Category: Innovation

Extending the knowledge graph

Big data takes baby steps on our desktops

Google’s latest search changes – introduced by Search Senior Vice President Amit Singhal – are another development, or baby step as Amit would call it, in making data more useful for us.

The flood  of data that’s washed over us since the web arrived has left most of us befuddled. Increasingly, a basic keyword search just hasn’t been enough to find the information we’re looking for and we’ve had to trawl through pages of irrelevant information.

One of the aims of Google’s new features is to make data more relevant to a user – so if someone in the US types “Kings” into Google, they will be given details of the Los Angeles Kings hockey team or the TV series “Kings”.

Those details will include snippets of information about the topic. It could be the teams venue or the cast of the TV show. For tourist locations it could be some basic facts or transport information.

Amit is particularly proud of integrating tourist information and flight details into search and Gmail which indicates Google is beginning to leverage its buyout of the ITA travel booking network last year.

Google’s treatment of data reflects what’s happening with other services. At the recent Australian Xero conference and in an interview with MYOB executives, it’s been emphasised how knowledge is being aggregated to give customers and users better, more useful results.

With Google’s knowledge graph we’re seeing the realisation of what big data can do, there’s many baby steps ahead but there’s a lot of potential.

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Are IT workers the new loom weavers?

Transition changes hit the technology industries once again, and many aren’t happy.

“There are IT workers who can’t put food on their table,” complained an industry representative at an outsourcing conference.

It’s true – there are hundreds of once well paid project managers, technicians and support staff staff who can’t get work in their industry as some tasks go offshore and others are supplanted by new technologies.

None of this is new, we only have to think back to the heady days of the Dot Com boom when any punk with a basic knowledge of HTML could pull down six figures a year.

Just like the loom weavers of the 17th Century who became the Luddites, the HTML coders of 1998 and the project managers of 2008 have had a short period of affluence before been overtaken by change.

It’s something that today’s hot shot coders should keep in mind, bubbles burst and technology changes.

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So you think services are easy?

The differences between service, hardware and software businesses shouldn’t be understated.

ZDNet columnist Ed Bott is possibly one of Microsoft’s closest followers and among the few to defend Windows Vista, Ed though can’t be faulted for doing the hard yards including reading Microsoft’s stock market10-K  filings.

In their most recent filing, Ed finds Microsoft has used the word “service” 73 times as opposed to 44 appearances last year.

A key phrase in the filing is “a growing part of our strategy involves cloud-based services used with smart client devices.”

This is consistent with the hands on previews of Windows 8 which Microsoft have been giving journalists over the last few months. Something that leaps out is the integration with online services; something that both Google and Apple have also been pushing.

What should worry investors is that moving into services isn’t easy. Service businesses are far more labour intensive and, as a consequence, far less profitable.

Despite having relatively low labour costs, cloud computing services are problematic as many sectors have been commoditised, which is the genius of Salesforce in establishing a profitable niche.

The fat margins Microsoft are used to in their core software business can’t be replicated in the cloud based markets, which is one of the reasons why customers are switching to the cloud.

Microsoft’s problem is shared by telecommunications companies who are finding their cloud offering don’t generate the same ARPUs — Annual Revenue Per User — that they’ve become accustomed to in the mobile phone market. Which means pain for executives whose KPIs are tied to historical performance.

For Microsoft, the problem is compounded by their simultaneous move into hardware with the Surface tablets. Meaning the company’s has to deal with two significantly different business models to the ones they are used to.

Again Microsoft aren’t alone in this, Google is having similar problems adjusting to the hardware market though its acquisition of Motorola Mobility.

Integrating hardware with services and manufacturing isn’t impossible, we only have to look at Apple for how a company can succeed in that space although most managements struggle with the very different demands of each sector.

During the 1980s we saw the rise of the “all business is soap” philosophy where MBAs and management consultants preached that the challenges of running a business were the same regardless of whether you sold cleaning products, soft drinks, computers or automobiles.

Those folk were wrong. Most famously the Australian media company Fairfax hired as CEO a business school professor who preached this philosophy and managed to ignore the rise of the Internet, the echoes of the failed McKinsey ideas haunt Fairfax over a decade later.

While its possible for a software company to succeed at services or hardware, the magnitude and complexity of the management challenge shouldn’t be understated. Both Google and Microsoft will be defined by how well their leaders succeed.

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Closed data doors

It’s time to reform government.

“Sydney now joins global cities including London, New York and Hong Kong that also have public transport on Google Maps” boasted Gladys Berejiklian, New South Wales minister for transport, last week that Sydney’s complex and confusing public transport system will now appear Google’s mapping service.

The minister neglected to mention the other 400 cities that already offer this service including Perth, Adelaide and Canberra in Australia. What’s more concerning is the attitude of public servants and governments towards access to what should be freely available data.

It’s difficult to think of anything less innocuous than public transport timetables yet access to the data is carefully guarded by most Australian governments under the claim of ‘Crown Copyright’.

Underlying the idea of Crown Copyright is all the information held by governments is the property of the state – or the monarch in Australia – rather than belonging to the people. This is a great example of governments and the law living in the 18th Century which gives a modern perspective of what the US founding fathers were thinking of when they wrote their constitution in 1787.

This refusal to make data available is not the attitude of any single government, the Victorian government notoriously refused access to fire information during the tragic 2009 bushfires and Google are still negotiating to add Melbourne’s public transport information to the Maps service.

‘Open Data’ is a concept that many agencies pay lip service to, as do many politicians while they aren’t in government, but in practice information is a precious resource which should be hoarded and hidden.

In the public service itself, information is power – your position and status with an agency is directly proportional to the knowledge you possess and the contacts you can hoard. This attitude spills over into the way services are delivered, or not as the case may be.

For startup businesses, this hoarding of data hurts local industry – with transport timetables application developers have to negotiate on a case by case basis for data access meaning that only big companies with plenty of resources are able to get hold of the information.

The tragedy is government are trying to encourage smaller developers and startups. New South Wales had its Mobile Concierge program but these well meaning initiatives fall down when agencies won’t open their data.

It’s time to scrap the idea of Crown Copyright and the philosophy that all government data is the property of the public service, or the monarch of the day. Certainly there are plenty of areas where it isn’t in the public interest to release confidential information but bus timetables are not one of those areas and there are plenty of laws already in place to protect that sensitive data.

Like many things in our political and legal sectors, thinking is stuck not in the 1980s but in the 1780s. Maybe it’s time to grab our politicians and their learned lawyer friends and drag them by their horse haired wigs into the 21st Century.

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Eating the Old Man’s lunch

Optus’ purchase of Eatability is ironic given Fairfax’s and Telstra’s failure with Citysearch.

Optus today announced the purchase of restaurant review site Eatability for $6 million.

Eatability is one of the services that’s destroyed the business models of both the phone directory business and that of newspapers.

Thirty years ago the Sydney Morning Herald launched its Good Living section and it became the way people went found where the good places were to eat.

Diners wanting to make a reservation at the hip eating places being reviewed in Good Living picked up the phone book.

Now they do neither, they go to web sites like Eatabilty or Yelp where they get reviews, contact details and everything else they need about the venue.

Which killed the advertising revenues that newspapers and phone directories depended upon.

The sad thing is both the newspapers and Yellow Pages could have owned this space. Citysearch was setup by Fairfax to address the online market and it was sold to Telstra when the newspaper chain struggled to make it work.

Citysearch today languishes neglected and nearly forgotten under the Sensis umbrella. Optus now owning Citysearch’s biggest local competitor which must bring a hollow laugh to those involved in the early days of Fairfax’s digital experiment.

Whether Eatability thrives under Optus remains to be seen, but it illustrates just how incumbent strengths like telephone directories are being eroded in the online world.

Old men have to start moving quickly if they don’t want upstarts eating their lunch.

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Creating a fresh view for online commerce

Andable provides a platform for time pressed creative entrepreneurs to sell their work.

When you’re running a part time business and holding down a full time job, selling is difficult and its hard to find the time to setup websites.

Online marketplace Andable provides an outlet for creatives and those entrepreneurs juggling full time jobs. The site’s mission is to be “an online marketplace where you can discover extraordinary things to buy and sell.”

The problem for those passionate entrepreneurs busy making things is they don’t have time – and often lack the skills – to sell their works. Co-founders Rupal Simian and Melissa Dean decided they would set up an online marketplace to help those businesses.

Central to Andable’s service is the ability for these small businesses to tell their stories. Most of the service’s merchants are part time businesspeople who hold down full time jobs.

Andable’s name comes from compressing “willing and able” and the site lets micro businesses list their products for free with a 5% commission from sales. Payments are handled through PayPal who they work closely with.

For sellers to qualify for a listing, they have to meet at least one of Annabel’s FRESH criteria; Fairtrade, Reused, Eco-friendly, Supporting local business or Handmade.

An interesting thing about Andable is how 10% of the sale goes into a Kiva microfinancing project. After six months that loan is repaid – Kiva boasts a 99% repayment rate – the 10% is rebated to the merchant.

Since the service’s launch in July, two investments have been made with Mel and Rupal looking at completing 600 loans by the end of their first year’s trading.

A month into operation, Andable has close to 200 shops including ranging from hand crafted jewellery, vintage lightboxes and hipster homewares. Sellers are based around the world from Germany and Indonesia through to Byron Bay and Fremantle.

What’s interesting about Andable is how we’re seeing different online marketplaces appearing to cater for different markets. For businesses, this means it’s becoming easier to get your products to market.

The challenge is to get attention in a marketplace that’s saturated with advertising and information. Platforms like Pinterest, eBay and Andable are ways motivated customers can find businesses.

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Writedowns and triumphalism

Sometimes headlines don’t tell the full story

The contrast between Microsoft’s and Google’s results released on Thursday attracted a lot of interest – for the first time in twenty years Microsoft posted a quarterly loss with Google’s profits continue to grow.

While there’s no doubt Microsoft are challenged by the effects of their lost decade and bad decisions made in that time, but the business itself is still extremely profitable.

Microsoft’s posted loss is due writing down 6 billion dollars in their aQuantive investment, an attempt to compete with Google in the online ad placement space.

Despite a six billion dollar writedown, Microsoft only posted a 500 million dollar loss showing the business is still making over 5 billion dollars profit each quarter.

Google on the other hand posted a profit of 2.8 billion, up 11% from the same period last year.

But Google also has some nasty writedowns coming in the future – the purchase of Motorola will see some substantial write downs of that 12 billion dollar deal. It’s conceivable that a very big portion of that investment will have to be written off as well.

Right now, Google’s seeing some benefit from the Motorola acquisition as the phone company’s cashflow is covering a decline in online advertising revenue, a threat to Google’s core business.

It’s easy to be triumphant when the headlines proclaim you’re a winner, but it’s often worthwhile looking at the fine print to see the real story.

 

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