Saturday, April 27, 2013

As Web Search Goes Mobile, Competitors Chip at Google’s Lead

We are headed to specific trusted sites vs general searches. Aivars Lode Avantce

As Web Search Goes Mobile, Competitors Chip at Google’s Lead
By CLAIRE CAIN MILLER | New York Times – 16 hours ago

Either way, Google lost a customer.
Say you need a latté. You might pull out your phone, open the Yelp app and search for a nearby cafe. If instead you want to buy an espresso machine, you will most likely tap
Google remains the undisputed king of search, with about two-thirds of the market. But the nature of search is changing, especially as more people search for what they want to buy, eat or learn on their mobile devices. This has put the $22 billion search industry, perhaps the most lucrative and influential of online businesses, at its most significant crossroad since its invention.
No longer do consumers want to search the Web like the index of a book — finding links at which a particular keyword appears. They expect new kinds of customized search, like that on topical sites such as Yelp, TripAdvisor or Amazon, which are chipping away at Google’s hold. Google and its competitors are trying to develop the knowledge and comprehension to answer specific queries, not just point users in the right direction.
“What people want is, ‘You ask a very simple question and you get a very simple answer,’ ” said Oren Etzioni, a professor at the University of Washington who has co-founded companies for shopping and flight search. “We don’t want the 10 blue links on that small screen. We want to know the closest sushi place, make a reservation and be on our way.”
People are overwhelmed at how crowded the Internet has become — Google says there are 30 trillion Web addresses, up from 1 trillion five years ago — and users expect their computers and phones to be smarter and do more for them. Many of the new efforts are services that people do not even think of as search engines.
Amazon, for example, has a larger share than Google of shopping searches, the most lucrative kind because people are in the mood to buy something. On sites like Pinterest and Polyvore, users have curated their favorite things from around the Web to produce results when you search for, say, “lace dress.”
On smartphones, people skip Google and go directly to apps, like Kayak or Weather Underground. Other apps send people information, like traffic or flight delays, before they even ask for it.
People use YouTube to search for things like how to tie a bow tie, Siri to search on their iPhones, online maps to find local places and Facebook to find things their friends have liked.
And services like LinkedIn Influencers and Quora are trying to be different kinds of search engines — places to find high-quality, expert content and avoid weeding through everything else on the Web. On Quora, questions like “What was it like to work for Steve Jobs?” get answered by people with firsthand knowledge, something Google cannot provide.
“There is a lot of pressure on search engines to deliver more customized, more relevant results,” said Shar VanBoskirk, an analyst at Forrester. “Users don’t need links to Web pages. We need answers, solutions, whatever intel we were searching for.”
But Google remains the one to beat, even as alternative search sites become popular. “They’re the specialty store you’re going into here and there,” said Danny Sullivan, an editor of Search Engine Land, a blog, “but they’re not your grocery store.”
Yet the promise of search is big enough that even though Microsoft loses billions of dollars a year on Bing and has failed to make a dent in Google’s market share, it keeps at it. Microsoft — which in February had 17 percent of the market, and 26 percent including the searches it powered for Yahoo — has said it views search as essential to its other products, from the Xbox to phones. And there is still a lot of money to be made as No. 2.
“You have millions of people a day saying exactly what they want, and if you’re an advertiser, it’s a beautiful vehicle,” Mr. Sullivan said.
EMarketer estimates that Google earns about three-quarters of search ad spending. Search engines bring companies troves of data and a measure of control as Internet users’ entry point to the digital world.
There are signs that people’s search behaviors are changing, however, with consequences for these companies.
Searches on traditional services, dominated by Google, declined 3 percent in the second half of last year after rising for years, according to comScore, and the number of searches per searcher declined 7 percent. In contrast, searches on topical sites, known as vertical search engines, climbed 8 percent.
While traditional searches increased again this year, other data reflects the threat to Google.
In the first quarter, spending on search ads fell 1 percent, a significant slowdown for Google, according to IgnitionOne, a digital marketing company. Last year, Google lost market share in search ads for the first time, according to eMarketer, falling to 72.8 percent from 74 percent.
This year, ad spending on traditional search engines is expected to grow more slowly than overall online ad spending, a reversal. Its growth significantly outpaced that of online ad spending until last year, eMarketer said.
Google is not watching from the sidelines. It is making more changes to search offerings, at a faster pace than it has in years.
Larry Page, its co-founder and chief executive, renamed the search division “knowledge.” Google’s mission, organizing the world’s information, was too narrow. Now he wanted people to learn from Google.
Google now shows answers instead of just links if you search something like “March Madness,” “weather” or even “my flight,” in which case it can pull flight information from users’ Gmail accounts.
The company’s biggest step happened last year, when it introduced the knowledge graph. While search generally matches keywords to Web sites, the knowledge graph uses semantic search, which understands the meanings of and connections among people, places and things.
A typical search engine, for instance, responds to a search for “Diana” by showing Web pages on which that word appears, from Wikipedia entries on the goddess of the hunt and the Princess of Wales to an engagement ring company.
But a more knowledgeable, humanlike search engine could know that you were looking for your roommate Diana’s online profile, or that you were also interested in Kate Middleton.
“What Google is beginning to do is share some of the knowledge in the world that humans have in their minds,” said Ben Gomes, a Google fellow, “so users can begin to communicate with Google in a way that’s much more natural to their thinking.”
Google calls these small steps that show where it is headed.
In the future, Google could answer more complicated questions, Mr. Gomes said, like “How far is it from here to the Eiffel Tower?” and “Where could I go to a concert in warm weather next year?”
Despite the advances of alternative search services, online habits are just as hard to break as real-world ones, especially when they are useful, said Andrew Lipsman, vice president of industry analysis at comScore.
“Most people have this very strong Google habit,” he said. “I go there every day and it gives me information I want, so it’s a self-reinforcing cycle. Not anyone can come in and just do those things.”

MarQ PC Shipments Worse Than Most Feared; Numbers Likely to Come Down to Our Estimates

PC sales off therefore Microsoft sales off looks like tablets and smart phones may have some effect. Aivars Lode Avantce

MarQ PC Shipments Worse Than Most Feared; Numbers Likely to Come Down to Our Estimates 
Preliminary MarQ PC shipment figures released last night by IDC and Gartner were worse than many expected, though in line with what we had been assuming in our MSFT model. IDC and Gartner noted that PC shipments experienced their largest y/y decline since each firm began tracking the PC market. In light of MSFT’s recent strength (up 6% over the last three trading sessions vs. a 2% gain in the S&P 500 for the period), we expect shares to be quite weak today and leading up to earnings next Thursday in reaction to these most recent PC data points.
  •   PC market contracted in MarQ between 11–14% y/y. IDC estimates the PC market declined 13.9% y/y (much worse than its forecast of a 7.7% decline) while Gartner estimated the market declined 11.2% (in line with its forecast of an 11.0% decline). Although we had modeled an 11.0% decline, we believe the Street had generally been expecting a decline in the high single digits.
  •   Consumer weakness pronounced, with Windows 8 not helping. IDC and Gartner highlighted weakness in the consumer segment, with IDC noting that the Windows 8 launch “appears to have slowed the market.” Both firms observed weakness worldwide, even in emerging markets, where consumers are increasingly choosing a tablet or smartphone as their first device. Although PC sales in emerging markets have less impact on MSFT given lower ASPs and higher piracy rates in those regions, the long-term implications of this trend are clearly worrisome.
  •   No change to our MSFT model at this time, as we had already lowered our estimates. Our model had already assumed an 11.0% y/y decline in PC unit shipments based on Gartner’s forecast at the time (see “Updating Our Model for Gartner’s 1Q13 PC Shipment Forecast,” dated March 21, 2013). However, if we were to use IDC’s PC shipment figure in our model, our MarQ GAAP revenue and GAAP EPS would be about $235M and $0.02 lower, respectively.
  •   Preview reminder. Recall our preview, “Software 1Q Preview: Low Expectations Should Help Against Deteriorating Fundamentals,” dated April 8, 2013, where we noted the discrepancy in our estimates compared to the consensus and the likely convergence of the two.
  •   We continue to rate shares of MSFT Neutral.
    See page 2 for analyst certification and important disclosures.

Oracle to release 128 security patches, hundreds of products affected

Oracle is having to fix a lot of their products and releasing a large number of bug fixes. Aivars Lode Avantce

Oracle to release 128 security patches, hundreds of products affected

Oracle will later on Tuesday release 128 fixes for security vulnerabilities that affect "hundreds" of its products.
(Image: James Martin/CNET)
The technology giant and Java software maker said in a pre-release announcement today that four of the patches include fixes for Oracle's flagship database product, which can be exploited remotely without the need for a username or password.
Also, 29 security fixes will arrive for Oracle Fusion Middleware, with 22 of these also allowing attacks without the need for authentication.
Affected components include Oracle HTTP Server, JRockit, WebCenter and WebLogic.
Both Oracle products have a common vulnerability scoring system (CVSS) rating of 10, described as the most severe vulnerability.
Oracle E-Business Suite contains six new security fixes, Oracle Supply Chain Products Suite has three new security fixes, and Oracle PeopleSoft Products contains 11 new security fixes.
Dozens more fixes for various Sun-branded products and Oracle financial software will arrive later on Tuesday when Oracle releases the patches over the usual update channels.
The "critical" patch update contains dozens more security fixes than the release in January, which contained 86 fixes. The high impact nature of these updates mean that the affected Oracle products must be patched "as soon as possible," as a result of the "threat posed by a successful attack."

Java updates on deck

The Web plugin Java, developed by Oracle, will also receive a number of updates, including 42 security patches.
Out of the total number, only three vulnerabilities relate to issues that are not remotely exploitable issues, meaning the software can be attacked over a network without the need for a username or password.
Affected Java software includes Java 5 (Update 41) and earlier, Java 6 (Update 43) and earlier, and Java 7 (Update 17) and earlier. JavaFX 2.2.7 and earlier versions are also affected.
Under Oracle's own CVSS rating system, some flaws rate as important though not critical, while some rate at the highest rating of 10.

Facebook, Apple, Twitter, and news agency NBC, as well as a number of others, all suffered as a result of a zero-day vulnerability in Java that led to hackers infiltrating both of the companies' internal networks in February.
It comes only a few months after Java software was pinpointed by a number of major technology companies as being the root cause of a series of successful corporate hacking attacks.
Facebook confirmed that its internal network breach was a result of a zero-day exploit in the Java plugin, as did Apple in a statement in mid-February. Law-enforcement agencies were informed in both cases.
Others came forward after initial reports suggested that Chinese hackers were behind the attacks, following reports of intrusions by The New York Times and other high profile newspapers.
The companies said there was "no evidence" to suggest that company or private user data had been stolen, the companies said in separate statements.
A "watering hole" technique was user by hackers attacking a popular iPhone and iPad development site that infected Java-running Apple MacBook machines. The site, riddled with malware that was injected into the website's code, used an exploit in the Java Web plugin to gain access to the employee laptops.

Big Blue misses Q1 targets big-time thanks to systems shortfall

IBM misses its numbers all around. Aivars Lode Avantce

Big Blue misses Q1 targets big-time thanks to systems shortfall

$1.4bn in charges for "workload rebalancing" – aka layoffs – coming in Q2
Free whitepaper – Hands on with Hyper-V 3.0 and virtual machine movement
Big Blue did not turn in the numbers that it expected in the first quarter thanks to more than $400m in mainframe systems, related software, and intellectual property licensing deals that rolled over into the second quarter. In the quarter ended in March, revenues were off 5.1 per cent, to $23.41bn, and net income fell by 1.1 per cent to $3.03bn.
On a conference call with Wall Street analysts after the market closed on Thursday, IBM CFO Mark Loughridge discussed those deals, saying, "We should have closed on those rollover deals, and we thought we had right up to the end," Loughridge said.

Loughridge said there were a number of factors contributing to IBM's difficulties in the first quarter. The fact that the Easter holiday was in March didn't help matters, and in fact the last time that happened was back in 2005 and IBM had a revenue miss then, too.
He also said that IBM had misjudged the effect of the political power change in China, specifically relating to the ripple effects it has on spending in the provinces and the industries they control. The US Federal business was also down thanks to the budgeting issues that Uncle Sam is facing, and the Japanese devaluation of the Yen didn't help the quarter, either.
There were also sales-execution problems in growth markets, which should have been up in the mid-single digits but which only rose a point compared to the year-ago quarter. But Loughridge made no excuses, saying that those mainframe deals should have closed and that it was an execution problem.
IBM doesn't do formal layoffs, but rather what it calls "workload rebalancing", which is a continuous business and employee evaluation process that results in layoffs, usually at a level that is below the radar of state reporting requirements.
Loughridge said that IBM would be booking $1.4bn in charges relating to layoffs, which would occur mostly outside of the US, so it can make its numbers for the year and line up its employee ranks against the opportunities it sees in the months ahead. Most of that rebalancing charge will hit in the second quarter, and there might be a good reason for that timing if IBM is indeed selling off portions of its System x x86 server business to Chinese PC and server maker Lenovo. (We will cover that in a separate story.)
The Systems and Technology Group at IBM, which makes chips as well as servers, storage, and networking products, had $3.11bn in revenues to the outside world (it actually sells products to other IBM divisions, such as Software Group, for appliance and data warehousing systems). That was a 17 per cent drop compared to the year-ago period. Most alarmingly, even with adding in another $120m in internal sales, STG still posted a $405m pre-tax loss in the first quarter. In the year-ago period, IBM had $3.9bn in total server sales ($151m came from internal sales and $3.75bn to the channel and customers), and had a $105m pre-tax loss. This business was not moving in the right direction in the first quarter.
But, said Loughridge, IBM is expecting for System z mainframe revenues, which were off 7 per cent in the first quarter, to have double-digit revenue growth in the second quarter.
Power Systems sales in Q1 were adversely affected by the impending rollout of entry and midrange machines using Power7+ processors, which launched in early February. IBM's Power line stomached a 32 per cent revenue decline in the first quarter, and Loughridge said that "Power picked up share, but it doesn't mean much if you are declining double digits."
True that.
IBM's CFO said that the company was taking actions to try to make Linux more appealing on Power Systems iron and doing other things to try to get the Power-based system business back on track, and said that these efforts could take six to nine months to come to fruition.
IBM's System x server line declined 9 per cent and was a relative bright spot. Tape, disk, and flash storage products saw an 11 per cent drop, and IBM's OEM chip business was off 16 per cent.
Software Group, which is the profit engine for Big Blue, was down a smidgen to $5.57bn in sales in the first quarter. Including a whopping $831m in sales to other divisions, it was able to post a pre-tax income of just over $2bn.
The five key products in the IBM software portfolio – WebSphere middleware, database and database tools, Tivoli security and systems management, social workforce solutions (what used to be called Lotus), and Rational development tools – grew 1 per cent to $3.51bn in external sales. Operating systems brought in $578m, down 2 per cent, and other middleware, mostly running on proprietary systems, brought in $1.06bn and was off a bit.
The Global Services behemoth had $14.1bnn in sales, down 3.9 per cent, but pre-tax income, after a lot of rejiggering in the past year, was up 9.9 per cent to $2.29bn. IBM exited the quarter with a services backlog of $141bn, up one point from a year ago.
Global Financing, which provides leases for end-user customers as well as financing to the reseller channel, is tracked separately from Global Services, and had $499m in external revenues and over $1bn when you add in financing that it did internally at the company (this seems like weird bookkeeping to El Reg, but it could be for wafer-baking and other capital equipment). Global Financing had $538m in pre-tax income.
Which shows you IBM should just do financing for the commodity servers and let someone else build them, perhaps. And it will very likely be a deal something like that which will come out of whatever negotiations that IBM and Lenovo are doing now for all or parts of the x86 server business.
Despite all of the issues that they're wrestling with, IBM reaffirmed its expectation that it can still bring at least $16.70 in operating earnings per share for 2013, and that it is well on its way of hitting its goal of at least $20 in operating EPS by the end of 2015, according to its financial roadmap.
That plan is what many unhappy IBMers call the 2015 Roadkill, and with the layoffs that IBM hinted at on Thursday, you can expect more grousing. ®

IBM Prepares to Eject Self from World of Internet Servers

IBM selling its server business. Aivars Lode Avantce

IBM Prepares to Eject Self from World of Internet Servers

  • 2:10 PM
Facebook technicians design servers — without help from companies like IBM. Photo: Wired/Jon Snyder
IBM makes more money from the sale of computer servers than any other company on earth. And yet the tech giant still wants to gut its server operation, selling a a third of the business to Lenovo, the same Chinese company that bought its desktop PC and notebook business nearly a decade ago.
That’s the word from CRN and The Wall Street Journal. And it should come as no surprise.
According to these reports, IBM is looking to shed the kind of servers that drive much of the internet — low-cost machines build around standard “x86″ processors from well-known chipmakers Intel and AMD — and it’s just another sign that the internet server game is on the move.
Though IBM is the world’s top server seller by revenue — selling an awful lot of very expensive and specialized machines to big, traditional businesses — it’s number three in the internet-centric x86 market, behind Dell and HP. And like Dell and HP, it has come under increasing pressure from manufacturers in Asia, who are now supplying machines to some of the biggest names on the net, including Google, Amazon, and Facebook.
This past fall, Intel’s Diane Bryant told us that 75 percent of the company’s server chip revenue now companies from eight different companies — and that one of them is Google, which designs its own servers. Four years ago, that 75 percent rested solely with Dell, HP, and IBM.
The irony is that some of the manufacturers who are challenging Dell, HP, and IBM have spent years building machines on behalf of Dell, HP, and IBM. Generally, the old “big three” don’t build machines themselves. They contract with original design manufacturers, or ODMs, in Asia, and these manufacturers are now starting to cut them out of the equation.
“The ODMs are emerging,” says Jean Bozman, an analyst with research firm IDC. She stresses, however, that the big three still control a very large part of the market.
There’s a wonderful symmetry to the news that IBM is now looking to abandon this business. In 2005, Big Blue sold its PC business to Lenovo, and just this week, IDC told the world that PC biz is now officially in decline. “They saw where the market was going. They saw it was becoming commoditized and they decided to get out of it,” says Christopher Ambrose, an analyst with research firm Gartner. The server market has a brighter future than the PC biz, but it too is turning into a commodity game.
Once again, IBM has showed the world the writing on the wall.

CFO warns IBM's 'underperforming' storage crew: We'll take 'substantial action'

IBMs big miss means they will have to shed business units. Aivars Lode Avantce

CFO warns IBM's 'underperforming' storage crew: We'll take 'substantial action'

  • alert
Legacy mid-range and entry arrays look unsafe
Analysis IBM's first quarter 2013 results were disappointing, and if you're in storage and servers at Big Blue, it appears the numbers guys are focusing on some of your product lines. In the earnings call, CFO Mark Loughridge said: "There are parts of our business that are in transition or have been under-performing like elements of our Power x and storage product lines that showed disappointing performance in the first quarter. Here we’re going to take substantial actions."
As to what "substantial actions" in the server business would include, some might speculate IBM's exit from the commodity server market - as last week's rumours of a possible acquisition by Lenovo might suggest. "Substantial actions" in the storage area could be similarly radical.
Storage boss Ambuj Goyal's team needn't be overly worried, though, certain storage product lines were called out and identified as having good growth by Loughridge: these included Storwize V7000, XIV, and Tivoli Storage Management software.
Goyal has just been appointed to run IBM's storage business. Only time will tell how he plans to boost profits in the storage biz.
IBM V7000 Screen GUI
Storwize V7000 GUI
Storage products that were not called out by Loughridge include:
  • DS8000 enterprise arrays
  • SONAS scale-out file system
  • DS5000 and DS5020and DCS3700 mid-range arrays
  • DS3500 Express entry-level array
  • SAN Volume Controller
  • Tape products including LTFS
  • N-Series arrays OEM'd from NetApp
  • ProtectTIER deduplicating arrays.
Let us start from the proposition that all of these are potentially on the block. Which ones are the likeliest to be axed and which ones are safe?
The acquired TMS, now FlashSystem flash arrays are part of IBM's $1bn flash investment and are seen as a growth product line.
As a SAN Volume Controller code is included with the V7000 we can judge that that product line is relatively safe. IBM Proprietary tape products are safeguarded by mainframe use. The LTO tape products are not and there could be a questionmark over them.
The growing popularity of Big Data suggests that ProtecTIER dedupe should be safe, although it is a bit-player in the deduping array market - like everyone else apart from EMC - and that SONAS should have a role to play. The mid-range and entry-level DS arrays are not safe according to this reading of IBM's storage product range and El Reg storage desk thinks we might expect "substantial actions" here.
We could hazard a guess that IBM needs to do something in the hybrid flash/disk array space, something to withstand the rising impact of Nimble Storage, Tintri and Tegile. That would give it a new mid-range array better targeted at storing data for virtual servers. It could also examine adding a cloud storage gateway to its product roster as well as having a look at object storage. Lastly it could start preparing for life after the N-Series.
IBM has had a big storage idea: primary data goes to flash. This prompts other questions, like what happens to bulk data storage? Is it going to the cloud? Are file systems that provide access to it going to be based on object storage? Will Facebook's Open Compute Project radically de-frill storage arrays in this area? Will file virtualisation be needed to provide a single access portal to file data stored in a variety of locations and moved around according to its access activity level?