Data Sheet—Friday, October 24, 2014

Good morning, Data Sheet readers. Both Microsoft and Amazon issued their latest earning reports last night. The results are markedly different, but cloud computing is a bright spot for both. Is your data science team overlooking valuable connections that could impact decision making? Read on for more details about an analytics approach used by Microsoft, Wal-Mart and Pfizer. Enjoy the weekend!

Microsoft sales soar. The software giant raked in $23.2 billion for the first quarter of fiscal 2015, but a $1.1 billion charge related to summer layoffs were a drag on profits. Among its commercial highlights: cloud revenue grew 128%, fueled by sales of Office 365, Microsoft Azure, and Dynamics CRM services. Indeed, up to one-third of Office license renewals were for the cloud version. Fortune

Amazon posts biggest ever quarterly loss. New product development and investments are costing the company dearly: it bled $437 million in the third quarter and took a $170 million charge related to the Fire Phone introduction (a huge disappointment). Fortune

Amazon Web Services (AWS) was one of the bright spots. Usage growth for its cloud computing offerings was up 90% over the year-earlier quarter. Its second European region is now up and running. Plus, it has two powerful new partners: AT&T and Verizon are counting on AWS for their cloud strategies. Notes Technology Business Research analyst Jillian Mirandi: "AWS remains significantly larger than Microsoft and Google in terms of public cloud [infrastructure-as-a-service] revenue, generating an estimated $4.7 billion in 2014, while Microsoft will generate an estimated $156 million and Google an estimated $66 in the year (to note, Google Compute Engine was made generally available in December 2013, and Microsoft Azure IaaS in April 2013, giving AWS a six-year head start)."

CLOUD CHATTER

Bigger deals buoy NetSuite. The early pioneer in enterprise resource planning software delivered as a service reported a record number of larger contracts worth at least $1 million as it builds credibility outside its core midsize enterprise customer base. NetSuite's third-quarter revenue grew 34% to $143.7 million. It's on track for $545 million to $555 million this year. ZDNet

STATS & SPECS

Bid for a Warhol painting or Helmut Newton photograph online! Venerable auction house Christie's has spent $50 million (so far) on e-commerce technology in its bid to support "the acquisition of new clients." It has even held online-only auctions, including one in 2011 for Elizabeth Taylor's clothing and jewelry. Rival Sotheby's is investing in similar capabilities through a relationship with eBay. New York Times

Google ramps artificial intelligence research. Its DeepMind group just forged a relationship with Oxford University, hiring several experts in computer vision and recognition systems in the process.

STARTUPS & DISRUPTORS

Can Soft Machines shake up semiconductors? Its chip automatically breaks up processing instructions coming from applications or operating systems (an approach called "threading"). That allows them to be assigned across the circuitry dynamically and more efficiently. CEO Mahesh Lingareddy (a former Intel executive) believes this will speed result in two to four times the performance of other chips, per watt of power consumed. Soft Machines plans to license its technology to others for manufacturing. The first focus is systems using the Android mobile operating system. Its story has attracted $125 million in backing from high-profile investors including Gordon Campbell, Samsung Electronics' venture unit, and Advanced Micro Devices. Wall Street Journal

FAQ

Find the six degrees of separation in your business data

When it comes to data science, what's one thing Microsoft, Wal-Mart and Pfizer have in common? They are just three of the companies using technology from Chicago-based Mu Sigma to visualize complex, seemingly unrelated business trends.

The company employs more than 3,500 data scientists with experience across 10 industry sectors including pharmaceuticals, banking, airlines and health care. What's more, it has attracted more than $200 million in financing from Sequoia Capital and General Atlantic.

Mu Sigma's technology automatically identifies connections between business data that could clarify a decision or provide more context that could affect the result. So, for example, the software could apply trending comments on social networks that could better explain a flood of customer service requests or product returns. Taken together, the knowledge gleaned from this related information could be used to keep a customer from switching services, the company says.

"The world is not one or two big problems but many problems that are interconnected with each other," notes Dhiraj Rajaram, founder and CEO.

MuSigma's latest technology for "discovering" potential connections is muUniverse. The software displays a visual overview of data points that might be relevant for a particular problem. Then, it allows business analysts to add or remove them as desired.

"Identifying the 'linkage' across analytics problems truly is fundamental to how companies will distinguish themselves in this space moving forward," notes one Mu Sigma customer, Ruben Sigala, chief analytics officer at Caesars Entertainment. "I can think of dozens of such projects in our past where the real breakthrough occurred when we began connecting what may have seemed tangential elements or projects into one cohesive analytics exercise."

These services aren't inexpensive. A proof-of-concept generally takes five to 16 weeks, and a Mu Sigma engagement could cost $1 million to $2 million during the initial phase if a business decides to go ahead with applying the model regularly in decision-making processes, Rajaram estimates. Perhaps that's why Mu Sigma signs many of its customer contracts with a company's CMO or CFO.

ONE MORE THING

Can your car predict pedestrians? Collision mitigation technology that automatically applies the brakes if you tailgate the car in front of you isn't all that new. New vehicles in Ford's 2015 European portfolio take this farther: they watch for people. The sensors warn if someone is stepping into the road, so the driver can take evasive action. Gigaom