Mr. Steven A. Ballmer, CEO,
Microsoft Corporation
One Microsoft Way
Redmond, WA 98052-7329
USA
Re: Blinkx
Dear Mr Ballmer
You may recall that I wrote to you back in January regarding Blinkx.
Given the rumours sweeping the UK markets in recent days about a Microsoft approach for Autonomy, I thought I would write again.
Of course I have no way of knowing whether the rumours are true, but even if they are not Microsoft could do a lot worse, strategically and financially, than think about acquiring Autonomy and Blinkx together.
Sadly, as far as shareholders are concerned there has been no improvement with Blinkx since last I wrote. Despite the CEO, Suranga Chandratillake, continuing to make very bullish statements about Blinkx’s future, the markets and potential investors don’t seem convinced and the stock price continues to languish. This may have something to do with the fact that none of the Blinkx senior management team – so far as I am aware – have ever bought a single share in the company in the open market to demonstrate their faith in the company’s future. Mr Chandratillake seems completely unaware of the psychological impact that this refusal to commit by the senior management team has had on markets and existing shareholders alike.
And yet from a purely technology point of view Blinkx appears to be continuing to make major strides. They now have in excess of 35 million hours of video indexed – and in fact only on Monday of this week you may have seen that they announced a deal with the Canadian Broadcasting Corporation to index their video content too.
In addition their Smartshopper product has been released (IE-only at the moment) and seems to work well – although without any major rollout of which I am aware, or any press or publicity, it’s hard to know how consumers are supposed to find and install the software.
And this really goes to the nub of many shareholders’ criticisms of the Blinkx management team: their B2B strategy seems to be progressing well (if very slowly: shareholders were told before last Christmas that Transaction Hijacking, another of their commerce-targeted products, was ready to go, and only now are management talking about establishing server farms in Nevada to host the solution), but they don’t seem to have a B2C strategy at all.
Blinkx has an index of more than 35 million hours of video. I would have thought it a total no-brainer to want to expose that index to as many video searches as possible, so that the index can be monetized by application of Blinkx’s Ad Hoc – ad-matching software which sets contextual ads against video search results.
And yet Blinkx has released no branded Facebook widget (Facebook currently has around 300 million users), nor have they released a branded iPhone app (Apple, as I’m sure you’re aware Mr Ballmer, are currently selling somewhere in the region of 5 million iPhones a quarter). Both of these applications would be relatively quick and relatively easy to produce, and would provide a quick ROI. They are low-hanging fruit which I would have thought any competent management team would have plucked before moving on to other matters.
It seems to me very much as though Blinkx is very good at creating technology but – at least on the evidence to date – absolutely appalling at monetizing it to benefit shareholders. Here we are more than two years after IPO, and yet the self-described “world’s largest and most advanced video search engine” is at less than half the IPO price. Of course I do not discount the economic downturn which has prevailed during that period: but again, if Blinkx had good PR, took the easy low-hanging fruit and communicated well with shareholders I doubt very much that the share price would be anywhere near where it is at the moment.
But such a low share price does, however, present a great opportunity for anyone who wished to acquire Blinkx. Blinkx management might not have any idea of how to monetize their technology – but I bet you could, couldn’t you Mr Ballmer?
Microsoft could probably get Autonomy and Blinkx doe somewhere between $5bn-$10bn. A very great deal of money, no doubt, but surely better for Microsoft to spend its cash mountain buying competitive advantage than to have it sitting there gathering hardly any interest? With both those companies Microsoft would be in a position to take on – and possibly even destroy – Google
Buying both companies would leapfrog Microsoft to a leading position in both the corporate search and video search markets – and if you don’t want the corporate search business I’m sure Oracle or SAP would happily buy it off you, leaving you with all the Blinkx-related IP in all markets, protected by more than 111 patents.
Worth thinking about, Mr Ballmer, no?
No comments:
Post a Comment