Data Sheet—Tuesday, December 2, 2014

Good morning, Data Sheet readers. Tableau Software was the first company to bring “visual analytics” to business intelligence, but it’s far from the only player today. That’s why its research and development ratio is higher than many public companies. Read on for my interview with co-founder and CEO Christian Chabot, plus other business technology news of the day.

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HP listens to server buyers. One of the weaker sales stories during Hewlett-Packard's latest quarter was its high-end hardware line used by banks, telecommunications and other businesses seeking high-performance computer power. That's troubling news ahead of its planned breakup into two companies. One factor: HP has struggled to convince big businesses to invest in hardware running its specialized Itanium chips, co-developed with Intel. So the company is preparing new models built on Intel's widely used Xeon chips instead. Wall Street Journal

Well, that was short-lived. Barely a week after its market capitalization touched $700 billion, Apple shares slid more than 3.3% on Cyber Monday, apparently helped by robot trading. Other tech stocks were hammered, with Facebook facing an even bigger decline than Apple. Wired, Fortune

Microsoft gets the message. It just acquired 18-month-old Acompli, which makes mobile email applications, for about $200 million. The fait accompli actually was announced prematurely over the weekend in an ill-timed blog post that later disappeared. New York Times

Trading tech firm IPC Systems talks up $1.2 billion sale. The deal with Centerbridge Partners represents a 50% appreciation in value since 2006. Its CEO reveals why the company opted to stay private, and what it means for future product direction. Fortune

Be on alert. The Federal Business Investigation issued a warning intended to help businesses avoid falling prey to sort of malware that last week crippled computers internally at Sony Pictures. Reuters

Hortonworks prices IPO. But the data management company's initial share price of $12 to $14 values it at far less than the $1 billion market cap suggested earlier this year. Fortune

RESEARCH & PREDICTIONS

$1.7 trillion and counting. That's the estimated cost associated with data losses and downtime after a technology failure—an amount equivalent to half of Germany's entire GDP. That data point comes to you courtesy of a new survey of more than 3,300 large and midsize businesses conducted by Vanson Bourne on behalf of EMC. Good news: data loss "incidents" are rarer. Bad news: the amount of information lost during each one is increasing "exponentially."

STARTUPS & DISRUPTORS

Chatting up chat. Symphony Communication Services—owned by more than a dozen banks and money managers—is buying rival messaging technology from financial data company Markit. Its plan to to provide a secure service that can be used by traders and other Wall Street professionals. WSJ

Zipcar founder steers city WiFi startup. Technology from San Francisco-based Veniam turns municipal buses into wireless hotspots that spread Internet access across urban areas or controlled environments (think seaport or shipping container terminal). There's an early deployment in Porto, Portugal. Veniam is backed with $4.9 million in financing, including a Series A round (disclosed Tuesday) led by True Ventures, and the company's executive chairman is former Zipcar CEO Robin Chase.

Dropbox fights back. It's apparently readying technology that will connect its cloud storage service to mission-critical applications, making it a more viable alternative to one offered by rival Box. The latter has been more successful in luring big businesses. TechCrunch

Validation for video messaging. Israel's Glide Talk has raised another $20 million for an application that lets people record quick clips that can be sent to one or more people (like WhatsApp). The technology has about 10 million registered users—and a fast-growing following among those who use sign language. WSJ

WHY ANALYTICS PIONEER TABLEAU SOFTWARE SPENDS SO MUCH ON RESEARCH

Tableau Software just celebrated its first $100 million quarter ever, but it isn't waiting for other business intelligence competitors to show up at the party.

The company, which pioneered the concept of "visual analytics" in 2003, plans to spend more on research and development (R&D) over the next two years than it did during its entire first decade. During the third quarter, Tableau dedicated 28% of revenue to this cause; last year, the ratio for the entire year was 26%.

"If you look at the industry data, very few companies in this arena of technology have had anywhere near the R&D investment we have, and that includes our current publicly traded competitors," said Christian Chabot, CEO and one of the company's three founding executives.

His cofounders, Chief Scientist Pat Hanrahan, and Chief Development Officer Chris Stolte, developed the idea of combining databases and computer graphics while collaborating on research at Stanford University. Their notion: make spreadsheets, databases, and other information sources far simpler for the average person to use.

"If you look at the top computer science programs anywhere in the world, you'll find that the computer graphics group and the databases group don't even talk to each other," Chabot said. "This is not an area of ripe and active collaboration. In fact, they are often not even in the same building. The genius idea, they had, way before anyone else thought of it, was to combine these two fields: computer graphics and databases. We call this combination 'visual analytics,' and we believe it is precisely the combination of technologies that history will show was required to finally make databases and spreadsheets easy for people to use."

Chabot just moved to London with his family to shepherd Seattle-based Tableau's international expansion. The company reached more than 5,000 customers in the Europe, Middle East, and Africa region during its last quarter. (For perspective, it has about 23,000 accounts overall.) Approximately 150 of its 1.700 employees are focused on this fast-growing geography.

Fortune spoke with Chabot about how Tableau aims to stay ahead of its increasingly vocal competition, which includes heavyweights like IBM, Microsoft and SAP, and newer players like Alteryx, QlikTech and Birst. Here's his perspective, edited for length and clarity.

You've mentioned the cloud as a big R&D focus. What does that mean?

To date, we've been growing our sales primarily with on-premise versions of our software. People download those products in a few seconds or a few minutes, and install them, and they're up and running. Our investments in cloud technology are primarily around removing even that small amount of friction. …

Here's an amazing thing you can do with Tableau Online [the company's first cloud foray]. You can just be at your desk. Let's say you're a teacher or a nurse or a journalist—you're some inspired and critical-thinking person, but you definitely wouldn't call yourself an analyst and you definitely wouldn't call yourself an IT person. There you are, sitting with a spreadsheet full of data, with every article, or every student with every test they've ever taken, or every patient and every shift and every covering nurse. You can open Tableau's software, and you can create an interactive, visual summary of everything going on. How patients are falling in and out of beds. Which students appear to be at risk. Or which articles on which days are producing the highest click-through rates.

Is Tableau Online attracting new users or do you see existing customers embracing the technology?

It's primarily the same kind of customers: inspired people who want to consult facts and harness the power of data, and they want to do it fast. We even have some accounts that are buying both Tableau Server and Tableau Online.

For the foreseeable future, Tableau will work on both. The reason is that often companies have large amounts of data that they want to keep behind their firewall. They actively prefer on-premise software that sits right on top of that data and doesn't pose any governance or legal problems. I don't view that going away in 18 months. It's a perfectly reasonable customer need. On the other hand, more data is being produced in the cloud. Tableau's strategy will be a hybrid approach

Your latest earning release mentions mobile as a particular investment area. What's your priority?

The tablet revolution is now a few years old, and companies are taking it very seriously. They are beyond playing with data on tablets and into actively deploying analytics applications in a mobile environment. We're supporting that in two ways.

First, we're continually updating our Tableau mobile application, which runs on iOS as well as Android. That's a way for a person to have the same kind of experience that we just talked about. Now, that same dashboard or visualization is completely multi-touch-enabled on the tablet. So we're doing a lot of work to make sure that the gestures seem natural, the performance is nice. In our next release, we'll have offline snapshots in case your connection is cut—really supporting the ability to bring facts to meetings and to wander around the hallways and be in the field and able to look through active data to make decisions.

We've also announced an R&D project called Elastic. We're really interested in making a first-class analytics product for the tablet that has no other dependencies.

You had a significant number of $100,000 orders in the third quarter. What should we take away from that?

What the increase in large deals signifies is a broad market shift toward Tableau's way of doing things. When I started the company, every single prospect or customer interested in Tableau was that inspired person I described earlier. They almost never were in IT, they often didn't consider themselves analysts. They were people who wanted to consult data and use it to improve the world around them.

Over the years, what has happened is that every year more and more IT departments have become interested in this. Flash forward to 2014, and it is now commonplace for the CIO or the chief security officer or the VP of information technology or the chief data officer to stand up in front of a roomful of their team and say, 'Guys, this year, we are moving our business intelligence strategy to a more self-service, agile and empowering orientation for our people.'

You used the verb "moving." Are you displacing technologies in place or competing with emerging technologies?

It's a little bit of both. One reason leaders are giving this speech is that their traditional enterprise technology in this arena was complicated and slow. In that regard, certainly there is displacement going on. But by 'move' I really mean a strategy move because there was a second contingent in that whole strategy. That second constituency includes those people who never had access to the big, slow-moving enterprise BI standard because they didn't have the technical skills or because their groups or departments were never prioritized.

What can you tell me about Tableau's global presence?

We started as a west coast American tech company and 100% of our initial sales were from the United States. Starting about five years ago, we started to invest in bringing this mission to the world. One really nice attribute of the data landscape is that customers in just about every country of the world are actually using the same data sources and database systems. Sometimes we take that for granted, but it's a really nice context for advancing a mission.

Connected is an interview series with leaders of innovative organizations. Conversations are condensed and edited.

MY FORTUNE.COM BOOKMARKS

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ONE MORE THING

Feds fund 50,000 police cameras. President Obama just pledged $263 million to outfit law enforcement agencies across the country with what amounts to personal surveillance technology. The Verge