IT Investment Research

Apache 2.2.2: Where is the Outrage? Where is the Bombast?

Jim Jagielksi announced August 30 release 2.2.2 of the Apache HTTP server, the latest update to the most successful yet least controversial open source project. This is THE Apache, the web server, not to be confused with the hundreds of other open source projects the Apache Software Foundation has spawned, dozens of which have reached relative stability.

This is the project/product that killed the standalone middleware market when IBM decided, "Why build our own.  Give these guys a few bucks to a have 'birds of a feather' meeting."

Congratulations but I sure miss the fun similar releases would have caused 10 years ago. BEA would tell you all the things that were wrong with it. Some open source zealot (not part of the Apache Software Foundation) would tell you that Microsoft (MSFT) causes world hunger.

From an investment point of view, starting with IBM's decision -- and Oracle's (ORCL) related decision to ship Apache with its app server -- increasingly the middleware market merged into the platform-software market and more recently the software market merged into the overall IT market. Today, all the IT leaders except SAP have declared they're in a business bigger than or different than the software business. (SAP's CEO made the declaration about 18 months ago and shortly thereafter was no longer SAP's CEO.)

Oracle sells servers.  Microsoft sells (or is trying to sell) telephones. EMC sells document management software. Intuit sells second mortgages. And ironically many of the smaller companies in the former software market that have not yet made their declaration have started calling themselves "open source" companies.  Looking for that Apache lightning to strike twice. 

-- Dennis Byron

HP's Wohl Kicked Upstairs for Killing WebOS, Buying Autonomy, Other Mistakes

The marketing communications business is a lot tougher than when I last practiced it 25 years ago. 

HP (HPQ) has had a bad week in the market because it admitted it wasted a ton of money on Palm, is planning to make another foolish acquisition, and has announced it is getting out of the consumer business. So HP canned its Marcom guy according to Bloomberg. Huh?

In a sense HP has a bad year with its then new CEO having to avoid going to headquarters, or apparently anywhere in the United States, for a while after he took the job.  In fact, let's face it, HP is having a bad century.

But back in the day, those were not the kinds of decisions that Bill Smith and Dick Brown made. Really, those are the real names of two of the greatest information-technology marketing-communications/PR professionals of all time and they worked back to back to back to back at Data General. That is, Smith was replaced by Brown who was replaced by Smith who was replaced by Brown between 1973 and 1983 as the company went from $20 million in annual sales to over a $1.2 billion (remember that's in 1970s/1980s dollars).  And PR guys certainly didn't get blamed, as some others have speculated, because some breaking news hit the wire 20 minutes before it should have on August 18. 

The fact that Wohl is being replaced by another ex-SAP guy actually tells the story.  I'm pretty sure this is another Brown replaces Smith replaces Brown sort of thing.

But at least someone remembered enough PR 101 that the news was released on a Friday afternoon(eastern U.S.)/nite (in Europe) in August in the northern hemisphere during a hurricane. Smith and Brown would be proud.

-- Dennis Byron

Obama and New York Times Are Both Like Match-Play Golf and "Tin Cup"

(Note: There is nothing to do with investment research or information technology in the following.)

There is a kind of meandering, non sensical column in the New York Times August 24 that compares former Illinois Senator Barack Obama to either or both Tiger Woods or to Kevin Costner's character in the golf movie, "Tin Cup." (I'm not sure because of the meandering.) The article popped on my little search doo-hickey because of the word "golf" but through the mention of golf strategy and "Tin Cup," the column is really a great metaphor for the Times itself and Obama.

Relative to the Times, the article begins with an odd description of the strategy of competitive golf, something along the lines of "play the course, not the opponent." "Play the course" is always good advice but the strategy that the Times associated with match-play golf in the article is more often associated with stroke play, the type of golf where you have to count every stroke, the lowest absolute stroke total wins, there are no "gimmes," and no running up a big stroke total into a  loss on one hole and yet make things "all even" on the next. Judging by its corrections page, the Times is always in need of match-play rules, not "playing the course" rules.

Then there is passing reference to Woods. It has nothing to do with his private life thankfully (if the timing had been right they could have done that column about Bill Clinton). 

Finally the article concludes with a paragraph that reads:

"There is a great scene where Dr. Molly Griswold is trying to help Roy “Tin Cup” McAvoy, the golf pro, rediscover his swing — and himself. She finally tells him: “Roy ... don’t try to be cool or smooth or whatever; just be honest and take a risk. And you know what, whatever happens, if you act from the heart, you can’t make a mistake.”"

That's where the metaphor for Obama comes in.  In the article the Times fails to tell the rest of the story.  Following this advice and against all sensible golf strategy (including the advice to "play the course"), Tin Cup proceeded to dump five shots in  row into a pond -- costing him 10 strokes and the chance to win a golf tournament. Isn't that the way his term as President has gone?

-- Dennis Byron

HP Acquires Hodgepodge of Enterprise Applications at Top Dollar

Boy, you take a few months off and the world goes crazy.

Congratulations to the guys at Autonomy (LSE: AUTN) for unloading that hodgepodge of old enterprise applications businesses for top dollar to HP. 

Maybe it's something to do with Euro to dollar exchange rate... or a way to save on U.S. corporate taxes by not repatriating profits... or something else not immediately obvious... Whatever, HP (HPQ) is

• back in a business it shouldn't be in
• will be trying to sell a half dozen products that didn't sell that well when they had their own brandnames on them 
• tyring to sell them into a market dominated by Microsoft (MSFT), Adobe (ADBE) and IBM
  • [I think even Oracle (ORCL) and Open Text (OTEX) are slightly bigger than HP will be in the content software market if the deal goes through but Oracle and Open Text have just as much a hodgepodge of products as Autonomy.]  
  • [Google (GOOG) could have entered this market with gusto anytime in the last 10 years and hasn't; does that tell you something?)

Supposedly this deal has driven up the share prices of MicroFocus and Sage a few pence (Is a pence what I think it is?) and put SAP and Software Ag (SOW) in play.

It would be interesting to know if Oracle had bid and if this price was just the result of some kind of male-urination contest.

-- Dennis Byron

Google Really Is a Technology Company... Full Stop. Exclamation Point

There has been a considerable debate over the years about whether Google (GOOG) is a technology company or a media company or consumer company or a new age company or a... As a result its future potential was analyzed and priced by some investment gurus one way and by others another, meaning they all used a separate set of assumptions against the same set of facts. 

For the casual investor, to depend on such analyses is like depending on S&P to rate your mortgage-backed securities. When I last looked at this issue in February 2010, I wrote:

"Google begins its 10-K with the statement:

"Google is a global technology leader..."

"As such Google doesn't compare itself against Amazon or eBay, Disney or McGraw Hill.  If you think of Google in that way instead of as an enteprise (sic) software market leader along with IBM, Microsoft (MSFT), Oracle (ORCL) and SAP, you do so at odds with the founders and other insiders that control 70% of the votes. If Eric, Larry and Sergey think they own a technology company, Google is a technology company.

So 18 months later, Google's pending (but likely to be adjudicated) acquisition of Motorola Mobility just puts the exclamation point on that way of looking at the company.  (Except that Eric is gone and you can take SAP from the list.)

I concluded at the time:

"So instead, think of Google this way: Primarily Google indexes information and web sites on its extremely large worldwide server farms in order to facilitate free Internet searches that help Google “sell” marketing enterprise applications.  Brilliantly these enterprise software sales are monetized by over $20 billion in advertising revenue annually instead of boring old license and maintenance contracts. But Google is still an enterprise software company."

Eighteen months later the pending Motorola Mobility acquisition just adds "from the palm of your hands to" to the phrase "worldwide server farms." And "over $20 billion" has become "over $25 billion." (And note that elsewhere -- thanks to Oracle -- I had changed the definition of "enterprise software company.")

When you invest in a company, take the owners' word for it -- not some investment guru's -- when they tell you what they do. It's their baby.

-- Dennis Byron