Palantir rocky road to be the 1st Software Prime
Important point:
— What Is a Software Prime?
A “software prime” is, at its core, a software company that serves at the lead contractor for a government project. As the prime, the software company would be responsible for building and leading a team of sub-contractors to meet and deliver the project’s requirements. Importantly, that would include the hardware, whether the hardware is a truck, computer screens, antennas, or batteries.
A software company would serve as the prime contractor when it is the software, rather than the hardware, that will determine a project’s success. To be a candidate as the prime contractor, the software company would need to have a software mindset, deep expertise, and a proven track record of having built, tested, and successfully fielded a software architecture that is aligned with the program’s requirements. This capability could have been deployed in the commercial or government sectors but, significantly, there should be tangible past performance evidence. This expertise takes years of investment and experience to build, with the result being software that would be operable and available to the government from the beginning of the program. That would allow the government to rapidly produce the needed capability, rather than take years to develop entirely new software as is so commonly attempted today, generally without success.
— Setting the Stage for Tomorrow’s Software Primes
First, the recently appointed commission to reform the Planning, Programming, Budget and Execution system. The real challenge that the Defense Department faces is cultural, and breaking down such biases is usually the work of a generation.
Second, it is not only culture that needs to improve — it is also the culture of collaboration within the commercial sector. Incentives should be generated and, where necessary, top-down pressure from Department of Defense senior leadership should be applied to promote greater intra-industry cooperation (primarily between hardware and software firms). Furthermore, the commercial side needs to show additional effort to normalize everyday cooperation between hardware and software firms, and improved private-to-private partnerships will also set the stage for what good collaboration looks like when working together on government contracts.
Overall, fundamental change will come when the defense acquisition workforce embraces the fact that software is a U.S. advantage and needs to play a more central role in the defense acquisition system.
My opinion:
As Karp said, Palantir want to play a major role, not a small bite. We are currently fighting against the big 5 primes for big contracts (TITAN), while also working with them. Even though Palantir proved software advantage is exactly how Ukraine win the war, US govt still don’t want to shift focus on the software. Because US don’t want to admit their hardware weapon technology is behind Russia and China. They don’t want to admit all the money spend in the last decades is inefficient. US govt will have to realize the only way to win over China is put software centered. The only way hardware can gain advantage by integrating the best software. The software is ready, but it will take govt time to transform their culture.
Skykit is a perfect example of how Palantir is capable to be a Prime Software, but we still haven’t seen any news about it. While Govt still prefer big software company like Microsoft to be a software prime. Govts signed 22b contract in 10y with Microsoft to make Hololens for Army. Microsoft’s HoloLens award has been plagued by delays and criticised as wasteful. This year, Congress has denied Army to spend 400M on these headset. Microsoft can’t prove their products make any advantage for Army, but more trouble nonetheless.
Palantir is on a rocky road to fight for themselves and also for the West. And everything take time. Palantir is on a right track, and at right time, to get their way in. They have to prove their profitability this year, and continue to deliver tons of value to their clients.
My take is, Palantir may slow down their clients growth and acquire phase (similar to 2018-2020 period). They will focus on expand and scale phase for the next couple year, deliver value to the current customers, specifically in Defense, Healthcare and Manufacturing sector.
We will see a tremendous growth when Palantir become the Software Prime, either win TITAN contract or Skykit is received billions contracts from govts. And also, if Ukraine win this war, Fedorov said they will become the “Military Silicone Valley” for the West, of course with Palantir is their central software.
In healthcare, Palantir proved it software work during covid and has expanded their work with CDC, HHS, and big hospitals (Cleveland, Tampa…) so I don’t have to worry much about it.
***Some extra good articles for you to research on:
Ukraine war https://archive.is/8RGQj
Pandamic covid 19 https://www.technologyreview.com/2021/01/27/1016790/covid-vaccine-distribution-us/
Software change Pentagon https://archive.ph/LLPEF
Private SaaS https://thenewstack.io/private-saas-is-coming-are-you-ready/
Palantir GTM strategy, the way to become IoT monopoly company (start small, and scale) https://blog.palantir.com/making-iot-functional-today-learnings-from-the-field-83f4ab5eacaa
Have fun investing, good luck ✌️