Monthly Archives: June 2017

Data Sharehouse?

This is yet another new term in our lexicon. The San Mateo, California-based startup Snowflake announced this week a new offering with this name, as a free add-on to the data warehouse it built for cloud computing. Now companies using Snowflake’s technology, officially called Snowflake Data Sharing, can share any part of their data warehouses, subject to defined security policies and controls on access, with each other.

Snowflake’s data sharehouse allows companies to provide direct access to structured and unstructured data without the need to copy the data to a new location. Current approaches include file-sharing, electronic data interchange, application programming interfaces and email, but all of them have issues ranging from lack of security to cumbersome methods of providing data access to the right people. Jon Bock, Snowflake’s marketing chief compared the difference in data sharing on Snowflake versus other methods to the difference between streaming music and compact discs. “It looks [to the data recipient] just as if the data resides on their own data warehouse,” he said.

The catch is that every participant must be a Snowflake customer using their data warehouse in the cloud. So this is another way to grow their market. We have seen this approach in the 1990s when Exchanges were introduced by the likes of Oracle for B2B data interchange. That did not go very far. Of course cost was a big factor, but the policy agreement on common formats and security for data exchange was another issue. Snowflake claims to solve this by having one source of truth in the cloud.

Of course companies, like manufacturers and suppliers, advertisers and publishers have been sharing data for quite a long time, but it has been cumbersome via technologies like EDI (electronic data interchange, developed in the 1940s), email, file sharing, APIs and more. That kind of sharing takes time and wasn’t created for the current situation, in which businesses need live data processed in real time to keep a competitive edge.

According to Bob Muglia, Snowflake’s CEO (ex-Microsoft), the data sharehouse changes the game and democratizes the possibilities, because anyone can access the service. Rather than being charged a subscription fee, users pay only according to the amount of data they have processed. Snowflake’s data sharing service is free to data providers, data consumers pay for the compute resources they use. Not only that, but data providers and consumers make their arrangements independent of Snowflake Computing which is the infrastructure provider.

In an increasingly collaborative world there is little doubt that sharing data easily, and in real time, without sacrificing security, privacy, governance and compliance is of great value. Whether it will create entirely new markets has yet to be seen, but actionable data-driven insights are likely to be huge differentiators in the digital economy.

It is a clever move, but time will tell if this will enable smooth data exchange or create more chaos.

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Amazon+Whole Foods – How to read this?

Last Thursday (June 15, 2017), Amazon decided to acquire Whole Foods for a whopping $13.7B ($42 per share, a 27% premium to its closing price). On Friday, stock prices of Walmart, Target, and Costco took a hit downwards, while Amazon shares went up by more than 2%. So why did Amazon buy Whole Foods? Clearly Amazon sees groceries as an important long-term driver of growth in its retail segment. What is funny is that a web pioneer with no physical retail outlet decided to get back to the brick-and-mortar model. Amazon has also started physical bookstores at a few cities. We have come full circle.

Amazon grocery business has focussed on Amazon Fresh subscription service so far to deliver online food orders. Amazon will eventually use the stores to promote private-label products, integrate and grow its AI powered Echo speakers, boost prime membership and entice more customers into the fold. Hence this acquisition is the start of a long term strategy. Amazon is known for its non-linear thinking. Just see how it started a brand new business with AWS about 12 years back and now it is a $14B business with a 50%+ margin. It commands a powerful leadership position in the cloud computing business and competitors like Microsoft Azure or Google’s GCE are trying hard to catch up.

The interesting thing to ponder is how the top tech companies are spreading their tentacles. This was a front-page article in today’s WSJ. Apple, a computer company that became a phone company, is now working on self-driving cars, TV programming, and augmented reality. It is also pushing into payments territory challenging the banks. Google parent Alphabet built Android which now runs most PC devices. It ate the maps industry; it’s working on internet-beaming balloons, energy-harvesting kites, and self-driving technologies. Facebook is creating drones, VR hardware, original TV shows, and even telepathic brain computers. Of course Elon Musk brings his tech notions to any market he pleases – finance, autos, energy, and aerospace.

What is special about Amazon is that it is willing to work on everyday problems. According to the author of the WSJ article, this may be the smarter move in the long run. While Google and Facebook have yet to drive significant revenue outside their core, Amazon has managed to create business after business that is profitable, or at least not a drag on the bottom line. The article ends with cautionary note, “Imagine a future in which Amazon, which already employs north of 340,000 people worldwide, is America’s biggest employer. Imagine we are all spending money at what’s essentially the company store, and when we get home we’re streaming Amazon’s media….”

With few tech giants controlling so many businesses, are we comfortable to get all our goods and services from the members of an oligopoly?