Microsoft’s New Product:
Insight Into The Industry:
Modularisation To Mitigate Competition:
Developer Community:
Microsoft’s New Product:
Microsoft recently launched a new competitive product, in which many argue will displace Palantir Foundry. Whilst there is some truth to this claim, the bottom line is that Palantir has a far superior product. But, importantly for investors to point out, there is a necessity to understand that the best product does not always win. If Palantir fails to market their product, the company will fail to capitalise on this momentum.
Microsoft are building a platform to aid the fragmentation between databases, analytics, and governance via the “intelligent data platform.” This is an effort to bring the company’s existing database, analytics and governance services closer together.
“This is about bringing all of our data products together into one fabric so you as developers can shift focus towards creativity instead of spending time on governance”, said CEO Satya Nadella. Interestingly, this calls into question the focus on interoperability of third party solutions, in which is common within the Palantir OS. Microsoft seem to solely want to integrate all of their products together into one fabric, in comparison to enabling interoperability of third party solutions, like Palantir.
The truth is, Microsoft as a company is excellent at selling their product. Palantir on the other hand has failed to integrate a viable sales force into the company until late 2021. This was based on Palantir’s ignorant view that their product was so good, that the solution would “sell itself”. Whilst this happened to an extent, with hindsight, Alex Karp admits that this was a poor idea.
Often within software, the best solution does not always win. Despite the fact Palantir has a more superior product, in comparison to Microsoft, if Palantir is unable to sell their solution and market properly, this will lead to evident issues in terms of garnering a large market share.
In consideration of the fact that Microsoft is already engrained within many organisations, the overall transition towards this new operating system will be far easier for organisations, and therefore Palantir may loose market share in consideration of Microsoft’s past relationships with companies.
Insight Into The Industry:
In regards to the industry, for software often is can be very hard for outsiders to understand if a software solution works or not. Doug Phillopone, the Head Of Defence at Palantir stated how, there are unique problems within selling software. Often it is hard to tell if software actually works. Commonly present is the miss-match between a casual observer understanding if the software functions or not.
This can become problematic for software companies – if these companies are unable to showcase their product in real-time.
The truth is, within large organisations, often it can be very hard to tell if a software solution is superior, in comparison to another tool. Furthermore, often organisations who are looking to solve a set issue, perhaps only need an individualistic or specific one-off solution to fill a certain deficit.
Interestingly, for Palantir, in accordance with an exclusive report by Jefferies, there was clear feedback for Palantir. This was a survey by over 400 individuals who were using the Palantir software solution. In regards to the question of, what feedback would you choose for Palantir, 61% of the respondents stated that, “Palantir is overkill for the use case”.
Furthermore, other responses stated that, “deployment is too challenging”, with 36% of respondents picking this as an answer, as well as 24% stating that the “product is too expensive”. Only 3% of individuals stated that there was “no negative feedback” for Palantir.
More interestingly to explain is the “overkill for the use case” response, in which validifies previous concerns by investors – namely the fact that the Palantir OS is too in-depth and detailed.
Modularisation To Mitigate Competition:
However, positively for investors, Palantir is taking steps to mitigate this risk, and therefore will dissuade against the potential of any viable Microsoft competition. A recent example of this is Palantir’s initiative towards creating a central operating system within every industry.
One evident example of this is the recent partnership with Rubicon:
“As part of the agreement, the two organizations will also develop a joint go-to-market strategy for the commercialization of new Rubicon subscription data products and supporting workflows.
The new partnership with Rubicon is supported by Palantir’s Foundry operating system, a fully managed, modular SaaS offering that includes data integration, flexible analytics, visualization, model-building, operational decision-making, and decision capture.”
Rubicon is an interesting company primarily because of how they use software to optimize the waste an organization has. Palantir’s Foundry is a natural fit for collaboration with Rubicon since both companies handle vast amounts of data and attempt to make sense of it produce efficient client results.
Overall, Palantir is creating central operating systems for a range of industries and organisations, in which will garner great competitive moats for the future. In addition, this specialisation of operating systems means that Palantir will no longer offer an invasive software system, in which may be overkill for a use case.
However instead, Palantir can offer a more specialised OS for a certain industry.
Developer Community:
In order for Palantir to grow business organically, without the necessity for sales and marketing constantly, the use of natural bottom-up growth is vital for success.
Overall, there are a few main benefits of the developer community for Palantir:
- Organic growth
- Better understanding of the product
- Greater adoption over time
Palantir within recent times did introduce the Certification Program to their software, in order to scale the platform and to empower customers and partners.
AWS mentioned within a recent report that there were evident benefits of the certification and training programs:
ESG surveyed more than 1,000 learners across the globe who have taken AWS Training courses, earned AWS Certifications, or both, and identified the following benefits of AWS Training and Certification:
- Improved productivity: 84% of learners said AWS Training improved their on-the-job efficiency and 83% reported improved effectiveness. Similarly, 80% said AWS Certifications boosted their efficiency, and 83% reported improved effectiveness.
- Increased operational skills: 85% of learners saw an improvement in their operational skills that far exceeded their expectations as a result of AWS Training and Certification. 90% of learners reported a positive return on investment (ROI) from AWS Training, and 91% reported the same from AWS Certification.
- Greater earning potential and job security: 69% of respondents reported higher earnings as a result of AWS Training, and 74% reported the same as a result of earning AWS Certifications. Additionally, 82% of learners reported increased job security as a result of AWS Training, and 83% reported the same for those who earned AWS Certifications.
The developer community will become fundamental towards Palantir tapping into smaller markets, and therefore growing organically bottom-up. This can evidently mitigate the risks of Microsoft digging into Palantir’s market share.
The truth is, despite the fact that Palantir may have a superior product in comparison to Microsoft, Microsoft can execute & sell their product. If Palantir fails to successfully sell their solution, and market properly, Palantir will loose market share to Microsoft.
