July 17, 2008 | Comments: (0)
Warning: Google is becoming Microsoft's evil twin
During its year of jousting with Microsoft, Google learned a lot from the software giant. Too bad it picked up Redmond's bad behaviors -- behaviors that are bad for both IT and the public at large.
The Google we all think we know is a kind, innovative, positive force. And because Google was the un-Microsoft, we have better tools for search, better platforms for e-commerce, and a whole new world of Web 2.0 applications.
But now it appears that Sergey Brin and the gang that will do no harm have learned the worst possible lesson from Microsoft: build a monopoly and they will come -- because they have to.
The deal to let Google sell its ads on Yahoo's Web site, and share an estimated $800 million a year in revenue, is bad for business, bad for consumers, and bad for IT. It will raise Web advertising rates by more than 20 percent. It ought to be stopped.
Just what we need: a new monopoly
Simply put, it will give Google/Yahoo a near monopoly on Internet advertising. Don't just take my word for it. Here's what Yahoo CEO Jerry Yang told Microsoft's top lawyer Brad Smith: "If we do this deal with Google, Yahoo will become part of Google's pole, and Microsoft ... would not be strong enough in this market to remain a pole of its own."
Normally, I'd be skeptical of a braggadocio story like this, but Smith recounted the conversation under oath Tuesday as he testified in front of a Senate committee looking into the proposed arrangement.
I think Smith is way too smart to perjure himself, but whether he is or not, there's a lot more evidence that the deal is anticompetitive. At the moment, Google's share of the search-related advertising market is about 70 percent, compared to about 22 percent for Yahoo, leaving just 8 percent for third-place Microsoft, according to SearchIgnite.
Remember, monopolies may be noxious, but they are not illegal in the U.S. What is illegal is abusing that power to the detriment of the market. Sound familiar? Of course. Microsoft used its monopoly in operating systems to unfairly stifle competition in the broader technology market.
SearchIgnite, which sells software that companies use to manage their search advertising, studied the Google-Yahoo deal and found that the cost to advertisers of a click from Yahoo's site will go up by 22 percent if Google sells the ads. (The report is available on SearchIgnite’s Web site, but you need to register for access.)
The analysis compared the cost per click of running the same keyword for the same advertiser in the same position on the page across both Google and Yahoo. It looked at 12 million clicks across 15,000 of the 20 million active keywords managed through SearchIgnite's technology.
We should note that the spike in rates only happens if Yahoo chooses to maximize its profits. But given the sad state of the company and the likelihood that
Microsoft will fail in its Yahoo bid, I'd say that's a pretty good bet. Would you really expect Yahoo and Google not to take advantage of a market share of 90 percent?
What you can do: just say no
Higher costs to businesses are bad enough, but the fallout extends further. As MSN loses more and more market share, Microsoft becomes less and less attractive as an e-commerce platform. Similarly, its tools for both search and e-commerce become less useful as they become less popular.
Let me explain. There's a well-known principle of economics called the network effect. In essence, a network becomes more useful as it attracts more and more users. The most obvious example, of course, is the telephone network. It wasn't very useful when almost no one had a telephone. And the Internet wasn't too useful when there were hardly any Web sites.
The same is true of tools and platforms. The more widely they are used, the more useful they become. The reverse is true as well. And while the impact won't be as dramatic as the likely price hikes, the weakening of Microsoft's e-commerce infrastructure will further discourage competition and stifle innovation.
It may seem weird to follow Microsoft's lead on anything that has to do with monopoly and freedom of choice. But the Yahoo/Google deal stinks. It isn't in our interest, and we should let Congress know it.
(Disclosure: I own a small number of shares in Microsoft.)
I welcome your comments, tips and suggestions. Reach me at bill_snyder@inforworld.com.
Posted by Bill Snyder on July 17, 2008 03:00 AM
July 03, 2008 | Comments: (0)
Does Microsoft have a new search strategy?
Can David help Goliath slay Google? Probably not. Microsoft is a couple of light-years behind Google in market share. But buying Powerset, a San Francisco startup focused on semantic search, is a smart move that will help the stumbling software giant get back in the game.
And in much the same way that competition from Mozilla and other upstarts has forced Microsoft to (finally) improve its Internet Explorer, Google (which has a nearly comparable lock on much of the search market) will be forced to improve its capabilities.
Before delving deeper into the story, here's a heads-up: Microsoft has hung out a "help wanted" sign for engineers skilled in search technologies. In the blog post announcing the Powerset acquisition, Satya Nadella, who heads Microsoft's search business, said, "We're buying Powerset first and foremost because we're impressed with the people there ... We're looking to add even more talented engineers to the San Francisco team to accelerate our shared progress. If you're interested in joining the team, drop us a line."
And if you're skilled in Ruby on Rails, you have a leg up, since Powerset uses the hot language for programming.
A smarter search
Comparing the smarts of Powerset's search to Google's isn't fair. Google has indexed much, if not all, of the Web. Powerset has "only" indexed Wikipedia -- a massive, but limited, task. Still, the premise of semantic search, developing algorithms that parse the meaning of a query, as opposed to the brute-force keyword matching of conventional search is promising.
Semantic search, by the way, is not exactly a synonym for natural language search. It's about how the engine analyzes the information on a Web page. The fact that a query can be framed more naturally is helpful, but not really the point. The real breakthrough is being able to understand text by using a series of powerful grammar engines, says Powerset CTO Barney Pell.
His company's core technology -- a natural language parser called the Linguistic Environment platform -- was licensed from the Palo Alto Research Center (the former Xerox PARC), one of the most fertile beds of technology innovation in the industry.
Here's how PARC explains the semantics problem: "'The company is ready to sell' is not easy for a computer to understand because the sentence is syntactically ambiguous -- is the company opening for business, or does it want to be acquired?"
Resolving this ambiguity requires understanding the context: Is the sentence in the middle of an article on mergers and acquisitions? Or is the sentence followed by "Its shelves are stocked with all the hot products"? This succeeding sentence is helpful only if the computer understands that the possessive pronoun "its" refers to the company, and that "stocked" and "products" are more relevant to selling goods than to being acquired.
Google doesn't work that way. And because it doesn't, its searches can be frustratingly inaccurate if the context is ambiguous. Adding natural language capabilities to Google (or any other search engine) is certainly possible, but would require a huge investment in time and money to re-index billions of Web pages.
A smarter strategy for Microsoft, too
Microsoft, of course, faces the same challenge. But having saved $46 billion by not buying Yahoo, Steve Ballmer and company can easily afford the effort. Indeed, it has little choice. The search market is really about ad dollars, and building a better search engine is the way Microsoft figures to snag them.
Despite a fair amount of effort and cash pushed into MSN and the search business, Microsoft is still an also-ran in that arena, with just 6 percent of all U.S. searches, compared to 20 percent for Yahoo and 68 percent for Google, according to Hitwise, a research firm. Aside from raw share numbers, Google has turned its name into a verb (as in "to Google"), the ultimate marketing coup. Putting a dent in that kind of mind share will be extraordinarily difficult.
Powerset will give Microsoft incremental advantages, and that's a good thing. But to really challenge Google in search, Microsoft will have to do something extraordinary.
One possibility: an engine that does a good job searching multimedia content, and not just tags or captions. There's already a developing market in facial recognition technologies used for law enforcement. A search engine that allows consumers to find an image or a song would be the game changer Microsoft desperately needs.
(Disclosure: I own a small number of shares Microsoft shares.)
I welcome your comments, tips and suggestions. Reach me at bill_snyder@inforworld.com.
Posted by Bill Snyder on July 3, 2008 03:00 AM
June 26, 2008 | Comments: (0)
SAP sticks its head in the ground
The contrast between old and new software couldn't have been stronger this week.
With his company beset by competition from Oracle, Microsoft, and Salesforce.com and with new technologies such as software as a service and cloud computing redefining how enterprises think about software, you'd think SAP's CEO would put on his visionary's hat and talk real strategy. You'd be wrong.
In an interview with The Wall Street Journal, Henning Kagermann airily dismisses software's new direction. His exact words weren't published, but here's the Journal's summary: "That's not to say there isn't a role for software from companies other than the SAPs and Oracles of the world. But Mr. Kagermann says that these systems will complement, not replace, traditional business software."
Days later, Salesforce.com CEO Marc Benioff announced that his company is making it easier to integrate Google Apps with the Salesforce platform. Benioff, and his "end of software" mantra can be annoying, but his company changed the game in enterprise software and keeps pushing out new ways of extending its platform. What a contrast to SAP, a company so stuck in the 20th century that its on-demand efforts (along with attempts to reach the small-business market) are pitifully weak.
Salesforce.com does Google
Salesforce.com released tools that allow developers using the SaaS pioneer's cloud-based development platform to integrate with data from Google services via Google Data APIs. Sure. That's an incremental step, not a leap. But it's yet another move toward the day when enterprises will make serious use of Web 2.0 mashups, instead of expensive, proprietary applications.
Ryan Boyd, of the Google Data APIs team, says in his blog that "the new toolkit enables server-to-server communication between the Force.com platform and your favorite Google Data APIs." What's more, developers can use Apex code to access the APIs for the Google's Contacts, Calendar, Spreadsheets, Documents, and Blogger tools.
Boyd says that "CODA, a European Financial applications provider, has used this new library to build a prototype Web application which enables an exchange of data between Google Spreadsheets and their CODA 2go financial application built on the Force.com platform." The end result is an easily made cost allocation spreadsheet -- an important accounting tool.
I'm not a programmer, but it certainly seems that these tools are easy to use. For example, Salesforce.com posted an entry on Monday showing that a developer can pull events from Google Calendar with only five lines of code.
Small but useful
Don't underestimate the power of small companies to develop applications that are useful for business.
A company called Astradia used this week's Salesforce.com/Google event to demo a couple of interesting apps, including one that makes it simple to create and save customer-ready quotes within Salesforce.com.
What's more, the ability to integrate existing business processes with new enterprise applications is an important selling point for a host of new players. For example, NetroMedia, a Canadian provider of streaming media services to customers in 77 countries, needed to update its CRM system. CEO Matt Carson told me that he looked at SAP, but found it too closed, too hard to customize for some of the specialized billing applications needed by his company. Instead, he opted for SplendidCRM, a tiny, open source provider.
Losing NetroMedia's business makes no difference to SAP's financials, of course, but the incident is a great demonstration of why the German software giant has gained no traction in the small-business market and is losing more significant business to Salesforce.com and other, more nimble players.
No, I'm not predicting doom for SAP. Google Apps are rather lightweight, of course, and SAP unquestionably delivers real value. But as businesses get evidence that Salesforce.com and other 21st century-oriented software providers can also provide serious business value -– at less cost and less aggravation -- Kagermann may be eating his words.
I welcome your comments, tips, and suggestions. Reach me at bill_snyder@infoworld.com.
Posted by Bill Snyder on June 26, 2008 03:00 AM
February 07, 2008 | Comments: (0)
Is Facebook the new Hula Hoop?
Social-networking sites are fun and even useful. But when it comes to attracting advertising dollars -- or the interest of IT mangers and other execs -- fugetaboutit.
Sure, social networking is hot. Most of us get more invitations to make a connection on sites such as LinkedIn or Facebook than we have time to manage. And you don't have to search very hard to find a news story touting the political impact of YouTube and viral marketing.
Not on IT's horizon
But if you worry that your enterprise will ask IT to support social-networking software and functions, you can relax -- at least for now. A recent survey of more than 2,000 IT and business professionals by The 451 Group and ChangeWave Research found that 54 percent were either unwilling or not very willing to use "social software" -- including blogs, wikis, social networking, and collaborative tagging technologies -- for business purposes. Just 14 percent said they were "very willing" to climb onboard.
The consumer-based business model is iffy, at least today
So maybe social networking isn't ready for business prime time, but surely there's a play around using the technology to reach consumers. After all, it seems that some days the news media are filled with nothing but stories about Facebook and other Web 2.0 trends.
But when it comes attracting ad dollars -- the lifeblood of the online world -- social networking lays an egg. In 2007, advertisers poured $21.4 billion into ads on the Web and within e-mail, and that number is expected to jump to $27.5 billion this year, according to eMarketer.com.
But social-networking sites attracted just $920 million in advertising revenue, an anemic 4.3 percent. And despite the buzz, the share in 2008 will grow to only 5.7 percent.
If anyone could cash in on a hot, online trend, it would be Google, which dominates online search and advertising the way Microsoft dominates the desktop. But on Google's most recent earnings call, CFO George Reyes said that his company's huge investments in MySpace and Orkut "are not monetizing as well as expected." Translation: We're not making money there and we're not sure when we will.
Google co-founder Larry Page said, "We're running lots of experiments," including better demographic targeting and "optimizing" the look and feel of the ads on social-networking site. Well, be careful what you wish for, Mr. Page.
John Verret, who runs the advertising program at Boston University's College of Communications, warns that "the fastest way to make YouTube and Facebook irrelevant to young people is to invade the sites with commercials, taking away what was once a place only for the kids." Indeed, when AOL started loading up its AIM service with ads, usage plummeted, Verret told me.
What's more, young people find online ads boring. "One reason why the ads may not be doing as well is because people tend to ignore them on social networking sites. There is so much other interesting content that the ads get overlooked," Susan Barnes and Neil Hare of Rochester Institute of Technology wrote in a recent research paper.
The freewheeling culture of the Web's social-networking sites also poses something of a dilemma for advertisers. "Social networks cannot guarantee a brand-safe environment. Advertisers don't want to see their ads displayed alongside illicit content, for example," says Karsten Weide, program director of IDC's Digital Marketplace: Media and Entertainment. "The dilemma for social networks is if they start to control what content users can post, they will lose popularity, which is what attracted advertisers in the first place."
Usually when I post a disclosure near the bottom of this column, it has to do with a stock that I own. In this case, I'll disclose that I'm one of those aging Baby Boomers who are a lot closer to retirement than to college. So maybe I don't get it. (I'm sure my daughters would agree.) But cool and fun don't necessarily translate into sales dollars, let alone profits. Nor do they necessarily translate into useful tools for business operations.
Freud is reputed to have said, "Sometimes a cigar is just a cigar." This may be an overstatement, but I'm tempted to say, "Sometimes a fad is just a fad."
I welcome your comments, tips, and suggestions. Reach me at bill_snyder@infoworld.com.
Posted by Bill Snyder on February 7, 2008 03:00 AM
February 04, 2008 | Comments: (0)
Microsoft Yahoo Deal Springs a Leak
In the arena of corporate combat, the well-placed leak is a venerable weapon. In the three days since Microsoft announced the blockbuster, $44.6 billion offer for Yahoo, there has been a spate of tasty tidbits leaked to the financial press.
The New York Times and the Wall Street Journal, great places to get attention when you want it, are running stories about Google’s efforts to undermine the deal.
I don’t actually know who’s doing the leaking, but my guess the calls are coming from inside Yahoo or investment bankers close to the action -- as well as Google. Both papers said that Google CEO Eric Schmidt on Friday (hours after the deal was unveiled) called Yahooer-in-chief Jerry Yang offering his “help” in keeping his troubled company out of the clutches of Ballmer & Co. Even more interesting, though, is this, and I’ll quote the Times story directly: http://www.nytimes.com/2008/02/04/technology/04yahoo.html?_r=1&oref=slogin
“People close to Yahoo said that the company received a flurry of inquires over the weekend from potential suitors. Some people inside Yahoo have even speculated about the prospect of breaking up the company. That could mean selling or outsourcing its search-related business to Google and spinning off or selling its operations that produce original content, these people said.”
Google doesn’t want this deal to happen. So anything it can do to muddy the waters with talk of possible anti-trust issues is on the table. Yahoo and its bankers have a vested interest in trying to push the $31 a share offer higher into the stratosphere. Google also has an interest in trying to make the deal even more expensive, just to weaken Microsoft, even if it can’t stop it.
It’s interesting that the co-author of the Times piece is Andrew Ross Sorkin, a terrific financial reporter who covers the world of deal makers and has great sources. It’s not hard to imagine an investment banker whispering in his ear.
I don’t think the deal is going to run afoul of the feds. Google has a huge share of the online advertising market, and would continue to do so if Microsoft and Yahoo combine. Conversely, a Google/Yahoo deal could easily be portrayed as anti-competitive.
That’s not to say that Microsoft’s offer won’t get scrutiny. The software giant has alienated a lot of people in Europe as well as here in the States, and the European Commission has been fairly hostile to Microsoft.
As to breaking up Yahoo, it’s hard to believe that the sum of the parts would be worth more than $44.6 billion. I think that Yahoo would be, if not crazy, ill-advised, not to jump at the offer. The company has problems. As more than one observer has said, "Take the money and run Jerry."
Meanwhile, there's some feeling on Wall Street that the deal may not be great for Microsoft’s shareholders. But that’s another story.
Disclosure: I have a small position in Microsoft.
I welcome your comments, tips and suggestions. Reach me at bill_snyder@inforworld.com
Posted by Bill Snyder on February 4, 2008 12:36 PM
November 05, 2007 | Comments: (0)
Google Mobile Platform = ISV Heaven
If it were as hard to develop applications for a PC as it is for a cell phone, we’d still be back in the DOS era. There’d be far fewer ISVs, a relatively small number of broadly popular applications and an Internet that was still the plaything of scientists and command link geeks. And the multi-billon online advertising industry probably wouldn’t exist.
That bleak picture is why today’s unveiling of Android by Google and its more than 30 industry partners is so exciting. Sure, there’s a bleak history of industry consortiums talking much and delivering little, but there’s a huge incentive for Google to make this happen.
A truly open platform for the cell phone will encourage the development of innumerable applications, many of which will support advertising. And serving ads, of course, is one of Google’s core strengths.
Some people may be disappointed that there was no introduction of a gPhone. But that’s not important. If Android, an open source platform, is successful, the hardware will follow.
As reported by IDG News Service, the open-source platform will have a complete set of components, including an operating system, middleware stack, customizable user interface and applications.
If the platform turns out to be free, or at least very cheap, it could certainly reduce the cost of powerful cell phones, and make them even more popular with consumers. There will be a trade off for consumers however: a lot more ads.
Android will pose an interesting challenge to Apple and its iPhone, to Nokia and to Microsoft, all companies with a very different approach to mobile devices and software.
In general, I haven’t been impressed with Google’s efforts to challenge Microsoft in the arena of productivity applications. This effort, however, does impress me and it merits a good deal of attention from investors as well as developers.
Posted by Bill Snyder on November 5, 2007 10:56 AM
October 31, 2007 | Comments: (0)
A War That Google Isn't Winning
With Google crossing the $700-a-share threshold, it’s hard not to be euphoric. But wait a minute, says Trip Chowdhry, of Global Equities Research: “Google is not winning the platform war.” And that could be a serious stumbling block in the road to long-term supremacy.
First of all, Chowdhry is NOT saying Google is in serious trouble. But what he is saying is this: Becoming a platform is not easy. You’ve got to have the developers (the ISVs that is); and right now Microsoft, not Google has them.
Here are some stats he presented in a note to clients this morning:
• Total developers in world: about 8 million, probably only 3 million are “real” developers. The others are testers, release engineers, occasional fixers/maintenance programmers
• Out of 3 million “real developers” MSFT has an exclusive lock on about 1.5 million. Oracle, SAP, IBM, and other ERP folks have a lock on total some 1 million developers. “These guys are doing enterprise development, not the consumer web.” So we are left with about 500k developers.
• These 500,000 developers “are targeted by every wannabe platform” vendor -- including both SaaS Enterprise companies and Web2.0. On the enterprise side, there’s Salesforce.com, Netsuite, Workday, Adobe, and Nokia. On the consumer side there’s Yahoo!, eBay, Amazon.com, Google, Facebook and Bebo.
Remember, Chowdhry is not talking about employees. Google has no problem hiring as many as it needs. But ISVs are another story, he says. “Microsoft has the strongest monetization model. Google does not.”
For ISVs, he says, “Google is a concept. Microsoft is reality.”
Is Chowdhry right? Too early to tell, but given the hysterical runup in Google’s share price, it’s certainly worth considering.
I welcome your comments, tips and suggestions. Reach me at bill.snyder@sbcglobal.net.
Posted by Bill Snyder on October 31, 2007 12:32 PM
TOP STORIES
ADDITIONAL RESOURCES
- Application Grid: Oracle's Vision for Next-Generation Application Servers and Infrastructure
- Do you have the power to resolve technical issues with one call?
- Take control of your content- leverage Microsoft SharePoint
- Four Steps to Disaster Recovery and Business Continuity Using iSCSI
- Document Management 2.0 - Web-based Collaboration and the Road to Compliance
- Content Management Integration - The Triumph of the foot soldier
