Lead story - Big tech earnings reports are in, so what's next?
MyPOV: Big tech earnings reports were decidedly mixed this week, but can we discern a useful pattern? Start with Amazon. As Stuart reports in AWS still soars as Amazon's retail arm is hit by sector slowdown, but it's another quarter of big losses overall, surging AWS can't make up for suddenly skittish/spendthrifty consumers. The sector-wide retail hit is compounded by gas/energy price hikes. Wall Street sees the upside:
It may have turned in a big loss, but Wall Street sent the Amazon share price up 12% in after-hours trading. There’s clearly a lot of confidence around the organization and its ability to ride out the current macro-economic turbulence better than many of its rivals.
It's a similar story at Google, where ad revenues via Alphabet are down. Stuart breaks it out in Google Cloud revenues rise, but so do its losses as Alphabet sees growth slow. Google blames "macro-economic uncertainty," and, obviously, it's cloud business is not entrenched enough to earn the kind of investor premium Amazon (AWS) received.
Still, I like Google's ad revenue prospects better than Meta's, which are tied to algorithmic-walled gardens with a big ol' TikTok vulnerability. Stuart covers that
sh#tshow off in Ruling the Metaverse proves to be a costly burden as Meta's growth goes into decline for the first time (Sidenote: even though I'm a Metaverse skeptic, this rough earnings report is not really a commentary on that, except that the Metaverse is nowhere near contributing to bottom lines and boosting Meta's revenues, outside of gaming).
It's a similar refrain over at Microsoft: Microsoft Q4 falls short of expectations, but Azure set to drive double digit growth this year. As with Amazon, Microsoft's cloud business is enough to offset the consumer spending blues, at least for investors. Stuart:
Wall Street was commendably calm about numbers falling short of expectations, buoyed perhaps by Microsoft’s forecast that Azure will drive revenue growth by double digits in the coming fiscal year.
Then, closer to enterprise concerns, have have ServiceNow: ServiceNow softens short-term guidance due to macro headwinds, but is bullish on future success. Derek writes:
What’s important is looking at the long-term indicators. Deal sizes increasing. Existing customers expanding their footprint. Strong renewal rates. On these metrics, ServiceNow is looking good for tackling any disruption in the short-term.
We can't read too much into these well-positioned behemoths; I expect the Wall Street treatment of companies not bolstered by cloud infrastructure plays to be a bit gloomier. Recession or not, I count inflation and wallet-guarding consumers as just one headwind at this point. I don't yet see the crisis that would make for truly dire circumstance. In the meantime, Derek's point carries the day: "McDermott is right, whilst some companies may be being cautious this year, what they also know is that reducing investments in digital and technology isn’t the solution."
I'll take that to mean that "tech," as a sector, provides some protection, but not enough to issue a pass for poor execution. I can think of times in tech when you could do well just by hauling out of bed and showing up. This isn't one of those times.
Diginomica picks - my top stories on diginomica this week
- Without metadata, your fancy cloud data store is useless - Neil nails down the problem with modern metadata: "Metadata management solutions built and maintained by manual management rarely provide sufficient value and inevitably lead to “shadow projects” that drain budgets and thwart efforts to standardize data management."
- Automation next in PetShop.co.uk's purrfect tech strategy to fuel e-commerce growth - Madeline with a retail (NetSuite) use case.
Vendor analysis, diginomica style. Here's my three top choices from our vendor coverage:
- "Pockets of weakness", but Infosys bullishly ups its outlook for the year as Cobalt cloud offering gains traction - More earnings news, this time from IT services. Stuart: "CEO Salil Parekh confidently pointed to continued demand for Infosys services despite the wider macro-economic uncertainties." Infosys is also outperforming some peers; back to the opportunity to execute, or take bigger macro hits.
- Cybersecurity - what’s the real cost? Ask IBM - Chris crunches IBM security data: "With 277 days being the average time lag – an extraordinary figure – the real lesson may be that today’s enterprise systems are adept at hiding security breaches, which may appear as normal network traffic."
- ZohoDay 2022 - does your technology vendor's culture matter? - Phil reflects on an Austin-based analyst gathering, with one of the most unique enterprise software vendors.
- Tightening up on the future of work - Slack users testify to the need for flexibility in the Vaccine Economy - Alex really got me thinking about the power of "asynchronous work" in this piece, versus meeting culture. If Slack, the king-of-the-real-time-ping, is talking up asynchronous work, it must be a thing.
A few more vendor picks, without the quotables:
- The state of SAP S/4HANA Cloud - an opinionated review of SAP's public cloud ERP solution - Jon
- Next gen for lead gen? Oracle drills down on Fusion Sales - Barb
- Retail's biggest challenge isn't inventory, it's talent - a cloud ERP retail view from Acumatica's Josh Fischer - Jon
- Nokia transforms business processes with Celonis - Derek
Jon's grab bag - Martin explores the future of enterprise developers in a low-code era in Being the 'manager of the managers' - platform thinking revisited by OutSystems. Chris applies a critical eye towards the UK's drone dreams/policies in Make way for the drone superhighway, says UK. Bonus points for calling out last mile urban drone delivery as an "absurd concept."
Best of the enterprise web
My top seven
- Intel CFO says we’re ‘on the bottom’ after company misses earnings and stock sinks - Intel's controversial earnings report comes with plenty of internal questions (and baggage). I'm glad Intel isn't just hiding under the macro-economic excuses, as there is more at play here. Important nugget on SMB weakness versus enterprise.
- Apple beats expectations on earnings and revenue, but growth slows to a trickle - Doing the right thing with people's data (at least more often than Google or Meta) has served Apple well, but when hardware demand goes down, what's the plan B?
- How to Save a Software Implementation Gone Wrong - Eric Kimberling in his project-intervention wheelhouse: "You must have visibility into what your system integrator is doing and why they're doing it."
- Scandal and Redemption in Trade Finance: SAP’s Business Network Gets an Improbable Boost - I really wasn't sure how Josh Greenbaum was going to tie a trade finance scandal into an SAP Business Network opportunity (of sorts), but I actually think he managed it.
- How to foster connection in the office space of today - This is a podcast (and transcript) from McKinsey, so it's not a concise narrative, but I it's a forward-thinking/honest look at what works in office settings, and where remote comes up short - though the discussion on proximity in office design needed more attention. Last I checked, peeps weren't that interested in returning to cube sardine life.
- Overcoming The Barriers to Use Channel Data - Lora Cecere is on a hot streak of data-packed, unflinching supply chain posts.
- TikTok and the Fall of the Social-Media Giants - Though I don't share Cal Newport's
wishful thinkingoptimistic conclusion about TikTok forcing a more open Internet, this is still one of the best pieces on the state of social media I've read in a long time.
In 2018, via one of the cheesiest ad campaigns ever conceived, Facebook proclaimed itself "A place for friends, not for the things that get in the way." Fast forward four years, and, well, TikTok got in the way of Meta. Now, in response, Facebook is indeed putting its AI algorithm right in the way of you and your friends:
Zuckerberg Promises to Double Amount of Content You Didn’t Ask For on Facebook https://t.co/1rnK67M1Bm
-> so, Facebook is "a place for friends," except when your friends' content isn't viral/controversial enough, + your earnings stink. Then u shift to "AI" to deliver viral crud
— Jon Reed (@jonerp) July 30, 2022
I haven't had much satirical fun with DAOs in this column yet. Well, let's rectify that, shall we?
Could a DAO Build the Next Great City? | TED https://t.co/TOGAEUJHPP
-> let me save you some time on this video -
— Jon Reed (@jonerp) July 31, 2022
Oh, and there was a viable scientific explanation presented recently to explain the possibility of the "Loch Ness Monster."
Hey, I'll take good news wherever I can find it. Finally, basketball legend and stellar human being Bill Russell passed away this weekend. On a tribute thread, saw this stunning picture of Russell with Ali and Abdul-Jabbar in their prime:
Nothing guarantees us a pass from the whiffs section, but living well is probably the best defense. See you next time...
If you find an #ensw piece that qualifies for hits and misses - in a good or bad way - let me know in the comments as Clive (almost) always does. Most Enterprise hits and misses articles are selected from my curated @jonerpnewsfeed