Edited transcript of BriefingsDirect[TM] B2B informational podcast on music search with Sun Labs, recorded Jan. 10, 2007.
Listen to the podcast here.
If you'd like to learn more about BriefingsDirect B2B informational podcasts, or to become a sponsor of this or other B2B podcasts, contact Dana Gardner at 603-528-2435.
Dana Gardner: Hi, this is Dana Gardner, principal analyst at Interarbor Solutions, and you're listening to BriefingsDirect. Today, a discussion with Paul Lamere, a staff engineer at Sun Microsystems Labs and principal investigator for Search Inside the Music.
This interesting research project is taking search to quite a new level. Instead of using lists of data about the music author, album, or composer, Search Inside the Music actually digs into the characteristics of the music, finding patterns, and then associating that with other music.
The possibilities here are pretty impressive. I want to thank Paul Lamere for joining us. Welcome to the show, Paul.
Paul Lamere: Hi, Dana. Thanks for having me.
Gardner: I had the opportunity to see your presentation face-to-face when I visited the Sun Labs’ campus in Burlington, Mass., back in December, 2006, and it really had me thinking for a few days after. I kept coming back to it and thinking, “Wow! What about this and what about that?” I thought it would be good to bring this to a wider audience and to use the medium of audio, seeing as it is so germane to this project.
Let’s get a little historical context. Tell us how you got involved with this project, why music, and how does that relate to IT in general?
Lamere: Okay, as you know, I work in Sun’s research lab, and our role as researchers is to be the eyes and ears for Sun. We’re trying to look out on the distant horizon for Sun to keep an eye on the interesting things that are happening in the world of computers. Clearly music has been something that's been greatly changed by computers since Napster and iTunes.
So I started to look at what's going on in the music space, especially around music discovery. The thing that I thought was really interesting is looking at Chris Anderson’s book and website, The Long Tail. You know, music is sort of the sweet spot for the long tail; the audio is a nice conveniently sized packet, and people want them. What we’re seeing right now is the major labels putting out 1,000 songs a week. If you start to include some of the independent labels and the music that's happening out on MySpace and that sort of thing, you may start to see more like 10,000 songs a week.
Chris Anderson said, “The key to The Long Tail is just to make everything available.” Now imagine not just every indie artist, but every kid with a drum machine in their basement and a PC putting on their tracks, and every recording of every performance of "Louie Louie" on the Web, and that same thing happening all over the world and sticking that on the Web. Now we may start having millions of songs arriving on the Web every week.
Gardner: Not to mention the past 800 or 1,000 years’ worth of music that has been recorded in the last 50 or 100 years.
Lamere: That’s right. So, we have many orders of magnitude, more music to sift through and 99.9 percent of that music is something you would never ever want to listen to. However, there is probably some music in there that is our favorite songs if we could just find them.
I’m really interested in trying to figure out how to get through this slush pile to find the gems that are in there. Folks like Amazon have traditionally used collaborate filtering to work through content. I’m sure you’re familiar with Amazon’s “customers who bought this book also bought this book,” and that works well if you have lots of people who are interested in the content. You can take advantage of the Wisdom of Crowds. However, when you have…
Gardner: They are working on the "short head," but not the long tail.
Lamere: That’s right. When you have millions of songs out there, some that people just haven’t listened to, you have no basis for recommending music. So, you end up with this feedback where, because nobody’s listening to the music, it’s never going to be recommended -- and because it’s never recommended, people won’t be listening to the music. And so there is no real entry-point for these new bands. You end up once again with the short head, where you have U2 and The Beatles who are very, very popular and are recommended all the time because everyone is listening to them. But there is no entry point for that garage band.
Gardner: Yes. When I use Amazon or Netflix and they try to match me up, they tell me things I already know; they haven't told me things that I don’t know.
Lamere: That’s right. Did you really need to know that if you liked The Beatles, you might like The Rolling Stones? So, we’re taking a look at some alternative ways to help weed through this huge amount of music. One of the things that we’re looking at is the idea of doing content-based recommendation. Instead of relying on just the Wisdom of Crowds -- actually rely on the audio content.
We use some techniques very similar to what a speech recognizer does. It will take the audio and will run signal processing algorithms over it and try to extract out some key features that describe the music. We then use some machine-learning techniques basically to teach this system how to recognize music that is both similar and dissimilar. So at the end, we have a music similarity model and this is the neat part. We can then use this music similarity model to recommend music that sounds similar to music that you already like.
Gardner: Yes, this is fascinating to me because you can scan or analyze music digitally and come out and say, this is blues, this is delta blues; this is jazz, this is New Orleans jazz. I mean, it’s amazing how discreet you can get on the type of music.
Lamere: Yes, that’s right, and the key is that you can do this with any kind of music without having any metadata at all. So, you can be given raw audio and you can either classify it into rather rich sets of genres or just say, "Hey, this sounds similar to that Green Day song that you’ve been listening to, so you might like to listen to this, too."
Gardner: Fascinating. So once we’re able to get characteristics and label and categorize music, we can scan all sorts of music and help people find what is similar to what they want. Perhaps they’re experimenting and might listen to something and think, “I wonder if I am interested in that,” and do all kinds of neat things. So, explain the next step.
Lamere: Well, there are lots of ways to go. One of the things that we can do with this similarity model is to provide different ways of exploring their music collections. If you look through current music interfaces, they look like spreadsheets. You have lists of albums, tracks, and artists and you can scroll through them much like you would through Lotus 1-2-3 or whatever spreadsheet you are using.
It should be fun; it should be interesting. When people look for music, they want to be engaged in the music. Our similarity model gives people new and different ways of interacting with their music collections.
We can now take our music collection and essentially toss it into a three-dimensional space based on music similarity, and give the listener a visualization of the space and actually let them fly through their collection. The songs are clustered based on what they sound like. So you may see one little cluster of music that’s your punk and at the other end of the space, trying to be as far away from the punk music, might be your Mozart.
Using this kind of visualization gives you a way of doing interesting things like exploring for one thing, or seeing your favorite songs or some songs that you forgot about. You can make regular playlists or you can make playlists that have trajectories. If you want to listen to high-energy music while driving home from work, you can play music in the high-energy, edgy space part of your music space. If you like to be mellowed out by the time you get home, you have a playlist that takes you gradually from hard-driving music to relaxing and mellow music by the time you pull into the driveway.
Gardner: Now, for those who are listening, I’m going to provide some links so you see some of these visualizations. It’s fascinating because it does look like some of these Hubble Telescope cosmos-wide diagrams where you see clusters of galaxies, and then you’re shown the same sort of visualization with clusters of types of music and how they relate.
If we take the scale in the other direction -- down into our brains and with what we know now about brain mapping and where activities take place and how brain cells actually create connections across different parts of the brain -- there is probably a physical mapping within our brains about the music that we like. We’re almost capturing that and then using that as a tool to further our enjoyment of music.
Lamere: That’s an interesting idea.
Gardner: Now, I’m looking here on my PC at my iTunes while we’re talking and I’ve got 4,690 items, 15 days of music, and 26.71GB. And it turns out -- even when I use shuffle and I’ve got my playlists and I’ve dug into this -- I’m probably only listening to about 20 percent or 30 percent of my music. What’s up with that?
Lamere: Yes, exactly. We did a study on that. We looked at 5,000 users and saw that the 80-20 rule really applies to people’s music collections: 80 percent of their listening time is really concentrated in about 20 percent of their music. In fact, we found that these 5,000 users had about 25 million songs on their iPods and we found that 63 percent of the songs had not been listened to even once. So, you can think of your iPod as the place that your music goes to die, because once it’s there, the chances are you will never listen to it again.
Gardner: I don’t want it to be like that. So, clearly we can use some better richer tools. Is that right?
Lamere: That’s right. Shuffle play is great if you have only a few hundred songs that you can pick and put on there, but your iPod is a lot like mine. It has 5,000 songs and it also has my 11-year-old daughter’s high-school musical and DisneyMania tracks. I have Christmas music and some tracks I really don’t want to listen to.
When I hit shuffle play, sometimes those come up. Also with shuffle play, you end up going from something like Mozart to Rammstein. I call that the iPod whiplash. A system that understands a little bit about the content of the music can certainly help you generate playlists that are easier to listen to and also help you explore your music collection.
So you can imagine instead of hitting shuffle play or just playing the same albums over again, you could have a button on your iPod, or your music player, that lets you play music you like. That’s something that is really needed out there.
Gardner: So, instead of a playlist, you could have a "moodlist." For example, I’m stressed and I need to relax, or I really want to get pumped up because I’m going to a party and I want to feel high-energy, or I have the kids in the back seat and I want them to relax. Your mood can, in a sense, dictate how you assemble a playlist.
Lamere: That’s right. Imagine that a few years from now, (it’s not hard to extrapolate with the new iPhone), we’re going to have wireless iPods that are probably connected to a cloud of millions of tracks. It’s not hard to imagine all of the world’s music will be available on your hand-held audio player in a few years. Try using shuffle play when you have 500 million songs at your disposal; you’ll never find anything.
Gardner: I don’t have the benefit of a DJ to pick out what I want either, so I’m sort of stuck. I’m not in the old top 40 days, but I’m in the 40 million tracks days.
Lamere: That’s right.
Gardner: Now let’s look at some practical and commercial uses. Professional playlists assemblers who are creating what goes into these channels that we get through satellite, cable probably could use this to advantage. However, that doesn’t strike me as the biggest market. Have you thought about the market opportunity? Would people be willing to pay another five dollars a month to add it to their service so they have all their music readily accessible? How do you foresee it commercializing?
Lamere: I’m sure you’ve heard of Netflix. They are probably one of the biggest DVD shippers and one of their biggest advantages is their recommendation engine. I’m not sure if you’ve heard about the Netflix contest. Any researcher who can improve their recommendation by just 10 percent will receive $1 million from Netflix. I think that really represents how valuable good recommendations are to companies trying to deliver Long Tail content.
Amazon has built their business around helping connect people with their content as well. The same things are going to happen (or are happening now) within the music world. There is a lot of value hooking up to people with music; getting them into the Long Tail.
Gardner: Can we easily transfer this into a full multi-media experience -- video and audio? Have you tried to use this with tracks from a movie or a television show? Is there an option to take just from the audio alone; a characteristic map that people could say, "I like this TV show, now give me ones that are like it?" Is that too far-fetched? How do we go to full multi-media search with this?
Lamere: Those are all really interesting research questions. We haven't got that far yet. There are so many interesting spaces to bring this -- for instance, digital games. People are interacting with characters, monsters, and things like that. Currently, they may be in the same situation 50 times because they keep playing the game over and over again.
Wouldn’t it be nice to hook up to music that matches the mood and knows changes or may even push the latest songs that match the mood into the games, so that instead of listening to the same song, you get new music that does not detract from the game? There are all sorts of really interesting things that could happen there.
Gardner: I saw you demonstrating a 3D map in real time that was shifting as music was going in and out of the library as different songs were playing. It was dynamic; it was visual; there were little icons that represented the cover art from the albums floating around. It was very impressive. Now, that doesn’t happen with a small amount of computer power. Is this a service that could be delivered with the required amount of back-end computational power?
Lamere: Yes. We can take advantage of all of the nifty gaming hardware out there to give us the whiz bang with the 3D visualizations. The real interesting stuff, the signal processing and the machine learning when dealing with millions of songs, is going to use vast computer resources.
If you think music is driving a lot of bandwidth now in storage and computation, in a few years when people start really gravitating toward this content-based analysis, music will be driving lots and lots of CPU cycles. A small company with this new way of content-based recommendation can rent time on a grid at a per-CPU hour rate and get an iTunes-sized music collection (a few million songs) in a weekend as opposed to the five or 10 years it would take on a couple of desktop systems.
Gardner: Interesting. The technology that you’ve applied to music began with speech. Is there a way of moving this back over to speech? We do have quite a bit of metadata and straight text and traditional search capabilities. What if we create an overlay of intonation, emphasis, and some of the audio cues that we get in language that don’t show up in the written presentation or in what is searchable? Does that add another level of capability or "color" to how we manage the spoken word and/or the written word? With my podcasting, for example, I start with audio -- but I go to text, and then try to enjoy the benefits of both.
Lamere: Right. These are all great research questions; the things that researchers could spend years on in the lab. I think one interesting application would be tied to meetings; work meetings, conference meetings, just like when you visited Sun last month.
If we had a computer that was listening to the meeting and maybe trying to do some transcripts, but also noting some of the audio events in the meeting such as when everybody laughed or when things got really quiet. You could start to use that as keys for searching content in the meetings. So, you could go back to a recording of the meeting and find the introductions again very easily so you can remember who was at the meeting or find that summary slide and the spoken words that went with the conclusion of the talk.
Gardner: Almost like a focus group ability from just some of these audio cues.
Lamere: That’s right.
Gardner: Hey, I’ve got something that you could take to the airlines. I tend to sit on planes for long periods of time and after my battery runs out, I am stuck listening to what the airline audio provides through those little air tubes. Wouldn’t it be nice if there were audio selections that were rich and they really fit my mood. This is a perfect commercialization.
Lamere: Yes, you can have your favorite music as part of your travel profile.
Gardner: This could also work with automakers. Now that everyone has found a way to hook up to their iPods or their MP3 equivalent in their automobile, the automakers can give you what you want off of the satellite feed.
Lamere: Definitely.
Gardner: There are many different directions to take this. Obviously you’ve got some interest in promoting Sun’s strategic direction. There must be some other licensing opportunities for something like this. Is this patented or are you approaching it from an intellectual property standpoint? If our listeners have some ideas that we haven’t thought of, what should they do?
Lamere: When you’re in the labs, the people who run the lab really like to make sure that the researchers are not tempted by other people’s ideas because it can make it difficult down the road. If people have some ideas they want to send my way, it’s always great to hear more things. We do have some patents around the space. We generally don’t try to exploit the patents to charge people entry into a particular space.
Gardner: Since this does fall under the category of search, there are some big companies out there that are interested in that technology. We have a lot of Google beta projects, for example, such as Google News, Google Blogs, Google Podcasts, and Google base. Why not Google Music?
Lamere: Google has two -- I guess, you may call them Friday projects -- on their labs site around music. One is Google Trends, and the idea there is they’re trying to track which music is popular. If you use Google’s instant messenger, you can download a plug-in that will also track your listening behavior. So every time you play a song, it sends the name of the artist and the track to Google and they keep track of that. They give you charts of top 100 music, top 100 artists, whatever. The other thing they have is a Music Search tailored toward music.
If you type in Coldplay or The Beatles, you’ll get a search result that’s oriented toward music. You’ll see links of the artist page and links to lyrics but, interestingly enough, they haven't done anything in public to my knowledge about indexing music itself. This is interesting because Google has never been shy about indexing.
Its mission is to index all the world’s information, and certainly music falls into that category. They haven't been shy about going up against publishers when it comes to their library project, where they’re scanning all the books in all the libraries despite some of the objections of the book publishers. But for some reason they don’t want to do the same with music. So, it’s an open question. But probably they’ll be announcing the Google Music Search tomorrow.
Gardner: At least we can safely say we’re in the infancy of music search, right?
Lamere: That’s right. I see a lot of companies trying to get into the space. Most of them are trying to use the collaborate filtering models. The collaborate filtering models really require lots of data about lots of users. So they have a hard time attracting users because until they get a lot of users, their recommendations are not that good. And because their recommendations are not that good, they don’t get a lot of users.
Gardner: The classic chicken-and-egg dilemma.
Lamere: Yes, it’s called the "cold start" problem.
Gardner: I firmly believe in the "medium is the message"-effect, and not just for viewing news or getting information. When I was getting my music through the AM radio, that characterized a certain way that I listened and enjoyed music. I had to be in a car, or I had to be close to a radio, and then I might avoid sitting under a bridge.
Then I had my LPs and my eight tracks and they changed from one song into an album format for me. We’re going back a number of years here. I’ve been quite fond of my iPod and iTunes for the last several years and that has also changed the way I relate to music. Now, you have had the chance to enjoy your Search Inside the Music benefit. How has using this changed the way you relate to and use music?
Lamere: That’s a good question. I agree that the media is the message, and that really affects our way of dealing with music. As we switch over to MP3s, I think listening to music has shifted from the living room to the computer. People are now jogging with their iPod and listening experiences are much more casual.
They may have access to 10,000 tracks. They’re not listening to the same track over and over like we used to. So I think over time music is going to shift back from the computer to the living room, back to the living spaces in our house and away from the computer.
I try to use our system away from the computer -- just because I like to listen to music when I’m living, not just when I’m working. So I can use something like Search Inside the Music to generate interesting playlists that I don’t have to think about.
Instead of just putting the shuffle play on The Beatles, I can start from where I was yesterday, and since we were eating dinner, let’s circle around this area of string quartets and then when we’re done, we will ramp it up to some new indie music. You still have the surprise that you get with shuffle, which is really nice, but you also have some kind of arc to the listening.
Gardner: So you are really creating a musical journey across different moods, sensibilities, and genres. You can chart that beyond one or two songs or a half-dozen songs into a full-day playlist.
Lamere: That’s right.
Gardner: Very interesting. Well, thanks for joining us, Paul. We’ve been talking with Paul Lamere, a researcher and staff engineer at the Sun Microsystems Research Labs in Burlington, Mass. We’ve been discussing Search Inside the Music, a capability that he’s been investigating. A lot of thoughts and possibilities came from this. Paul is the principal investigator. I wish you well on the project.
Lamere: Thanks, Dana. It’s been great talking to you.
Gardner: This is Dana Gardner, principal analyst at Interarbor Solutions. You’ve been listening to BriefingsDirect. Come back next time.
If any of our listeners are interested in learning more about BriefingsDirect B2B informational podcasts or to become a sponsor of this or other B2B podcasts, please fill free to contact Dana Gardner at 603-528-2435.
Listen to the podcast here.
Transcript of BriefingsDirect podcast on music search with Sun Labs. Copyright Interarbor Solutions, LLC, 2005-2007. All rights reserved.
Tuesday, February 06, 2007
Monday, January 29, 2007
Transcript of BriefingsDirect Podcast on Business Webs and Relationships-Oriented Business Search
Edited transcript of BriefingsDirect[TM] podcast on Business Webs and search with host Dana Gardner, recorded Jan. 9, 2007.
Listen to the podcast here. Sponsor: Zoom Information Inc.
SPECIAL OFFER: Listeners of this podcast are invited to try ZoomInfo's Business Web search and discovery benefits through a special free-trial offer. Just go to www.zoominfo.com/businesswebpodcast to obtain free access to Zoominfo's advanced business search capabilities.
Dana Gardner: Hi, this is Dana Gardner, principal analyst at Interarbor Solutions, and you're listening to BriefingsDirect. Today, a sponsored podcast discussion on the burgeoning "Business Web," the concept around how companies and commerce-focused organizations can discover one another and create partnerships, relationships, and alliances.
In doing so, they can exploit and leverage the search technologies around the Semantic Web and around the new opportunity for discovery of assets, resources and tacit knowledge. Joining us to discuss this is a representative from Zoom Information Inc., Russ Glass. He is the vice president of product and marketing at ZoomInfo. Welcome to the show, Russ.
Russ Glass: Thanks for having me.
Gardner: Also joining is John Blossom, president of Shore Communications and a noted analyst covering these topics. Thanks for joining us, John.
John Blossom: Thank you, Dana.
Gardner: Search has been around for a number of years. It’s been used for many -- I suppose you could say -- pedestrian purposes, and has increasingly been focused on business. But business relationships and finding partners is as old as business itself. Finding the right partners can make or break an activity, a go-to-market, an innovation, and any new process that’s brought to the market.
Now, we’re starting to bring these things together, perhaps a "Reese’s Cup" moment -- chocolate and peanut butter, if you will -- a whole greater than the sum of the parts. This seems to be particularly relevant now because we’re entering this Web 3.0 era, where semantic information is more readily available, and context scales massively, but also scales down to the long-tail or micro niches.
So, we want to talk about the need for aggregation, the fact that there is just a tremendous amount of information, even an overload, given what search is capable of. We also want to explore how this new semantic opportunity and how business relationships and the Business Web can be brought to bear on overload and discovery.
I want to start with you, John. Could you help us understand just how large this ocean is that we’re roiling about in with search. What is the need for aggregation, context, or pertinence when it comes to this huge trove of disparate business information that it is now available through the Web?
Blossom: Sure thing, Dana. The Internet as everybody knows is a growing database of information, accessible globally. We used to measure things in megabytes and gigabytes, then terabytes, then petabytes and exabytes. Basically, we just keep on putting the zeroes behind the ones, and we have untold quantities of information that are being produced every day around the world and are being published on the open Web.
What’s happening in today’s environment though is that businesses are getting much more intelligent about how they use the Web to present themselves as not just companies with shareware sites, but as publishers that provide in-depth information about their activities.
At the same time, individuals in business are learning how to expose themselves through that instrument also. Why did they bother? Well, our research shows that most people in business start on the open Web when they’re trying to solve a business problem and find business information, as opposed to going to internal subscription services. Certainly, subscription content is still a very important part of the equation, but many people, knowing that companies are out there publishing information on the Web, are going out to search engines to find the answers to their business questions.
So, search engines have become a natural first point for not just Googling individuals to find general information or haphazard information, but to solve real, specific business and sales problems in the process. In today’s environment, with so much information being published by individuals and institutions, search engines don’t necessarily provide the level of filtering that the average businessperson needs to be able to do solve problems effectively.
Gardner: All right, let’s move to Russ. Russ, it's a given that search is become a front-end for more and more business activities. When we’re thinking about exploring new opportunities in different markets, partnerships -- and given that more and more companies are in fact partnering and aligning themselves -- what can be brought to this opportunity and how can we then at the same time solve this overload issue?
Glass: When John talked about how much information is on the Web and how fast it’s growing, he nailed it right on the head. John Battelle calls it the "Database of Intentions." where the Web is now this huge repository for what companies are doing, what partnerships they’re signing up, who works within different companies, what industries they’ve worked in in the past, where they went to school, etc. If there was a way to tie all that together in an efficient manner and with a search interface that made sense for the business user, there’s tremendous value to get out of it.
At ZoomInfo, we’ve got a product called PowerSearch, which is essentially the front-end interface that’s targeted to the business user to be able to pull out these intentions: who’s working with whom, what are they trying to accomplish, how can I discover markets to use in my day to day business life?
Gardner: So, it really isn’t just about businesses. It’s about individuals, because businesses are composed of people. I might be dating myself here, but there was this time when your Rolodex was your standard. How good your Rolodex was indicated how good you were at partnerships and relationships and what your past business history was. That’s now given away to the Web, but again we hit overload. What’s being done technically to align business user needs with some an automated approach? In a general sense, are we talking about crawling, and is it traditional, or do we have to go a step further technically in order to accomplish this notion of a Business Web?
Glass: We need to go a step further. Obviously, crawling is a starting point for all search engines. You have to have a mechanism to get out there and actually find the information, but it’s not just enough to say, “Oh, these keywords exists out there.” For example, my name, Russell Glass, is actually two keywords in the eyes of the search engine, when Russell Glass is really an entity. I’m a person. You have to take that level of understanding beyond just crawling, to be able to say that I’m a person, I have certain attachments, I belong to certain organizations, I’ve worked for certain companies.
I have all these characteristics when you really get to semantics, the Semantic Web side of this. I have all this metadata, if you want to call it that, from a technical standpoint, which defines who I am. The next step for search is really to understand that metadata and use that to create a more useful and filtered experience for a business user. For example, if I am looking for people within a certain industry -- let’s say the healthcare industry -- I need to be able to tell that search engine that the results I want are people, and those people have to work within the healthcare industry. That search engine has to be a lot smarter than just bringing back certain keywords that are found out there on the Web.
Blossom: That’s a key point, and what you’re pointing out from my perspective, Russ, is that for many years people were talking about the Semantic Web and the need for metadata, so people will be able to do these kinds of searches. But the Web is not self-organizing in the way that it’s published. The information is out there and it can be extracted, but people are not publishing content with that structure in mind.
The technologies that are becoming more prevalent in this era, and that sometimes get bucketed into the label "Web 3.0," are about being able to extract that semantic structure from content that’s been published without semantics in mind. They provide the hooks that will allow specialized searches to go out there and provide semantic structure across a wide range of information, regardless of how it was initially published.
Gardner: John, let’s take a step back for a moment, and for our listeners benefit, give them a timeline of Web 1, Web 2 and Web 3. I’ll start with a very broad overview. Web1 was HTML content, pretty straightforward and basically a push, it was just, "Here’s a brochure" type of affair.
Web 2.0 is characterized a lot by relationships and user content discussion, give and take, bringing this more to the level of a village, but with massive scale but also massive niche or long-tail opportunity.
Help us explain now this next progression to Web 3.0, what do you mean by "semantic" and "Web," and what sort of tools can be brought in this newer era to align business interests and cut to the wheat and get rid of the chaff.
Blossom: It’s always dangerous to use labels like Web 3.0, especially when it’s so vague and undefined that Wikipedia has locked down the page for Web 3.0, and won’t even allow people to make an entry on it. What I think we can say safely is that everything old is becoming new again, through the advancement of technology on the Web. If you think of pre-Web information services, they were oriented around databases. Those databases were highly structured and you had indexes and needed specific words to be able to organize records in that database.
Gardner: You practically had to be a developer to know how to approach the database to get basic information?
Blossom: Absolutely. If you look at some of the interfaces that were available in early information products, such as Dialog and other databases of that sort, with a virtual programming language unto itself just to do a simple query. Then, along comes the Web, and what's now termed Web 2.0, and people said, “Well, let’s just not worry about structure too much, let’s put the information out there." There is enough intelligence in search engines for us to be able to find stuff that’s been pushed out there on the Web.
It was a huge step forward, when the search engines provided the ability for information to be aggregated in new ways without the structure of a database, but on a rather ad-hoc basis. Sometimes it was guided by popularity and sometimes by semantic structure, but whatever the combination, information was more easily aggregated from any number of sources regardless, of its structure.
Web 2.0 is probably best described as the read/write Web, where there is an increasing proportion of content that’s being pushed out by individuals as opposed to institutions. We have a broader mix of sources and a broader mix of information going out from a range of publishers. It has some default structure in it because of the standards that are being applied, but it’s still fairly loose information.
Gardner: At least those individuals are not only contributing content, but they also, in a sense, contribute ranking opportunity by voting with their attention, with their activity, and with their links, which information is relevant, and this helps codify into some categorization.
Blossom: Exactly, and the ability for people to be able to build up webs of links, to be able to indicate what’s important, provides a level of importance to semantics. That begins to highlight information more effectively to people, when they’re trying to figure out what’s relevant in a trendy topic.
Gardner: If it works for finding people who are interested in your baseball collection, your baseball card collection, then it might also help in putting together your business community or ecology as well.
Blossom: Absolutely. Business publications and corporations are all beginning to latch onto this idea and to use Web 2.0-style publishing to be able to reach people. We have individuals out there in business with Weblogs. We have CEO’s with Weblogs. We have PR departments with Weblogs. Everybody is pushing out and trying to engage the world in a conversation. Now, with all that information out there, the question is how we structure it. What we’re beginning to see in the Web environment is the use of more sophisticated content extraction technologies and analytics to be able to take those relationships and to present them more effectively to information systems.
So, to bring it back to what I was saying originally, we’ve gone back to trying to provide structure in our information, but with a much more sophisticated publishing environment than people used to have in standalone databases. Now, in effect, the entire Web has become a database because of the ability to structure information on the fly.
Gardner: Okay, so the best of the old and the best of the new. Russ, you’re in the position now of creating product and then bringing that product to market at ZoomInfo. What is it about this next step of the best of the old and the new that is exciting to you as a search product developer?
Glass: John made a key point -- when he was talking about how Web 2.0 was driven by the individual -- moving from totally unstructured information to a world where now users can start to give feedback. Businesses have started to follow the individuals' lead to Web 2.0, but they have then taken the next step because all that information is useful to a business only if it’s structured and if it can be efficiently incorporated into the business environment.
Businesses are really leading the drive toward these "Web 3.0" technologies, moving from unstructured to structured information. As a product guy in this space, that’s what excites me, because I think that companies like ZoomInfo, which are focused on semantic technologies, are going to find the most success in the business world in the short term, because the ROI is there. Businesses can make tremendous amounts of money in both the cost side and the top line by aggregating this information and using it effectively.
Gardner: It seems to me that this notion of a Business Web isn't really, "Let’s build it, and see who’ll come." This is really business responding to an opportunity, recognizing that they have need of finding an audience, of finding channels, of finding partnership, extending into new markets -- globalization. Help me understand the chicken and the egg here when it comes to the Business Web?
Glass: Sure. I don’t think we’re creating the Business Web. I think the Business Web’s already out there. It’s out there in the form of Websites and press releases and SEC filings and blogs and anything else with business content. What we’re doing is taking technology and making all of that information accessible in an efficient way. That’s really the next step, because as we’ve talked about already, there’s just too much information out there to absorb. It’s in too many different repositories, in too many different formats.
When we have something that can tie it all together in a way that makes sense to a business user who can then use it to define markets and find people within those markets and do competitive research on different companies within those markets, etc., that’s where the real value is going to be extracted from the Business Web.
Blossom: It's interesting that the sorts of problems that businesses are trying to solve on the open Web are very similar to the problems that they’re also trying to solve behind the firewall and their intranets and extranets. Even inside corporations, they have created many repositories of different types of information. Being able to unify that effectively with analytics-driven aggregation systems is key for their internal operations. Increasingly, businesses are seeing the open Web as an extension of their business operations. It’s just the matter of which IP routers are you going through to be able to extract business intelligence.
Gardner: Perhaps we have dual track here. On one hand, we’ve got progression toward the Semantic Web, but at the same time inside the firewall, as you point out, we’ve got a long-term progression toward the semantic enterprise. We’ve been using warehousing and mining business intelligence, and a number of other trends over the past 10 or 15 years.
Help me understand, John, how these come together. What is this "whole greater than the sum of the parts," when we apply the semantic enterprise to the Semantic Web?
Blossom: It’s the same problem solved in a different environment, although there are more structured databases inside your typical corporation. With the proliferation of departmental Web servers and Web 2.0 applications within the corporate environment, there’s not a lot of homogeneity in their internal information. When the corporations look out to the external Web, they are more open to the idea of this being a resource that they can use for business purposes, not just because of the tools that are out there, but because they understand this is the same sort of problem that they have had to solve internally.
There’s a greater openness to look at Web information as the same type of resource that they have available on a corporate basis, and they're more open to the idea of being able to transform it into a resource that has semantic structure and usefulness for enterprise-ready applications.
Glass: Think about it from the end user’s perspective. If I’m a businessperson and I need access to information, at the end of the day, I don’t really care where it comes from as long as I know the authority of the source, and as long as I’m able to quickly and efficiently use the information. Just make sure that it’s holistic, that I get as much information about the topics I’m looking for, and that it’s easy and efficient to use.
Blossom: Users in the corporate environment use open Web search engines as their first point to find information. The internal search engines that they have in the corporations are literally competing for attention with those. It only makes sense that those users are going to be very open to more sophisticated resources that are available to them on the Web.
Gardner: I suppose it boils down to, they want to know what they don’t know about what's going on out in the greater business environment.
Blossom: Absolutely. And, the Web itself is becoming the most efficient channel through which to communicate that information. There’s less need for the info-media ways of the past.
Gardner: Let’s drop down from a few thousand feet to the basement and get concrete here. Are there some examples of companies that have gone out -- perhaps beta customers for you at ZoomInfo -- and applied this kind of cutting edge innovative basis and had some payoffs?
Glass: We’ve got on the order of a couple of thousand customers that are using this technology now and getting bigger ROI out of being able to use this information that's just been gathered and display it efficiently from the open Web. Adobe is a good example. They use us within their field sales force. The problem they face is that their field sales are disparate. They look at a lot of different types of companies and a lot of different types of industries that all have different value props for using Adobe products.
A tool like ZoomInfo can define markets and really give a good holistic look at which companies play in a certain market space in a certain location. So, their field sales force has a good understanding of where they can go look for opportunities, all the way down to the specific person within the company -- whether it be the VP of marketing or whoever else would buy Adobe products.
Gardner: So you can take that notion of the Rolodex and just explode it. Not just shooting in the dark, but pinpointing the right people to talk to at the right time in certain companies. That gives you a much better chance of saying, “Aha, you’ve got a problem? I’ve got a solution.”
Glass: It’s a context. It’s understanding. Your Rolodex gives you a name in a company, but if you know that that person makes decisions about certain products, and you know that the person knows someone else that you already have as a customer, it really helps you be able to both warm the call, get yourself in the door, get your foot in the door, and then close the deal.
Gardner: If I'm selling and I find one company that’s a likely candidate for my universe, then I can apply the same criteria and probably come up with a bunch of similar companies, and then come up with an expanding universe of prospects.
Glass: That’s exactly right. It’s kind of like the crystal set. You need that one little crystal to form the entire large crystal. Once you know a single company in a certain area, you can pivot around that company and discover all the other companies that do exactly what that company does.
That’s all because of the way the Web works. Every company is out there trying to describe what they do. Having an intelligent technology that can take the metadata out of that, take the semantics out of that, and understand which companies are actually doing the same things is very powerful for business.
Gardner: I can apply that to sales and marketing prospects, looking for buyers, but I suppose I can apply the same approach of the Business Web to looking for partners, saying, "Here is a company that is doing something close to what I’m doing and there’s a natural affinity. Let me find all the other companies that could also potentially be in a partnership or a symbiotic relationship with me. Then, I'd have a whole new opportunity to expand my universe.
Glass: As we’ve all seen that in the Web and the hi-tech world today, "co-opetition" is the name of the game. You’re competing with companies, and at the same there are great efficiencies to working with them. If anybody has defined that, it’s Google. I don’t know of a single company that doesn’t have some sort of relationship with Google, even if it’s as simple as AdSense or using them to place ads on their content, but at the same time they’re often competing with Google for advertising dollars.
Blossom: What seems to be happening in the midst of this is that the Web is becoming a more effective tool over time to classify businesses than traditional industry classification schemes. The competitors I had three months ago are not necessarily the competitors I’m going to have three months from now -- or even today -- because business changes at the speed of light, as the Internet pumps information around the world and business strategies change on the dime.
In that sort of environment, it becomes more effective to be able to classify companies and individuals through semantics and relationships that are defined through Web content, than to rely exclusively on databases based on long standing industry classifications and formal relationships. Being able to get those webs of competitors and relationships right on the fly requires an environment like the Web, where that information changes every day.
Gardner: John, it seems to me there are some other mega trends that accelerate this. Globalization, we’ve mentioned. It seems that as companies go more to business-process outsourcing -- if they’re looking to employ services oriented architecture and software-as-a-service, it seems that its what wires and connects companies together becomes more important than having it all internal, doing it all yourself. Am I too far out here?
Blossom: Not really. There is a great example that Don Tapscott uses in his new book, Wikinomics. He talks about a gold mining company up in Canada that recognized all of a sudden that they had all sorts of potential deposits of gold, but they had no idea exactly where they were, and they wanted to get at them most efficiently. Their CEO happened to go to a seminar that was talking about open-source software and Linus Torvalds's development of Linux.
He said to himself, “Well, let’s open-source our functions." He put all of their normally secretive information about geology and mineralogy, mineral deposits that were on that property, and he put it out on the open Web and asked people to find the gold. He put out a little reward money. They got input from over 1,000 people, and doubled the yield of that property in just a matter of weeks.
Glass: Wisdom of crowds, right?
Blossom: The wisdom of crowds, which sounds a little bit frightening at times -- and at times it can be -- but the idea that corporations benefit most from wherever today’s most insightful people are at the drop of the hat, pushes people towards Web infrastructure, where they can collect that knowledge and wisdom as efficiently as possible in an open environment. That doesn't necessarily mean that they have business relationships with those people, but being part of that Web is becoming far more important over time than segmenting too much intellectual property behind the firewall.
Gardner: So, it sort of takes the notion of the knowledge economy a step further, that the coin of the realm is information in the right people’s hands at the right time?
Blossom: Absolutely.
Gardner: And search is a very powerful tool to bring that about. Well, great. This has been a good exploration of this notion of the Business Web. I was sort of fuzzy on it, and now I have a much better handle on it. Was there anything else that we needed to bring to the table for people to appreciate business Web? How about when this notion, still nebulous as it is, of Web 3.0 and the Semantic Web? Are we in the fifth or sixth inning of a nine-inning ballgame here, or are we only just in the first few minutes of this in terms of what’s going to be possible in the next few years?
Glass: We’re in the first few minutes. The Business Web and what's happening with tools like ZoomInfo is the first step. You can almost think of the Business Web as a microcosm for what's going to happen to the rest of the Web. This will be the first step toward a truly semantic type of search, where you can aggregate all this information and use the power of unstructured content to, as John said earlier, be able to recognize things on the fly, as they’re changing real time, and not have to rely on old categorizations and old information. The rest of the Web will head this direction, led by what's going on in the Business Web -- one big content nation comprised of individuals and institutions cooperating and collaborating to create knowledge that’s going to help all of us.
Gardner: That’s a high note to end on. I want to thank you both for joining us in this discussion of exploring the definition of a business Web, some of the tools that are available to explore that now, and what we can expect in the future. We’ve been taking this discussion to a new level with Russ Glass, Vice President of Product and Marketing at Zoom Information, and John Blossom, President of Shore Communications. Thank you, gentlemen.
Blossom: Thank you very much.
Glass: Thank you, Dana.
Gardner: This is Dana Gardner, principal analyst at Interarbor Solutions. You’ve been listening to a sponsored BriefingsDirect podcast. Thanks for listening, and join us next time.
SPECIAL OFFER: Listeners of this podcast are invited to try ZoomInfo's Business Web search and discovery benefits through a special free-trial offer. Just go to www.zoominfo.com/businesswebpodcast to obtain free access to Zoominfo's advanced business search capabilities.
Listen to the podcast here. Sponsor: Zoom Information, Inc.
Transcript of Dana Gardner’s BriefingsDirect podcast on Business Webs and relationships-oriented search. Copyright Interarbor Solutions, LLC, 2005-2007. All rights reserved.
Listen to the podcast here. Sponsor: Zoom Information Inc.
SPECIAL OFFER: Listeners of this podcast are invited to try ZoomInfo's Business Web search and discovery benefits through a special free-trial offer. Just go to www.zoominfo.com/businesswebpodcast to obtain free access to Zoominfo's advanced business search capabilities.
Dana Gardner: Hi, this is Dana Gardner, principal analyst at Interarbor Solutions, and you're listening to BriefingsDirect. Today, a sponsored podcast discussion on the burgeoning "Business Web," the concept around how companies and commerce-focused organizations can discover one another and create partnerships, relationships, and alliances.
In doing so, they can exploit and leverage the search technologies around the Semantic Web and around the new opportunity for discovery of assets, resources and tacit knowledge. Joining us to discuss this is a representative from Zoom Information Inc., Russ Glass. He is the vice president of product and marketing at ZoomInfo. Welcome to the show, Russ.
Russ Glass: Thanks for having me.
Gardner: Also joining is John Blossom, president of Shore Communications and a noted analyst covering these topics. Thanks for joining us, John.
John Blossom: Thank you, Dana.
Gardner: Search has been around for a number of years. It’s been used for many -- I suppose you could say -- pedestrian purposes, and has increasingly been focused on business. But business relationships and finding partners is as old as business itself. Finding the right partners can make or break an activity, a go-to-market, an innovation, and any new process that’s brought to the market.
Now, we’re starting to bring these things together, perhaps a "Reese’s Cup" moment -- chocolate and peanut butter, if you will -- a whole greater than the sum of the parts. This seems to be particularly relevant now because we’re entering this Web 3.0 era, where semantic information is more readily available, and context scales massively, but also scales down to the long-tail or micro niches.
So, we want to talk about the need for aggregation, the fact that there is just a tremendous amount of information, even an overload, given what search is capable of. We also want to explore how this new semantic opportunity and how business relationships and the Business Web can be brought to bear on overload and discovery.
I want to start with you, John. Could you help us understand just how large this ocean is that we’re roiling about in with search. What is the need for aggregation, context, or pertinence when it comes to this huge trove of disparate business information that it is now available through the Web?
Blossom: Sure thing, Dana. The Internet as everybody knows is a growing database of information, accessible globally. We used to measure things in megabytes and gigabytes, then terabytes, then petabytes and exabytes. Basically, we just keep on putting the zeroes behind the ones, and we have untold quantities of information that are being produced every day around the world and are being published on the open Web.
What’s happening in today’s environment though is that businesses are getting much more intelligent about how they use the Web to present themselves as not just companies with shareware sites, but as publishers that provide in-depth information about their activities.
At the same time, individuals in business are learning how to expose themselves through that instrument also. Why did they bother? Well, our research shows that most people in business start on the open Web when they’re trying to solve a business problem and find business information, as opposed to going to internal subscription services. Certainly, subscription content is still a very important part of the equation, but many people, knowing that companies are out there publishing information on the Web, are going out to search engines to find the answers to their business questions.
So, search engines have become a natural first point for not just Googling individuals to find general information or haphazard information, but to solve real, specific business and sales problems in the process. In today’s environment, with so much information being published by individuals and institutions, search engines don’t necessarily provide the level of filtering that the average businessperson needs to be able to do solve problems effectively.
Gardner: All right, let’s move to Russ. Russ, it's a given that search is become a front-end for more and more business activities. When we’re thinking about exploring new opportunities in different markets, partnerships -- and given that more and more companies are in fact partnering and aligning themselves -- what can be brought to this opportunity and how can we then at the same time solve this overload issue?
Glass: When John talked about how much information is on the Web and how fast it’s growing, he nailed it right on the head. John Battelle calls it the "Database of Intentions." where the Web is now this huge repository for what companies are doing, what partnerships they’re signing up, who works within different companies, what industries they’ve worked in in the past, where they went to school, etc. If there was a way to tie all that together in an efficient manner and with a search interface that made sense for the business user, there’s tremendous value to get out of it.
At ZoomInfo, we’ve got a product called PowerSearch, which is essentially the front-end interface that’s targeted to the business user to be able to pull out these intentions: who’s working with whom, what are they trying to accomplish, how can I discover markets to use in my day to day business life?
Gardner: So, it really isn’t just about businesses. It’s about individuals, because businesses are composed of people. I might be dating myself here, but there was this time when your Rolodex was your standard. How good your Rolodex was indicated how good you were at partnerships and relationships and what your past business history was. That’s now given away to the Web, but again we hit overload. What’s being done technically to align business user needs with some an automated approach? In a general sense, are we talking about crawling, and is it traditional, or do we have to go a step further technically in order to accomplish this notion of a Business Web?
Glass: We need to go a step further. Obviously, crawling is a starting point for all search engines. You have to have a mechanism to get out there and actually find the information, but it’s not just enough to say, “Oh, these keywords exists out there.” For example, my name, Russell Glass, is actually two keywords in the eyes of the search engine, when Russell Glass is really an entity. I’m a person. You have to take that level of understanding beyond just crawling, to be able to say that I’m a person, I have certain attachments, I belong to certain organizations, I’ve worked for certain companies.
I have all these characteristics when you really get to semantics, the Semantic Web side of this. I have all this metadata, if you want to call it that, from a technical standpoint, which defines who I am. The next step for search is really to understand that metadata and use that to create a more useful and filtered experience for a business user. For example, if I am looking for people within a certain industry -- let’s say the healthcare industry -- I need to be able to tell that search engine that the results I want are people, and those people have to work within the healthcare industry. That search engine has to be a lot smarter than just bringing back certain keywords that are found out there on the Web.
Blossom: That’s a key point, and what you’re pointing out from my perspective, Russ, is that for many years people were talking about the Semantic Web and the need for metadata, so people will be able to do these kinds of searches. But the Web is not self-organizing in the way that it’s published. The information is out there and it can be extracted, but people are not publishing content with that structure in mind.
The technologies that are becoming more prevalent in this era, and that sometimes get bucketed into the label "Web 3.0," are about being able to extract that semantic structure from content that’s been published without semantics in mind. They provide the hooks that will allow specialized searches to go out there and provide semantic structure across a wide range of information, regardless of how it was initially published.
Gardner: John, let’s take a step back for a moment, and for our listeners benefit, give them a timeline of Web 1, Web 2 and Web 3. I’ll start with a very broad overview. Web1 was HTML content, pretty straightforward and basically a push, it was just, "Here’s a brochure" type of affair.
Web 2.0 is characterized a lot by relationships and user content discussion, give and take, bringing this more to the level of a village, but with massive scale but also massive niche or long-tail opportunity.
Help us explain now this next progression to Web 3.0, what do you mean by "semantic" and "Web," and what sort of tools can be brought in this newer era to align business interests and cut to the wheat and get rid of the chaff.
Blossom: It’s always dangerous to use labels like Web 3.0, especially when it’s so vague and undefined that Wikipedia has locked down the page for Web 3.0, and won’t even allow people to make an entry on it. What I think we can say safely is that everything old is becoming new again, through the advancement of technology on the Web. If you think of pre-Web information services, they were oriented around databases. Those databases were highly structured and you had indexes and needed specific words to be able to organize records in that database.
Gardner: You practically had to be a developer to know how to approach the database to get basic information?
Blossom: Absolutely. If you look at some of the interfaces that were available in early information products, such as Dialog and other databases of that sort, with a virtual programming language unto itself just to do a simple query. Then, along comes the Web, and what's now termed Web 2.0, and people said, “Well, let’s just not worry about structure too much, let’s put the information out there." There is enough intelligence in search engines for us to be able to find stuff that’s been pushed out there on the Web.
It was a huge step forward, when the search engines provided the ability for information to be aggregated in new ways without the structure of a database, but on a rather ad-hoc basis. Sometimes it was guided by popularity and sometimes by semantic structure, but whatever the combination, information was more easily aggregated from any number of sources regardless, of its structure.
Web 2.0 is probably best described as the read/write Web, where there is an increasing proportion of content that’s being pushed out by individuals as opposed to institutions. We have a broader mix of sources and a broader mix of information going out from a range of publishers. It has some default structure in it because of the standards that are being applied, but it’s still fairly loose information.
Gardner: At least those individuals are not only contributing content, but they also, in a sense, contribute ranking opportunity by voting with their attention, with their activity, and with their links, which information is relevant, and this helps codify into some categorization.
Blossom: Exactly, and the ability for people to be able to build up webs of links, to be able to indicate what’s important, provides a level of importance to semantics. That begins to highlight information more effectively to people, when they’re trying to figure out what’s relevant in a trendy topic.
Gardner: If it works for finding people who are interested in your baseball collection, your baseball card collection, then it might also help in putting together your business community or ecology as well.
Blossom: Absolutely. Business publications and corporations are all beginning to latch onto this idea and to use Web 2.0-style publishing to be able to reach people. We have individuals out there in business with Weblogs. We have CEO’s with Weblogs. We have PR departments with Weblogs. Everybody is pushing out and trying to engage the world in a conversation. Now, with all that information out there, the question is how we structure it. What we’re beginning to see in the Web environment is the use of more sophisticated content extraction technologies and analytics to be able to take those relationships and to present them more effectively to information systems.
So, to bring it back to what I was saying originally, we’ve gone back to trying to provide structure in our information, but with a much more sophisticated publishing environment than people used to have in standalone databases. Now, in effect, the entire Web has become a database because of the ability to structure information on the fly.
Gardner: Okay, so the best of the old and the best of the new. Russ, you’re in the position now of creating product and then bringing that product to market at ZoomInfo. What is it about this next step of the best of the old and the new that is exciting to you as a search product developer?
Glass: John made a key point -- when he was talking about how Web 2.0 was driven by the individual -- moving from totally unstructured information to a world where now users can start to give feedback. Businesses have started to follow the individuals' lead to Web 2.0, but they have then taken the next step because all that information is useful to a business only if it’s structured and if it can be efficiently incorporated into the business environment.
Businesses are really leading the drive toward these "Web 3.0" technologies, moving from unstructured to structured information. As a product guy in this space, that’s what excites me, because I think that companies like ZoomInfo, which are focused on semantic technologies, are going to find the most success in the business world in the short term, because the ROI is there. Businesses can make tremendous amounts of money in both the cost side and the top line by aggregating this information and using it effectively.
Gardner: It seems to me that this notion of a Business Web isn't really, "Let’s build it, and see who’ll come." This is really business responding to an opportunity, recognizing that they have need of finding an audience, of finding channels, of finding partnership, extending into new markets -- globalization. Help me understand the chicken and the egg here when it comes to the Business Web?
Glass: Sure. I don’t think we’re creating the Business Web. I think the Business Web’s already out there. It’s out there in the form of Websites and press releases and SEC filings and blogs and anything else with business content. What we’re doing is taking technology and making all of that information accessible in an efficient way. That’s really the next step, because as we’ve talked about already, there’s just too much information out there to absorb. It’s in too many different repositories, in too many different formats.
When we have something that can tie it all together in a way that makes sense to a business user who can then use it to define markets and find people within those markets and do competitive research on different companies within those markets, etc., that’s where the real value is going to be extracted from the Business Web.
Blossom: It's interesting that the sorts of problems that businesses are trying to solve on the open Web are very similar to the problems that they’re also trying to solve behind the firewall and their intranets and extranets. Even inside corporations, they have created many repositories of different types of information. Being able to unify that effectively with analytics-driven aggregation systems is key for their internal operations. Increasingly, businesses are seeing the open Web as an extension of their business operations. It’s just the matter of which IP routers are you going through to be able to extract business intelligence.
Gardner: Perhaps we have dual track here. On one hand, we’ve got progression toward the Semantic Web, but at the same time inside the firewall, as you point out, we’ve got a long-term progression toward the semantic enterprise. We’ve been using warehousing and mining business intelligence, and a number of other trends over the past 10 or 15 years.
Help me understand, John, how these come together. What is this "whole greater than the sum of the parts," when we apply the semantic enterprise to the Semantic Web?
Blossom: It’s the same problem solved in a different environment, although there are more structured databases inside your typical corporation. With the proliferation of departmental Web servers and Web 2.0 applications within the corporate environment, there’s not a lot of homogeneity in their internal information. When the corporations look out to the external Web, they are more open to the idea of this being a resource that they can use for business purposes, not just because of the tools that are out there, but because they understand this is the same sort of problem that they have had to solve internally.
There’s a greater openness to look at Web information as the same type of resource that they have available on a corporate basis, and they're more open to the idea of being able to transform it into a resource that has semantic structure and usefulness for enterprise-ready applications.
Glass: Think about it from the end user’s perspective. If I’m a businessperson and I need access to information, at the end of the day, I don’t really care where it comes from as long as I know the authority of the source, and as long as I’m able to quickly and efficiently use the information. Just make sure that it’s holistic, that I get as much information about the topics I’m looking for, and that it’s easy and efficient to use.
Blossom: Users in the corporate environment use open Web search engines as their first point to find information. The internal search engines that they have in the corporations are literally competing for attention with those. It only makes sense that those users are going to be very open to more sophisticated resources that are available to them on the Web.
Gardner: I suppose it boils down to, they want to know what they don’t know about what's going on out in the greater business environment.
Blossom: Absolutely. And, the Web itself is becoming the most efficient channel through which to communicate that information. There’s less need for the info-media ways of the past.
Gardner: Let’s drop down from a few thousand feet to the basement and get concrete here. Are there some examples of companies that have gone out -- perhaps beta customers for you at ZoomInfo -- and applied this kind of cutting edge innovative basis and had some payoffs?
Glass: We’ve got on the order of a couple of thousand customers that are using this technology now and getting bigger ROI out of being able to use this information that's just been gathered and display it efficiently from the open Web. Adobe is a good example. They use us within their field sales force. The problem they face is that their field sales are disparate. They look at a lot of different types of companies and a lot of different types of industries that all have different value props for using Adobe products.
A tool like ZoomInfo can define markets and really give a good holistic look at which companies play in a certain market space in a certain location. So, their field sales force has a good understanding of where they can go look for opportunities, all the way down to the specific person within the company -- whether it be the VP of marketing or whoever else would buy Adobe products.
Gardner: So you can take that notion of the Rolodex and just explode it. Not just shooting in the dark, but pinpointing the right people to talk to at the right time in certain companies. That gives you a much better chance of saying, “Aha, you’ve got a problem? I’ve got a solution.”
Glass: It’s a context. It’s understanding. Your Rolodex gives you a name in a company, but if you know that that person makes decisions about certain products, and you know that the person knows someone else that you already have as a customer, it really helps you be able to both warm the call, get yourself in the door, get your foot in the door, and then close the deal.
Gardner: If I'm selling and I find one company that’s a likely candidate for my universe, then I can apply the same criteria and probably come up with a bunch of similar companies, and then come up with an expanding universe of prospects.
Glass: That’s exactly right. It’s kind of like the crystal set. You need that one little crystal to form the entire large crystal. Once you know a single company in a certain area, you can pivot around that company and discover all the other companies that do exactly what that company does.
That’s all because of the way the Web works. Every company is out there trying to describe what they do. Having an intelligent technology that can take the metadata out of that, take the semantics out of that, and understand which companies are actually doing the same things is very powerful for business.
Gardner: I can apply that to sales and marketing prospects, looking for buyers, but I suppose I can apply the same approach of the Business Web to looking for partners, saying, "Here is a company that is doing something close to what I’m doing and there’s a natural affinity. Let me find all the other companies that could also potentially be in a partnership or a symbiotic relationship with me. Then, I'd have a whole new opportunity to expand my universe.
Glass: As we’ve all seen that in the Web and the hi-tech world today, "co-opetition" is the name of the game. You’re competing with companies, and at the same there are great efficiencies to working with them. If anybody has defined that, it’s Google. I don’t know of a single company that doesn’t have some sort of relationship with Google, even if it’s as simple as AdSense or using them to place ads on their content, but at the same time they’re often competing with Google for advertising dollars.
Blossom: What seems to be happening in the midst of this is that the Web is becoming a more effective tool over time to classify businesses than traditional industry classification schemes. The competitors I had three months ago are not necessarily the competitors I’m going to have three months from now -- or even today -- because business changes at the speed of light, as the Internet pumps information around the world and business strategies change on the dime.
In that sort of environment, it becomes more effective to be able to classify companies and individuals through semantics and relationships that are defined through Web content, than to rely exclusively on databases based on long standing industry classifications and formal relationships. Being able to get those webs of competitors and relationships right on the fly requires an environment like the Web, where that information changes every day.
Gardner: John, it seems to me there are some other mega trends that accelerate this. Globalization, we’ve mentioned. It seems that as companies go more to business-process outsourcing -- if they’re looking to employ services oriented architecture and software-as-a-service, it seems that its what wires and connects companies together becomes more important than having it all internal, doing it all yourself. Am I too far out here?
Blossom: Not really. There is a great example that Don Tapscott uses in his new book, Wikinomics. He talks about a gold mining company up in Canada that recognized all of a sudden that they had all sorts of potential deposits of gold, but they had no idea exactly where they were, and they wanted to get at them most efficiently. Their CEO happened to go to a seminar that was talking about open-source software and Linus Torvalds's development of Linux.
He said to himself, “Well, let’s open-source our functions." He put all of their normally secretive information about geology and mineralogy, mineral deposits that were on that property, and he put it out on the open Web and asked people to find the gold. He put out a little reward money. They got input from over 1,000 people, and doubled the yield of that property in just a matter of weeks.
Glass: Wisdom of crowds, right?
Blossom: The wisdom of crowds, which sounds a little bit frightening at times -- and at times it can be -- but the idea that corporations benefit most from wherever today’s most insightful people are at the drop of the hat, pushes people towards Web infrastructure, where they can collect that knowledge and wisdom as efficiently as possible in an open environment. That doesn't necessarily mean that they have business relationships with those people, but being part of that Web is becoming far more important over time than segmenting too much intellectual property behind the firewall.
Gardner: So, it sort of takes the notion of the knowledge economy a step further, that the coin of the realm is information in the right people’s hands at the right time?
Blossom: Absolutely.
Gardner: And search is a very powerful tool to bring that about. Well, great. This has been a good exploration of this notion of the Business Web. I was sort of fuzzy on it, and now I have a much better handle on it. Was there anything else that we needed to bring to the table for people to appreciate business Web? How about when this notion, still nebulous as it is, of Web 3.0 and the Semantic Web? Are we in the fifth or sixth inning of a nine-inning ballgame here, or are we only just in the first few minutes of this in terms of what’s going to be possible in the next few years?
Glass: We’re in the first few minutes. The Business Web and what's happening with tools like ZoomInfo is the first step. You can almost think of the Business Web as a microcosm for what's going to happen to the rest of the Web. This will be the first step toward a truly semantic type of search, where you can aggregate all this information and use the power of unstructured content to, as John said earlier, be able to recognize things on the fly, as they’re changing real time, and not have to rely on old categorizations and old information. The rest of the Web will head this direction, led by what's going on in the Business Web -- one big content nation comprised of individuals and institutions cooperating and collaborating to create knowledge that’s going to help all of us.
Gardner: That’s a high note to end on. I want to thank you both for joining us in this discussion of exploring the definition of a business Web, some of the tools that are available to explore that now, and what we can expect in the future. We’ve been taking this discussion to a new level with Russ Glass, Vice President of Product and Marketing at Zoom Information, and John Blossom, President of Shore Communications. Thank you, gentlemen.
Blossom: Thank you very much.
Glass: Thank you, Dana.
Gardner: This is Dana Gardner, principal analyst at Interarbor Solutions. You’ve been listening to a sponsored BriefingsDirect podcast. Thanks for listening, and join us next time.
SPECIAL OFFER: Listeners of this podcast are invited to try ZoomInfo's Business Web search and discovery benefits through a special free-trial offer. Just go to www.zoominfo.com/businesswebpodcast to obtain free access to Zoominfo's advanced business search capabilities.
Listen to the podcast here. Sponsor: Zoom Information, Inc.
Transcript of Dana Gardner’s BriefingsDirect podcast on Business Webs and relationships-oriented search. Copyright Interarbor Solutions, LLC, 2005-2007. All rights reserved.
Sunday, January 28, 2007
Transcript of BriefingsDirect SOA Insights Edition Vol. 8 Podcast On SOA Through the Eyes of Investors
Edited transcript of weekly BriefingsDirect[TM] SOA Insights Edition, recorded Jan. 12, 2007.
Listen to the podcast here. If you'd like to learn more about BriefingsDirect B2B informational podcasts, or to become a sponsor of this or other B2B podcasts, contact Dana Gardner at 603-528-2435.
Dana Gardner: Hello, and welcome to the latest BriefingsDirect SOA Insights Edition, Volume 8, a weekly discussion and dissection of Services Oriented Architecture (SOA) related news and events, with a panel of industry and financial analysts and guests. I’m your host and moderator, Dana Gardner, principal analyst at Interarbor Solutions, ZDNet blogger, Redmond Developer magazine columnist.
Our panel this week consists of Steve Garone, a former IDC group vice president, founder of the AlignIT Group, and independent IT industry analyst. Welcome, Steve.
Steve Garone: Thanks, Dana, great to be back.
Gardner: Also Joe McKendrick, a research consultant, columnist at Database Trends, and blogger at ZDNet and ebizQ. Welcome back, Joe.
Joe McKendrick: Thanks, Dana, I’m glad to be back as well.
Gardner: Its also a return visit for Jim Kobielus, principal analyst at Current Analysis. Hi, Jim.
Jim Kobielus: How’s it going, Dana? Hi, everybody.
Gardner: Neil Ward-Dutton, also making a repeat appearance, is a research director at Macehiter Ward-Dutton in the U.K. Hello, Neil.
Neil Ward-Dutton: Hi there. Hi, everyone.
Gardner: Our guest this week is Trip Chowdhry, a managing director of equity research at Global Equities Research. Welcome, Trip.
Trip Chowdhry: Hi, everybody.
Gardner: Our topics this week are going to revolve around three meaty issues. The first is the business opportunity for vendors around SOA. How will Wall Street, the City of London, other markets, and investor organizations view SOA as a growth opportunity, and what sort of companies will benefit?
Our second topic is going to be around the rcent announcement at Macworld -- and we’re talking about the week of January 8, 2007 -- by Steve Jobs and Apple Inc. of the iPhone, and what this might mean for a mobile front-end: Is it just for consumers? Is there an enterprise aspect to iPhone? And what might be some implications for SOA and composite applications?
First, let’s dig into this notion of SOA as a business opportunity for vendors. Some of the things you need to ask as an enterprise buyer are: "Am I buying into a company that’s going to be around in five years? Am I getting locked into a technology or relationship? If so, will that vendor be able to devote the resources for R&D, for support?"
I’d like to know that my vendors and primary suppliers are healthy financially. Some news just today: SAP came out with some results from the fourth quarter that came in below their Wall Street guidance. So, a little bit of a shocker there.
Let’s go first to Trip, because you’re an equity analyst, how do you view this SAP announcement? Is it a blip or is there some other opportunity to look at the impact of SOA and how the business is changing for business applications vendors?
Chowdhry: Actually, if you think about companies like SAP who have very long implementation cycles, they have a lot of moving parts. It's a complex product, and the problem that SAP has -- and to some extent, most of the SOA vendors have -- is that they’re trying to solve complexity with complexity, and with that you can easily get a few early adopters.
When it comes to mass adoption -- or the second phase of product adoption that needs to occur to show growth -- then you really have to ease the product, ease the message. You have to tell what you do in one bullet point. So far, our research shows that NetWeaver and SAP, and some other vendors, have very complicated messages, which CIOs are now struggling to understand.
That is going to create some sort of a downward pressure near-term in SOA-based initiatives from a business and financial point of view. From a technology adoption point of view and a trials point of view, SOA is definitely a trend, but it seems like the messaging, the product, and everything else need to be simplified, so that people can know how one initiative can correlate and coexist with other initiatives they have going.
Gardner: That’s interesting, because a recurring theme of our discussions over the past several months has been the complexity and the lack of clarity and understanding in SOA messaging and the business value. It seems to be also impacting how investors and those who value vendors look at this as an opportunity. It's like they don’t quite get it.
Steve Garone, do you agree with that, and do you think that there are certain types of companies, vendors, maybe systems integrators, that might be able to benefit from this complexity and lack of clarity?
Garone: Yes, I do. Dana, let me go back to your statement regarding messaging. Yes, we have had a variety of conversations about that, and in particular this sort of chasm that exists between technology messaging and business messaging. This is an architecture and a technology that can provide benefits from the technical point of view, but also from the business point of view.
It’s not clear that either the end-users or the providers of technology are able to clearly articulate either of them or have them interoperate -- so to speak -- have them mesh into a coherent vision of what SOA actually is and what it can deliver. So, I think 2007 is going to be a very important year for sorting out all that within organizations, and therefore in the responses that vendors provide in terms of messages.
Trip, I really loved your statement, "solving complexity with complexity." I think that’s right on the money. Another way to put that is that despite the Nirvana that SOA allegedly can provide, it’s still fundamentally about integration, and integration is always a difficult and complex problem. So, vendors who can address that in a robust and user-friendly way, are going to have significant amount of success.
In terms of companies like SAP, they sort of come at this from the enterprise application side. They in fact are going to have to move toward a model where they can present their products as a series of loosely coupled services that adhere to standards, and can therefore be integrated with other applications and easily accessed and used. I think they’re moving in that direction. I’m not really prepared to say that being unable to do this, or the speed at which a company like SAP is doing this, is affecting their financial results, but I do think that that’s going to become pretty much the ante that these companies have to put up in order to actually continue to play the game.
Gardner: It’s interesting, I speak to some systems integrators, and I characterize SOA as the gift that keeps giving, and they chuckle and they nod their heads and kind of wink. If you’re are a services organization, professional services, then complexity, integration, and such long-term trends always tend to be positive.
Garone: Yes, I agree with that.
Gardner: They also say they think SAP and perhaps other business or package business applications providers, monolithic application providers, are going to be yielding to some pressure in the market. Of course, it's too soon to tell from one quarterly result. We are having a robust global growth. Gross domestic products (GDP) are in growth mode. Even if the United States is in two to three percent growth, many of the emerging markets are growing much more rapidly.
You would think that a global vendor like SAP would be also enjoying some growth. So, it’s too soon to tell if there is a longer-term trend here. Let’s go over to Jim Kobielus. Jim, do you think that complexity is bad for vendors, good for SIs, and can you think of any types of vendor that might be able to go to Wall Street and say, "We’re going to be worth twice as much in two years because of SOA?"
Kobielus: I’ve joked for many years with people that the more change you have, the more complexity you have, and the more need you have for consultants to come in and explain it all. So, there’s always going to be an opportunity for consultants and analysts to explain what things like SOA are and are not, and what their relevance is to the average business user.
In terms of whether complexity is bad for vendors or good for vendors, and so forth, let’s take a step back here. In terms of the business opportunities in SOA or that SOA creates, first of all remember that SOA is just an architectural abstraction. How do you shrink wrap and make sexy something that’s just a three letter acronym?
In terms of differentiating your value prop as a vendor in this market, one of the problem with SOA is that SOA essentially has an architectural approach, smashing and dissolving the ability for vendor lock-in, because everybody is implementing common standards with any-to-any interoperability. So, these SOA universes are getting so multi-vendor and heterogeneous, the complexity can be overwhelming.
In many ways, the number-one opportunity that SOA presents for vendors are for those vendors that can reduce the complexity by providing SOA suites of software and other components, and secondarily those vendors, those service providers, who can provide SOA and integration best practices to enterprise customers.
So, how do you shrink-wrap SOA? Well, these suites -- from the likes of SAP/NetWeaver, Oracle, IBM, Microsoft, etc. -- implement all the piece-parts of SOA, the portals, the app servers, the databases, and the UDDI registries. Next, the Accentures of the world provide the warm bodies and warm brains of professional services to crunch this complexity down into greater simplicity, and deliver end-to-end integrated solutions that leverage the largesse that an SOA universe provides.
Gardner: What about middleware? We’ve seen IBM in the last several quarters come out with its newest growth engine, its software division, and within the software division the growth is in middleware: WebSphere. So, suddenly we’ve got the largest vendor and perhaps the largest SI as well, but their growth is in middleware. Oracle has also come out with some results in the last couple of quarters that have shown some strength in their middleware offerings.
Is SOA perhaps a leader to a larger infrastructure opportunity on Wall Street? What do you think, Joe McKendrick?
McKendrick: Well, Dana, I think basically at this point the terms middleware and SOA are fairly synonymous. If you talk about middleware and offering middleware out to the marketplace, you’re talking about some type of standardized, componentized service-based offering. So, absolutely. Middleware and SOA is the direction in which companies are going.
In terms of the opportunities, there are essentially three levels or three types of offerings vendors can offer, and put out to the marketplace. On one level, you have the applications. Then, there are the services, the systems integration (SI) services. And, then there are the development tools used to build these applications or systems. Microsoft, of course, still reigns as king of development tools. It has plenty of competition.
What I find interesting is on the application level, and this is where SAP has a lot of work cut out for it. As we see more standardized, componentized middleware evolving into the marketplace, we’re seeing more of a commoditization of software taking place, just as we saw commoditization of hardware back in the '80s and '90s. This stuff is probably happening under the radar at the this point, but I wouldn’t be surprised if we saw a Dell-type of business model begin to evolve in the software space, where you’re not an original equipment manufacturer or you’re not actually producing the software, but you’re pulling together components that someone else makes and offering it to the marketplace.
Gardner: Joe has raised an interesting issue, which is the business model. Let me take it back to Trip Chowdhry. Wall Street tends to frown on companies that are in cycles that have peaks and troughs, sometimes two or three years cycles. They’re difficult to predict. Wall Street prefers a recurring-revenue model that can show consistent returns and growth.
It seems to me that a move from an enterprise license approach, which we’ve seen in these large vendors, to a services-support-maintenance type of model, which we might expect with SOA offerings, might in fact please Wall Street. Do you have a sense of whether a shift in business model is in the offing and what it means?
Chowdhry: This is very good stuff that you mentioned, because there are some companies that are trying to innovate SOA as more of a service. There is a startup company called Mule, that’s trying to have -- I won’t say integration as a service, but has some SOA flavors to it. It’s not exactly SOA, but when I speak to these CIOs, they don’t say "I want SOA." They say "I want to make two systems work together with the least effort." That is a change over the last year. If that’s the problem, then the solutions could be many.
That’s one thing that we’re seeing. Then, of course, the Apache Foundation has its own product called ServiceMix, which is given out free, and JBoss coming out with its own SOA. Then, we have these commercial companies including BEA Systems, webMethods, and TIBCO, which have commercial offerings that are still on a license model. If you look at the various kind of plays in the market, one is software-as-a-service SaaS).
You have open-source alternatives like ServiceMix and JBoss, and then you have commercial pairs. Investors hate it when there is uncertainty, and there is no clear winner. Right now, there is no clear winner who can say, "Here is SOA." As someone on this panel mentioned, there is no product called SOA. You have a product called "database," but SOA is still a concept. And Wall Street is having a tough time putting a valuation or momentum behind SOA. Wall Street is thinking that any company that is in a disastrous situation evolves to be in "SOA."
IONA is one of them. WebMethods is another. TIBCO is struggling with growth. IBM, at the end of the day, is a services company, and since they are services company, they can push their own software the way it is, even though it’s not the best. BEA is also in transition. They don’t know what will happen to middleware. Oracle is trying to create a vertical stack. SAP is going with the horizontal stack. Microsoft is thinking the world is Microsoft.
Now, from an investor point of view, they see confusion and uncertainty, and when that occurs, they stay on the sidelines.
Gardner: All right, let’s take it over to Neil Ward-Dutton. Neil, it sounds like we ought to invest in bonds until this whole SOA thing gets settled down. What’s your perspective?
Ward-Dutton: I’ve just been listening to everyone and frantically writing stuff down. It’s interesting what Trip just said about how SOA is still not a product, and I absolutely agree with what some of the other guys said. It will never be a product. I think it's interesting about the observations that were made around IBM and Oracle in their middleware results, the contribution of middleware to their business. I think putting SOA in front of that is like putting the cart before the horse.
I agree with Trip in that what’s not happening is people saying, "I want SOA." What’s happening is a desire for delivering multi-channel services, dealing in a more consistent way with compliance mandates, making supply chains more flexible to allow better syndication of products and services, BPO and the need to integrate services across and between organizations. Those are the things that are being done, and SOA is more and more just the flavor with which those things are being delivered.
So, the big theme that is not going away -- and someone else said this five or 10 minutes ago -- is integration. It’s easy to think integration was a fashion in the late 1990s with Enterprise Application Integration (EAI), which incidentally was something that only really got off the ground once the big SIs got involved. The integration specialist players didn’t really make a huge market by themselves. What made a huge market that became a multi-billion-dollar market was actually the systems integrators. And, it’s the same with SOA.
Pure-play technology vendors providing really innovative little bits and pieces aren’t going to make a mainstream market. It’s only the SIs who really make that happen, because they can take a complex proposition and can actually communicate that effectively to the right communities that need to play into this.
Gardner: It would appear that SIs might be in the role of kingmaker when it comes to SOA -- if they are leading in terms of business opportunity, taking advantage of the change. They’re also going to be saying, "Well, here’s the best-of-breed that we suggest you use." IBM might favor its own software, but I think they’ve taken some pains to be a little bit agnostic or ecumenical.
If the customer says, "We’re an Oracle shop, and we want to use Oracle," then IBM will help them use Oracle. As Trip pointed out, IBM finds itself in a pretty good position because it has both the software business and the systems integration business. HP could also be considered in a good position. They have hardware, they have software partners, and they have this strong systems integration and professional services capability.
So, the question is: Are the SIs in a very strong and advantageous position over the next several years?
Ward-Dutton: SOA is a change in mindset. The challenge is primarily a change in the way you think about delivering capabilities through IT. So, what does that mean? Well, who’s going to make the money? The people who can help you change the way you think, not the people who give you bits of technology.
If you look at how the technology is being delivered, a lot of the technology that gives you the on-ramp to SOA -- the Web services enablement pieces -- those are being delivered free or nearly free as part of upgrades. The vendors are baking those technologies into products in the hope of making sure customers renew. That technology is finding its way to the market and to customers without lots of new money being spent. It's part of the regular upgrade cycle of technology, and the way that’s being procured.
The really interesting stuff is around change management, organization, and culture. That's where the real SOA market value is coming from. It absolutely plays into what everyone else was saying a minute ago about more of a subscription model on the technology side, because it's that kind of model that actually aligns the value of the investment with the value you’ll receive with the customer.
Gardner: Are you saying that SOA as a vision or a concept -- as it works its way into how people design, develop and integrate and manage and run their IT departments -- will in fact lower the amount of money that the market projects onto these vendors? Is that to say that SOA is a disruptive influence in terms of the amount of money required to do IT?
Ward-Dutton: No, at all. SOA does not create a whole pot of money to dive into. What it’s doing, because it’s a flavor of technology that’s being baked into existing upgrade cycles, is to create a replacement market. SOA-related technologies are replacing others.
Gardner: Let’s go around the table. I want to ask a very simple basic question and that is: Does SOA create more demand and more net spending over a two- or three-year period, or does SOA, in fact, spur on and create less IT spending? This is very general and aggregate, but we’re trying to determine whether SOA subtracts from the amount of money -- the pie that’s spent on IT -- or not? First, let’s go to Steve. What do you think?
Garone: Wow, that’s quite a question, Dana. I’m not sure that I can give a precise answer today.
Gardner: Gut instinct?
Garone: We’ve all recognized during these conversations that SOA is really just starting out, people are just really starting out with SOA. If you look at all the case studies that are around, and I’ve talked to end users about this, they’re really just beginning to ramp up with pilot projects or even small production projects, but it really hasn’t permeated a lot of organizations. There’s going to be a fair amount of money invested in new products and technologies, in training people to understand these and use them, and, in cases where you can’t do that or don’t see it cost-effective to do that, to go outside to system integrators to get that done.
Gardner: Steve, I was hoping for a short answer here.
Garone: I’m sorry.
Gardner: Is SOA a growth impetus or is it an contraction impetus?
Garone: I think it’s a growth impetus, especially in the short-term.
Gardner: Okay, Joe McKendrick?
McKendrick: It depends on how the economy does over the next two to three years, if the economy goes downward, we go into a recession or some type of economic downturn, when IT budgets decline, SOA will be seen as a strategy to cut cost. Formerly, a systems integrator would come in and spend about a year working on tying two systems together in an enterprise. If the two systems are SOA standardized to some degree, that could be shaved to a matter of weeks.
Gardner: So you’re seeing SOA as a cost-saving and somewhat of a contractor in terms of total spent?
McKendrick: If the economy goes into a downward cycle.
Gardner: Let’s just say the economy is adjusted, we’re going to have an adjusted perspective in terms of what the macro economics are.
McKendrick: IT spending probably will remain constant, but it’s going to shatter the types of projects that are out there. The systems integrators are in a tough spot because these one-year engagements that they could charge tens of thousands, hundreds of thousands, of dollars for are probably going to be going by the wayside. You’re going to see a lot of smaller engagements, smaller projects.
Gardner: Jim Kobielus, what do you think?
Kobielus: SOA is primarily going to be a belt-tightening approach that will come in very handy when the economy turns down. I mean if you do SOA right, it’s the whole notion of "don’t reinvent the wheel." In fact, you share, reuse, and consolidate all your existing silos down into fewer silos that can be then repurposed into new applications fairly quickly though some open standards.
If you do SOA right, then the SOA-specific projects will result in a leaner, meaner IT organization. Conceivably, the budgets might remain the same, but the share of the money will go not so much into the SOA plumbing, as UDDI registries and so forth, but will go for value-added projects in terms of business process reengineering (BPR). This will be based on the project accelerator templates that more and more of these SOA software vendors are providing -- more of the high-level systems integration.
Gardner: So over time there might be a bump in spending in order to actualize and realize SOA advantages, but once they are realized, the total amount of money required for IT should go down. This means a smaller pie for the vendors, which means vendors will be fighting over a smaller total marketplace, and we can expect some of the bigger players to perhaps have an advantage there.
McKendrick: In any given IT project, the role of the IT analyst will shrink and the role of the business analyst will grow, because then the value-added will be in process optimization as driven by the business people.
Gardner: I dare say that productivity will increase, but again we’re looking at this through the lens of how to size the total market for SOA and how vendors will adjust to that. Neil Ward-Dutton, what do you think about this, is SOA a contracting influence over time or is it a growth influence?
Ward-Dutton: It’s neither. Things won’t change, and the reason has to do with the size of the pie. There’s a maturing view of IT as a business enabler out there, and so IT budgets are really going to pretty much track the overall business performance. The thing that is going to happen is, while the budget stays the same, SOA enables better choices to be made around where the money gets spent in IT. That’s what’s really important.
It’s about being able to draw a line between stuff you want to reduce cost on and stuff you want to go crazy on, because it’s where you really differentiate the business. SOA enables you to move that line, as and when you want. That’s really interesting. It puts the customer in the driver's seat. SOA is like table stakes for the vendors, SOA is not a net new market opportunity, it's table stakes.
Gardner: So, spending remains fairly neutral in real terms, but productivity as a result of that spending increases?
Ward-Dutton: Yes.
Gardner: Trip Chowdhry, you’ve done some studies, how do you see the total pie for enterprise software and infrastructure being affected by SOA?
Chowdhry: If you look at the big picture, the industry is going through consolidation. Companies are merging, and that definitely puts integration as a top priority. Even before the two companies merge, the second thing they look at is: Can the two ITs work together, can the two IT departments, can the two products and platforms, work together between the two companies that are merging?
Definitely, an SOA kind of an architecture makes the M&A activity more fluid, but the question is, Who will benefit? Would it be software product vendors or would it be system integrators and consultants? I think there will be in two phases. The first phase would be the system integrators and consultants will win, because I think when we speak to the CIOs, anybody who can help them understand the mess gets the money. In the long term, software vendors may make money relatively or literally more than the SIs, because they may automate and simplify many of these processes. But net-net I think SOA is good for IT sector as a whole.
Gardner: Why, exactly, is it good as a whole?
Chowdhry: Because the past infrastructure has been wasted on legacy technology. Now, business is being done across every geography. Even a small company has to interact with a producer in China, a call-center in the Philippines, a software developer in India. When you think about the companies that are evolving today, it requires strong agility.
If you don’t like your vendor in India, you should be able to fire it and immediately get another one -- say, in Ghana or South Africa -- up and running. What SOA provides for a business user is flexibility, agility and the ability to optimize your processes to get the resource where it is cheapest and sell it where it’s more profitable. From a business point of view, SOA is a dream come true. The only problem is that it's not mature enough for everybody to put their hands around. The biggest problem SOA has is people and vendors saying, "It’s a concept! It’s a concept!"
The day people say, "SOA is a product, and I have a SOA product," like a database, then overnight SOA can become a reality and it could show the same sense of maturity and adoption that databases or Microsoft Office have.
Gardner: Okay. So, for investors, they want to see a product that they can sink their teeth into and say, "This is SOA and this is how it’s going to be sold into the enterprise." That way I can estimate and value the monetary flow.
Chowdhry: Exactly. They want to have an SKU and hear the price. That’s their mentality. Concepts are very difficult, because there’s no end to concept. The pushback I'm getting is that the problem with SOA is that it’s a constant evolution of various standards. First, it was SOAP; then, REST, and then the whole community debate about which protocol is good and which is not. Whenever there is so much discussion going on, people step back and say, "Let them figure it out. Maybe I'll put money into it next year."
Gardner: My take on this is that ultimately SOA is a growth influence, because it’s been the history of IT that when you’re about to crest from investment into recovering productivity benefits phase, and the cost begins to go down, there’s yet another thing that you have to begin to invest in. So, it’s ongoing. We’re still in the early stages of IT. This is not going to be something that you’re just going to mature to and then pull the plug and say, "We’re all done." It’s a journey and the spending will ultimately continue to grow.
Let's go on to our next subject. This week we saw Steve Jobs get on stage and introduce a fairly innovative confluence of what we’ve seen in multiple devices and multiple services. He’s taken a mobile device footprint, put a flat screen on it, given it a GUI, with a touch screen, brought together communications, both in text and voice, together with a full-blown operating system -- in this case OS X -- that can connect through Wi-Fi and through its Cingular partnerships, the EDGE network.
I’ve been very encouraged by this. It does a lot of what I would like to do from a personal productivity perspective. The iPhone product isn’t due until June, and it seems as if the feature and function list is still not completely nailed down.
My thoughts go back to when the Apple Newton was first discussed -- we’re talking 10 or 12 years ago. There was some vision about doing away with the PC for many workers. Now, notebook computers weren’t nearly as ubiquitous back then, and they were heavy. They were kludgey. The batteries didn’t work so well. But this notion of having a small-footprint device that can pretty much do what you’d want a PC to do strikes me as something that’s still of interest to the enterprise.
We see a lot of vertical niche applications with this. For example, when a FedEx person shows up at your home with a package, they’re essentially carrying a mobile PC device, but it’s highly verticalized and very expensive. It strikes me as being a very significant development, if we could get a common-footprint approach, an industry standard approach to this. If we could bring that into the enterprise and realize some of these benefits around business process and around edge workers and knowledge workers and business analysts getting out of their cubicles, going to where the activity is happening. They could tap applications through a mobile full-function browser anywhere, anytime, at low expense.
Am I alone in this? Steve Garone, do you think that things like the iPhone, and the Sony Mylo -- although that’s been directed more at college students -- are going to be the end-points for SOA?
Garone: It’s an interesting question, and to me there are actually two questions there. One is whether this is a useful device for the enterprise. Based on what I’ve seen of the iPhone, personally I’d love to have one. It’s very cool. The indications that I get from people who are actually implementing solutions in the enterprise is that there are some questions around what email systems it can work with, how robust the email is, which of course is very important in an enterprise environment. I was a little bit turned off by the fact that this is a single carrier only, which I think is contrary to the whole notion of an open interconnected network, and SOA, in particular.
Gardner: Not to mention competition.
Garone: Right. We can all talk about the tendency of Apple to do things like that throughout its history. But conceptually these kinds of devices from the very beginning have been part of the SOA vision. The question is: Is this the right device, does it meet enterprise needs in terms of email, and in terms of application access?
Gardner: Couldn’t you do Webmail through the browser?
Garone: You could conceivably do Webmail through the browser, but we haven’t even seen this device yet so we don’t know.
Gardner: If it runs OS X, it probably will run the Mac Mail program which is a strong POP client.
Garone: I agree. One issue that could come up, though, is one of the visions that has been talked about in the context of mobile devices and handheld devices is being able to access and download parts of all applications and databases for local use. The question is whether this the kind of device that can do that in an open and robust way in terms of other platforms and other technologies?
Gardner: Now, you mentioned you’d like one of these personally. This is how the PC entered in the enterprise. People liked PCs and they brought them in. They weren’t sanctioned by IT. They called them toys and trinkets. Perhaps the same effect could happen with something like the iPhone. What do you think, Joe McKendrick. Is this an end point that will find its way into the enterprise?
McKendrick: It’s interesting. I suspect it remains to be seen how deeply consumers embrace iPhone or whatever they’ll be calling it a few months from now. It’ll be interesting to see if this is something that enterprises embrace, which I don’t think will happen, I think it’s going to be kind of a bottom-up percolation.
Employees will be bringing these things into work with them, just as the cell phones and smart phones and PalmPilots had their roots, and the PCs began back in the early 1980s -- not as a deliberate strategy of the enterprise to reach these devices. But if there’s enough of a critical-mass of employees who are using the devices -- the iPhones, in this case -- then enterprises will begin to take a second look and reach out. I don’t think enterprises are looking at it right now or will be looking at it when it’s introduced in a few months.
Gardner: Jim Kobielus, do you see this as taking a step toward that notion of a mobile device that’s closer to a PC but does voice and other things that the enterprise could make good use of?
Kobielus: Oh yeah, for sure. But I don’t see anything terribly revolutionary in the iPhone, other than the fact that it comes from the Steve Jobs godhead. There’s no doubt that Apple does great design, does a great marketing, and does a great zeitgeist. They made a splash with the Newton and look what happened there. What in the iPhone is not already being used in corporate environments in a major way? People are carrying their iPods into the office and using them to listen to podcasts, or using their cell phones. They’ve already got mobile messaging and mobile browsers in a variety of devices that they’re using.
Gardner: They use iPods as a mobile storage device, too.
Kobielus: It's a nice design. I don’t want to sound to flip and cynical about it, but it's one of those things where Apple does a very good job, just like Microsoft does, of getting the average person on the street aware of the fact that we are reaching some sort of a tipping point in terms of putting these things in the hands of the average individual and the average office worker. Quite frankly, I’d like to wait another six to 12 months to see if this gets any traction in the enterprise arena. It probably will, but I don’t think there is anything strongly differentiating this particular client device.
Gardner: What do you think, Neil? Is having a low-form factor, but highly functional browser, something that will blow this open, something that brings together the necessary ingredients for a whole greater than the sum of the parts?
Ward-Dutton: No. Something I always try to remember is that I am not typical, and it's something I need to burn into my forehead. I am not typical, and I’m afraid neither are you guys. You are atypical. Most people aren't anything like us and don’t have our interests, nor all the time that we have to think about this stuff.
That mistake was at the heart of an awful lot of the far-out rhetoric that you heard in the late '90s- and early 2000-time around the previous generation of PDAs and mobile computing and how it was going to revolutionize the way that all business processes were enacted. They’re not, because actually it’s a minority of people that need this functionality. Most people aren’t mobile workers.
Gardner: Is it just another hype-curve here?
Ward-Dutton: I’m afraid so. As a consumer and an individual who loves gadgets, I think it's incredibly lust-worthy. I read some of the reviews and they'd crawl over broken glass to get one. It’s not going to be cheap, but as an individual, I think it’s awesome. Someone just said, "I’ll wait six to nine months." I’ll wait six to nine years.
Gardner: Trip Chowdhry, what do you think? You’re in Silicon Valley. Is this something that’s going to have an impact on the enterprise?
Chowdhry: Actually, I did see the iPhone at Macworld and I was very impressed. It seems like the name may have to change to Apple Phone, because Cisco has sued them. I think there are definitely enterprise kinds of applications that could work very easily on it. That is based on the demo that I saw at Macworld. First of all, browsing is very good -- very, very good. I would say very, very impressive.
It's very easy to use. If somebody sends you an email attachment or PDF or Word file, you can see it like you'd see it on a computer. It's totally amazing. You can expand it and contract it. The visual things are very good. Instant messaging is another application, which -- at least in the financial sector -- people like to communicate with.
Someone on this panel mentioned that the feature-effects are not complete. I think down the road there will be two or three versions. One could be for teenagers, one could be for a business user edition or small business edition, and the third could be for entertainment. The IM feature, as well as email and attachments, which are very business-centric, could do very well.
IM was one of the things I feel could be a killer app. I wouldn’t believe that many of the enterprise applications, like Salesforce.com-kind of stuff or running some mobile enterprise ERP system, on this PDA would do justice to it. But you can effectively communicate with your colleagues without a lot of baggage, and have four hours of battery life and being able to carry a very small battery as a spare.
I think it’s a good form-factor that can fit in every pocket. The feature sets still needs to be sorted out, but it’s a development platform. So, third-party guys will also come out with their own platform. First step, it will be a good replacement for products like BlackBerry and others.
Gardner: I tend to look at this optimistically in regard to the enterprise. I think that for salespeople, the mobile warriors, for those who are in the field, or internally on a factory floor, for example, this pulls together a lot of what was necessary and doesn’t require the integration on the back end.
The IT people will say, "Listen, all the stuff we’ve got can be plugged into this, whether it’s through the browser, through POP, through other standards of instant messaging. We can have a VPN go to it, and have secure access through the browser to our applications."
I think what makes this an intriguing to the enterprise is that Jobs and company have done the integration for them, and they don’t have to go and take each and every application or function and force-feed it to a device. That's done through standards and it could be very interesting as an accelerator to replacing the laptop and even desktop computer for a lot of workers.
Chowdhry: We think more in terms of data, but the people who were standing next to me [at Macworld] were representing a biotechnology company. They said, “I'll use iPhone at work, just to make sure I can scan through my voicemails.” That’s a feature where you can preview your voicemails just like you preview your emails. They felt that was the killer application for the enterprise. They said, “We have 20 to 30 voice messages in the morning. We have to go from one to thirty without knowing which one is important.”
Gardner: As I have alluded to in some of my blogs, if we bring Voice over IP (VOIP) into this, and we can do telephony and get the convergence benefits of having CTI and other benefits from an all-IP environment -- a lot of what we used to think of as "unified messaging" becomes a reality. And, as you say, that’s a very important productivity benefit.
McKendrick: Dana, this is Joe. The real test for the iPhone will be if a year from now we can do this entire podcast all using iPhones.
Kobielus: The problem with iPhone is that the hoopla surrounding it has still got us fixated on this notion that we all need or want one gadget for everything. I think the way it's all shaking out is that each of us possesses a federation of gadgets of our own. I don’t think so much that iPhone is a replacement for your laptop or even for your desktop, but rather yet another device that will hook up with them in various ways, through Wi-Fi and Bluetooth, and so on.
Then, you can zip all kinds of contents back in forth. What interests me more than iPhone from this past week is Apple TV or iTV, whatever they’re calling it -- the IPTV appliance. That seems to me to be a more exciting development on the whole. In a year’s time, we simply can be doing this video podcast using Apple TV.
Gardner: I would just add to that. I think this is going to reduce the number of gadgets I’ve got to have. In a sense, my notebook computer becomes my server, and it serves my television as a node using something like Apple TV or TiVo or Slingbox or whatever it might be. My notebook computer becomes my server for my content, so that I can manage it up to the cloud or to the other devices. It could be the cell phone, an iPod, or an iPhone. It really increases the value and strength of what the notebook computer does. It gives me a mobility node and also a home entertainment node. And that’s, I think, the vision here.
Kobielus: Didn’t Apple release, or didn’t they discuss, a home server this week as well?
Gardner: No, that was Microsoft, at CES.
Kobielus: Microsoft, I get these guys mixed up.
Gardner: The notion of a server is necessary, but whether we actually want to go out and buy another $1,000 Microsoft device that’s going to require a systems administrator behind every potted plant in every living room is still an open question.
Kobielus: I think it’s inevitable. I think the whole notion of a SOHO server is coming to the fore, I think every household in the world is going to have its own SOHO server before long, to coordinate this federation of gadgets and channels.
Gardner: Will it be a discrete box or will it be a virtualized server, where part of it’s on the cloud and part of it is just availing the extra power, capacity and storage I’ve already got on my notebook computer?
Kobielus: It’s a so-called set-top box repurposed.
Garone: Now, Dana, this is Steve. I just want to ask a sort of a devil’s advocate question here. Given what you just said, how does that pertain to the enterprise?
Gardner: Well, it’s interesting because if more and more people do this and they're getting this great functionality, productivity, and I guess you could call it client-server approach for their home and their personal life, and then they walk into their enterprise and they’re left with this kludgey, uncoordinated, un-integrated stuff, they’re going to be thinking, "Wow, I’d be better off having my SOHO and be a contractor to this enterprise than I would be by being actually a member of the enterprise."
Garone: That’s probably true, but I think what I’m getting at here is you see this as a very powerful browser, and certainly you can’t argue with that. But in terms of doing real enterprise work on this device, is this the right device for that at this point in time? I’m not getting the sense that it is -- maybe some day.
Gardner: I think it’s a combination of a notebook computer and something like the iPhone, because all the enterprise has to do is put things into an IP stream and put it onto a VPN, and that way I can access it through my notebook if I want full feature, or my iPhone type of a device if I want mobility. Plus that same device can then be something I use in my home for entertainment and managing my personal life as well.
So, for me this frees up the enterprise. I, as a user, have to worry about the node, the end-device. And they, the enterprise IT department, simply need to worry about putting their applications or their services or their SOA services into a stream through IP through a VPN.
Garone: That paints the picture of this device being an extremely thin client that communicates with and leverages assets that are on a server.
Gardner: It’s a rich convergence client, which is really what people have been looking for.
Chowdhry: I had a comment regarding the iTV, I saw it. Actually, I came back little less optimistic about it, because it uses Wi-Fi, and there are serious problems with Wi-Fi if you want to deliver high definition TV. Wi-Fi has a lot of problems with collision and jitteriness. They were showing some high definition videos on iTV and you could see jitteriness. For the way it’s being positioned, delivering high definition TVs within your home, at maximum you could only do it as one channel.
I am little less optimistic about that, because the right technology for something like that is probably a power-line technology. There’s a company, I think its called DS2, which has these 200 megabits-per-second chips that you could just broadcast right over your existing home networks. Some company -- I think its LG Electronics or Samsung -- are trying to use broadband 200 megabits power per second right into the electrical outlet. With that, you can deliver four to five high-definition streams.
Probably the first generation of iTV could just have mere success. It will take at least two or three years before iTV also incorporates some of these power-line technologies to get at least consistent broadband within the home.
Gardner: That’s a good point. The iPhone, iTV and even the AirPort (the Apple Wi-Fi device) are limited right now. But the fact that they are putting so much emphasis into it tells me that there are might be further generations of these wireless network capabilities out there that they’re banking on. It’s the paradigm that they like. Whether the current level of standards and capabilities meets the task of the future remains to be seen.
Okay, folks, we’re about out of time. I want to thank our guests: Steve Garone, Joe McKendrick, Jim Kobielus, Neil Ward-Dutton and Trip Chowdhry. Thanks all for joining.
I’m Dana Gardner, principal analyst at Interarbor Solutions. You’ve been listening to BriefingsDirect, SOA Insights Edition. Come back and listen again next week.
If any of our listeners are interested in learning more about BriefingsDirect B2B informational podcasts or to become a sponsor of this or other B2B podcasts, please fill free to contact me, Dana Gardner at 603-528-2435.
Listen to the podcast here.
Transcript of Dana Gardner’s BriefingsDirect SOA Insights Edition, Vol. 8. Copyright Interarbor Solutions, LLC, 2005-2007. All rights reserved.
Listen to the podcast here. If you'd like to learn more about BriefingsDirect B2B informational podcasts, or to become a sponsor of this or other B2B podcasts, contact Dana Gardner at 603-528-2435.
Dana Gardner: Hello, and welcome to the latest BriefingsDirect SOA Insights Edition, Volume 8, a weekly discussion and dissection of Services Oriented Architecture (SOA) related news and events, with a panel of industry and financial analysts and guests. I’m your host and moderator, Dana Gardner, principal analyst at Interarbor Solutions, ZDNet blogger, Redmond Developer magazine columnist.
Our panel this week consists of Steve Garone, a former IDC group vice president, founder of the AlignIT Group, and independent IT industry analyst. Welcome, Steve.
Steve Garone: Thanks, Dana, great to be back.
Gardner: Also Joe McKendrick, a research consultant, columnist at Database Trends, and blogger at ZDNet and ebizQ. Welcome back, Joe.
Joe McKendrick: Thanks, Dana, I’m glad to be back as well.
Gardner: Its also a return visit for Jim Kobielus, principal analyst at Current Analysis. Hi, Jim.
Jim Kobielus: How’s it going, Dana? Hi, everybody.
Gardner: Neil Ward-Dutton, also making a repeat appearance, is a research director at Macehiter Ward-Dutton in the U.K. Hello, Neil.
Neil Ward-Dutton: Hi there. Hi, everyone.
Gardner: Our guest this week is Trip Chowdhry, a managing director of equity research at Global Equities Research. Welcome, Trip.
Trip Chowdhry: Hi, everybody.
Gardner: Our topics this week are going to revolve around three meaty issues. The first is the business opportunity for vendors around SOA. How will Wall Street, the City of London, other markets, and investor organizations view SOA as a growth opportunity, and what sort of companies will benefit?
Our second topic is going to be around the rcent announcement at Macworld -- and we’re talking about the week of January 8, 2007 -- by Steve Jobs and Apple Inc. of the iPhone, and what this might mean for a mobile front-end: Is it just for consumers? Is there an enterprise aspect to iPhone? And what might be some implications for SOA and composite applications?
First, let’s dig into this notion of SOA as a business opportunity for vendors. Some of the things you need to ask as an enterprise buyer are: "Am I buying into a company that’s going to be around in five years? Am I getting locked into a technology or relationship? If so, will that vendor be able to devote the resources for R&D, for support?"
I’d like to know that my vendors and primary suppliers are healthy financially. Some news just today: SAP came out with some results from the fourth quarter that came in below their Wall Street guidance. So, a little bit of a shocker there.
Let’s go first to Trip, because you’re an equity analyst, how do you view this SAP announcement? Is it a blip or is there some other opportunity to look at the impact of SOA and how the business is changing for business applications vendors?
Chowdhry: Actually, if you think about companies like SAP who have very long implementation cycles, they have a lot of moving parts. It's a complex product, and the problem that SAP has -- and to some extent, most of the SOA vendors have -- is that they’re trying to solve complexity with complexity, and with that you can easily get a few early adopters.
When it comes to mass adoption -- or the second phase of product adoption that needs to occur to show growth -- then you really have to ease the product, ease the message. You have to tell what you do in one bullet point. So far, our research shows that NetWeaver and SAP, and some other vendors, have very complicated messages, which CIOs are now struggling to understand.
That is going to create some sort of a downward pressure near-term in SOA-based initiatives from a business and financial point of view. From a technology adoption point of view and a trials point of view, SOA is definitely a trend, but it seems like the messaging, the product, and everything else need to be simplified, so that people can know how one initiative can correlate and coexist with other initiatives they have going.
Gardner: That’s interesting, because a recurring theme of our discussions over the past several months has been the complexity and the lack of clarity and understanding in SOA messaging and the business value. It seems to be also impacting how investors and those who value vendors look at this as an opportunity. It's like they don’t quite get it.
Steve Garone, do you agree with that, and do you think that there are certain types of companies, vendors, maybe systems integrators, that might be able to benefit from this complexity and lack of clarity?
Garone: Yes, I do. Dana, let me go back to your statement regarding messaging. Yes, we have had a variety of conversations about that, and in particular this sort of chasm that exists between technology messaging and business messaging. This is an architecture and a technology that can provide benefits from the technical point of view, but also from the business point of view.
It’s not clear that either the end-users or the providers of technology are able to clearly articulate either of them or have them interoperate -- so to speak -- have them mesh into a coherent vision of what SOA actually is and what it can deliver. So, I think 2007 is going to be a very important year for sorting out all that within organizations, and therefore in the responses that vendors provide in terms of messages.
Trip, I really loved your statement, "solving complexity with complexity." I think that’s right on the money. Another way to put that is that despite the Nirvana that SOA allegedly can provide, it’s still fundamentally about integration, and integration is always a difficult and complex problem. So, vendors who can address that in a robust and user-friendly way, are going to have significant amount of success.
In terms of companies like SAP, they sort of come at this from the enterprise application side. They in fact are going to have to move toward a model where they can present their products as a series of loosely coupled services that adhere to standards, and can therefore be integrated with other applications and easily accessed and used. I think they’re moving in that direction. I’m not really prepared to say that being unable to do this, or the speed at which a company like SAP is doing this, is affecting their financial results, but I do think that that’s going to become pretty much the ante that these companies have to put up in order to actually continue to play the game.
Gardner: It’s interesting, I speak to some systems integrators, and I characterize SOA as the gift that keeps giving, and they chuckle and they nod their heads and kind of wink. If you’re are a services organization, professional services, then complexity, integration, and such long-term trends always tend to be positive.
Garone: Yes, I agree with that.
Gardner: They also say they think SAP and perhaps other business or package business applications providers, monolithic application providers, are going to be yielding to some pressure in the market. Of course, it's too soon to tell from one quarterly result. We are having a robust global growth. Gross domestic products (GDP) are in growth mode. Even if the United States is in two to three percent growth, many of the emerging markets are growing much more rapidly.
You would think that a global vendor like SAP would be also enjoying some growth. So, it’s too soon to tell if there is a longer-term trend here. Let’s go over to Jim Kobielus. Jim, do you think that complexity is bad for vendors, good for SIs, and can you think of any types of vendor that might be able to go to Wall Street and say, "We’re going to be worth twice as much in two years because of SOA?"
Kobielus: I’ve joked for many years with people that the more change you have, the more complexity you have, and the more need you have for consultants to come in and explain it all. So, there’s always going to be an opportunity for consultants and analysts to explain what things like SOA are and are not, and what their relevance is to the average business user.
In terms of whether complexity is bad for vendors or good for vendors, and so forth, let’s take a step back here. In terms of the business opportunities in SOA or that SOA creates, first of all remember that SOA is just an architectural abstraction. How do you shrink wrap and make sexy something that’s just a three letter acronym?
In terms of differentiating your value prop as a vendor in this market, one of the problem with SOA is that SOA essentially has an architectural approach, smashing and dissolving the ability for vendor lock-in, because everybody is implementing common standards with any-to-any interoperability. So, these SOA universes are getting so multi-vendor and heterogeneous, the complexity can be overwhelming.
In many ways, the number-one opportunity that SOA presents for vendors are for those vendors that can reduce the complexity by providing SOA suites of software and other components, and secondarily those vendors, those service providers, who can provide SOA and integration best practices to enterprise customers.
So, how do you shrink-wrap SOA? Well, these suites -- from the likes of SAP/NetWeaver, Oracle, IBM, Microsoft, etc. -- implement all the piece-parts of SOA, the portals, the app servers, the databases, and the UDDI registries. Next, the Accentures of the world provide the warm bodies and warm brains of professional services to crunch this complexity down into greater simplicity, and deliver end-to-end integrated solutions that leverage the largesse that an SOA universe provides.
Gardner: What about middleware? We’ve seen IBM in the last several quarters come out with its newest growth engine, its software division, and within the software division the growth is in middleware: WebSphere. So, suddenly we’ve got the largest vendor and perhaps the largest SI as well, but their growth is in middleware. Oracle has also come out with some results in the last couple of quarters that have shown some strength in their middleware offerings.
Is SOA perhaps a leader to a larger infrastructure opportunity on Wall Street? What do you think, Joe McKendrick?
McKendrick: Well, Dana, I think basically at this point the terms middleware and SOA are fairly synonymous. If you talk about middleware and offering middleware out to the marketplace, you’re talking about some type of standardized, componentized service-based offering. So, absolutely. Middleware and SOA is the direction in which companies are going.
In terms of the opportunities, there are essentially three levels or three types of offerings vendors can offer, and put out to the marketplace. On one level, you have the applications. Then, there are the services, the systems integration (SI) services. And, then there are the development tools used to build these applications or systems. Microsoft, of course, still reigns as king of development tools. It has plenty of competition.
What I find interesting is on the application level, and this is where SAP has a lot of work cut out for it. As we see more standardized, componentized middleware evolving into the marketplace, we’re seeing more of a commoditization of software taking place, just as we saw commoditization of hardware back in the '80s and '90s. This stuff is probably happening under the radar at the this point, but I wouldn’t be surprised if we saw a Dell-type of business model begin to evolve in the software space, where you’re not an original equipment manufacturer or you’re not actually producing the software, but you’re pulling together components that someone else makes and offering it to the marketplace.
Gardner: Joe has raised an interesting issue, which is the business model. Let me take it back to Trip Chowdhry. Wall Street tends to frown on companies that are in cycles that have peaks and troughs, sometimes two or three years cycles. They’re difficult to predict. Wall Street prefers a recurring-revenue model that can show consistent returns and growth.
It seems to me that a move from an enterprise license approach, which we’ve seen in these large vendors, to a services-support-maintenance type of model, which we might expect with SOA offerings, might in fact please Wall Street. Do you have a sense of whether a shift in business model is in the offing and what it means?
Chowdhry: This is very good stuff that you mentioned, because there are some companies that are trying to innovate SOA as more of a service. There is a startup company called Mule, that’s trying to have -- I won’t say integration as a service, but has some SOA flavors to it. It’s not exactly SOA, but when I speak to these CIOs, they don’t say "I want SOA." They say "I want to make two systems work together with the least effort." That is a change over the last year. If that’s the problem, then the solutions could be many.
That’s one thing that we’re seeing. Then, of course, the Apache Foundation has its own product called ServiceMix, which is given out free, and JBoss coming out with its own SOA. Then, we have these commercial companies including BEA Systems, webMethods, and TIBCO, which have commercial offerings that are still on a license model. If you look at the various kind of plays in the market, one is software-as-a-service SaaS).
You have open-source alternatives like ServiceMix and JBoss, and then you have commercial pairs. Investors hate it when there is uncertainty, and there is no clear winner. Right now, there is no clear winner who can say, "Here is SOA." As someone on this panel mentioned, there is no product called SOA. You have a product called "database," but SOA is still a concept. And Wall Street is having a tough time putting a valuation or momentum behind SOA. Wall Street is thinking that any company that is in a disastrous situation evolves to be in "SOA."
IONA is one of them. WebMethods is another. TIBCO is struggling with growth. IBM, at the end of the day, is a services company, and since they are services company, they can push their own software the way it is, even though it’s not the best. BEA is also in transition. They don’t know what will happen to middleware. Oracle is trying to create a vertical stack. SAP is going with the horizontal stack. Microsoft is thinking the world is Microsoft.
Now, from an investor point of view, they see confusion and uncertainty, and when that occurs, they stay on the sidelines.
Gardner: All right, let’s take it over to Neil Ward-Dutton. Neil, it sounds like we ought to invest in bonds until this whole SOA thing gets settled down. What’s your perspective?
Ward-Dutton: I’ve just been listening to everyone and frantically writing stuff down. It’s interesting what Trip just said about how SOA is still not a product, and I absolutely agree with what some of the other guys said. It will never be a product. I think it's interesting about the observations that were made around IBM and Oracle in their middleware results, the contribution of middleware to their business. I think putting SOA in front of that is like putting the cart before the horse.
I agree with Trip in that what’s not happening is people saying, "I want SOA." What’s happening is a desire for delivering multi-channel services, dealing in a more consistent way with compliance mandates, making supply chains more flexible to allow better syndication of products and services, BPO and the need to integrate services across and between organizations. Those are the things that are being done, and SOA is more and more just the flavor with which those things are being delivered.
So, the big theme that is not going away -- and someone else said this five or 10 minutes ago -- is integration. It’s easy to think integration was a fashion in the late 1990s with Enterprise Application Integration (EAI), which incidentally was something that only really got off the ground once the big SIs got involved. The integration specialist players didn’t really make a huge market by themselves. What made a huge market that became a multi-billion-dollar market was actually the systems integrators. And, it’s the same with SOA.
Pure-play technology vendors providing really innovative little bits and pieces aren’t going to make a mainstream market. It’s only the SIs who really make that happen, because they can take a complex proposition and can actually communicate that effectively to the right communities that need to play into this.
Gardner: It would appear that SIs might be in the role of kingmaker when it comes to SOA -- if they are leading in terms of business opportunity, taking advantage of the change. They’re also going to be saying, "Well, here’s the best-of-breed that we suggest you use." IBM might favor its own software, but I think they’ve taken some pains to be a little bit agnostic or ecumenical.
If the customer says, "We’re an Oracle shop, and we want to use Oracle," then IBM will help them use Oracle. As Trip pointed out, IBM finds itself in a pretty good position because it has both the software business and the systems integration business. HP could also be considered in a good position. They have hardware, they have software partners, and they have this strong systems integration and professional services capability.
So, the question is: Are the SIs in a very strong and advantageous position over the next several years?
Ward-Dutton: SOA is a change in mindset. The challenge is primarily a change in the way you think about delivering capabilities through IT. So, what does that mean? Well, who’s going to make the money? The people who can help you change the way you think, not the people who give you bits of technology.
If you look at how the technology is being delivered, a lot of the technology that gives you the on-ramp to SOA -- the Web services enablement pieces -- those are being delivered free or nearly free as part of upgrades. The vendors are baking those technologies into products in the hope of making sure customers renew. That technology is finding its way to the market and to customers without lots of new money being spent. It's part of the regular upgrade cycle of technology, and the way that’s being procured.
The really interesting stuff is around change management, organization, and culture. That's where the real SOA market value is coming from. It absolutely plays into what everyone else was saying a minute ago about more of a subscription model on the technology side, because it's that kind of model that actually aligns the value of the investment with the value you’ll receive with the customer.
Gardner: Are you saying that SOA as a vision or a concept -- as it works its way into how people design, develop and integrate and manage and run their IT departments -- will in fact lower the amount of money that the market projects onto these vendors? Is that to say that SOA is a disruptive influence in terms of the amount of money required to do IT?
Ward-Dutton: No, at all. SOA does not create a whole pot of money to dive into. What it’s doing, because it’s a flavor of technology that’s being baked into existing upgrade cycles, is to create a replacement market. SOA-related technologies are replacing others.
Gardner: Let’s go around the table. I want to ask a very simple basic question and that is: Does SOA create more demand and more net spending over a two- or three-year period, or does SOA, in fact, spur on and create less IT spending? This is very general and aggregate, but we’re trying to determine whether SOA subtracts from the amount of money -- the pie that’s spent on IT -- or not? First, let’s go to Steve. What do you think?
Garone: Wow, that’s quite a question, Dana. I’m not sure that I can give a precise answer today.
Gardner: Gut instinct?
Garone: We’ve all recognized during these conversations that SOA is really just starting out, people are just really starting out with SOA. If you look at all the case studies that are around, and I’ve talked to end users about this, they’re really just beginning to ramp up with pilot projects or even small production projects, but it really hasn’t permeated a lot of organizations. There’s going to be a fair amount of money invested in new products and technologies, in training people to understand these and use them, and, in cases where you can’t do that or don’t see it cost-effective to do that, to go outside to system integrators to get that done.
Gardner: Steve, I was hoping for a short answer here.
Garone: I’m sorry.
Gardner: Is SOA a growth impetus or is it an contraction impetus?
Garone: I think it’s a growth impetus, especially in the short-term.
Gardner: Okay, Joe McKendrick?
McKendrick: It depends on how the economy does over the next two to three years, if the economy goes downward, we go into a recession or some type of economic downturn, when IT budgets decline, SOA will be seen as a strategy to cut cost. Formerly, a systems integrator would come in and spend about a year working on tying two systems together in an enterprise. If the two systems are SOA standardized to some degree, that could be shaved to a matter of weeks.
Gardner: So you’re seeing SOA as a cost-saving and somewhat of a contractor in terms of total spent?
McKendrick: If the economy goes into a downward cycle.
Gardner: Let’s just say the economy is adjusted, we’re going to have an adjusted perspective in terms of what the macro economics are.
McKendrick: IT spending probably will remain constant, but it’s going to shatter the types of projects that are out there. The systems integrators are in a tough spot because these one-year engagements that they could charge tens of thousands, hundreds of thousands, of dollars for are probably going to be going by the wayside. You’re going to see a lot of smaller engagements, smaller projects.
Gardner: Jim Kobielus, what do you think?
Kobielus: SOA is primarily going to be a belt-tightening approach that will come in very handy when the economy turns down. I mean if you do SOA right, it’s the whole notion of "don’t reinvent the wheel." In fact, you share, reuse, and consolidate all your existing silos down into fewer silos that can be then repurposed into new applications fairly quickly though some open standards.
If you do SOA right, then the SOA-specific projects will result in a leaner, meaner IT organization. Conceivably, the budgets might remain the same, but the share of the money will go not so much into the SOA plumbing, as UDDI registries and so forth, but will go for value-added projects in terms of business process reengineering (BPR). This will be based on the project accelerator templates that more and more of these SOA software vendors are providing -- more of the high-level systems integration.
Gardner: So over time there might be a bump in spending in order to actualize and realize SOA advantages, but once they are realized, the total amount of money required for IT should go down. This means a smaller pie for the vendors, which means vendors will be fighting over a smaller total marketplace, and we can expect some of the bigger players to perhaps have an advantage there.
McKendrick: In any given IT project, the role of the IT analyst will shrink and the role of the business analyst will grow, because then the value-added will be in process optimization as driven by the business people.
Gardner: I dare say that productivity will increase, but again we’re looking at this through the lens of how to size the total market for SOA and how vendors will adjust to that. Neil Ward-Dutton, what do you think about this, is SOA a contracting influence over time or is it a growth influence?
Ward-Dutton: It’s neither. Things won’t change, and the reason has to do with the size of the pie. There’s a maturing view of IT as a business enabler out there, and so IT budgets are really going to pretty much track the overall business performance. The thing that is going to happen is, while the budget stays the same, SOA enables better choices to be made around where the money gets spent in IT. That’s what’s really important.
It’s about being able to draw a line between stuff you want to reduce cost on and stuff you want to go crazy on, because it’s where you really differentiate the business. SOA enables you to move that line, as and when you want. That’s really interesting. It puts the customer in the driver's seat. SOA is like table stakes for the vendors, SOA is not a net new market opportunity, it's table stakes.
Gardner: So, spending remains fairly neutral in real terms, but productivity as a result of that spending increases?
Ward-Dutton: Yes.
Gardner: Trip Chowdhry, you’ve done some studies, how do you see the total pie for enterprise software and infrastructure being affected by SOA?
Chowdhry: If you look at the big picture, the industry is going through consolidation. Companies are merging, and that definitely puts integration as a top priority. Even before the two companies merge, the second thing they look at is: Can the two ITs work together, can the two IT departments, can the two products and platforms, work together between the two companies that are merging?
Definitely, an SOA kind of an architecture makes the M&A activity more fluid, but the question is, Who will benefit? Would it be software product vendors or would it be system integrators and consultants? I think there will be in two phases. The first phase would be the system integrators and consultants will win, because I think when we speak to the CIOs, anybody who can help them understand the mess gets the money. In the long term, software vendors may make money relatively or literally more than the SIs, because they may automate and simplify many of these processes. But net-net I think SOA is good for IT sector as a whole.
Gardner: Why, exactly, is it good as a whole?
Chowdhry: Because the past infrastructure has been wasted on legacy technology. Now, business is being done across every geography. Even a small company has to interact with a producer in China, a call-center in the Philippines, a software developer in India. When you think about the companies that are evolving today, it requires strong agility.
If you don’t like your vendor in India, you should be able to fire it and immediately get another one -- say, in Ghana or South Africa -- up and running. What SOA provides for a business user is flexibility, agility and the ability to optimize your processes to get the resource where it is cheapest and sell it where it’s more profitable. From a business point of view, SOA is a dream come true. The only problem is that it's not mature enough for everybody to put their hands around. The biggest problem SOA has is people and vendors saying, "It’s a concept! It’s a concept!"
The day people say, "SOA is a product, and I have a SOA product," like a database, then overnight SOA can become a reality and it could show the same sense of maturity and adoption that databases or Microsoft Office have.
Gardner: Okay. So, for investors, they want to see a product that they can sink their teeth into and say, "This is SOA and this is how it’s going to be sold into the enterprise." That way I can estimate and value the monetary flow.
Chowdhry: Exactly. They want to have an SKU and hear the price. That’s their mentality. Concepts are very difficult, because there’s no end to concept. The pushback I'm getting is that the problem with SOA is that it’s a constant evolution of various standards. First, it was SOAP; then, REST, and then the whole community debate about which protocol is good and which is not. Whenever there is so much discussion going on, people step back and say, "Let them figure it out. Maybe I'll put money into it next year."
Gardner: My take on this is that ultimately SOA is a growth influence, because it’s been the history of IT that when you’re about to crest from investment into recovering productivity benefits phase, and the cost begins to go down, there’s yet another thing that you have to begin to invest in. So, it’s ongoing. We’re still in the early stages of IT. This is not going to be something that you’re just going to mature to and then pull the plug and say, "We’re all done." It’s a journey and the spending will ultimately continue to grow.
Let's go on to our next subject. This week we saw Steve Jobs get on stage and introduce a fairly innovative confluence of what we’ve seen in multiple devices and multiple services. He’s taken a mobile device footprint, put a flat screen on it, given it a GUI, with a touch screen, brought together communications, both in text and voice, together with a full-blown operating system -- in this case OS X -- that can connect through Wi-Fi and through its Cingular partnerships, the EDGE network.
I’ve been very encouraged by this. It does a lot of what I would like to do from a personal productivity perspective. The iPhone product isn’t due until June, and it seems as if the feature and function list is still not completely nailed down.
My thoughts go back to when the Apple Newton was first discussed -- we’re talking 10 or 12 years ago. There was some vision about doing away with the PC for many workers. Now, notebook computers weren’t nearly as ubiquitous back then, and they were heavy. They were kludgey. The batteries didn’t work so well. But this notion of having a small-footprint device that can pretty much do what you’d want a PC to do strikes me as something that’s still of interest to the enterprise.
We see a lot of vertical niche applications with this. For example, when a FedEx person shows up at your home with a package, they’re essentially carrying a mobile PC device, but it’s highly verticalized and very expensive. It strikes me as being a very significant development, if we could get a common-footprint approach, an industry standard approach to this. If we could bring that into the enterprise and realize some of these benefits around business process and around edge workers and knowledge workers and business analysts getting out of their cubicles, going to where the activity is happening. They could tap applications through a mobile full-function browser anywhere, anytime, at low expense.
Am I alone in this? Steve Garone, do you think that things like the iPhone, and the Sony Mylo -- although that’s been directed more at college students -- are going to be the end-points for SOA?
Garone: It’s an interesting question, and to me there are actually two questions there. One is whether this is a useful device for the enterprise. Based on what I’ve seen of the iPhone, personally I’d love to have one. It’s very cool. The indications that I get from people who are actually implementing solutions in the enterprise is that there are some questions around what email systems it can work with, how robust the email is, which of course is very important in an enterprise environment. I was a little bit turned off by the fact that this is a single carrier only, which I think is contrary to the whole notion of an open interconnected network, and SOA, in particular.
Gardner: Not to mention competition.
Garone: Right. We can all talk about the tendency of Apple to do things like that throughout its history. But conceptually these kinds of devices from the very beginning have been part of the SOA vision. The question is: Is this the right device, does it meet enterprise needs in terms of email, and in terms of application access?
Gardner: Couldn’t you do Webmail through the browser?
Garone: You could conceivably do Webmail through the browser, but we haven’t even seen this device yet so we don’t know.
Gardner: If it runs OS X, it probably will run the Mac Mail program which is a strong POP client.
Garone: I agree. One issue that could come up, though, is one of the visions that has been talked about in the context of mobile devices and handheld devices is being able to access and download parts of all applications and databases for local use. The question is whether this the kind of device that can do that in an open and robust way in terms of other platforms and other technologies?
Gardner: Now, you mentioned you’d like one of these personally. This is how the PC entered in the enterprise. People liked PCs and they brought them in. They weren’t sanctioned by IT. They called them toys and trinkets. Perhaps the same effect could happen with something like the iPhone. What do you think, Joe McKendrick. Is this an end point that will find its way into the enterprise?
McKendrick: It’s interesting. I suspect it remains to be seen how deeply consumers embrace iPhone or whatever they’ll be calling it a few months from now. It’ll be interesting to see if this is something that enterprises embrace, which I don’t think will happen, I think it’s going to be kind of a bottom-up percolation.
Employees will be bringing these things into work with them, just as the cell phones and smart phones and PalmPilots had their roots, and the PCs began back in the early 1980s -- not as a deliberate strategy of the enterprise to reach these devices. But if there’s enough of a critical-mass of employees who are using the devices -- the iPhones, in this case -- then enterprises will begin to take a second look and reach out. I don’t think enterprises are looking at it right now or will be looking at it when it’s introduced in a few months.
Gardner: Jim Kobielus, do you see this as taking a step toward that notion of a mobile device that’s closer to a PC but does voice and other things that the enterprise could make good use of?
Kobielus: Oh yeah, for sure. But I don’t see anything terribly revolutionary in the iPhone, other than the fact that it comes from the Steve Jobs godhead. There’s no doubt that Apple does great design, does a great marketing, and does a great zeitgeist. They made a splash with the Newton and look what happened there. What in the iPhone is not already being used in corporate environments in a major way? People are carrying their iPods into the office and using them to listen to podcasts, or using their cell phones. They’ve already got mobile messaging and mobile browsers in a variety of devices that they’re using.
Gardner: They use iPods as a mobile storage device, too.
Kobielus: It's a nice design. I don’t want to sound to flip and cynical about it, but it's one of those things where Apple does a very good job, just like Microsoft does, of getting the average person on the street aware of the fact that we are reaching some sort of a tipping point in terms of putting these things in the hands of the average individual and the average office worker. Quite frankly, I’d like to wait another six to 12 months to see if this gets any traction in the enterprise arena. It probably will, but I don’t think there is anything strongly differentiating this particular client device.
Gardner: What do you think, Neil? Is having a low-form factor, but highly functional browser, something that will blow this open, something that brings together the necessary ingredients for a whole greater than the sum of the parts?
Ward-Dutton: No. Something I always try to remember is that I am not typical, and it's something I need to burn into my forehead. I am not typical, and I’m afraid neither are you guys. You are atypical. Most people aren't anything like us and don’t have our interests, nor all the time that we have to think about this stuff.
That mistake was at the heart of an awful lot of the far-out rhetoric that you heard in the late '90s- and early 2000-time around the previous generation of PDAs and mobile computing and how it was going to revolutionize the way that all business processes were enacted. They’re not, because actually it’s a minority of people that need this functionality. Most people aren’t mobile workers.
Gardner: Is it just another hype-curve here?
Ward-Dutton: I’m afraid so. As a consumer and an individual who loves gadgets, I think it's incredibly lust-worthy. I read some of the reviews and they'd crawl over broken glass to get one. It’s not going to be cheap, but as an individual, I think it’s awesome. Someone just said, "I’ll wait six to nine months." I’ll wait six to nine years.
Gardner: Trip Chowdhry, what do you think? You’re in Silicon Valley. Is this something that’s going to have an impact on the enterprise?
Chowdhry: Actually, I did see the iPhone at Macworld and I was very impressed. It seems like the name may have to change to Apple Phone, because Cisco has sued them. I think there are definitely enterprise kinds of applications that could work very easily on it. That is based on the demo that I saw at Macworld. First of all, browsing is very good -- very, very good. I would say very, very impressive.
It's very easy to use. If somebody sends you an email attachment or PDF or Word file, you can see it like you'd see it on a computer. It's totally amazing. You can expand it and contract it. The visual things are very good. Instant messaging is another application, which -- at least in the financial sector -- people like to communicate with.
Someone on this panel mentioned that the feature-effects are not complete. I think down the road there will be two or three versions. One could be for teenagers, one could be for a business user edition or small business edition, and the third could be for entertainment. The IM feature, as well as email and attachments, which are very business-centric, could do very well.
IM was one of the things I feel could be a killer app. I wouldn’t believe that many of the enterprise applications, like Salesforce.com-kind of stuff or running some mobile enterprise ERP system, on this PDA would do justice to it. But you can effectively communicate with your colleagues without a lot of baggage, and have four hours of battery life and being able to carry a very small battery as a spare.
I think it’s a good form-factor that can fit in every pocket. The feature sets still needs to be sorted out, but it’s a development platform. So, third-party guys will also come out with their own platform. First step, it will be a good replacement for products like BlackBerry and others.
Gardner: I tend to look at this optimistically in regard to the enterprise. I think that for salespeople, the mobile warriors, for those who are in the field, or internally on a factory floor, for example, this pulls together a lot of what was necessary and doesn’t require the integration on the back end.
The IT people will say, "Listen, all the stuff we’ve got can be plugged into this, whether it’s through the browser, through POP, through other standards of instant messaging. We can have a VPN go to it, and have secure access through the browser to our applications."
I think what makes this an intriguing to the enterprise is that Jobs and company have done the integration for them, and they don’t have to go and take each and every application or function and force-feed it to a device. That's done through standards and it could be very interesting as an accelerator to replacing the laptop and even desktop computer for a lot of workers.
Chowdhry: We think more in terms of data, but the people who were standing next to me [at Macworld] were representing a biotechnology company. They said, “I'll use iPhone at work, just to make sure I can scan through my voicemails.” That’s a feature where you can preview your voicemails just like you preview your emails. They felt that was the killer application for the enterprise. They said, “We have 20 to 30 voice messages in the morning. We have to go from one to thirty without knowing which one is important.”
Gardner: As I have alluded to in some of my blogs, if we bring Voice over IP (VOIP) into this, and we can do telephony and get the convergence benefits of having CTI and other benefits from an all-IP environment -- a lot of what we used to think of as "unified messaging" becomes a reality. And, as you say, that’s a very important productivity benefit.
McKendrick: Dana, this is Joe. The real test for the iPhone will be if a year from now we can do this entire podcast all using iPhones.
Kobielus: The problem with iPhone is that the hoopla surrounding it has still got us fixated on this notion that we all need or want one gadget for everything. I think the way it's all shaking out is that each of us possesses a federation of gadgets of our own. I don’t think so much that iPhone is a replacement for your laptop or even for your desktop, but rather yet another device that will hook up with them in various ways, through Wi-Fi and Bluetooth, and so on.
Then, you can zip all kinds of contents back in forth. What interests me more than iPhone from this past week is Apple TV or iTV, whatever they’re calling it -- the IPTV appliance. That seems to me to be a more exciting development on the whole. In a year’s time, we simply can be doing this video podcast using Apple TV.
Gardner: I would just add to that. I think this is going to reduce the number of gadgets I’ve got to have. In a sense, my notebook computer becomes my server, and it serves my television as a node using something like Apple TV or TiVo or Slingbox or whatever it might be. My notebook computer becomes my server for my content, so that I can manage it up to the cloud or to the other devices. It could be the cell phone, an iPod, or an iPhone. It really increases the value and strength of what the notebook computer does. It gives me a mobility node and also a home entertainment node. And that’s, I think, the vision here.
Kobielus: Didn’t Apple release, or didn’t they discuss, a home server this week as well?
Gardner: No, that was Microsoft, at CES.
Kobielus: Microsoft, I get these guys mixed up.
Gardner: The notion of a server is necessary, but whether we actually want to go out and buy another $1,000 Microsoft device that’s going to require a systems administrator behind every potted plant in every living room is still an open question.
Kobielus: I think it’s inevitable. I think the whole notion of a SOHO server is coming to the fore, I think every household in the world is going to have its own SOHO server before long, to coordinate this federation of gadgets and channels.
Gardner: Will it be a discrete box or will it be a virtualized server, where part of it’s on the cloud and part of it is just availing the extra power, capacity and storage I’ve already got on my notebook computer?
Kobielus: It’s a so-called set-top box repurposed.
Garone: Now, Dana, this is Steve. I just want to ask a sort of a devil’s advocate question here. Given what you just said, how does that pertain to the enterprise?
Gardner: Well, it’s interesting because if more and more people do this and they're getting this great functionality, productivity, and I guess you could call it client-server approach for their home and their personal life, and then they walk into their enterprise and they’re left with this kludgey, uncoordinated, un-integrated stuff, they’re going to be thinking, "Wow, I’d be better off having my SOHO and be a contractor to this enterprise than I would be by being actually a member of the enterprise."
Garone: That’s probably true, but I think what I’m getting at here is you see this as a very powerful browser, and certainly you can’t argue with that. But in terms of doing real enterprise work on this device, is this the right device for that at this point in time? I’m not getting the sense that it is -- maybe some day.
Gardner: I think it’s a combination of a notebook computer and something like the iPhone, because all the enterprise has to do is put things into an IP stream and put it onto a VPN, and that way I can access it through my notebook if I want full feature, or my iPhone type of a device if I want mobility. Plus that same device can then be something I use in my home for entertainment and managing my personal life as well.
So, for me this frees up the enterprise. I, as a user, have to worry about the node, the end-device. And they, the enterprise IT department, simply need to worry about putting their applications or their services or their SOA services into a stream through IP through a VPN.
Garone: That paints the picture of this device being an extremely thin client that communicates with and leverages assets that are on a server.
Gardner: It’s a rich convergence client, which is really what people have been looking for.
Chowdhry: I had a comment regarding the iTV, I saw it. Actually, I came back little less optimistic about it, because it uses Wi-Fi, and there are serious problems with Wi-Fi if you want to deliver high definition TV. Wi-Fi has a lot of problems with collision and jitteriness. They were showing some high definition videos on iTV and you could see jitteriness. For the way it’s being positioned, delivering high definition TVs within your home, at maximum you could only do it as one channel.
I am little less optimistic about that, because the right technology for something like that is probably a power-line technology. There’s a company, I think its called DS2, which has these 200 megabits-per-second chips that you could just broadcast right over your existing home networks. Some company -- I think its LG Electronics or Samsung -- are trying to use broadband 200 megabits power per second right into the electrical outlet. With that, you can deliver four to five high-definition streams.
Probably the first generation of iTV could just have mere success. It will take at least two or three years before iTV also incorporates some of these power-line technologies to get at least consistent broadband within the home.
Gardner: That’s a good point. The iPhone, iTV and even the AirPort (the Apple Wi-Fi device) are limited right now. But the fact that they are putting so much emphasis into it tells me that there are might be further generations of these wireless network capabilities out there that they’re banking on. It’s the paradigm that they like. Whether the current level of standards and capabilities meets the task of the future remains to be seen.
Okay, folks, we’re about out of time. I want to thank our guests: Steve Garone, Joe McKendrick, Jim Kobielus, Neil Ward-Dutton and Trip Chowdhry. Thanks all for joining.
I’m Dana Gardner, principal analyst at Interarbor Solutions. You’ve been listening to BriefingsDirect, SOA Insights Edition. Come back and listen again next week.
If any of our listeners are interested in learning more about BriefingsDirect B2B informational podcasts or to become a sponsor of this or other B2B podcasts, please fill free to contact me, Dana Gardner at 603-528-2435.
Listen to the podcast here.
Transcript of Dana Gardner’s BriefingsDirect SOA Insights Edition, Vol. 8. Copyright Interarbor Solutions, LLC, 2005-2007. All rights reserved.
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