Solarwinds on Cloud Business

Solarwinds took its first step on cloud business. It ties up with Copper Egg a Cloud monitoring and Analytics company to provide free tools for monitoring Cloud Performance on real time. It is free to monitor up to two servers in private and public clouds.

Enterprises who are using cloud computing can use the Solarwinds Cloud Performance Monitor for getting alerts on server, system and operating system  issues in public cloud environments like Amazon EC2, Rack Space, Microsoft Azure or private cloud environments.

SolarWinds Cloud Performance Monitor capabilities include:

• Windows, Linux, MacOS, and FreeBSD monitoring
• Configurable alerts and multi-user access
• 5-second monitoring resolution
• No system polling, push-only
• Delivered as a SaaS service
• Simple and easy installation in 10-seconds

Saravanan

Atlassian - SWOT Analysis

Scott Farquhar and Mike Cannon-Brookes start the Atlassian in 2002 with a basic product JIRA - Bug Tracker.

Today they have 400 employees and there are no sales people. They have products under the following category

• Project and Issue Management
• Collaboration and Content Sharing
• Distributed Version Control &
• Code Quality

Recently they have reduced the starting price of the their flagship product JIRA to $10 per month for Ten users. They are concentrating on the customer satisfaction. After the reduction of the pricing, there is an increase in the customers count by 3000.

They have done 102 M in 2011. This is 35% increase compared to 2010 revenue (75 M in 2010). In that 50% of the revenue is from JIRA the Bug Tracking tool.

Strengths:

Their product is highly configurable. They have rest API that helps users to integrate it with any other third party product.

Their business model is a big strength for them. They have both open source as well as low pricing for the product.

They have both on-premise and on-demand products. 85% of their customers are using on-premise products.

The market place strategy is a major success. We are able to see a maximum downloads of paid plugins both directly from Atlassian and from the other vendors.

As many companies are releasing plugin for JIRA, their customer base will increase and in turn the revenue will grow.

The product is sold on its own due to the quality of the products and the brand name. They have a complete PDLC solution at an affordable price. They will replace Microsoft Projects in many enterprises during the downturn.

Their enterprise customer count alone is more than 21,000.

The current count as at 24-May-2012 is 20,113 customers in 129 countries.

21,000 companies have purchased our enterprise licenses, and tens of thousands more own $10 Starter Licenses  

They count the customers as companies that have currently paid for subscription or licenses. That means their ave. revenue per customer is around 5k.

Their pricing model (user based license) is one of the reasons for the big revenue. Even the plugin cost is very high.

They have released the JIRA 5 in Feb-2012. Their revenue has gone more than 10M on the same month. May be 10M rev. in Feb is due to Enterprise release.

The revenue from Confluence & JIRA combination is selling considerably. In the market place the max. plugin sold through Atlassian is "Team Calendars for Confluence". For this JIRA integration is mandatory. At the same time there is a contribution from confluence as a standalone product.

They are going to increase the confluence on premise pricing from Nov 3rd 2012. The reason could be

• To increase the monthly subscription sale more (or)
• Product adds more value and users are ready to pay and so increase in the pricing

Weakness:

There is no vision in the future. They are doing the same set of products for the past Ten Years. They are all technical people and they don't have exposure on growing to the next level. 

They don't believe in Sales people. 

Opportunity:

As they have good tech talent and perfect issue management framework, they can integrate more collaboration tools such as Chat, etc and this will bring them more revenue.

They have raised fund with VCs. They will help them in moving the company to the next level.

Treats:

Not having good UI. They never give importance to it but in the social world it is going to be a big challenge for them.

The breadth of products they have are very less which may be a big concern for them. More companies are coming with the complete story like Atlassian. 

Saravanan

Google Q3 2012 result analysis

Google has announced its Q3 results. It shows 45% growth y-o-y in Q3 and 14b in total revenue. This includes the Motorola revenue of 2.4b.

On the high level if we see it, this is a big revenue, but the in general, there is a drop in its growth %.  The revenue growth % in Q2 & Q3 2011 compared to previous year was 32.0% & 33.5% respectively where as in 2012 it came down to 21% and 18,5% (after removing the revenue from Motorola). This is the lowest growth % in Google's history (after going public). 

The Revenue growth is mainly due to the Motorola Acquisition.

In addition this is a consecutive second quarter Google closed the quarter with a drop in net profit (due to Motorola investment). The total cost and expenses are increased in Q3 2012. The increase is very high compared to Q3 2011. It increased from 6.662M in Q3 2011 to 11.365 M in Q3 2012. In percentage the increase is from 69% in Q3 2011 to 89% in Q3 2012.

The TAC (traffic acquisition cost) is increasing in the recent past. This has gone up by 1.8% y-o-y. Google has paid a big amount to keep the google.com as default search in IOS 6.

If the growth is in the same pace, the fourth quarter revenue is going to be 15b (12.4b+2.6b).

For the first time in Google's history, US revenue has reached 50% of the total revenue. This is mainly due to slow down in Europe. 

As per the Google CFO Mr. Patrick, there is a drop in the aggregate CPC. So customers are bidding lower in the third quarter compared to last year but the number of clicks is increased.

Our aggregate CPC or cost-per-click was down 15% and down 3% quarter-over-quarter.

In contrast to the above, we are facing increase in the CPC as the competitors are bidding high. May be this is in B2B market. As we enter into the fourth quarter, the CPC still increases as our competitors are desperate in acquiring more contact to get the max. revenue in the final quarter.

ServiceNow Revenue growth analysis

ServiceNow has announced its Q2 2012 revenue growth in Aug. They showed 93%growth y-o-y and 20% q-o-q. They did 57 M in Q2.

They are expecting 61 M - 63 M in Q3 which is around 90%+ growth y-o-y. This year they will be doing around 230M. The growth is very high.

This year they conducted user conference and there were 2000 participants. This is double of last year. There is a big growth in their revenue. At the same time their spending is drastically increasing.

Compared to last year second quarter, they have doubled their spending. Last year their spending on sales and marketing was around 15 M and this year it is 33 M. In addition their net income has become negative.

They have gone public this year. The biggest advantage for them is this. When you become public, you have to see the growth rate mainly. The net income is going to be secondary for public listed companies.

Once they show the growth, the company value get increased. This is the major difference between a privately held company and a public listed company.

Saravanan

Solarwinds announced Q2 2012 results

Solarwinds released their Q2 results. They have grown 40% in total revenue and 43% growth in net income year over year. Their Q-o-Q growth is 7% in total revenue and 13% in net income.

Their selling cost has gone up only by 36% y-o-y and 3.8% q-o-q. This is also a great sign for their spending control.

They have done one more acquisition now. They acquired  webhelpdesk.com a help desk company (installable) for $20M. They are increasing their breadth of IT products by acquisition. They have acquired Seven companies in the last couple of years.

1. webhelpdesk.com - July 2012 - Help Desk - $20M
2. Eminentware   -  Feb 2012 - Patch Management - $ M
3. Dameware - Dec. 2011  -  Remote control tools - $40M
4. DNSstuff.com - Dec 2011 - DNS Management - $11M
5. TriGeo - July 2011 - Log Management - $35M
6. Hyper9 - Jan 2011 - Virtualization - $23M
7. Tek Tools - Jan 2010 - Storage Management -  $42M

I was expecting SWI will acquire a help desk company in Q1 2012, but it happend now in early Q3.

http://vpsaran.blogspot.in/2012/01/solarwinds-acquicition-continues.html

Solarwinds was expecting a revenue of around $245M - $255M, a 24% - 29% growth in 2012. The present growth rate shows they will be doing between $265M and $270M which is more than 33% growth. Their strategy of acquire and grow works very well.

Solarwinds CEO Kevin Thompson said that "SolarWinds feels comfortable with an acquisition a quarter".

Now they have few more areas where they can invest - Customer Support, Project Management and CRM. Soon they will move from IT to collaborative business applications.

One big draw back they have is that they are not investing on the cloud applications. They may miss that market now. As their approach is acquire and grow, it is very easy for them to acquire cloud companies and establish them self on cloud any time. Now cloud business is started growing, they will get good established companies when it matures. Then their growth rate will be fast and good.

Saravanan

Google Q2 2012 report - a Review

Google has announced its Q2 results $12.2 billion. It is 35% growth y-o-y and 15% growth compared to Q1 2012.

The major revenue contribution is from Advertising and other category (90%). Also the growth rate is high in non-us region (53%).

The employee count has increased from 33k last year to 55k. The increase is due to the motorola acquisition. 23k  employees were moved under Google from Motorola. 1000 employees were recruited by Google directly in Q2 2012 alone.

The Cost-Per-Click has gone down by 16% in Q2 2012 compared to Q1 2012. But this has gone up by 1% compared to Q1 2012.

The growth differentiator is the revenue from Motorola. Otherwise the revenue growth is same trend of previous quarters. The standalone growth is 21%.

Google registers consistent increase in revenue from non-US region. The Europe region growth was limited due to the economic turmoil in Countries like Spain, Greece, Italy. UK had a growth of 20% y-o-y.

Why Companies are Acquiring Social Media Start-ups

Recent days, acquisition of social media start-ups by the public listed companies are increasing. This trend started early 2012.

Microsoft is acquiring the social media company "Yammer" that has tool for the easy collaboration among employees and increase the productivity.  This is one of the biggest acquisitions in social media start-ups. Microsoft pays around $1 billion as it is looking for a major change to come out of its stagnation.

Facebook acquires Instagram a photo sharing mobile app company for around $1 billion is cash and shares.

Salesforce.com acquires Buddy media a social marketing company that has facility to publish content, provide marketing Ads and measure the effectiveness of its marketing activities. This acquisition also involves major money i.e. around $700 millions.

Oracle has acquired Virtue a social marketing company for $300M. 

How are these social media acquisition helps the companies? Will it improve their business or this is also one kind of .com bubble?

Today, the social media sites are getting more users and very frequent visitors. After the gaming sites, these sites are getting more traction from all groups/ages. So users are familiar with the usage. By bringing in similar approach in the business apps and bringing in the collaboration as a part of the business applications, the productivity will be increased. Also the traditional marketing is not bringing enough business and conversion tracking is an issue, by moving to social media these difficulties are eliminated. 

Why do companies going for acquisition instead of using their services? Is it adding value to these companies?

As the CRM, Social Media and Marketing getting more traction, all the businesses wants social media marketing and monitoring the marketing activities. If the business applications like salesforce.com etc. integrates their services with the social marketing and monitoring tools, the value addition to their customers will increase and the growth of their customers will increase. This will be one more marketing value addition they can propose.

We have to wait and watch how this strategy works for these companies. 

Saravanan