search application. The changes are targeting litigation between foreign countries where laws and statues obviously differ. An e-mail from the PR firm handling the announcement said the platform “regulates the ‘processing’ of personal data, and the ‘transport’ or ‘export’ of data outside of the EU.” Read that as “keeps track of anything anyone does to search or organize e-mail or electronic documents.” As we all know, paper trails are very important to lawyers. The E-Discovery platform and new drop-in appliance are web-based, quick to install, and changes are reportedly streamlined to ensure compliance with those pesky rules governing legal action. Therefore, “Mobile Clearwell” can go to the (paper) mountain along with Mohammad. Keep an eye out here for the official announcement next month.
Jessica W. Bratcher, January 21, 2009
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