Impact Report
Skytide hones focus on analyzing online content Analyst: Krishna Roy Date: 9 Oct 2008 Skytide has expanded beyond providing an analytic platform, with a heavy emphasis on high-volume analysis of semi-structured data sources including log files, HTTP, XML and HTML, to an attendant set of applications – mainly in the shape of dashboards and reports – for the online media and entertainment industry, in the past 18 months or so. Content delivery network (CDN) applications, released earlier in the year, have been followed by an Insight for Online Broadcasting application, which made its debut in September. Management tells us that it is also tapping into OEM relationships to build similar types of applications for other industries. The 451 Take We think Skytide offers something genuinely different in analytics and its focus on semi-structured analysis clearly fits well with CDNs, online media and broadcasting organizations. However, we believe the startup needs to expand beyond this niche eventually – an objective being pursued with partners, which will no doubt be greatly aided by the injection of some new capital. That said, we also still maintain it would make an excellent acquisition candidate because analysis of unstructured and semi-structured is an emerging arena not only for BI but for other related and complementary sectors, too. Context Skytide's efforts to court CDNs started early last year when it signed up Netli, which was bought by Akamai for $108m in February 2007. Netli is using Skytide to essentially analyze log files to provide visibility into network performance and activity, and therefore potential billing opportunities, for example. Targeting every US-based CDN was the principal focus until the beginning of 2008, when the startup began going after deals with content publishers and distributors as well, with the objective of enabling them to understand audience measurement, the best distribution channels for their content, costs attached to redistributing content and revenue generated via distribution, for example. Management tell us that it currently has half a dozen proof of concepts in place with US CDNs and about 25 paying customers on the direct side of the business, up from approximately 20 last October. OEM customers remain at the same level as last year. Skytide has five OEMs, and Nuance Communications is reportedly the largest. Average deal sizes have stayed steady at the same level as last year, but management anticipates average deals to rise from the current level of $300,000 to $500,000 going forward. The startup has raised $7m to date – El Dorado Ventures provided $1m seed funding and was one of two investors in the startup's $6m series A round – the other was Granite Ventures, which we're told reinvested a small undisclosed sum in April of this year. The intention is to raise around $10m in series B funding to scale out the organization, which has currently about 17 staff members. Technology At the heart of the Skytide Analytical Platform is the Skytide Server. The Server has both an XML modeling and XML rendering engine. The Modeling layer within the Server comprises an XML Rendering engine and Analytical Model engine, which normalizes the data and automates the manual process of building and updating analytical models. XML-based rendering of data is then paired with the Analytical Model engine, which builds complex models, based on user-defined business rules and the actual data at runtime.
The Analytical Model engine uses XPath as its modeling language. The current patent secured is around the ability to build analytical models by leveraging XML for normalization of data. We're told it has a couple more patents in progress. The Server can ingest data from relational structured sources but also from semi-structured sources including log files, HTML, XML and emails. It links directly to data sources, thereby eliminating the need for a data warehouse, and is designed to handle 'tens' of terabytes of data. Data is automatically aggregated, summarized and correlated across all data sources, making possible both multi-dimensional and historical views of the data. Storage of data for compliance purposes, for example, is handled by the column-based database within the platform. Skytide only stores and 'persists' data that is pertinent to the query, although all raw data is kept. The in-memory database handles the processing of data, including aggregations. There's also a presentation layer, which includes the ability for business users to build analytic models through a graphical dashboard interface and perform ad hoc analysis as well. The analytic models also come with predefined reports. Skytide has a reseller partnership with Corda Technologies that has enabled it to integrate Corda's dashboards within its platform. It also provides integration with Business Objects Crystal Reports and JasperSoft. The presentation layer also includes Java Database Connectivity and MDX drivers and an API software developer kit for integration with third-party applications. The presentation layer is also where the CDN application (see below) resides. Products Skytide Insight for Online Broadcasting is the latest offering from the startup's stable. Designed to be a turnkey application for smaller players in the online broadcasting and webcasting fray, it follows the introduction of a set of reports and metrics for network management, billing and customer portals – marketed as a CDN application and aimed at the CDN big guns – which were introduced earlier in the year. Insight for Online Broadcasting is designed to deliver reporting and analytics on the data sources involved in online broadcasting including data log files from CDNs, downloadable media server files, geographic data, customer registration data and call-center files. The idea is that it can shed light on details of video consumption, for example, across key segments, such as: geography, time periods and viewer demographics. As well as standard reports that are created by analytical models, which consolidate multiple sources of data to generate Web dashboard reports, Insight for Online Broadcasting also includes viewer metrics, content metrics and geographic distribution features. There's also an ad hoc reporting capability, the ability to create custom reports and a standard data connection library for the most commonly used media file formats, as well as the ability to create custom connections to other corporate data sources, such as CRM and financial data. Starting at approximately $20,000, as opposed to the CDN application, which ranges from $25,000 to $1m, Insight for Online Broadcasting essentially uses a version of the core Analytical Platform with limited data sources, whereas the CDN application uses and includes the full platform. Skytide Analytical Platform 2.5 is the current release. Principal enhancements are geared toward making it easy to use in very complex large data volume environments by automating more system tasks a user needs to carry out. Improved performance is also part of the mix. Specifically, 2.5 includes a growing library of parsers for ingesting industry data sources, as well as features to partition and process data at improved rates. There's also an option to run the platform as a managed service where it is installed at the customer site but Skytide looks after running it. Management is also mulling the possibility of delivering it under a software-as-a-service model. Competition Omniture tends to be the vendor, we're told, Skytide most frequently competes against. That makes sense since Omniture – like Skytide – is focused on Web analytics. Omniture bought fellow rival Visual Sciences, which at the time was a merged entity consisting of the original company and Web analytics firm WebSideStory for $394m in October 2007, arguably making it a more dominant force in Web analytics than Skytide. Omniture has also made other acquisitions to build up its present in online marketing. That said, Omniture doesn't play in the CDN space, unlike Skytide. Visible Measures, which is a third-party measurement firm for Internet video publishers, advertisers and viral marketers, is also seen in deals involving analyzing video content, which figures, given this is a core capability of Skytide Insight for Online Broadcasting. WebTrends and Coremetrics are also in the Web analytics fray but only encountered from time to time.
However, management reports that by far the most common alternative to Skytide is performing the types of analytics it delivers using a traditional warehouse, which carries certain inherent issues, particularly as most warehouses are designed for analytics on structured relational data – not semi-structured sources. The only exception we know is SenSage, which is focused on event-based warehousing using log files, for example. Skytide hasn't reportedly seen SenSage in deals thus far, but may do so in future. It comes as no surprise that Skytide doesn't really encounter BI behemoths SAP/Business Objects, IBM/Cognos, Oracle, Microsoft, MicroStrategy and SAS Institute directly. Although they all have some degree of capability to analyze semi-structured data sources – Business Objects bought text analytics vendor Inxight Software in May 2007, while SAS bought longtime text analysis partner Teragram in March 2008, for example – their wares are largely dependent on a warehouse, where Skytide is not. Customers and prospects therefore go with Skytide or choose to follow a data-warehousing route involving vendors including Business Objects, Cognos, et al. Skytide is also an Inxight partner. We think the next big gun, which is already in Web analytics and other areas but has the potential to move into some of the same arenas as Skytide, is Google, which has a strong relationship with BI stalwart Panorama Software.