Google’s Planned IPO

The Economist has its say on Google’s plans for an IPO next spring, which could value the company at USD 15 billion or more:

To be worth the rumoured $15 billion for longer than it takes a bubble to burst, it will need to raise its profitability substantially. That means matching such internet stars as eBay (market capitalisation $37 billion), but without the natural-monopoly advantages that have made eBay so dominantthe classic network effect of buyers and sellers knowing they do best by all trading in one place. For Google to stay permanently ahead of other search-engine technologies is almost impossible, since it takes so littleonly a bright idea by another set of geeksto lose the lead. In contrast to a portal such as Yahoo!, which also offers customers free e-mail and other services, a pure search engine is always but a click away from losing users.

Yahoo!, in fact, will probably be the first to attack. It now owns rival search technologies including AltaVista, AlltheWeb and Inktomi. With the contextual-advertising technology of Overture, Yahoo! now has under its own roof all the elements of the business model that made Google such a success. It cannot be long before Yahoo! turns from a lucrative customer of Google’s into a powerful rival.

Even more frightening (especially to those who remember Netscape’s fate in the browser wars), Microsoft smells blood. It is currently working on its own search algorithm, which it hopes to make public early next year, around the probable time of Google’s share listing. Historically, Microsoft has been good at letting others (Apple, Netscape, Real) pioneer a technology before taking over, exploiting its dominance in desktop operating systems.

Google the new-age advertising agency makes money, but it is Google the search engine that builds the consumer brand which makes the ad agency powerful. Whenever users click on advertisements on Google’s own site, Google gets all the revenues. Whenever users stray to other search engines, even ones where Google has placed sponsored links, Google has to share the revenues with the site owner. As the competition between Google, Overture and others heats up, Google’s profit margins will fall.

Booming Data Storage

Business Week writes about the rapid growth in the demand for storage, nearly dobling every year:

Until recently, storage was predominantly a hardware business — boxes big and small (including so-called flash memory cards) still account for about $14 billion in annual revenue. But software that extends the life of such hardware is where the growth is now. Veritas says in each of the past four quarters its revenues have set records — not bad, considering the three-year tech slump. Market researcher IDC forecasts that the $5.7 billion software segment of the storage biz will grow at a 12% compound annual growth rate through 2007, vs. 4% for the more competitive hardware market.

Every supplier should benefit as storage becomes easier to install and use — but chief among the winners will be the sellers of storage software which, more than hardware, can deliver efficiencies in a flash.

By making software development easier, the new standard should also fuel innovation. The greatest potential for that may be in what’s already the hottest corporate segment: Storage resource management (SRM) software, which is used to control an organization’s entire storage operation. When a storage device becomes 80% full, for instance, this software can automatically delete certain files or move them elsewhere. Because of the potential savings in labor costs, “comprehensive storage management is the holy grail,” says Bill North, a research director at IDC.

Microsoft OneNote

WSJ (Walter Mossberg) writes about the a $99 product designed to help people take and organize notes:

OneNote was developed to help people jot down and collect all kinds of ideas and notes too random to fit easily into a traditional word-processor document or spreadsheet. These are the kinds of notes people might scrawl on a napkin, even if they are computer users. In fact, the code-name for OneNote was “Scribbler.”

Unlike a word processor, OneNote arranges pages into tabbed sections, labeled by topic. Each section can have many subsections and note pages. The pages can have blank backgrounds, or look like ruled notepad paper or grid paper. Whole sections can be color-coded.

OneNote is nonlinear, in the sense that each note you jot down can appear anywhere on the page, in its own little “container,” a box that’s normally invisible but can be made to show up in pale gray. Unlike in a Word document, the notes don’t follow each other line by line down the page. You can make one note appear in the upper left-hand corner, and the next one in the lower right-hand corner. And you can rearrange them.

Overall, I like OneNote. It’s a good idea well executed, especially for a first effort at Microsoft. A 60-day trial version is available for download.

Probably worth a try…

Fast Pace of Change

WSJ writes: “In the shrinking world marketplace, innovations that seduce consumers in one region become global trends with ever-growing speed. The process is shaking up the power structure of one industry after another, from computers to consumer electronics to automobiles.”

The cellphone industry highlights it more than any other:

Major new styles or technological advances in cellphones now appear somewhere in the world almost annually. Wired, well-traveled consumers seek out the latest thing, local retailers rush to offer it and service providers order it to boost revenue. The rapid changes in taste and demand have forced producers into a frantic race to keep up. The pressures have forced some makers to simply pull out.

Manufacturers that can jump on an emerging trend early can command higher prices and reap substantial rewards. Mobile-phone sales at Samsung rose 51% last year as color screens spread from Asia to Europe and the U.S. Companies that miss trends can also miss out on sales big-time. Nokia’s mobile-phone sales last year were nearly flat; Motorola’s rose just 4%.

Innovation

eWeek reports on comments made by SAP executive Claus Heinrich, who “stressed the importance of innovation and embracing new technologies”:

“Innovation is one of the key differentiators for the success of companies,” Heinrich said, adding that successful firms differentiate themselves by how well and how fast they can adapt technology to suit their business processes.

But such innovation really isn’t an option, he stressed.

“It’s no longer a question of can I innovate in order to become best in class, now it’s a question of can I innovate in order to survive,” Heinrich said.

The executive spoke of the real-time nature of business today and how business events can be accounted for right away, not having to wait until a nightly batch process is complete.

“You don’t have to model real-world data anymore,” Heinrich said. “The real world and the IT world are increasingly becoming one and the same.”

“The velocity and complexity of information have increased dramatically,” said Heinrich. “It’s not a threat, it’s an opportunity…to better serve customers.”

In the real-time, event-driven world, the RSS ecosystem can play a very important role.

Social Networking Sites

Social Networking is abuzz with excitement. Friendstrer has reportedly raised USD 13 million from Kleiner Perkins and Benchmark. WSJ takes a look at some are calling as a bubble:

Most of the social-networking sites operate on the same basic idea: connecting people to new people. In the case of Friendster, an individual — say person A — creates a personal profile and invites friends B, C and D to join with their friends; B accepts and brings in his buddies, as does C, who brings in her friends, and so on, enabling person A to meet friends of friends of friends. Friendster connects to “four degrees of separation,” Mr. Abrams, who founded Friendster, says.

“They’re obviously growing by leaps and bounds and spending no money on marketing,” says Mr. Doerr. “That they’re using very powerful human relationships to connect is really at the core of what makes this for me quite compelling.”

Ethan Watters, author of “Urban Tribes,” a recent book that examines friendships among young, unmarried urbanites, says Friendster has caught on with this group because the complicated tasks that confront them — finding a job, a friend, an apartment, a date or a used-car deal — are facilitated by connections.

Friendster’s users have eclectic aims, but some networking sites specialize. LinkedIn and Ryze.com, for example, focus on matters of employment. Tribe.net functions like online classifieds. (How better to buy a used car than from someone you know?) Meetup.com helped Democratic presidential hopeful Howard Dean with successful grass-roots fund raising. Emode gained steam as a place where users could take personality tests and then connect with like-minded friends.

Sites like Friendster have to be careful about how they grow, says Charlene Li, an analyst with Forrester Research Inc. in San Francisco. “The social networks are great as long as they are small,” she says. But “in order to have a business model, that requires scale, typically,” she adds. “Those two things are inherently in contradiction. It’s a fundamental challenge.”

TECH TALK: SMEs and Technology: 1:1 Computing

So far, few applications have tended to put the user at the centre. The focus has always been on technology. For example, the knowledge management applications have always focused on top-down approaches. We are saying it should be different put the individual at the centre, and then build things around. When done top-down, there is no incentive for the individual to contribute. In fact, it could even involve a disruption of the persons normal activities. This creates resistance. So, we need to think of it not as a knowledge management problem, but as a user productivity challenge. The question to be answered is: how can we provide the appropriate technology tools for users to do their work better? Along with the tools, the individuals also need training in how to use them a methodology, which may result in change of some habits.

Productivity enhancements works at two basic levels: individual and groups. The enterprise productivity is derived from the other two. The focus needs to be on enabling information flows and capturing the tacit knowledge within. This is what gives the organisation its memory and productivity. Analytics and Business Intelligence software will work at the organisational level.

The focus has to be on (a) ubiquity of technology, and (b) making people more productive via the applications. Small- and medium-sized enterprises (SMEs) have to genuinely believe that their investment in technology will go a long way in boosting their productivity. The progression is: individual productivity, group collaboration and organisational processes.

In this series, we have discussed various reference architectures: clients, servers, systems software, information management and business applications. The one unifying thread that flows across them is what I describe as 1:1 Computing. This needs to be seen at two levels: one business, one server; and one employee, one computer. The server has all the applications necessary for the enterprise, while the presence of a computer on every desktop creates the foundation for digital processes.

The business goal of 1:1 Computing should be to create a modernised business with a connected computer for every employee to improve productivity by 10% and business profits by 10%. It does so with two key sets of components: the Server, which provides the back-end infrastructure, and the client desktops, which provide the front-end interface. The benefits: reliable messaging and secured enterprise, an increase in individual productivity, improved information flow within groups which builds an organizational memory, and efficient business processes across the organisation.

Technology should thus provide the small- and medium-sized enterprises (SMEs) with complete integrated business systems needed to modernise, automate and simplify your business. A 1:1 Enterprise is identified by:

  • A scalable backend infrastructure which provides instant, personalised and cost-effective communications, secures the enterprise, and provides simplified administration of the technology resources.
  • A computer for every employee provides the foundation for personal productivity enhancements and creating the base for electronic capture and flow of information.
  • A suite of applications that powers an information refinery and ensures an intelligent, event-driven, real-time enterprise.

    A 1:1 Enterprise is what SMEs should aspire to be. The power of 1:1 does not stop with just the technology infrastructure. It extends to the way SMEs view their relationships with their customers and vendors. The 1:1 Computing infrastructure provides the foundation for the 1:1 Enterprise.

    Next Week: SMEs and Technology (continued)

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