Despite the forward momentum, a new study conducted by Cisco shows that 60 percent of IoT initiatives stall at the Proof of Concept (PoC) stage and only 26 percent of companies have had an IoT initiative that they considered a complete success. Even worse: a third of all completed projects were not considered a success.
While 26% may, at first, seem bad, if you baseline it against the Standish Chaos reports, it looks pretty normal for an IT project:
In 2015, Standish’s study said about 29% of projects were considered a success. There’s a 2016 report out too, but it’s hard to find anything more than an outline of it. I’ve never figured out how legit the CHAOS report is, but it seems a-OK.
Point being: innovating in software, let alone the business around that software, is all about failure. ~25% success rate is pretty good.
I was on vacation last week, so this notebook is a little stale. Perishable news. (JOKES!)
- The deal size is $13.7bn, a 30% premium; expected to close in the second half of this year (Todd Bishop)
- Highly likely to remain independent: “Reading between the lines of Bezos’ statement, Amazon is signaling that it doesn’t plan to disrupt what Whole Foods is doing with a major shakeup of the retailer’s infrastructure or strategy in the near term. Amazon has a history of allowing acquired companies — from Audible to Twitch to Zappos — to continue operating with relative independence, with some product and feature integrations.” (Ibid.)
Not good for competition
- Investors really believe in that AMZN magic: “In total, those five grocery chains [Target, CostCo, Kroger, Walmart, SuperValu] shed about $26.7 billion in market capitalization between the market’s close Thursday and Friday morning, as investors worried that Amazon deeper push into the industry could be a death knell for some.”
- EU too: “The worries weren’t just contained to U.S. markets. Some investors in the U.K. and Europe also saw the purchase as a sign that Amazon could take its grocery ambitions global. Shares of French retailer Carrefour fell sharply on the news, about 4%, while in London, Tesco shed 6% and Sainsbury dropped 5%.”
- See chart too.
- More brick-and-mortar, foot-traffic, and distribution centers for Amazon: “the acquisition provides the AmazonFresh program, currently only in 15 markets, with 465 new locations [the Whole Foods stores] that generate eight million customer visits per week as well as 11 warehouses.”
- Amazon now has a big foot-print across the US, at least in affluent neighborhoods.
- Like Amazon, Whole Foods is big into private label: “Whole Foods generates $2.3 billion worth of private label and exclusive brand sales per year; its private label products account for 32% of items in Instacart’s food category, taking up far more of the shelf than Walmart Grocery (16%) and Peapod (6%).”
- (Further) driving down supplier costs: “It’s also possible that Amazon will use Whole Food’s partnerships with suppliers to get more of them on the Amazon platform. Amazon and Whole Foods will be tough negotiators, but the lure of the 300 million customer accounts on Amazon.com, in addition to all of its other CPG-related programs, will be tough to turn down.”
- More: “he scale at which Amazon is making use of this strategy should force CPG brands and Big Box retailers to make some major changes to their distribution strategies.”
- Ben Thompson, with some multi-sided platform theory sprinkled in:
- “The truth, though, is that Amazon is buying a customer — the first-and-best customer that will instantly bring its grocery efforts to scale.”
- “What I expect Amazon to do over the next few years is transform the Whole Foods supply chain into a service architecture based on primitives: meat, fruit, vegetables, baked goods, non-perishables”c
- “At its core Amazon is a services provider enabled — and protected — by scale.”
- This should remind you of the “middle-man”/unpaid for buy in my warehouse/drop-ship type of advanced retail play that the likes of Dell made famous.
- I want pizza and baby-wipes, not software – this kind of argument (though, not really “invalid”) makes me bristle. It’s like a pizza company saying they’re a technology company. As long as the pizza comes in the box and the paper-towels come in the mail, they can call themselves whatever they want…but the pizza shop and Amazon are, to me, a pizza and retail company. How they get the pizza into my mouth is not my problem. Since I’m a paying customer in these instances, it’s not like the “you are the product” epiphany of .com, eye-ball companies.
- Whole Foods had invested in Instacart in May 2016. What up with that, now?
- Laura Entis: “Just last year, Instacart and Whole Foods signed a five-year delivery partnership, which gave Instacart exclusive rights to deliver Whole Foods’ perishable items.”
- I guess it’d make sense for someone like Walmart to acquire them. Can Instacart be stand-alone now?
Getting that cash
- For TAM:
- FMI put estimate the US TAM at $668.680bn in 2016.
- Statista, on the US market: $606.26 in 2015.
- Very old, but the USDA in 2011 said, “The [US’s] 212,000 traditional foodstores sold $571 billion of retail food and nonfood products in 2011.”
- Online grocery TAM: “Last year, online grocery sales were about $20.5 billion.” The growth rates, of course, are huge compared to in-store.
- More market slicing numbers.
- Room to grow, future cash to grab:
- “Grocery remains the most under-penetrated e-commerce category, with less than 5% of sales happening online. However, with 20% of grocery sales estimated to begin online by 2025, brands investing in digital will reap the rewards.” (Elisabeth Rosen)
- Online groceries penetration: “The online grocery business is still in its infancy. Last month, for example, 7% of U.S. consumers ordered groceries online, according to Portalatin. Of this group, 52% already has an Amazon Prime account. Groceries represent “the final frontier for Amazon — they haven’t quite cracked the code on that, but they already have a relationship with consumers.”
- Some interesting grocery spending trends, by demographic, from Nielsen in 2015, via Cooper Smith:
- Mint says that last year, my family of two adults and two kids spent ~$15,000 at the grocery store. So that’s around what you’re upper-middle-class people (or whatever I am somewhere in the 90th percentile) spend, I guess.
For us consumers…
- Many predict either free or highly discounted delivery fees for Amazon Prime members. That certainly makes sense as Amazon Video and Music, and Prime Now, shows.
- This Cooper Smith guy is a good Amazon analyst.
- While bunch of survey and demographics data, globally, in this April 2015 Nielsen report.
- Bold predictions and cow animated gifs on Amazon in as a whole, after this, from Scott Galloway. (Yeah, that dude who does the machine-gun, yelling Mary Meeker style slides on e-commerce and such.)
- As always, what’s not to like about the booze-y tone of some Matt Levine commentary?
While department stores are sinking, sales of apparel and accessories on Amazon are skyrocketing, with $22 billion in clothing sales in 2016, or 6.6 percent of the market.
“Ansible, a DevOps automation engine that’s often used with Kubernetes deployments, was big, responsible for six of the quarter’s transactions of over $1 million. This included one deal valued at over $5 million — “our largest deal ever for Ansible,” according to Shander.”
Also, updates on RHEL, OpenStack, and OpenShift. And Oracle.
As part of CoreOS’s conference this week, 451 put out a sponsored study on container orchestration. It’s been much cited and is free, so it’s worth taking a look. Here’s my highlights and notes:
- Leadgen yourself to CoreOS get a copy of the report.
- This report is really more of a “container orchestration usage” report than much about “hybrid cloud.”
- “We surveyed 201 enterprise IT decision-makers in April and May 2017. This was not a survey of developers; rather, we received responses from those in C-level and director-level positions, including CISO, CTO, CIO, director of IT, IT Ops and DevOps, and VPs and managers of IT.”
- All from the US
- “All of our survey respondents came from organizations using application containers, and all were familiar with their organization’s use of containers.” – This survey, then, tells you what people who’re already using containers are doing, not what the entire market is thinking and planning on.
- “A significant slice of the survey respondents represented large enterprises.”
- Organizations are hoping to use containers for “[a] ‘leapfrog’ effect, whereby containers are viewed as a way to skip adoption of other technologies, was tested, and a majority of respondents think Kubernetes and other container management and orchestration software is sufficient to replace both private clouds and PaaS.”
- Obviously I’m biased, being at Pivotal, but the question here is “to do what?” As we like to say around here, you’re going to end-up with a platform. People need a “platform” on-top of that raw IaaS, and as things like Icito show (not to mention Pivotal’s ongoing momentum), the lower levels aren’t cutting the mustard.
- There’s an ongoing semantic argument about what “PaaS” means to be mindful of, as well: in contexts like these, the term is often taken to mean “that old stuff, before, like 2009.” At the very least, as with Gartner’s PaaS Magic Quadrant, the phrase often means means “only in the public cloud.” Again, the point is: if you’re developing and running software you need an application development, middleware, and services platform. Call it whatever you like, but make sure you have it. It’s highly likely that these “whatever you want to call ‘PaaS’ PaaSes” will run on-top of and with container orchestration layers, for example, as Cloud Foundry does and is doing.
- That said, it’s not uncommon for me to encounter people in organizations who really do have a “just the containers, and maybe some kubernates” mind-set in the planning phase of their cloud-native stuff. Of course, they frequently end-up needing more.
- Back to the survey: keeping in mind that all respondents were already using containers (or at least committed to doing so, I think), ~27% had “initial” production container use, ~25% of respondents had “broad” containers in production. So, if you were being happy-path, you’d say “over half of respondents have containers in production.”
- In a broader survey (where, presumably, not every enterprise was already using containers), of 300+ enterprises, production container use was: 19% in initial production, 8% were in broad production implementation.
- Nonetheless, 451 has been tracking steady, high growth in container usage for the past few years, putting the container market at $2.7B by 2020 and $1.1bn in 2017.
- As the report says, it’s more interesting to see what benefits users actually find once they’re using the technology. Their original desires are often just puppy-love notions after actual usage:
- Interesting note on lock-in: “Given that avoiding vendor lock-in is generally a priority for organizations, it might seem surprising that it was not ranked higher as an advantage since much of the container software used today is open source… However, our respondents for this study were users of containers, and may have assumed that the technology would be open source and, thus, lock-in less of a concern.” (There’s a whole separate report from Gartner on lock-in that I’ll take a look at, and, of course, some 140 character level analysis.)
- On marketshare, rated by usage, not revenue:
- On that note, it’s easy to misread the widely quoted finding of “[n]early three-quarters (71 percent) of respondents indicated they are using Kubernetes” as meaning only Kubernetes. Actually, people are using many of them at once. The report clarifies this: “The fact that almost 75% of organizations reported using Kubernetes while the same group also reported significant use of other container management and orchestration software is evidence of a mixed market.”
As one last piece of context, one of the more recent Gartner surveys for container usage puts usage at around 18%, with 4% of that being “significant production use”:
Of course, looks at more specialized slices of the market find higher usage.
This early in the container market, it’s good to pay close attention to surveys because the sample size will be small, selective, and most people will only have used containers for a short while. But, there’s good stuff in this survey, it’s definitely worth looking at and using.
Simon Sharwood pulls together some shipment numbers to put VR headset shipments in context.
The tl;dr on annual shipments: 9.2m VR headsets, vs. 135.6m wearbles, vs. ~1.5bn smartphones.
VR headsets have a runrate of, like, 9.2m units:
Virtual reality headsets are moving at a rate of 2.3 million a quarter
But, fast growing:
IDC says shipments are up 77.4 per cent year over year.
Meanwhile, wearables are at something like “33.9 million shipments a month,” like a runrate of 135.6m units.
Meanwhile, taking from this year’s Internet Trends report (sourced from Morgan Stanley), smart phone shipments are under 1.5bn, though slowing in growth:
And then smartphone shipments from IDC (probably where Morgan got those numbers):
For the full year [of 2016], the worldwide smartphone market saw a total of 1.47 billion units shipped, marking the highest year of shipments on record, yet up only 2.3% from the 1.44 billion units shipped in 2015.
Casper had been out raising a large round of funding when the talks started, sources said. The startup generated around $200 million in sales in 2016 — its second full year in business — and was valued at around $550 million after its last private investment in 2015.
And, as the headline says: “Target looked at buying the mattress startup Casper for $1 billion but will invest instead.”
There’s a fair amount of commentary on this type of e-commerce stuff in this year’s Internet Trends report as well.
Each year, Mary Meeker and team put together the Internet Trends report that draws together an ever growing collection of charts and analysis about the state of our Internet-driven world, from the latest companies to industry and economic impact. Over the years, the report has gone on to include analysis of markets like China and India. Being a production of the Kleiner Perkins Caufield & Byers venture capital firm, the focus is typically on new technologies and the corresponding business opportunities: you know, the stuff like “millennials like using their smartphones” and the proliferation of smartphones and Internet globally.These reports are good for more than just numbers-gawking, but can also give some quantitative analysis of new, technology innovations in various industries. The consumer and advertising space consumes much of this business analysis, but for example, in this year’s report, there’s an interesting analysis of health-care and transportation (bike sharing in China!). For enterprises out there, it may seem to over-index on startups and small companies, but that doesn’t detract from the value of the ideas when it comes to any organization looking to do some good, old-fashioned “digital transformation.”
Normally, I’d post my notebook things here, but the Pivotal blog overlords wanted to put this in on the Pivotal blog, so check it out there.
Appian raised just $48m as a private company, compared with $163m for Alteryx, $220m for Okta, $259m for MuleSoft and more than $1bn for Cloudera. In fact, all four of the unicorn IPOs raised more in a single round of private-market funding than Appian did in total VC funding.Not having done an IPO-sized funding in the private market meant that Appian could come public with a more modest raise. (It took in just $75m, compared with this year’s previous IPOs that raised, on average, $190m for the four unicorns.) And, probably most importantly, the Appian offering showed that these types of IPOs can work, both for issuers and investors. (Appian created about $900m of market value, and saw its shares finish the first day of trading up about 25%.) So when it comes to IPOs for the second half of this year, the ‘Appian way’ could help a lot more startups make it to Wall Street. “Will the ‘Appian way’ lead more startups to Wall Street?”
Put another way: maybe you don’t have to be unicorn class to IPO now? Who knows really, it’s always a bit of a mystery.
Pretty RAD, customer count and profile
Appian provides app development software for its business and government customers. “With our platform, organizations can rapidly and easily design, build and implement powerful, enterprise-grade custom applications through our intuitive, visual interface with little or no coding required,” the company explained in their S-1 filing…. Appian acknowledges that its biggest competitors are Salesforce and ServiceNow. IBM and Oracle are also in related spaces.
Founded in 1999, Appian offers a software as a service platform that helps business people create enterprise applications, especially for managing business processes, without needing programming expertise. The company is known for its “low-code” approach that allows non-programmers to create applications using building blocks and data, but managed and deployed by developers in a company’s information technology department, all on the same technology platform.
- “…booked $135 million in sales for the 12 months ended March 31, albeit at a loss of $12.5 million.”
- “The company’s client base includes the U.S. Department of Agriculture, Sprint, Ryder, Dallas-Fort Worth Airport, BUPA North America, CenturyLink and the Department of Homeland Security.”
Meanwhile, Gartner’s magic quadrant on this space (“Enterprise High- Productivity Application Platform as a Service”), says of Appian:
Appian is an hpaPaaS vendor with strong business process management (BPM) and case management capabilities. Appian has been delivering its Appian Cloud platform since 2007. It has taken a uni ed-platform approach that enables a single application de nition to be accessed on a range of devices without additional development. Appian applications can be developed and executed both on-premises and on its aPaaS offering. Appian has positioned its Appian Cloud platform for general-purpose application development, which includes robust process orchestration, application life cycle management and integration capabilities that compete with both hpaPaaS and high-performance RAD vendors, with a common per-user or per-application-and-user pricing model.
And a few more interesting items from Gartner:
- “There are more than 400 customers using Appian Cloud”
- “90% of the reference customers delivered applications in less than three months, which is a much higher proportion than average.”
- “With a predominantly direct selling effort and higher price point, Appian’s focus has been at the higher end of hpaPaaS market and not on small or midsize businesses (SMBs).”
- It uses OSGi!