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Short version: It’s easier to comprehend why Facebook bought Instagram for crazy money if you ignore the social networking and instead focus on the value in automatic location updates via Internet-connected mobile devices. That’s a place where Facebook can build a serious business model.
“All models are wrong, but some are useful.” – George Box, Statistician, circa 1978
“All models are wrong, and increasingly you can succeed without them.” – Peter Norvig, Google, 2008
One of the reasons the technology sector is in the news so much at the moment is the emergence of five connected trends disrupting so many traditional industries: massive online social networks, social media tools, internet-connected mobile devices, cloud computing and ‘big data’ analytics. The social networks enable us to connect with anyone globally, social media tools have made it easy to share thoughts and opinions with those connections, internet-connected devices enable us to post updates instantly and from any location – no more waiting ’til you get home and login to your computer. Cloud computing enables all this information to be stored and accessed over the Internet. And accessing massive amounts of data, updating in real-time, enables new forms of analytics not previously possible.
An early new market is the world of social media analytics – providing feedback in real-time about what people are saying about your organisation or product/service. Sentiment analysis adds emotion – are people using words that are positive or negative, happy or sad, loving or hating. Mining Internet data such as Tweets and other status updates is far more effective than standing on a street corner trying to conduct a market survey.
But who gets to access all of this data? We share it freely and lose ownership in the process.
In February, the New York Times published an interview ‘Just the facts? Yes, all of them’ with Gil Elbaz. His first company, Applied Semantics, was acquired by Google and formed the basis of Adsense, Google’s business model. Gil’s latest venture – Factual – is focused on acquiring massive data sets, and then selling access to them. Current storage is running at 500 Terabytes:
FACTUAL sells data to corporations and independent software developers on a sliding scale, based on how much the information is used. Small data feeds for things like prototypes are free; contracts with its biggest customers run into the millions. Sometimes, Factual trades data with other companies, building its resources.
Factual’s plan is to build the world’s chief reference point for thousands of interconnected supercomputing clouds.
And now this month (via Techmeme) Forbes has an article asking ‘Will Data Monopolies Paralyze the Internet?’. Is it the end of Web 2.0 as blogs and status updates become locked inside password-protected social networks? They think not because more data lies outside them and if it can be mined, any entrepreneur can do it given sufficient resources.
But not all data is open to mine. The Forbes article highlights a new area of focus and I disagree with their position (emphasis mine):
Some very promising data hasn’t been collected on a large scale yet and might be less susceptible to monopolization than things like status updates. Lots of people I spoke with at the Where conference last week were excited about new ways to approach ambient data. …[collecting] the little specks of data that we’re constantly releasing–our movements, via smart phone sensors; our thoughts, via Twitter feeds–and turn them into substantial data sets from which useful conclusions can be inferred. The result can be more valuable than what you might call deliberate data because ambient data can be collected consistently and without relying on humans to supply data on a regular basis by, say, checking in at favorite restaurants. It also offers great context because constant measurements make it easier to understand changes in behavior.
The article is right to emphasise the value of automatic updates over manual ones – a phone automatically registering your location versus you manually ‘checking in’ to a location is both easier and more reliable. (Hence why Instagram is potentially more valuable than Foursquare). But it also highlights just how important mobile devices are in this equation.
Who gets to own or access those updates captured by a mobile device’s sensors? Simple. The device manufacturer (e.g. Apple), the network operator transmitting the data (e.g. AT&T), and/or the app you granted access to record the data (e.g. Instagram – automatically geo-tagging your photos for you). Sure, the social network gets a look in if you allow the app to share. But it’s far lower down the chain compared to the app installed on the mobile device. And top of the queue is the device itself. You can connect those dots for yourself. Small wonder there are constant rumours that Facebook and Google are building/buying their own mobile devices. Presumably Microsoft too (well they’ll probably buy Nokia)…
In that context, Instagram is valuable to Facebook way beyond its benefits as a social network. Those location updates originating from Apple and Android devices are a large, accurate and valuable dataset that Facebook now owns.
Related blog posts
- Lies, damn lies and statistics – Feb 2012
- Thinking in reverse – July 2008
- Zillionics change perspective – April 2008
The Economist has an article ‘Don’t lie to me Argentina‘ explaining why they are removing a figure from their indicators page:
Since 2007 Argentina’s government has published inflation figures that almost nobody believes. These show prices as having risen by between 5% and 11% a year. Independent economists, provincial statistical offices and surveys of inflation expectations have all put the rate at more than double the official number…
What seems to have started as a desire to avoid bad headlines in a country with a history of hyperinflation has led to the debasement of INDEC, once one of Latin America’s best statistical offices…
We see no prospect of a speedy return to credible numbers. From this week, we have decided to drop INDEC’s figures entirely.
Whilst we often talk about how statistics can always provide the answers people are looking for (hence the popular quote used as the title for this post), there is another angle to consider – are the underlying numbers telling the truth? It is a critical question when decisions are based on increasingly complex calculations that are then converted into summary data visualisations to assist decision-making. Was the original source data automatically scraped from systems or keyed in by people? Just how balanced is that scorecard..?
One of the current hot trends on the Internet is the emergence of ‘Big Data’ – being able to scrape massive quantities of information automatically generated, such as the search and surfing habits of everyone who ever logged into Facebook… and then analysing for patterns. One of the potential attractions is eliminating human error – or influence (in terms of truthfulness) – over the underlying data sources. Doesn’t solve the challenge of influence through gaming of the system but that’s perhaps a post for another day.
If you are interested in the use and abuse of statistics, there’s an excellent short book that walks through historical examples of where statistics simply don’t work – The Tyranny of Numbers: Why counting won’t make us happy, by David Boyle – Click Here for an old book review I wrote. And naturally, the book is listed on Amazon.
Related blog posts:
A few years ago, I published an infographic showing the history of SharePoint, to help decypher the different twists, turns and acquisitions that influenced what went into (and out of) SharePoint. (May get round to doing an update on that sometime…)
A related product has also had a few twists and turns of its own – PerformancePoint. The clue is in the name, it’s in the same family of products as SharePoint and originally targeted performance management solutions. Here’s its life story so far…
Back in 2001, business intelligence and performance management were quite hot topics but became overshadowed by the rise of the portal. An early market leader was ProClarity and most people thought Microsoft would acquire it. Instead they purchased Data Analyzer, owned by a ProClarity partner.In the same year, Microsoft acquired Great Plains, a provider of business applications to small and medium-sized organisations. Included with the acquisition was FRx Forecaster which had been acquired by Great Plains the previous year.
Data Analyzer remained available as a desktop product for a while before disappearing. Some of the technology merged into what would become Microsoft’s first performance management server product: Business Scorecard Manager 2005 (BSM – naturally, not to be confused with the British School of Motoring if you’re reading this in the UK 🙂 )
BSM enabled you to define key performance indicators (KPIs) and then create scorecards and dashboards to monitor and analyse performance against targets. The product included web parts that could display those KPIs, scorecards and dashboards on a SharePoint site. It even had a little bit of Visio integration producing strategy maps (a key component of an effective business scorecard). BSM was a classic v1 product: difficult to install, basic capabilities and limited adoption by organisations.
In 2006, Microsoft finally acquired the company it should have bought in the first place – ProClarity, which had a desktop and server product. The products were available standalone and some of the technology integrated into the replacement for BSM – PerformancePoint Server 2007 (PPS). Also integrated into PPS was a new forecasting capability based on the FRx Forecaster
PPS was effectively two products – a Monitoring Server and a Planning Server. The Monitoring Server included a revamped Dashboard Designer with improvements to the core monitoring and analysis capabilities – KPIs, reports, scorecards and dashboards. It also leveraged corresponding web parts available in SharePoint Server 2007 Enterprise Edition. The Planning Server included a new Planning Business Modeler that enabled multiple data sources to be mapped and used to plan, budget and forecast expected performance. The Planning Server proved particularly problematic to configure and use…
In 2009, Microsoft announced that PerformancePoint Server was being discontinued. The Monitoring Server elements were to be merged into future releases of SharePoint (and anyone licensed for SharePoint Server 2007 Enterprise Edition was immediately given access to PerformancePoint Server 2007 as part of that license). The source code for the Planning Server elements was released under restricted license as a Financial Planning Accelerator, ending its life within Microsoft. The FRx technology returned to the Dynamics product range.
In 2010, SharePoint Server 2010 was released and the Enterprise Edition includes the new PerformancePoint Service complete with dashboard and scorecarding capabilities but no planning options. This year also saw the release of Management Reporter which offers both monitoring and planning capabilities with direct integration into the various Dynamics products. And a new BI tool was released – PowerPivot for Excel, an add-in that enables you to create pivot tables and visualisations based on very large data sets. A trend worth keeping an eye on…
Going forward, Microsoft has business intelligence and performance management solutions in two camps: the Office and SharePoint platform that can provide a front-end to business applications and data sources of all shapes and sizes; and the Dynamics Product range that provides end-to-end business applications for small- to medium-sized organisations (and divisions within larger organisations). Dynamics can also leverage SharePoint as its front-end, just like any other business application.
SQL Server continues to provide the core foundation for all data-driven solutions – offering its own database capabilities as well as warehousing and integration with other ODBC-compliant data sources plus the reporting and analysis services on which BI solutions are built. SharePoint provides the web front-end for information and data-driven solutions amongst other things, like search, collaboration etc… Office continues to provide desktop tools as well as web-based versions that integrate with SharePoint. Excel now has its sidekick PowerPivot (wish they’d named that one PivotPoint…), Visio continues to be, well, Visio – one of the few acquisitions to keep its original name intact. And also worth a mention are Bing Maps and MapPoint, which provide location-specific visualisations. I originally wrote that MapPoint was discontinued. But did a search to check when it stopped being available only to find it alive and well as MapPoint 2010… hey ho!
You’d be right to think this performance management roadmap has looked a little rocky. What’s interesting to note is there is a Corporate Performance Management team within the Dynamics group, whilst Business Intelligence messaging barely mentions it, focusing instead on subsets of performance management – reporting and analysis.
If you are a performance management purist, you will likely be disappointed with the capabilities offered by PerformancePoint, much in the same way a taxonomy purist will gripe at the limitations within ManagedMetadata. Both are services within SharePoint 2010 that help manage and visualise information – they are part of a platform as opposed to specialist niche solutions that will typically offer a more comprehensive feature set. But if you want to start improving how everyone interacts with information and data as part of daily decisions and activities, a platform is a pretty good place to begin, requiring less skills or resources to get started.
Final note: All the above comments are based on my own opinions and observations. They do not represent any Microsoft official statements from the past, present or future 🙂 Have to mention on this sort of post as it covers the period of time I worked at Microsoft.
- Microsoft Business Intelligence (BI) web site
- PerformancePoint Services team blog
- Dynamics Corporate Performance Management (CPM) team blog
- MapPoint web site (only BI-related product that doesn’t get a mention on the BI web site)
- New features in PerformancePoint Services 2010 – blog post by PPS team
- Management Reporter: What’s next – roadmap into 2012+ (more planning planned)
- Microsoft shutters PerformancePoint and Planning Server gets an extension – RedmondMag
Related blog posts
Here’s a selection of links shared during February via Google Reader, Delicious and Twitter. Organised into the usual overlapping categories: Systems and the bits and pieces that make them work.Hot topic this month- games and reputation starting to be examined seriously as social media rumbles on into the workplace. Enjoy!
- Rwanda’s laptop revolution – the ‘one laptop per child’ programme in practice and enabling change
- Lessons from Chile – better building codes work and the importance of architecture
- Social media protest against Nestle may have long standing ramifications – other brands, take note
- Social Media cheat sheet – nice guide for any looking to use social media to enhance their business
- On unintended consequences – three unrelated examples remind of the unforeseen
- Keep Moving Forward vs Defend & Extend – Opposing strategies: how Apple and RIM took mobile market share from Microsoft and Palm
- Planning is very important … it doesn’t work – the plan is not the goal, it is the current best picture
- Blog post: Did the clouds just get darker – global cloud services get entangled in local borders
- Blog post: Social Media judges the Olympics – trending topics on Twitter show real-time analytics
- Blog post: You cannot walk in another’s shoes – how our perception trumps reality
- Blog post: How to lower productivity – monitor what everyone is doing
- The Performance Paradox – focus on movement rather than timing
- 10 principles for leading and managing in the networked knowledge workplace
- Cognitive learning theories and e-learning – how cognitive learning abilities are acquired
- Before they were titans: putting rejection letters in perspective – nice reminder of priorities in life
- Will Twitter Spam Ruin Your Reputation – the challenge facing social media and the systems depending on it
- Should Doctors Google Their Patients – revenge of the professional? 🙂 but a serious question… changes diagnosis?
- Games entering the workplace as a topic is hotting up – and not before time
- Gaming can make a better world – TED Talk
- Thinking the unthinkable – 12 months ago, who would have thought Toyota would be in the position its in today?
- Unifying probabilistic and rules-based approaches to artificial intelligence – human and machine-based approaches to learning and decisions
- Analysis of the UK budget on a human scale – puts deficit in perspective (FT.com – subscription may be required)
- Blog post: Do Search and Social Networks mix? – Does all information want to be found? Google Buzz thoughts
- Blog post: Blogging mistakes help improve policy – sometimes you need to learn the hard way
- On risk – defining the boundaries between good policy and excessive application gets harder
- Pew Internet on how we get our news – latest statistics: Of those who get news online, 75% forwarded through email or posted on social nets and 52% then share onwards – suggests participation is increasing over pure consumption
- Stanford Uni Workshop on Algorithms for Modern Massive Date Sets – presentations
- Why privacy is a human right – an old post by Bruce Schneier worth dusting off once in a while as data goes public
- Blog post: SharePoint 2010 and Adobe PDF indexing (updated from SharePoint 2007)
- Blog post: Microsoft’s Productivity Hub (add-on site collection for SharePoint)
- Analysts review of SharePoint 2010 – Gartner, IDC, Forrester
- Blog post: Concerns with cloud computing – looking beyond the technical issues
- Blog post: Private Public Sector Clouds – how commerce is creating dedicated cloud services for government
- Microsoft on cloud computing – gallery of video talks
- Redesigning school from in-world out – how a UK school used SecondLife to 3D model plans and avoid costly mistakes
- Do experiments, not projects – IT is no longer simply automating existing manual processes, it is trying to change the way people think and behave. Nobody really knows what’s going to happen (the need to move away from the fixed delivery boundaries of IT projects)
…and finally, finishing with the usual bit of fun. Well two bits this month as couldn’t decide between them:
1. Dilbert highlights a painful reality for too many projects
2. Why companies needn’t worry too much about how people blog – stuff usually catches up with you and lessons are often best remembered when learned the hard way…
Hot on the heels of announcing the new PowerPivot for Excel at the SharePoint conference recently, Microsoft’s Live Labs have announced another new tool with a very similar name: Pivot. So it seems we have PowerPivot for Excel and Pivot for the web.
There’s no mention of whether or not the products are technically related or just share the same name. What they do have in common is the goal to easily visualise massive amounts of data.
Side note: I wanted to embed the video (you can see it on the Pivot web site – link below) but the embed code provided didn’t work. Wish Microsoft could use a simple standard for embedding like everyone else…
So much for publishing soundbites during the recent SharePoint 2009 Conference. What can I say, I got distracted 🙂 Here’s a delayed one.
Microsoft announced a new product at the conference that has been going under the codename Project Gemini – PowerPivot
PowerPivot is being released as an add-on component to Excel 2010 (licensing not available at time of writing). It’s purpose: analysing massive sets of data using familiar tools. It brings business intelligence (BI) into Excel. Historically, to do such large scale analysis has required specialist tools.
PowerPivot enables incredibly fast filtering and sorting of spreadsheet data extending to 100 million rows. That’s a pretty big dataset for Excel to handle. PowerPivot includes some nifty compression algorithms and the working data set is read only. There are features to enable you to edit related tables that feed into it. With SharePoint 2010 you will be able to display the content and analysis in web parts for browser-only scenarios. And whilst its title suggests it’s a giant PivotTable, PowerPivot is not your traditional Excel pivot table. You can have multiple slices based on related tables to cross-analyse the data. Here’s a couple of images taken from the conference:
In the image above there is the main pivot table (selected in blue) summarising and filtering total purchases by selected continents. To the left and top left of it you can see two slices that are being used to further filter the data by genre and rating
In the image above you can see one of the new functions that are included with PowerPivot, it is creating a sum by matching values in a related table. It’s hard to visualise how different this is to the traditional Excel pivot tables and formulas. One example given during the talk was that PowerPivot could enable historical comparison analysis such as comparing accounting information across financial years.
This is an interesting move for Microsoft as we enter an era where massive amounts of data are being created and shared across the Internet. Finding easy ways to visualise such quantities of data is a hot topic. Microsoft is not the ony one coming up with new tools…
Some reading on how massive amounts of data is challenging conventional wisdom:
- Recent Innovations in method (The Technium, December 2004)
- The Google Way of Science – replacing the hypothesis (The Technium, June 2008)
- The Future is Big Data in the Cloud (GigaOM, October 2009)
Side note: Whilst I can see where Microsoft got the name from, I can’t help but keep calling it PivotPoint instead. Blame SharePoint, PowerPoint and PerformancePoint for that 🙂