latoga labs

Today I came across an interesting posting from Chris Schneider, CEO of MomentumSI, about Consolidations in the Software Industry. He makes some interesting observations about recent consolidations in the technology industry amongst the “next 40″ (the largest 40 software/services companies after Microsoft). He also points out the next set of acquisition targets from that same set.

Predictions are always hard to make (and harder to look at years later). But out of Schneider’s next acquisitions, I have my own set of thoughts I wanted to share.

• Sybase, Tibco, BMC and CA - I actually don’t see these companies being acquired. While there are some interesting technologies that they all own (BMC and CA have a diverse collection of tools…both old and new), at a cursory glance there is nothing immediately compelling within them to make them acquisition targets.
• Cognos and Citrix - These could be acquisition targets from someone.
  • Citrix has application virtualization and acceleration technology that might be interesting to someone; as long as their other applications are of interest or could be easily disposed of.
  • Cognos is interesting to those who are looking to acquire customers in the BI space (maybe combining with Sybase?)
• Red Hat and Adobe - I don’t see these two being acquired (or wanting to be)
  • Red Hat - If Red Hat were to be acquired, I fear that the open source world might start to swing in a completely different direction. I don’t see Red Hat letting that happen.
  • Adobe - They have an interesting mix of products that makes them much more unique than these other companies. Their combination of enterprise and end use solutions make them an interesting company to watch in the next few years.

Even more interesting than focusing on these acquisitions, is focusing on the companies that aren’t getting acquired. These are the companies that we don’t hear about that exist below the radar threshold. Small companies that are profitable, doing interesting if not exciting stuff in very focused or niche markets. I know of a number of companies like this that were boot strapped by their founders, grown to impressive revenue numbers, and still kept private and focused on providing value to their customers and their employees.

Some of these companies get acquired every now and then and pop up above the radar level. But the more interesting thing is how many stay down where they are. Perhaps this is part of the maturing of the High Tech industry that has been in process for a while. The development of High Tech business leaders that are in the business for something more than the quick buck or the big bang.

Wow! That’s what I said this morning as I noticed the changes that occurred over the past 24 hours in the Technorati graph that I included in my previous posting. Exactly 24 hours ago, that graph showed a little over 1,000 mentions of the new Apple iphone, now it has skyrocketed to about 21,000 mentions. I guess I underestimated the speed at which either

1. people were blogging about the phone (is that in indicator of how long it takes people to break away from Steve Job’s gravity field?)
2. or the speed at which Technorati indexers work.

Either way, after spending a few minutes jumping between blogs this morning to validate my hype-pothesis, I’m sitting here writing this with a small smirk on my face. Way too many of the blog entries fit square into my general hypester category (Apple’s Marketing teams must be very smug right now knowing that people are spending hours building cardboard iphones…).

Amazing thing about hype, how it can be used to distract you from what is really going on (I think that is a parallel to the De Tocqueville model). So, Mr. Jobs…how is that stock option backdating investigation coming along?

As I write this, it is exactly 24 hours since Steve Jobs gave his keynote address at the 2007 MacWorld conference. By now, the word has spread like wild fire about the iphone (oh yea, and that other thing Steve announced too…). I did a search on Technorati this morning at exactly 9:00am PST for “iphone”. This search revealed 55,035 blog entries that featured the word “iphone”.

My plan was to use this 24 hour period to highlight a point that has been bothering me lately. That point being how much hype powers the blog-o-sphere. What I expected to find were tens of thousands of blog postings about the iphone that hit within the past 24 hours. I was surprised to find that in reality there were only a little over 1000 blog postings. (Side Note to Technorati…how about adding the ability to search for blog entries based upon date of posting…I was astounded to see that your advanced search didn’t contain this option!) Most of the blog entries were pre-announcement hype about the iphone. Here is a chart from Technorati for posts that contain Iphone per day for the last 30 days.

Digging a little deeper, I did a Google search for “+blog +iphone“. 2.38M hits as of this morning. I’m mentioning both sets of statistics as it is still hard to find any type of statistics with regards to blog postings that don’t have accuracy issues of one type or another…

Surprising to me was how long the iphone hype was spinning out there in the ether…especially the spike right before Christmas. Generally speaking, I don’t become obsessive compulsive about tracking and contributing to the hype (I see it as being as fruitful in the long term and as stressful in the short as day trading stocks…I’m working on reducing the stress in my life, not increase it). So while I heard rumors about the Apple cell phone, I never really cared enough about to give it a second thought.

And Hype was the point I was hoping to make using the iphone as an example. How the content of the blog-o-sphere is so skewed in the direction of hype. Unfortunately, it is so hard to gauge the amount of solid content that exists in the blog-o-sphere in comparison to the hype..this measurement is subjective anyway. (I sense a tangent post coming soon about what the true value of the blog-o-sphere…). There is solid content out there, but like anything precious, you have to work to find it.

Yes, I know…I’m not the first by a long shot to make this point…but this thought has been swirling around in my head for a while, so this is just my way of working through the thought and getting it out.

I look at the hype as coming from two sources: general hypesters and professional hypesters:

General Hypesters

How many times have you seen a blog entry that contains less than a paragraph of content? And usually that same blog entry is just talking about a blog entry that some other person wrote. It’s almost like there is this compulsive need in people to be the first one on the record to say something, regardless of the value of what they are saying. I could spin down a path of analysis of the ego here, but I’m not a qualified psychiatrist (but if someone is looking for a thesis topic…). My hypothesis is that these general hypester bloggers become flashes in the pan, quickly having their interest being pulled in some other direction. This is the reason you find so many blog titles in use but abandoned on the free blogging sites…you go to the blog and find the most recent posting being over a year old.

Some of General Hypesters get a small or medium sized following (I’m being vague here on purpose), place a few Google ads on their blog and just keep on churning out the hype as long as the advertising revenue keeps flowing in. (ever notice all those magazines at the checkout isle of your grocery store?)

The net-net of my description for general hypesters is the fact that their content is not adding any real value but only adding to the chaff that is flying through the air.

Professional Hypesters

These are the guys who tend to be the fan that starts all the chaff flying in the first place. They can be people who have migrated from the trade rags to the blog-o-sphere, or they could be people who are secretly writing for a company or organization to help create the hype. Sometimes they are just people stating their opinion that build a big following. Follow the source of the general hypesters and their postings will refer back to the professional hypesters.

Occasionally they will be openly employed for and by the company or organization they are creating the hype about. Many company sponsored blogs are purposely not hype machines (my current company included). Sure, they all tend to have some bend of marketing and opinion guiding to them with regards to what the company does, but that’s true about all blogs (and a lot of “reporting”) today. The small percentage that aren’t are blatantly or inadvertently hype machines.

One example I can think of most recently is the “SNAFU” that a small software company out of Washington state made (they have gotten enough air cover out of it, so I’m being vague on purpose). They gave fancy laptops out to bloggers in the hope of the bloggers would write about the new version of the companies software and the fancy laptops. They said in essence ‘keep the laptops’. A day or two later they retracted that statement and said ‘we meant that you should preferable give the laptop away or send it back or keep it’. There was more blog entries about the retraction that there were about the review of the software! (and a lot of them were by the general hypesters)

Was this planned by the company or just an accident? Either way they got a lot of air cover out of it.

My Point

My point was just to state my opinion about how much Hype is out there in the technology industry. I’m hoping that I get you to think about what you’re reading a bit more by putting on your critical thinking hat. Is this something of usefulness or is it just hype? The obvious ones (general hypesters) are easy to spot. The professional hypesters are not always as easy…that’s why they are professionals.

Should we be concerned about the hype in the technology industry? Absolutely. We all remember the internet bubble. Look around, how many other bubbles do we see out there today?

(I’m focusing this on technology industry related hype. If by the end of this you’re thinking this only applies to the technology industry, consider getting yourself a better hat…)