Market Outlook for Text Analytics

Originally published April 23, 2009


IT provider health affects decisions about directions and suppliers, especially when you're considering adopting, or expanding your investment in, new(-ish) technologies. Despite rapidly expanding awareness and uptake, text analytics is definitely still in that "new(-ish)" category. For this reason, I thought it would be helpful to take a broad look at the market outlook for text analytics.

This article is a follow-on to my article Perspectives on Text Analytics, which invited industry-insider CEOs, CTOs and thought leaders to respond to a query, "What do you see as the most important  text analytics technology, solution or market challenges in 2009?" This current article will take a different tack. It will look at market indicators. First up will be a market-sizing exercise, which I’ve conducted each of the last few springs in the run-up to the annual Text Analytics Summit. These numbers don’t solve business problems, but they are nonetheless a primary indicator of the health of this particular domain. The exercise may reassure buyers that they are making sound investments, and it may reassure developers and investors that they are spending their resources wisely. But there are indicators beyond software revenues and growth. One is what I'll call "vendor dynamics," and solution-provider positioning is a third.

We'll save a look at the customer/prospect demand side of the equation for a later article, after I've collected data. You can help provide that data by taking a survey, more on which below. For now, how's the text analytics market doing?

2008 Market Sizing

Last year I estimated a worldwide 2007 text analytics market (software and support and vendor-provided services) of $250 million with continuing 25% year-on-year growth, at that time over twice the rate of growth of the business intelligence (BI) software market. Higher growth rates reflected an immature market, a smaller growth baseline and rapid uptake of a relatively new technology. Despite the economic downturn, I believe the value of the worldwide  text analytics market passed $350 million in 2008. And I believe growth will continue apace, at a rate exceeding 25%, through 2009.

To explain my methodology…

Several text analytics players release revenue and growth figures. Some of them are public companies, Nstein for example. Some privately held European companies will provide figures as a matter of mandate or practice. Expert System and Temis are in this category. In one case, revenue figures came out because of an acquisition, 2008’s Lexalytics-Infonic deal.

Where revenue figures are not available, I estimate them, either by projecting from prior-year figures – for example, when Business Objects announced its 2007 acquisition of Inxight, we learned that Inxight’s 2006 revenues were over $25 million – or by estimating from market share, head-count, venture funding and/or sales announcements. Business Objects and the Inxight technologies are, of course, now part of SAP. In many cases, Attensity, Basis Technology and Clarabridge among them, I can get company execs or other observers to confirm that estimates are in the ballpark, even if others such as Linguamatics decline to comment.

For many companies, both public and private, text analytics is only one component of a broad line of products and services. In these cases – companies such as Autonomy, IBM, SAP, SAS, and SPSS – I allocate a portion of overall revenue to text analytics. This step is critical, particularly in the case of Autonomy, which is by far the largest  text analytics company, albeit one with a strong solutions and search focus whose technologies cover a variety of media beyond text. Autonomy’s recorded $503.2 million in 2008 revenue, up 47% from 2007, shows that steep growth is not limited to small companies.

Vendor Dynamics

To consider vendors dynamics – new entrants, mergers, repositioning – let’s slice up the software providers by size.

We start with the smallest providers, new entrants and established companies with headcount under, somewhat arbitrarily, twenty. Who’s out there? Among others, there’s Crimson Hexagon, Digital Sonata, GeeYee, Jodange, Leximancer, Sentimetrix and Serendio, most focused to a significant extent on sentiment analysis. Data points don’t derive solely from company communications. I field inquiries from potential users looking for a solution provider who ask specifically about these companies and others. The demand is out there.

Do note that not every small company wants to get large. Take Alias-I, which publishes the LingPipe suite of Java libraries for the linguistic analysis of human language. Partners Breck Baldwin and Bob Carpenter seem quite happy and seem to be doing quite well, sticking to what they do best: coding great natural-language processing software.

The established middle range includes companies such as Megaputer, IxReveal, Attensity and Clarabridge. They’re bulking up, with new OEM deals, partnerships, and (in some cases) executive line-ups. Take Attensity as a special case. The company is now part of a roll-up under industry veterans, former Inxight CEO Ian Bonner, Inxight co-founder Ian Hersey and SAP co-founder Klaus Tschira, and executives of Attensity, e-mail and content solutions providers empolis and Living-e. The roll-up will allow the combination to cover a wider spectrum of information life cycle management needs.

GATE and RapidMiner also deserve special mention. Like other successful open-source projects, the user community is far out of proportion to project staffing. Core GATE development is carried out at the University of Sheffield, England. The software is being extended through collaborations with organizations such as Matrixware, and the project is looking at making support, consulting and customization available from a commercial entity, just as the folks behind RapidMiner did in creating Rapid-I to commercialize the software.

Provider Positioning

Provider focus on solutions rather than just primarily on technology is a sure indicator of market maturity. Autonomy CEO Michael Lynch captured this shift in a statement accompanying his company’s January announcement of 2008 financial results, calling “the explosion of unstructured information” a fundamental driver. According to Lynch, “this change for the IT industry affects all areas... Whilst this switch to unstructured information may take ten to fifteen years, in 2008 we saw two particular aspects of this bigger picture come to the fore. The first and most important of these which affects all industry sectors are regulatory changes such as the amendments to the U.S. Federal Rules of Civil Procedure. The second of these effects was the increase in regulation and litigation in the financial markets as a result of recent turmoil.”

Now where Autonomy has built strong verticals in e-discover and compliance, through acquisitions and internal development, other companies such as Attensity, Clarabridge and Expert System have intensified their focus on voice of the customer (VOC) and related applications. Island Data went so far as to change its name to Overtone, reflecting this same focus.

The Demand Side

Finally, it's also important to understand the customer/prospect demand side of the equation. How have current users benefitted from text analytics, and what's on their (and prospective users') wish lists? I studied this topic in last year’s BeyeNETWORK report, "Voice of the Customer: Text Analytics for the Responsive Enterprise." It's definitely worth updating and broadening coverage beyond VOC to the spectrum of  text analytics applications. You can help. Please take a short survey that I have set up. It's designed for users, prospects, integrators and consultants – no vendors please. It should take you 5-10 minutes depending on how much you have to say. I'll be writing up my findings in a free report that I'll plan to summarize in a future BeyeNETWORK channel article. I’ll also relay findings in my opening address at this year’s Text Analytics Summit, which I chair. (Do consider attending this year, June 1-2 in Boston, and if you’re just starting out with text analytics, my pre-summit workshop, Text Analytics for Dummies, may be for you. The BeyeNETWORK is a summit media partner.)

I expect the demand-side study to surface positive perceptions of text analytics, of technology capabilities and experiences, and ROI, but there's no substitute for actually asking. Similarly, investigating key market-outlook indicators validates perceptions of text analytics market strength, that solution providers, whom users rely on, are doing well. The market seems healthy, full of opportunity for users and providers alike.

SOURCE: Market Outlook for Text Analytics

  • Seth GrimesSeth Grimes

    Seth is a business intelligence and decision systems expert. He is founding chair of the Text Analytics Summit and principal consultant at Washington, D.C., based Alta Plana Corporation. Seth consults, writes, and speaks on information-systems strategy, data management and analysis systems, IT industry trends, and emerging analytical technologies. Seth chairs the Sentiment Analysis Symposium and the Text Analytics Summit.

    Editor’s Note: More articles and resources are available in Seth's BeyeNETWORK Expert Channel. Be sure to visit today!

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Posted January 13, 2010 by Seth Grimes

Hello Theresa.

I plan to do a market-size estimate in a couple of months.  I need to do some research but my feeling, based on 2009 part-year numbers from various vendors who publish them or are willing to discuss them broadly in private conversations, is that the market grew at close to the rate I anticipated, at 20-25%, in 2009. 

Certain segments such as listening platforms and social-media analysis had significant alliance and OEM deals that should lead to accelerated market growth in 2010-11, i.e., 25% as a bottom end of an estimate.

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Posted January 13, 2010 by Theresa Edgington theresa_edgington@baylor.edu

Hi Seth,  Any thoughts on the 2010 market and current growth rate?

 

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Posted April 24, 2009 by Frank Diana

Seth,

Thanks for the perspective on the Text Analytics market. This type of analysis is very hard to come by. Those of us working hard in this space truly appreciate your continued analysis. Very insightful, and I believe right on the money.

Frank Diana

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