Big Data = Big Opportunity

Big Data is running wild, and everyone is noticing.  Peter Sondergard, SVP of Gartner Research, notes, "Intelligence about Information is the Oil of the 21st Century.”  He couldn't be more right.  The data about Big Data speaks for itself.  Corporations are producing 60 percent more data every year, and 80+ percent of all data is unstructured and, therefore, hard to find and use. Data comes in many more forms, too.  It's not just e-mail and Office documents; it's also video, social networking posts, mobile data, and a host of data types stored in SharePoint.

To combat the Big Data explosion, corporations are spending wildly on software products that treat the symptoms of Big Data problems.  By 2014, the US market for Big Data point software products is projected to exceed $9 billion, but problems will remain:

• Data growth exceeds the ability to process, deliver, and analyze information.
• Solutions are silos – not integrated – meaning that it’s very difficult to find the right information hidden in the data.
• Hidden costs are huge in hardware, services, human capital, and productivity. Spending on services is 2-3x size of software market.
• Analysis and decisions are sub-optimal.
• With every terabyte stored, business risk increases, not decreases.

The bottom line is, when it comes to Big Data, there has to be a better way. Corporations need a unified solution for finding, capturing, organizing, packaging, and delivering relevant information to decision-makers.  

There are three companies that claim to turn Big Data into a Big Opportunity through a unified Information Management platform:

• EMC, which acquired an Information Management platform called Kazeon in 2009 and owns multiple Big Data management software products that can feed Kazeon.
• Autonomy, which provides a broad suite of Information Management capabilities under the catch phrase "Meaning-Based Computing."  Autonomy is the market leader with $1 billion in revenues chasing Big Data opportunities.  Now it's clear why HP would want to buy them.
• StoredIQ, a growing, Austin, Texas-based company, that does what Autonomy and EMC do with a more lean footprint and much more scalability.  StoredIQ is a company to watch in 2012.

So what makes an Information Management Platform successful and unique? The enterprise IM Platform combines elements from three, successful product categories to create a new set of capabilities that are needed and necessary in major corporations:

1. Like search engines (Google, Bing): The core of the IM platform is the ability to process vast amounts of data and turn it into relevant information that is delivered to users in a form that promotes effective decision-making.  Google delivers a list of relevant webpage results based on a proprietary algorithm, while the Platform delivers a package of documents (or document subsets) based on decision-maker defined criteria.
2. Like network switches and management software (Cisco, BMC): The IM Platform manages the transport and delivery of information based on a defined set of rules much like switches and routers deliver messages across voice or wide area networks.
3. Like enterprise Business Intelligence for structured data (Cognos, Business Objects, MicroStrategy): The IM Platform enables decision-makers to define their information needs and then processes unstructured data from many sources to deliver summarized, actionable information.

How do you know whether an IM Platform implementation is successful? There are three, important benefits:

1. Much lower business risk across the board. 
2. Substantially lower data management costs.
3. Dramatically improved insight into important business problems and potential opportunities.

At the moment, it's hard to pick the long-term winner in the Information Management Platform market; however, a few things are for sure:

• It will become an imperative for large corporations and government agencies to implement enterprise-wide Information Management strategies.
• IM Platform products have the ability to turn Big Data problems into IM strategies that create Information Intelligence opportunities.
• The market for IM Platforms is likely to be among the fastest growing in Enterprise Software for many years to come.

HP's Real Big Gamble

Yesterday, Hewlett Packard had a no good, mixed up, horrible, very bad day.  First of all, HP had to admit that its foray into coolness - the TouchPad - was a massive flop.  There are over 200,000 unsold TouchPads sitting in warehouses at Best Buy waiting to be euthanized.  The parts are probably worth more melted down than the finished product, which lacks apps, customers, and friends.  This means that the slick webOS operating system that came to HP as a result of its $1.2 billion acquisition of Palm is an orphan, too.  Perhaps the development team can go hang out with the guys who are resurrecting the Commodore Amiga. 

But, wait, there's more.  HP is "exploring a spin-out" of its PC business, which is their way of putting a big, flashing/honking for sale sign that reads, "Take my PCs, please."  The PC business is pretty much an Asian thing now with the exception of Dell and HP (for the time being).  Most PCs either come from Asian up-and-comers, like Lenovo, Asus, and Acer, or are designed and built Asian Original Design Manufacturers, like Han Hoi Limited, also known as Foxconn.  More than likely, one of the Asian leaders or a company that wants a big market entry, like Samsung, will make a play for the business.  This is a good thing for HP since it's going to need all the cash it can get its hands on.

The third, most important, and least remarked on HP news from yesterday was their stated intention to purchase Autonomy - the UK-based provider of software products to manage massive amounts of unstructured data. Autonomy has been "cooking with gas" over the last few years - generating annual sales approaching $1 billion and net income of about 25 percent.  HP, which has an enterprise software business that it badly wants to grow, needs better software products, and Autonomy is - hands down - the leader in its market, which is big and growing fast.  This all sounds good except that HP will be using $10 billion of its $12.7 billion in cash reserves to purchase Autonomy.  That's a 70 percent premium over Autonomy's current market cap and 10x Autonomy's current revenues.  It better be worth it, because, unless HP sells that PC business for a really good price, it won't be doing any more big transactions for a while.  

At the end of day, HP hopes to look a lot like IBM and Oracle with software, services, and enterprise-level hardware targeted an enterprise-level customers for enterprise-level prices.  IBM has pursued this strategy since 2005 when it sold its PC business to Lenovo.  IBM has added IT security, business intelligence, and development tools software companies and seems to be on the lookout for more.  Oracle has pursued a similar strategy - buying up big competitors with great maintenance streams, like PeopleSoft and Siebel, vertical market software leaders in finance, healthcare, and manufacturing, and then capping their shopping spree with Sun Microsystems, which brought hardware and world-class J2EE knowledge and products.  While HP is spending most of its cash on one acquisition, IBM and Oracle are flush with cash.  Oracle has $16 billion sitting around and IBM, about $12 billion, which means both can take a run at just about anything that looks good.  

So here are the questions for HP:

• Is HP up to the task of competing 100 percent across the board with IBM and Oracle - given that it is five years behind the curve?
• Autonomy is dominant in one, fast-growing market, but one market doesn't create an enterprise software leader or even a strong challenger.  What are the next target markets and companies for HP, and can HP afford to play against its well-funded direct competitors?
• Is HP sure it will find a high value buyer for its PC business to help replenish its stash of cash?
• Is it Leo Apotheker's dream to add SAP AG, his former employer, as the crown jewel of HP's software business?  How could HP ever afford that?

At the moment, HP isn't answering most of these questions.  In the coming months, it will have to.

Did Google Buy Motorola Mobility to Fix a Strategic Mistake?

The proposed Google-Motorola Mobility transaction has created more fodder for columnists, industry analysts, and in-the-know bloggers than any technology event in recent memory.  The event itself is actually beating down the frenzy of a new iPhone launch, which is scheduled for September, October, or who knows.  Whenever it is, Apple will sell a lot of them.

Most of the columnists have concentrated on the strategic implications of the transaction.  Is it defensive with Google wanting to build up a stack of mobility-oriented patents?  Absolutely, but $12.5 billion is a lot to pay for protection.  Even the Mafia doesn't charge its most needy customers that much.  Is it offensive by giving Google the ability to build integrated products - like the iPhone and iPad - without creating "walled garden" Android operating system?  Sure.  Other providers can still use Android and modify its capabilities as they see fit.  Note, however, that HTC and Samsung can't be too pleased from a business perspective since Google is likely to give Motorola significant home court advantages over time.  From a legal perspective, HTC and Samsung have to be thrilled, because the halo from those patents covers them as well.

In reality, the best perspective I have seen is from Horace Dedui, an ex-industry analyst for Nokia, who wrote in a blog post for the Harvard Business Review that Google bought MMI to correct a big strategic mistake.  It's an interesting and provocative take on the transaction.  The debate over open vs. closed systems in IT and communications will go on forever, but there is no doubt that the most money has been made in technology when companies create large platform plays that customers purchase lock, stock, and barrel.

Over the last 20 years, there have been several major technology platform waves:

• ERP - SAP, Oracle, Baan, and PeopleSoft built integrated application suites that made large- and mid-sized companies much more efficient.
• Systems & Network Management - Large computing behemoths, like HP, and smaller companies, like Tivoli, built products to tame the data center chaos caused by the wide roll-out of client-server computing.  In this space, big companies, like IBM and CA, rolled up the smaller winners in order to maintain their dominant data center presence.
• The 3 letter acronym rush - In the late 90s and early 2000s, big CRM, SCM PLM, and DCM players emerged, including Siebel, Documentum, and Dassault Systemes, to fill in the gaps that ERP vendors weren't satisfying.
• Search & Cloud - Throughout the 2000s, an increasing percentage of corporate infrastructure and consumer activity moved to the cloud.  In business, Salesforce became the standard for managing go-to-market activities, and, to expand its market, Salesforce has opened up its platform to enable vendors and customers to build additional applications using its tools.  Google created the ultimate search engine and has built productivity, social networking, payment, and reference tools on top.  Dozens of other companies, including Amazon, Sharpcast, Concur, and Intuit, have built tools that make consumers and businesses much more productive.

The biggest platform play of all time was and is Microsoft Windows, which runs on close 90 percent of the world's desktop computers, and has enabled Micorsoft to create office productivity, data center, and development tools that are category leading.  Microsoft not only created incredible shareholder value for itself, but also made tens of thousands of other companies successful by providing a way for entrepreneurs and established companies to build on top of its platform and nurturing the best of its partners to greatness along the way.

The companies struggling to become winners in the Mobile Platform race want to be the Microsoft of the 21st century.  To become the Mobile Platform winner, companies like Google, Apple, Microsoft, and Nokia have to accomplish five things:

• Conquer the Market:  Building the platform is critical, but ensuring that tens of billions per year are spent on tools and applications that create a platform standard creates the leader.
• Transform behavior:  The Mobile Platform winner unifies things that didn't work together before, enhances existing tools and applications, or provides a much more functional replacement.  In mobile, examples could be - creating new types of computing platforms that replace laptops in corporations, changing the way consumers consumer media, or inventing new applications that improve personal and corporate productivity.  You see evidence of all three in the iPad ecosystem today.
• Create quantifiable benefits:  In the business world, customers have to chalk up a win – for example, more revenues, lower costs, better efficiency, or improved ROI/TCO.  Away from work, consumers have to save time and money and gain more personal enjoyment.
• Makes lots of companies rich, not just the platform provider:  The more big companies a platform spawns, the better.  Apple, Microsoft, or Google should have a hand in creating thousands of 7, 8, and 9 figure revenue companies that make founders rich and customers happy satisfied.
• Generates customer commitment:  On the corporate side, the Mobile Platform provider needs to lock in customers for 10+ years.  On the consumer side, buyers need to purchase the devices with the same mobile platform through every refresh cycle.  It should be painful to switch out dozens of applications and productivity tools.

Certainly, it appears that, in the battle for mobile dominance, Apple has a clear lead, not in necessarily devices sold, but in mindshare, wealth creation, and business and consumer satisfaction.  In MMI, hopes to gain the ability to ape Apple and become the platform leader for any company or consumer that isn't deeply attached to the Apple ecosystem.

While Apple has the lead, long-term platform winners tend to be very practical - rather than iconoclastic - companies.  Platform winners also tend to be relentless executors more than producers of the best products with all the best features.  There's an old adage that the best product only wins about 25 percent of time.  The rest of the time, the winners delivered the best "total package" of product, sales, support, brand image, and trustworthiness.

Therefore, in Mobile Platforms, look for a long-term battle with the three, obvious combatants - Apple, Microsoft, and Google - battling it out till the end.  The winner is hard to predict:

• Apple brings beautiful products, strong support, and reliability, but my-way-or-the-highway doesn't work for everyone.  A more "practical" Apple would be a bigger winner.
• Microsoft has access to 90 percent of the desktop computers in the world, a proven ability to work on something until it gets it right, and a highly practical, unflappable culture that is tough and resilient.  Plus, it has boatloads of cash and smart people.  It's never wise to bet against cash and smart people.
• Google knows the Cloud better than anyone, almost everyone uses multiple Google products, and it is a Cloud-only company.  It has to win to maintain and enhance its shareholder value.

Unlike other platform battles, the winner won't be chosen in the next one to two years.  The battle will go on longer than the typical land war in Asia.  It will be a wondrous thing to watch.

Google Buys Motorola Mobility - Creating Big Opportunities and Risks for Schmidt, Page, Brin, and Company

In the high tech world, M&A transactions happen all the time. Some are noticeable; others fall through the cracks. Today's Google buys Motorola Mobility deal potentially changes the landscape in computing and communications. You can be sure all the big players - Apple, Microsoft, RIM, Samsung, Microsoft, HP, and HTC - convened their war councils this morning to try to figure out how to respond.

Google gains a lot, including:

• A huge base of cell phone users who currently use Android phones and could buy another Android phone the next time around.
• Access to 24,000 thousand patents related to mobile phones, tablets, and TV set-top boxes. Yes, Motorola Mobility is the largest provider of set-top boxes for TV sets and a natural home for Google TV and YouTube products when Google gets its living room act together.
• An integrated product platform that now includes hardware, software, carrier relationships globally, and new relationships with cable and telco providers. Basically, Google gains the ability to ape Apple's approach to winning the hearts and minds of consumers.

Nevertheless, for Google, the risks are great:

• An awful lot of Google phones are made by Samsung, HTC, LG, and Sony Ericson, which may now be motivated to look for other OS options. Phone and tablet OS providers, like Microsoft, HP, and Intel, will be making a lot of phone calls and getting on planes in an attempt to shift market share.
• Google does dozens of acquisitions to per year, but this one is different. DOJ almost didn't approve Google's acquisition of DoubleClick a few years ago, and the market impact of this transaction could be greater. Google just gained major market share in multiple markets, and antitrust regulators will be analyzing this transaction every which way since Sunday. Don't expect quick approval of those Hart-Scott-Rodino filings.
• If Google expects to be litigious with Motorola's patents, it should think twice. The effect of lawsuits goes both ways. The 13 year long IBM antitrust suit, which IBM won, did great damage to Big Blue's can-do culture - causing it to be much less aggressive just as competition was heating up and the computing world was embracing PCs and client-server. DOJ's multiple pursuits of Microsoft crushed an innovative, entrepreneurial culture that created huge wealth not only for Microsoft, but also for thousands of its software and implementation partners. Microsoft will never recover.

Right now, Google is a great company that is run by and is all about the great work of its engineers. Their engineers give us AdWords, search rankings, productivity apps, social networks, mobile operating systems, an answer to almost any question in an instant, and, for some companies, access to customers that they would never find otherwise. Google is a daily productivity enhancer for a billion people and millions of companies around the world. The day Google is run by lawyers, not engineers, would be a sad, sad, day.