Weekly Update January 13, 2007
--------------------------------------------------------------------------------
According to IDC analyst Sue Feldman, "Text mining is growing at an enormous rate." The field of electronic document search and retrieval has gone from practically nothing three years ago, to achieving 30 percent growth over the past year.
Google opened its doors in 1998 with three people working from a friends garage trying to solve one of computing's biggest challenges: retrieving relevant information from a massive set of data. Now the company is worth more than $100 Billion and has proven the importance of search engines and data mining in a world critically dependent upon technology and managing digital data.
Nstein has search engine technology that is dramatically low key because it is not a high profile Internet search engine, but the brains driving this technology may become highly valuable in the next year or two (if not sooner).
NStein (EIN/TSX.V $0.85)
www.nstein.com
Nstein is in a very large market experiencing strong growth and there are very few public players. This company flies abnormally low on the radar. If Google is a 100 on the scale of visibility, NStein is a negative number. Yet the underlying technology engine driving NStein has tremendous potential in the digital world.
Unlike traditional search engines that search only for text and keywords, Nstein's cybernetic brain imitates a human's cognitive process when reading a piece of text. It first does a statistical analysis to see which words are repeated the most, thus inferring the importance of that term. Then it compares words to a database of synonyms to establish related terms and topics. Finally, a linguistic analysis uses rules of language to identify the parts of a sentence
What helps make this so fascinating is that NStein search technology is used by Corbis - a company founded by Bill Gates in 1989. Corbis is a world leader in digital media with 70 million images under license.
Equally impressive, Google's philanthropy chief is rallying industry support for an ambitious plan to create a global early-warning system to identify and prevent the spread of infectious diseases and other disasters. The technology capable of doing this and which he has recommended, is from the Canada Public Health Agency - it uses NStein as its backbone.
AMERICA'S DESIRE TO SUE ANYTHING & EVERYTHING WILL FUEL GROWTH
A recent extensive reform of the Federal Rules of Civil Procedure (FRCP) will also drive this growth. The reform means that electronic documents in all forms, including e-mail, instant messages and even transcripts of video conference and VoIP calls, are fair game for litigants during the discovery phase of a lawsuit. This has given enterprise search application vendors significant new momentum.
However, finding relevant documents among billions of pages is no easy task for corporations. According to one recent report, "the CEO of one vendor said he told a prospective customer that it would take between 200 and 300 servers (in addition to the ones already in place) to index some 30 terabytes of data. He was informed that his competition had quoted somewhere in the range of 1,000 servers."
The market is growing so rapidly because of the importance of discovery in the legal system which forces plaintiffs and defendants to put their cards on the table. This forces a settlement one way or the other. Apparently this results in fewer than two percent of federal cases ever going to trial.
If they fail to provide these documents in a timely manner, the courts can be very harsh. Morgan Stanley was apparently hit with a $1.45 billion settlement because the judge in the case instructed the jury to take the broker's failure to provide electronic documents as proof that the missing information was damaging to its case.
Companies are being encouraged by the courts to use technology in order to reduce the costs associated with discovery, and to make searching more productive.
The courts have already issued rulings with regards to electronic documents, but awards of the magnitude of the Morgan Stanley case prompted Congress to amend the FRCP to give those precedents force of law. The FRCP has only been amended a few times since 1938 !
NRC PARTNERSHIP WILL LEAD TO SEARCHES NEVER SEEN BEFORE
December 12th NStein signed a 10-year technology licence agreement and a three-year collaborative research agreement with the National Research Council of Canada (NRC). Under the agreement, nStein will commercialize a search technology initially developed by NRC under the name Factor and ensure its development at a joint lab with NRC. Factor is a next-generation search technology capable of detecting and decoding relationships between facts and entities tagged by nStein's advanced text analytics tools in documents and unstructured information.
Factor sets the standard for a new information discovery and retrieval experience. By making semantic searches customizable and interactive, it leverages the power of linguistic-based text analytics like no other technology can. Factor acts as a magnifier of nStein's capabilities, creating a relational layer that identifies links between facts (such as business acquisitions, hirings or financial statements) and entities (such as people, geographic locations or currencies).
In contrast, mainstream search engines, which do not have these differentiation capabilities, would generate countless hits only based on keyword matching and requiring a great deal of time and effort to sift through.
NSTEIN TECHNOLOGY OVERVIEW
Nstein Technologies develops and markets leading- edge software solutions for analyzing vast amounts of unstructured data in virtually any language. Nstein’s text mining and information access solutions transform reactive decision-making into a high- impact proactive – and even predictive – process. The Company is headquartered in Montreal, with offices in the United States and Europe.
a) Content Management for e-publishers, media & entertainment
A complete solution for digital asset management, web content management, advanced search and value-added semantic context with advanced text mining.
Nstein recently signed an important deal with Transcontinental Media, one of Canada’s largest publisher of magazines, to deploy Nstein’s Ntelligent Content Management (NCM) Suite in order to optimize the publication and administration of over 20 online information portals.
b) Market Intelligence, Information Access & Search
For media & entertainment, financial services, health & life sciences, retail and government agencies. Includes sentiment analysis and other Search Driven BI applications leveraging emails, blogs, websites, etc.
Strategy
Since its foundation, the Company has focused on developing and marketing solutions that accelerate and improve multilingual information search and access. The Company’s initial offering targeted the e- publishing market, followed by solutions for governmental agencies (specifically for automated monitoring and analysis of information for homeland security and intelligence). Nstein’s technology is also used in information search and access solutions designed for corporations.
REVOLUTIONIZING THE MEDIA ON THE INTERNET ?
According to a December report in the Montreal Gazette, Nstein's CEO (Girard) believes the future of media resides with his company's technology. The media will need a special tool to organize and index their content quickly so they can be sent to the right readers and then offer more relevant ads.
Nstein's semantic analysis software reads through tonnes of data and creates a neat summary of it: what it's about, how important it is, and what's related to it. Exactly as the reader would specify. "Nstein is the closest technology to the human brain when it comes to understanding text," Girard said.
Nstein believes it can help publications that want to attract the "digital tribes" to their home pages. When a major event happens, websites will want to quickly offer mountains of content on that topic so that interested readers will stick to that site, thus increasing page views and ad revenue.
"We're not far from this today," he said. A Web browser on a cellphone that can do a Google search doesn't count, he said. "Yes, you ask Google to find you information on viruses and it will give you one billion results. Are you happy with that ?"
Mainstream search engines that do not have Nstein's differentiation capabilities, would generate countless hits only based on keyword matching and requiring a great deal of time and effort to sift through.
CONCLUSION
In theory, NStein has the potential to change the face of search engines and corporate data search (who must sift through billions of pieces of digital information for research purposes, or as we saw above, legal reasons).
NStein along with the National Research Council of Canada are developing (or have developed) an entirely new generation of search, capable of detecting and decoding relationships between facts and entities (something I believe hasn't been done before). Everything we have moved towards in tradional media and the Internet, involves massive amounts of digital data and information.
When you have corporations like that owned by Bill Gates using the technology in its current form (without combining the NRC technology), or Google's philanthrooy chief using it indirectly, there has to be strong potential in here somewhere.
The Microcap Blog is updated Monday to Thursday evening with a summary of noteable microcap news for the day. Also send me your stock tips, rumours, etc. and I will post them for others to read. Direct link is available from the home page of www.microcap.com
Danny Deadlock
Microcap.com
News 
Market Data 
Discover 
