I found this video on O’Reilly Radar by Brady Forrest. If you love pictures and technology, this will blow your mind.
Archives for August 2007
Charles Phillips recently emphasized Oracle’s SaaS leadership in an interview to Datamonitor:
Always on the look out for growth, Oracle believes the SaaS movement will provide it with two revenue opportunities, one from additional database sales and the other from direct income from services.
Charles also discusses the fact that Oracle was early in adopting the On-Demand model and has been doing it successfully for over 9 years. In another interview with AccountingWeb, Charles Phillips brings out Oracle’s successes in SaaS and in competing with SAP.
Dennis Howlett of AccmanPro called the claims outrageous leading to a debate on Enterprise Irregulars – and Josh Greenbaum who writes a ZDNet blog, in a rare feat, wrote the following response arguing for the facts in favor of Oracle and I quote him (with permission):
We’re not trying to preserve something from the 1970s like SAP is. As a company, we were in infrastructure first, then we moved into applications.
Correction: SAP is not preserving anything from the 70s (except some of its founders, who ARE relatively well-preserved. And Oracle was NOT an infrastructure company first: they started in database, moved to applications (in 89) and then went into infrastructure.
But the rest of it is actually not too outrageous.
Statement: We could not be reporting those numbers without competing among SAP customers. A significant proportion of our new customers are also SAP customers who we can now add value to.
Fact check. They are competing among SAP customers: The overlap has always been huge, (DBMS), and now it’s bigger with PSFT, SEBL and Hyperion on board. If he didn’t have SAP customers to sell (DBMS and middleware and appliactions) to he’d be out of business.
Statement: I know for a fact that there are far more SAP customers calling me now than there were three or four years ago.
Fact check: see above. He’s just bought into more overlap.
Statement: We have entire sales territories that are now just based on SAP accounts, our salespeople can make a living out of just selling to SAP accounts.
Fact check: Yup on that one too. Guess what, SAP has territories that are all ORCL too.
Statement: SAP doesn’t want that co-existence so they haven’t made it easy for their customers.
Fact check: I was only one of several analysts who discussed this issue with Henning earlier in the year. Field sales hasn’t been open to ceding CRM to SEBL and completing the rest of the sale with SAP, so they’ve been losing accounts that want SEBL and care less about the rest of the system.
Statement: SaaS is very database intensive,” acknowledges Phillips. “Normally people don’t want all their data resident on an on-demand product. So if Salesforce.com is hosting data for a large company, they are forcing them to create a replicated database behind the firewall, which means that companies are creating more and more databases.”
Fact check: The first part of this doesn’t wash with me, though I would love to hear Phil’s comments when he gets back. The idea that SaaS generates net greater DBMS sales seems bogus. But the very last statement is true regardless: companies are creating more and more databases.
Statement: Oralce is going to be the on-demand leader, seemingly using the terms on-demand and SaaS interchangeably.
Fact check: until very recently, ORCL and SFDC were the only two companies that stuck with the on-demand market, and, while the numbers were small, ORCL was a leader in number of customers doing OD. If you define leadership by number of users, no way. If you define leadership by vision, ORCL was definitely a leader in OD. As for mixing OD and SaaS, at the risk of annoying the purists, they are interchangeable, except by lexicographers and semanticists intent on splitting hairs.
Statement: We continue to make progress (on fusion).
Fact check: True. Can’t say more, or the NDA police will draw and quarter me.
Oracle is not only a leading SaaS provider but is also the database and middleware platform of choice for well known leading SaaS ISVs and several others that are not so well known.
(Note: Cross posted on http://blogs.oracle.com/zen also.)
As we go through this volatility and near madness in the equity markets triggered by mortgage crisis – further enhanced by hedge funds; I thought it would be good to go back and read what Warren Buffett said on this topic. And unlike my other posts, where I pontificate – I will simply quote Warren Buffett (comments added by me in italics):
How to Minimize Investment Returns (and what value hedge funds add!)
It’s been an easy matter for Berkshire and other owners of American equities to prosper over the years. Between December 31, 1899 and December 31, 1999, to give a really long-term example, the Dow rose from 66 to 11,497. (Guess what annual growth rate is required to produce this result; the surprising answer is at the end of this section.) This huge rise came about for a simple reason: Over the century
American businesses did extraordinarily well and investors rode the wave of their prosperity. Businesses continue to do well. But now shareholders, through a series of self-inflicted wounds, are in a major way cutting the returns they will realize from their investments.
The explanation of how this is happening begins with a fundamental truth: With unimportant exceptions, such as bankruptcies in which some of a company’s losses are borne by creditors, the most that owners in aggregate can earn between now and Judgment Day is what their businesses in aggregate earn.
True, by buying and selling that is clever or lucky, investor A may take more than his share of the pie at the expense of investor B. And, yes, all investors feel richer when stocks soar. But an owner can exit only by having someone take his place. If one investor sells high, another must buy high. For owners as a whole,
there is simply no magic – no shower of money from outer space – that will enable them to extract wealth from their companies beyond that created by the companies themselves.
Indeed, owners must earn less than their businesses earn because of “frictional” costs. And that’s my point: These costs are now being incurred in amounts that will cause shareholders to earn far less than they historically have.
To understand how this toll has ballooned, imagine for a moment that all American corporations are, and always will be, owned by a single family. We’ll call them the Gotrocks. After paying taxes on dividends, this family – generation after generation – becomes richer by the aggregate amount earned by its companies. Today that amount is about $700 billion annually. Naturally, the family spends some of these
dollars. But the portion it saves steadily compounds for its benefit. In the Gotrocks household everyone grows wealthier at the same pace, and all is harmonious.
But let’s now assume that a few fast-talking Helpers approach the family and persuade each of its members to try to outsmart his relatives by buying certain of their holdings and selling them certain others.
The Helpers – for a fee, of course – obligingly agree to handle these transactions. The Gotrocks still own all of corporate America; the trades just rearrange who owns what. So the family’s annual gain in wealth diminishes, equaling the earnings of American business minus commissions paid. The more that family members trade, the smaller their share of the pie and the larger the slice received by the Helpers. This fact is not lost upon these broker-Helpers: Activity is their friend and, in a wide variety of ways, they urge it on. After a while, most of the family members realize that they are not doing so well at this new “beatmy-brother” game. Enter another set of Helpers. These newcomers explain to each member of the Gotrocks clan that by himself he’ll never outsmart the rest of the family. The suggested cure: “Hire a
manager – yes, us – and get the job done professionally.” These manager-Helpers continue to use the broker-Helpers to execute trades; the managers may even increase their activity so as to permit the brokers to prosper still more. Overall, a bigger slice of the pie now goes to the two classes of Helpers.
The family’s disappointment grows. Each of its members is now employing professionals. Yet overall, the group’s finances have taken a turn for the worse. The solution? More help, of course.
It arrives in the form of financial planners and institutional consultants, who weigh in to advise the Gotrocks on selecting manager-Helpers. The befuddled family welcomes this assistance. By now its members know they can pick neither the right stocks nor the right stock-pickers. Why, one might ask, should they expect success in picking the right consultant? But this question does not occur to the Gotrocks, and the consultant-Helpers certainly don’t suggest it to them.
The Gotrocks, now supporting three classes of expensive Helpers, find that their results get worse, and they sink into despair. But just as hope seems lost, a fourth group – we’ll call them the hyper-Helpers – appears. These friendly folk explain to the Gotrocks that their unsatisfactory results are occurring because the existing Helpers – brokers, managers, consultants – are not sufficiently motivated and are
simply going through the motions. “What,” the new Helpers ask, “can you expect from such a bunch of zombies?”
The new arrivals offer a breathtakingly simple solution: Pay more money. Brimming with selfconfidence, the hyper-Helpers assert that huge contingent payments – in addition to stiff fixed fees – are what each family member must fork over in order to really outmaneuver his relatives.
The more observant members of the family see that some of the hyper-Helpers are really just manager-Helpers wearing new uniforms, bearing sewn-on sexy names like HEDGE FUND or PRIVATE EQUITY. The new Helpers, however, assure the Gotrocks that this change of clothing is all-important, bestowing on its wearers magical powers similar to those acquired by mild-mannered Clark Kent when he
changed into his Superman costume. Calmed by this explanation, the family decides to pay up.
And that’s where we are today: A record portion of the earnings that would go in their entirety to owners – if they all just stayed in their rocking chairs – is now going to a swelling army of Helpers.
Particularly expensive is the recent pandemic of profit arrangements under which Helpers receive large portions of the winnings when they are smart or lucky, and leave family members with all of the losses – and large fixed fees to boot – when the Helpers are dumb or unlucky (or occasionally crooked).
A sufficient number of arrangements like this – heads, the Helper takes much of the winnings; tails, the Gotrocks lose and pay dearly for the privilege of doing so – may make it more accurate to call the family the Hadrocks. Today, in fact, the family’s frictional costs of all sorts may well amount to 20% of the earnings of American business. In other words, the burden of paying Helpers may cause American
equity investors, overall, to earn only 80% or so of what they would earn if they just sat still and listened to no one.
Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius. But Sir Isaac’s talents didn’t extend to investing: He lost a bundle in the South Sea Bubble, explaining later, “I can calculate the movement of the stars, but not the madness of men.” If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole,
returns decrease as motion increases.
The Facebook platform debate continues to evolve with Dan Farber’s recent piece on Facebook, social capitalists and open networks and Wired’s very well thought out article Slap in the Facebook. The key question from my perspective is whether we consider the Internet as the platform or does Facebook or some other single entity come to dominate and become a platform. The history, and even the brief history of the internet, has examples of both – a platform owned by a single entity, and the internet itself as the platform with various platform players as parts of the whole:
- EBay: Ebay is a platform and is a pretty closed one. They recently had the chutzpah to even take on Google by banning Google Checkout. The APIs and other interfaces to Ebay allow you to enhance the functionality but does not offer any interoperability – you cannot cross list items on Ebay and some other auction site, etc.
- B2B: B2B Exchanges were an attempt to create a platform (remember Covisint) but eventually lost out to the Internet as the platform. Companies transact billions of dollars of business today on the B2B platform but they rely on protocols like RosettaNet and there is no single hub or platform that dominates.
- Instant Messaging: IM is an interesting case study as it started out as platform islands (Yahoo!, MSN, AOL) but over time and sometimes grudgingly they have learned to play well with each other. IM is still not an open network in the sense that I cannot create a new IM service and seamlessly connect to these proprietary IM networks.
- Email: Email is the ultimate open network. It has mostly worked great except the openness allows for spam and viruses to be spread using this platform. This security issue is a (valid?) excuse many platform players are using to keep their platforms closed.
What model is Facebook following?
So is Social Networking going the way of the EBay model, IM model or the Email model? Facebook today sits somewhere between the Ebaymodel and IM model. Under the Ebay model, Facebook does not enable to send messages back and forth to say MySpace – in fact, the messaging system could have been associated with an email address (@facebook.com) but is not. At the same time, unlike Ebay which blocked out Google Checkout, Facebook is allowing third-party applications to be shared and used in conjunction with its service – somewhat akin to the IM model. You still can’t use your Facebook id to interact with someone that does not have a Facebook account.
The Identity Problem
Its been suggested several times that the lock in and lack of interoperability comes from the fact that the identity systems of Facebook and other services are not open and standards-based. If Facebook and others like Myspace all adopted the OpenID or equivalent identity system, it would be so much easier for users to leverage multiple services without worrying about whether they are built by Facebook, LinkedIn or MySpace. Irregular friend Dennis Howlett describes the conversation on Facebook use within the enterprise on his ZDNet blog post.
Dan Farber comments on this lack of interoperability:
Today, people are mostly content, experimenting with the more civilized walled gardens that aggregate information and friends and bank all the personal data and social capital. The revolution won’t happen until social capitalists realize that the capitalists–Facebook, Google, MySpace (News Corp.), etc.– shouldn’t have too much control over their digital lives.
Who will bell the cat?
I feel that the masses will not be the one’s that change the status quo. It will be a game changer – a new Facebook or Google that will challenge the closed networks by offering a good enough service that is as good as MySpace or Facebook but is entirely open. In fact, Google could do this, and it would be much easier than you think. Here is what I would do if I were running Google social networks group (no, they haven’t asked me):
- Google has the email accounts of several million users.
- Google could analyze my email messages to all users – this is where having stored all my emails helps – to determine my top 100 contacts. Repeat this for every user and you have created a social networking graph for all Google users and many non-Google users too.
- Google could then instantiate GoogleBook (I own the copyright!) accounts for every Google user ready to be activated. All a user would have to do is select and unselect the suggested links and the account would be all ready to go. For non-Google users, a ‘claim this’ GoogleBook account would be created which they can claim by requesting an email be sent to their email address.
- Google Groups – like functionality would be available for each user i.e., I can send messages to all my contacts, share calendar, files etc.
- And since you are NOT required to ever create a gmail (Google) account with a new id, the users wouldn’t be forced to create yet another dan.farber@gmail/cnet/yahoo/etc.
Whether Google or some other new player does this anytime soon is anybody’s guess but many of us are getting sick and tired of creating multiple user id’s, checking messages on multiple inboxes and accepting the same 75 friends on 10 different social networks. For now here is my personal solution to the social networking problem – if you have my gmail address and my blog address, that is all that you need to reach me, read about me, see my pictures, date me, send me fan letters and/or harass me.
Update: Dan Farber has posted a response to this post on ZDNet and the conversation continues.
Update: Dan Farber reports that Google is planning a foray into social networking. I expect them to mine my email etc. for helping create my network – as I mention above – let’s see what comes out.