Efficient Frontier’s Startling Data about Online Advertising
July 21, 2008
M2, the UK news outfit, reported on a news story that appeared in Telecomworldwire. I tried to get the nested links to work and ran into latency issues. You will want to read the M2 story here. The key point in the item in my opinion was this statement:
According to the report, for every new dollar (USD) spent on search advertising in Q2 2008 versus Q2 2007, Google received USD1.10, while Yahoo! lost USD0.09 and Microsoft Live Search lost USD0.01. Google accounted for 77.4% of total search engine spending in Q2 2008, an increase of 2 percentage points over the previous year. Yahoo! lost nearly 2 percentage points of search engine share in that period, accounting for 17.8% of total spend, while Microsoft Live Search’s share remained relatively stable at 4.8% of search engine spending.
I had seen some of these data elsewhere. But this paragraph underscores the challenge Microsoft, Yahoo, and others in the online advertising game face in their “close the gap” efforts with Google.
Stephen Arnold, July 21, 2008
Scale Fail: Amazon and Pizza Team Engineering
July 21, 2008
My news reader is chock full of glowing embers of hostility this morning. It’s 8 30 am in rural Kentucky, where nothing works very well. Power failed again last night, but we have oil lamps and candles. Based on scanning a number of the Amazon S3 outage, Amazon may want to shore up Dr. Werner Vogels’ engineering team today. Shoestrings are great for keeping sneakers on my feet, but massively parallel distributed infrastructures needs a bit more than shareware, cleaver graduate students from the Netherlands, and technical reviews by PhD candidates from University of California computer science programs.
Amazon codes using teams large enough to be fed with one pizza. The idea is that a SOCOM-type unit is better than a rigorous engineering approach found at Boeing or even Microsoft for that matter. Amazon also allows its teams considerable latitude when solving problems. In fact, some teams can use whatever programming language or method that allows the team to solve the problem.
This is a burned pizza. Great ingredients, distracted chef. Source: http://msp71.photobucket.com/albums/i122/xoaleycat926ox/6298db24.jpg
This approach is fast, economical, and flexible. The downside is that if the fix triggers a fault elsewhere, the pizza team or teams must scramble to figure out what happened and why. If the previous team used some off beat language or clever method, then the fixers have to puzzle out the solution. Some folks love puzzles, but I don’t think Amazon Web Services’ customers are too keen on the approach, if I read some of the nasty grams this morning.
Om Malik’s “S3 Outage Highlights Fragility of Web Services” is among the best of the essays I reviewed. You can read his full post here. For me, the key point in his analysis was:
That said, the outage shows that cloud computing still has a long road ahead when it comes to reliability. NASDAQ, Activision, Business Objects and Hasbro are some of the large companies using Amazon’s S3 Web Services. But even as cloud computing starts to gain traction with companies like these and most of our business and communication activities are shifting online, web services are still fragile, in part because we are still using technologies built for a much less strenuous web.
I quite enjoyed Center Networks’ understatement aboiut the problem by reporting Amazon’s own comment:
Amazon S3 has “elevated error rates”.
I think this means crash or fail.
New Idea’s Founder Speaks, New Search Tools Service in Beta
July 21, 2008
New Idea Engineering is one of those specialized engineering firms that keep a low profile because the company is swamped with work. Miles Kehoe and Mark Bennett, the two founders of New Idea have deep experience with search and related technologies. Messrs. Kehoe and Bennett, , revealed in an interview for the Search Wizards Speak series the premise of their firm:
New Idea has from Day One tried to make our products and tools cross-vendor, but none of the major vendors has any incentive to do so until customers start objecting.
This is a clear statement of one reason why search vendors may not rush to resolve some issues for their customers. Now The problems with enterprise search are now becoming more widely known. New Idea’s founders explain why:
…The biggest problem we see in failed implementations is that the technology the customer picked is just not the right one for their environment. Corporate IT managers have to remember that a great demo is indistinguishable from product, but sometimes they seem willing to accept the vendor’s demo as a suitable substitute for their environment. There is also a mind set in many IT departments that search is either not critical – it’s still often a “check-box item” – or that it must be terribly easy…
You can read the full text of the interview here. Additional information about New Idea is here. The company has a useful Web log, and a new addition to the New Idea arsenal of useful resources is a listing of software tools that can help untangle some of the Gordian knots in an enterprise search deployment. An alpha version of the new service called Search Components Online is available here.
Disclaimer: I have provided some information about open source and shareware content transformation tools. Kudos to the New Idea Engineering team for creating a much-needed listing that can help those struggling with flawed enterprise search systems or consultants trying to help their customers get their system back online. I have linked to the company’s enterprise search Web log and cheerfully nabbed nuggets from the company’s informed postings.
Stephen Arnold, July 21, 2008
Microsoft’s Vietnam: Search
July 21, 2008
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
iPhone BI
July 20, 2008
Business intelligence is coming to the iPhone, the mobile device that delights those with tiny fingers and a youthful love of multi-function gizmos. Cliff Saran’s “Oracle and Salesforce Develop iPhone Business Apps”, published on July 11, 2008, pulled two announcements together that I had overlooked. One of my engineers has an iPhone, and I watch him surf the Web, make the occasional call, and send misspelled SMS messages to me about projects’ status. You can read Mr. Saran’s interesting article here.
Mr. Saran identifies two companies pushing into what is for me a territory near the BlackBerry frontier. First, he describes Oracle’s Business Indictors. The id4ea is that a hip CFO will use her iPhone to “to view the latest company financial trends and enables sales managers to receive alerts on sales performance and customer satisfaction issues.” You can learn more about Business Indicators here but the Oracle Web site is a sometimes snail-like machine. Be patient.
He also describes Salesforce Mobile for the iPhone. This application “allows Salesforce users to view and edit records (accounts, opportunities), log sales or service activities such as e-mails, phone calls, and in-person meetings, and assign tasks and events to colleagues.” More about SMiP is here.
From my vantage point in rural Kentucky, it is too soon for me to make a call about the iPhone’s ability to gain a foothold in the enterprise. But my engineer is, as he says, “likin’ it”. Also, I want to see how the Apple and Google mobile initiatives interact. Could a showdown be coming between Apple and Google with Research in Motion relegated to the scrub team?
Stephen Arnold, July 20, 2008
More Burton Group Wisdom about Enterprise Search
July 20, 2008
On July 17, I commented on the first part of an interview conducted by Margie Semilof. Her interview subjects were two consultants attached to the Burton Group. You can read my views and opinions about Part I here.
The second part arrived today with a publication date of July 14, 2008. Like the US snail mail service, express delivery can vary. You can read the full text of the interview with Guy Creese, a content management expert at Burton Group, a Midvale, Utah-based research company here.
I don’t get too excited about content management systems, and I am quick to point out that CMS has created more challenges than CMS has resolved. Software experts in CMS who want to make the leap into enterprise search or a closely allied field remind me of some of the MBAs at Booz, Allen & Hamilton when I worked there 35 years ago. These confident folks figured that with a half hour and some journal articles, no discipline was beyond their ken.
Now to the second part of the interview, which is titled “ABCs of Enterprise Search.” So, my first point is that the poetic convention is abandoned and the interview does not cover the sweep of enterprise search. The interview hits a handful of points, scattering generalizations to dazzle the interviewer.
Several points warrant comment.
First, Mr. Creese, CMS expert, narrows enterprise search to “finding content on your website as well as searching behind the firewall.” Hmmm. In a recent search installation, one of the key requirements was sending queries to a number of public Web sites, concatenating the results, and generating answers. The focus was not finding, but answering questions. Since finding systems have a dismal track record in user satisfaction, I am baffled by this definition.
Second, the interviewer asks a question about tools to normalize content so that a query goes across collections, data types, and sources. The answer given my Mr. Creese is about what’s happening in the market and what Mr. Creese calls segmenting the search market in “a Goldilocks fashion.” I have no idea how transformation and normalization tools relate to the Goldilocks reference. I ask myself, “What the heck is this CMS expert referencing.” Maybe the editor fouled up. Wacky stuff. In his answer, Mr. Creese suggested Microsoft could not develop Fast Search technology itself. I think Microsoft has tried to develop search technology and found that it was not competitive with products from Microsoft Gold partners and tried to buy a Cadillac. Fast is more of a Chevrolet Vega, and I think Microsoft has yet to confront the challenges the acquisition puts on Microsoft’s doorstep.
Third, the interviewer asks, “Who is in charge of enterprise search?” The CMS expert names people who could be in charge. The answer in most organizations is, “No one.” Search is a hot potato and responsibility moves around like a miniature poodle with fleas. I find that more organizations are using procurement teams because the single point responsibility does not work very well.
Fourth, the interviewer wants to know about Microsoft’s acquisition of Fast Search & Transfer. Mr. Creese, if I understand his answer, is that Microsoft wanted a migration strategy and a way to get around the document limit in SharePoint search. My understanding is that Microsoft itself may be confused about why it bought Fast Search & Transfer. The price tag was astounding. The Fast ESP installations require quite a bit of baby sitting to work. Integration so far consists of a Web part. One source in Norway told me that Microsoft is cleaning up the rumors swirling around Fast Search’s financial dealings. In short, the logic is clear in the Microsoft news releases. The reality is a trifle muddy.
Fifth, the interviewer wants to know what one gets with Fast Search & Transfer search technology. In my experience, you get a box of parts. Licensees have to have these assembled to deliver a system that meets specific requirements. As long as the resources are available, Fast ESP–as well as a number of other vendors’ systems–can perform many marvelous functions. When resources aren’t sufficient, well, there’s some trouble in paradise.
My thought is that the answers as published reveal a CMS expert who has not been deeply involved in multiple enterprise system projects. Just like the confident MBAs at Booz, Allen so long ago. It’s easy to talk; harder to be deeply informed.
Agree? Disagree? Help me learn.
Stephen Arnold, July 20, 2008
Google and the M Word
July 20, 2008
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
July 20, 2008
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
Google Learns about Ben Franklin’s Maxims
July 19, 2008
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.
Corporate Social Networks: Might Be Losers
July 19, 2008
On July 17, 2008, ReadWriteWeb.com let the cat out of the bag. Marshall Kirkpatrick’s essay “Corporate Social Networks Are a Waste of Money, Study Finds”. Please, read the full post plus the useful linked stories embedded in the essay.
The source of this insight is Edward Moran, a brain-for-hire at Deloitte Touche Tohmatsu, one of the remaining Big Eight largely untarnished by service scandals in the last few years. As a veteran of Booz, Allen & Hamilton, I am reluctant to embrace these types of studies without reading and studying them first hand. I am, therefore, not agreeing or disagreeing with the news media’s summary of the story or Mr. Kirkpatrick’s analysis.
I wanted to capture the most important point for me; to wit:
They [corporate social networks] are stupid.
Brilliantly summarized, Mr. Kirkpatrick.
I continue to be skeptical of social networks as a user. As a person who has worked in law enforcement and intelligence for short periods of time over the years, I think social networks are extremely useful. I don’t want to participate. I want to peruse the information about the topics, who reads what, who comments, on what, and other tasty info nuggets.
My view of social networks is probably not what the cheerleaders for social networks and collaborative systems had in mind for their products. That’s okay with me. Keep ’em coming. Pump up that usage. Every little clickstream helps.
Stephen Arnold, July 19, 2008
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