The Bloor Perspective: Dangerous technology, Sun's one and search engine shenanigans

This week the team of analysts at Bloor Research consider the risks certain applications pose, the return of employee No. 1 to Sun and Google's main rivals...

This week the team of analysts at Bloor Research consider the risks certain applications pose, the return of employee No. 1 to Sun and Google's main rivals...

There are a variety of dangerous and questionable practices that IT can introduce, both at the user and technical levels.

The most obviously dangerous practice is the use of spreadsheets. Consider how rigidly controlled your general ledger is. You can't just go into it and change the data. But you can do that if you extract the data into a spreadsheet and the same applies to any other sort of data, regardless of whether those changes are deliberate or accidental. In particular, there is no audit trail so you can't detect fraud and you can't comply with corporate governance requirements.

This lack of security is not the only problem with spreadsheets. PricewaterhouseCoopers did a survey of large client spreadsheets and found that 90 per cent contained significant errors. Moreover, the cost of these mistakes, according to a 1996 report (probably more today), is within the range of $10,000 to $100,000 per decision per month. If you are going to use spreadsheets for any significant sort of planning then you really need to treat them like any other IT resource and fully test them before they are deployed.

The good news is that a growing number of vendors have woken up to this problem and are either providing Excel look-alike facilities within their own product or are running Excel within their environment so that full auditing and security is provided. The bad news is that most user companies do not seem to be aware of the pitfalls involved in using spreadsheets.

Another potentially dangerous practice that we have recently come across is web clipping. A number of portal products, such as Oracle Portal 10g, offer this as a mechanism for extracting a bit of a web page and embedding it within your portal. Apart from any legal implications, the big problem with this is that it messes up clickstream analytics. Yes, the details are still captured by the server so you will know that someone visited the page but it will completely mess up any details you may want to capture about how long a page was open, for example.

A third dangerous thing is anti-spam software. Of course, none of us like spam but where does legitimate marketing end and spam begin? For example, we recently discussed SPSS' acquisition of Data Distilleries. The latter's software aims to identify the best prospects for particular sales campaigns and the best medium to use (mail, phone, email) for each particular prospect. The danger with anti-spam software is that you end up throwing out the baby with the bath water.

The point about all these dangerous things is that they seem good in themselves but they have consequences that are not necessarily obvious. As the proverb says: "The road to hell is paved with good intentions."

*Sun (Number) One*

At its annual analyst event in San Francisco, Sun Microsystems last week made a number of product announcements and reasserted its research and development roadmap. However, the audience was surprised when CEO and chairman Scott McNealy announced plans to acquire Kealia, a move that will see Sun's former co-founder and employee number one return to the fold.

Kealia is a privately held company based in Palo Alto that was co-founded and led by Andy Bechtolsheim. The company was established to develop advanced server technology and Sun believes that it will gain computing technology directly applicable to its systems business. More importantly it will also bring back Bechtolsheim, a well-known industry visionary and leading computer architect.

"It is great to have Andy [Bechtolsheim] back home at Sun," said McNealy. "We started the company together over 20 years ago and both of us could not be more excited about working together again. The return of employee number one is 'back to the future' for Sun Microsystems and marks the start of a new wave of innovation at the company. Stay tuned. Andy has been more than prolific for Sun in the past, when he practically invented building computing 'Ferraris' out of off-the-shelf parts."

For his part, Bechtolsheim stated: "I am very excited about working with Sun to bring the next generation of volume servers, desktops and storage products to market more quickly. We will see some of the biggest innovations in servers over the next few years and I look forward to working with Sun to deliver this vision to the market."

Sun will acquire Kealia in a stock-for-stock merger, in a deal that is expected to close during the third or fourth quarter of Sun's fiscal year 2004. Following closure of the deal, Kealia will become the Advanced Systems Technology group within Sun's existing Volume Systems Products division. Bechtolsheim is slated to become the man charged with leading the development of Sun’s next generation computing systems working on all of the company’s chip architectures with the title senior vice president and chief architect. He will report to executive VP Neil Knox, head of the Volume Systems Products organisation, and will also join Sun’s Executive Management Group.

With Sun now developing systems based on its continuously evolving Sparc chip set and AMD’s Opteron platform the company will have plenty of scope to keep Bechtolsheim fully occupied. It will be interesting to see if the company can communicate its plans for its developing software offerings as well as its server systems, especially as McNealy sees IBM, Intel and Microsoft as Sun’s three major competitors.

*Search engine competition*

Recent statistics indicate that within the US Google has 32 per cent of the share of web searches, followed by 26 per cent conducted via Yahoo, 18 per cent by AOL and 17 per cent by MSN, the other major players in the market. At the same time while 76 per cent of its own search enquiries are powered by Google technology, Google technology additionally powers search engine technology for MSN, Ask Jeeves and some other small players, giving it over 50 per cent of the search engine market.

The search engine market is now the second most used feature of the internet after emails. One of the key spin-offs from the surge in use of search engines is advertising and it has boosted the flagging virility of web advertising. Search engines provide advertisers with a growing arena for getting their messages across via the web. They can enable advertisers, in a very focused way, to target their advertising. Pricing of advertising becomes more specific and accurate.

Few other media provide this opportunity. Other forms of quasi advertising revenues come in the form of sponsored links and 'paid-for placings'. Sponsored links arise as part of the search result. 'Paid-for placings' are embedded in the search engine to appear as very specific sets of search criteria are employed.

Search engines seek to differentiate themselves. Some do it technologically and this is the route by which Google has become so prominent. Others, such as AOL, have used search engine technology to develop and enhance their marketing and information delivery capability. Yahoo used Google technology early in 2003 when it purchased Inktomi. Yahoo judges this to be superior, with proprietary development capabilities which can surpass Google.

Unless Google presents itself very firmly in the marketing arena, as a marketing-driven company rather than a technology-dependent company, there is a possibility market-driven companies will, with their own technology, overtake Google's dominant position. The attraction of the prospective IPO will then begin to pale.