Monday, June 14, 2010

Dallas - Threat or Opportunity?

I just finished reading a little article from InfoWorld on Microsoft's Dallas project. For those who don't know what Dallas is, Microsoft hopes Dallas to be "the iTunes for data" according to Douglas Purdy, Microsoft's Chief Technology Officer for data and modeling. Dallas is important for Microsoft's cloud strategy since it promises to be the data warehouse/store for apps running on Azure, Microsoft's cloud infrastructure.

According to a Dallas program manager, Microsoft intends Dallas to be "broker for discovering information", something well underway with data from InfoGroup, NASA, Zillow and the Associated Press available through Dallas. At a high-level, the plan is to expose information from providers through a series of APIs (application programming interfaces) or hosted within Azure by the data owner. One assumes if the data is held off-Azure, Dallas/Azure will offer a standardized api with support tools to allow scalability for data providers - essentially a proxy service whereby users wishing to consume data from a number of sources need only program to one service yet call multiple content offerings - a data nirvana for a number of heavy data users such as investment banks and hedge funds.

Thus the challenge - is Dallas a threat or opportunity?

Well, like most things depends on who you are, quite frankly.

For a firm like Mashery, a API management provider, Dallas and Azure might very well be a huge threat to their business. Mashery currently boasts customers such as Thomson Reuters, Hoovers, ZoomInfo, the New York Times and Trulia (a real estate information provider), Dallas effectively could offer a competitive solution, with the backing off an industry leader with a distribution network of millions of firms. Ouch.

For tier-two information providers, Dallas offers a huge opportunity as a data distribution channel whereby customers can access their information easily and integrate it with their office productivity tools. For example, for a firm like Dow Jones, plugging into Dallas would in theory allow for an investment banking customer to seamlessly integrate data into hosted pitch-books that leverage Microsoft Excel and Powerpoint, thus simplifying the work flow in which a junior banker needs to simply update the template, (i.e. replace company A with company B) replace the data, update the book and publish it through the Azure cloud to others within the firm - a far easier and cleaner method than exists today.

For, Dallas is also a threat. Despite the acquisition of Jigsaw by, lacks broader information that is needed across the enterprise - Jigsaw's contact and company data is targeted more for sales and some marketing types. With the right content sources, Dallas can address Jigsaw's competitive advantage and move beyond the value due to broader need for information. hasn't fully (or at least publicly) stated a broader content strategy to compete with Dallas although I do know someone did pitch this need last year to them. Perhaps Jigsaw is the start of such a strategy - it remains to be seen.

For customers, particularly the large investment banks, hedge funds and asset management firms that consume huge quantities of information for a number of different business purposes, Dallas is a huge opportunity. These firms use a number of sources - internal and external - for both business operations and compliance purposes, Dallas offers a single warehouse/api to pull this information together. And, with Microsoft allowing storage of data by customers, the opportunity for a single master copy of data is within reach. Clearly there are operational risks and regulatory issues to be considered but there is the possibility.

Finally for those large information providers such as Bloomberg, Standard & Poors and Thomson Reuters, Dallas is both a threat and opportunity. The threat really lies in what's possible. If customers or 3rd party application providers can build complex, .NET apps on Azure that are as good or better than what these vendors offer themselves, customers may simply move to these hosted apps and away from the terminal products these firms offer. This shift would then dictate customers wanting 'only the data' something I'm not sure these firms want to provide. Should they resist, the opportunity exists for the raft of smaller tier-two and niche information providers to grow.

However, there is an opportunity as I said. If one of these leaders can embrace the Azure platform, the distribution channel it offers and get the commercials right - they can readily gain to the expense of the others. Since Microsoft has hundreds of millions of users of its software and office productivity tools, a new economic model can significantly shift the playing field to the detriment of the others - perhaps for good.

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