There has been much talk about MicroStrategy's Q2 earning report with its dramatic announcement of 19% year over year decline in product revenue . Prior to this announcement the general perception was that MicroStrategy was showing a nice recovery post V10 release . And apparently making strides within the data exploration space with its Desktop offering combined with its AWS cloud offering for rapid deployment . So this report does come as a surprise. I laid out my perspective about MicroStrategy's pros and cons and why I believe they are still struggling to gain market share in the admittedly overcrowded BI space.
1. Eco system : Unlike Salesforce or Tableau Microstrategy user groups and online eco system ( bloggers , evangelists ) are far and few in-between. Trusted network recommendations play a huge factor in BI tool selection and a dynamic user community makes it easy to have a higher adoption. This area continues to be a huge challenge for MicroStrategy despite attempts like providing free Desktop to increase market visibility . Although free, MicroStartegy Desktop is isolated and users cannot dynamically publish or embed output in websites . Thus, it falls short of the free model offered by other players who allow free public sharing and interactive use .
2. Marketplace : Several MicroStrategy partners have created Industry or Technology specific solutions like Visual Crossing - Map Solutions , Third I - Tableau connectors & Ad analytics and ourselves Vitara- Visualizations and Salesforce solutions to name a few . But these are all in SILOs and MicroStrategy does not benefit from the breadth of solutions that are already in place for different industries due to the lack of a centralized marketplace which is categorized, trusted and showcased. Salesforce has this model perfected . Any new or existing Salesforce customer can rest assured that their own technical or industry problem is solved and ready to use without re-inventing the wheel when they go to the Salesforce App Exchange .
3. Implementation Partners : Software growth to large enterprises is inevitably tied to partnerships with big SIs . Deloitte, Accenture , BCG , PWC etc are huge influencers during BI tool selection and adoption. MicroStrategy's stance on its own services business has fluctuated wildly and this low margin businessline is a big distraction for SI partners. Microstrategy can do way better giving away free training and empowering big SIs by embedding technical advisers reaping much larger software sales in return. Selling without big SI support is like swimming in shark infested deep waters without support.
1. Leadership : Michael Saylor has been more focused than ever before and consistently engaging in all aspects of the business. This is a much better alternative than a Board that is not aligned or who might have conflicting motives and cater to short term interests.
2. Technology : MicroStrategy might have gaps in specific areas but as a scale-able , enterprise BI platform it has tremendous advantages . Mobile continues to be a differentiation. While MicroStrategy marketing machine has always struggled with positioning these advantages , the company quietly continues to have customers with extremely large enterprise customer deployments to the scale of several thousands of users. With the current focus in BI space being speed to market rather than decidedly un-sexy discussion around scale and sustainability , MicroStrategy does have to swim upstream . But for any viable and sustainable BI solution in the mid-longer term, MicroStrategy has a lot to offer.
3.Market size : MicroStrategy has approximately 5% market share in the total BI market today that is valued upwards of $10 Billion . BI market is projected to grow 10% YOY. MicroStrategy has room to grow if it makes the right moves and has by no means reached the limit of possibilities.
I'm optimistic after reading the transcript of the earnings call as MJS has talked about evolving partnership model and investing in marketing. Messaging and getting the right excitement around the product is just as important as keeping the technology fresh and interesting. I'm eagerly waiting to see how the remaining half 2017 will play out for MicroStrategy.