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May 30, 2006

Coming up: Vivisimo CEO, a chat with the dark horse search engine company; John Kish CEO of Wyse Technology spells out the end of the desktop; Dan Berg CTO of Sun Services tells of adventures in Central Europe; plus, SVW Leader Sponsor news!

By Tom Foremski for Silicon Valley Watcher

- Memorial Weekend is but a memory as SVW swings into gear with an interview with Raul Valdes-Perez, CEO of Vivisimo, the dark horse search engine company that is fast carving out a solid business in enterprise markets. Interview coming up this week along with a white paper from Mr Perez on why behavioral marketing is barking up the wrong tree.

- I chat with John Kish, CEO and President of Wyse Technology, yet another savvy buyout from Garnett & Helfrich Capital, the Silicon Valley mid-sized VC buyout firm that's going places. Find out why thin computing is burying the desktop. It's the economics (and security.)

- I catch dinner with Dan Berg, CTO of Sun Services. It's been about six months since we last spoke and Mr Berg tells of life in Prague and the innovation bubbling up in Central Europe. "Silicon Valley is still the Mecca," he says.

- Also, exciting news on SVW Leader Sponsors, some announcements coming up! Who says bloggers don't have a business model :-)

O'Reilly/CMP lawyers warn"Web 2.0" phrase users...

By Tom Foremski for Silicon Valley Watcher

Use the term Web 2.0 and you could get a nasty letter from lawyers representing the interests of O'Reilly Media, the Sebastapol, California based publisher owned by Internet 1.0 pioneer Tim O'Reilly, and CMP Media. The target for now, is an Irish conference organiser:

From Tom Raftery's I.T. views:

One of these events - the upcoming Web 2.0 half-day conference is the target of a cease and desist letter (below) from the legal team of O’Reilly publishers. Basically O’Reilly are claiming to have applied for a trademark for the term “Web 2.0″ and therefore IT@Cork can’t use the term for its conference. Apparently use of the term “Web 2.0″ is a “flagrant violation” of their trademark rights!

Ironically I invited Tim O’Reilly to speak at this conference last February and his response (which I received on 15th of February) was

I would love to be able to do it, but my schedule is just too full for an additional international trip.

So Tim was aware of the event in February but decided to wait until 2 weeks before the conference to set the lawyers on us.

As I mentioned, IT@Cork is a not-for-profit organisation and doesn’t have the resources available to O’Reilly - what do people suggest we do?

Bad news for the gazillion of me-too Web 2.0 startups out there. But great news for everyone that is absolutely sick of hearing the term.

At SVW, we prefer Internet 2.0 because this next stage of the Internet is about far more than web browsers. RSS, for example, has nothing to do with web browsers and all to do with Internet 2.0. There is no trademark on Internet 2.0. Jump ahead of the Web 2.0 pack and use the term Internet 2.0!

You can even use this catchy phrase in your business plan: Xyz.com moves beyond Web 2.0 and is an Internet 2.0 company.

Edelman grabs top slot in Silicon Valley PR

By Tom Foremski for Silicon Valley Watcher
Edelman, the world's largest privately held PR firm late last week announced it had acquired A&R Partners--a deal that creates Silicon Valley's largest PR firm.

It's part of a series of aggressive, strategic moves by Richard Edelman, the CEO of Edelman. Mr Edelman has also been acquiring the PR industry's top bloggers, such as Steve Rubel, who writes Micro Persuasion, and Phil Gomes. Plus a recent deal with Technorati will extend Edelman's ability to monitor the blogosphere internationally.

The acquisition of A&R comes at a time when the demand for PR services is rising rapidly as Silicon Valley VC firms fund a new generation of what some call "Web 2.0" companies. The large number of such companies is increasing the noise level which makes it difficult for them to attract attention without professional help.

Large Silicon Valley tech companies are also increasing their PR spend as traditional forms of advertising are slipping in their effectiveness because of the turmoil in the media sector. Traditional and trade media publications are transitioning to online business models but the change is disruptive and there are fewer publications.

Public relations is potentially more cost effective than some forms of advertising. Intel recently boosted its PR spending with several deals spanning its global markets.

Pam Pollace, who used to head Intel's communications team is now at Edelman as director of the US Technology Practice.

Here are some of the details from the press release:

Edelman Acquires A&R Partners, Emerges As a National Leader in Tech Public Relations
Friday May 26, 10:00 am ET
Deal combines largest independent global PR firm with leading independent technology agency in San Francisco Bay Area

NEW YORK, May 26 /PRNewswire/ -- Edelman, the world's largest independent public relations firm, announced today that it has acquired A&R Partners, Silicon Valley's largest independent technology PR firm. The move significantly expands Edelman's global tech practice and makes it the leading agency in the San Francisco Bay Area and one of the largest technology practices in the state.
Edelman's Mountain View office will merge into A&R's San Mateo headquarters, creating a nexus of technology PR expertise to serve clients throughout the world. The combined Silicon Valley operations will be called A&R Edelman.

The acquisition of 115-person A&R includes its offices in San Mateo, San Diego, Los Angeles, New York, Washington D.C., Denver, Portland and Louisville.

"Edelman has excellent technology clients; we have done strong work in technology for decades. Our goal is to play a global leadership role in this market. With this acquisition, technology will become our third largest practice after consumer and healthcare. A&R Edelman catalyzes our global technology team, creating instant global technology communications leadership," said Richard Edelman, Edelman's CEO.

The integration of A&R will push Edelman's annual revenues to more than $300 million globally and $200 million in the U.S. The combination of the two agencies will create one of California's largest technology practices. Edelman currently has California offices in Los Angeles, Sacramento, San Francisco and Mountain View.

Bob Angus and Zelda Rudin founded A&R Partners in 1986. The agency has ranked #1 in revenue in Silicon Valley for the past four years and has received several prominent industry awards, including PR Week's Mid-sized Agency of the Year and the Holmes Report Tech Agency of the Year, both in 2004. The company also has consistently ranked among the top PR agencies to work for in the U.S. by The Holmes Report.

Bob Angus, A&R's president, said, "Our decision to join with Edelman is all about extending our global reach, adding new services and practices for our clients and giving our people more opportunities for growth. At the same time we will help move Edelman's tech practice into a leadership position in the U.S. Edelman is an outstanding fit for us, both strategically and culturally. We share the same vision, interest in our people and passion for results."

"They think like we think. We have known A&R and Bob Angus for years; we share a common approach to our business," said Pam Talbot, Edelman's U.S. CEO.

Talbot will oversee A&R's acquisition by Edelman, and A&R's president Angus will report to her as president, A&R Edelman. He will also become director of Edelman's U.S. technology practice, working closely with Pam Pollace, president of Edelman's global technology practice.

Pollace said, "This acquisition will expand our strong tech practice, strengthen our global credentials and extend our experience across the board -- in mobile computing, digital entertainment, social networks, enterprise software, semiconductors, security and beyond. This will create new growth opportunities for Edelman in a revitalized technology PR sector."

Edelman is the world's largest independent public relations firm, with 2,000 employees in 45 offices worldwide. AdvertisingAge recently named Edelman as the best PR firm in its 2005 "Best Agencies" issue while PR Week awarded the firm its "Editor's Choice" distinction at the start of 2006 and named it best large agency of the year. Edelman's network includes four specialty firms -- Blue (advertising), First&42nd (management consulting), StrategyOne (research) and BioScience Communications (medical education and publishing) -- making it possible to provide clients with a comprehensive spectrum of communications services. Visit www.edelman.com for more information.

Key Facts:

A&R Partners Edelman

Revenue 2005 $14.1 million $261 million

% Revenue
growth over
2004 17.6% 13.6%

Founded 1986 1952

Management President and Managing Founder and Chairman -
Partner - Bob Angus Daniel J. Edelman
Sr. Partner - Zelda Rudin Global CEO - Richard Edelman
Sr. Partner - Maria Amundson US CEO - Pam Talbot
Partner - Lisa Auslen Vice Chairman - Leslie Dach
Partner - John Derryberry President, Global
Partner - Todd Irwin Technology Practice -
Partner - Mark Rawlins Pam Pollace

Staff 115 2000 (21 Silicon Valley)

Offices San Mateo(HQ), New Co-headquartered in the
York, Washington D.C., U.S. in New York and
Los Angeles, San Diego, Chicago, with offices in
Denver, Portland and other major U.S. cities
Louisville -- 45 offices Globally

May 24, 2006

Edelman's Technorati deal and the blogosphere...

By Tom Foremski for Silicon Valley Watcher

[This stomach bug has taken the wind out of my sails for a few days, my apologies about the backed up emails I hope to get to them in the next few days...]

Edelman's deal with Technorati is interesting. For an undisclosed sum of cash Edelman, the world's largest private PR firm is financing Technorati's expansion into the rest-of-the-world blogosphere. It's a savvy move, not one without risks, but Richard Edelman has been out in the forefront in trying to understand the blogosphere and the need for tools to measure influence and reach within the entire (global) mediasphere (of which the blogosphere is a subset).

There are lots of comments on the deal out in the ether, but none seem to get it. We won't know unless we know the terms of the deal, either way its a bold move.

So far, Edelman has hired the top PR industry bloggers and it is moving ahead on a course that I do not see other PR firms following. And I think it is because they don't understand the nature of the game.

Edelman's moves are very interesting because they are potentially game changing, they are risky, and bold. Let's see if the other the-game-is-still-the-same PR firms figure things out. Can they be fast followers? I don't think so . . . but I'd love to be proved wrong.

Technorati has had problems scaling its infrastructure but that's probably because it has done a masterful job on branding. It really understands the psychology of the blogosphere and it has managed to keep that balance of being a good community citizen along with its right to monetize what it is doing.

Technorati has managed to almost privatize the trackback--a key element of the blogosphere. Trackbacks seem to have stopped working but if I look at my Technorati links there are many links that don't register as trackbacks. I've no idea why that is the case but Technorati offers a solution.

May 22, 2006

This&That: Beyond Blogging; Take the man out of Manhattan; Beet TV; OutCast dinner; Blake leaves WetFeet and PR; Personal APIs; The Net DVD release

By Tom Foremski for Silicon Valley Watcher

[I've caught one of those stomach bugs and am a bit low to the ground at the moment, but the blog must be fed(!)]

Last week I was with Chris Heueur over at the de Young, we were trying to do a podcast but it was surprisingly busy and this was a mid-week afternoon. So we popped back to his place in Duboce Triangle and recorded the podcast there on his deck in the gorgeous sunshine, in between pauses in his neighbor's lawn mowing activities.

It was a great conversation and Chris is using some of it for an event in Washington.D.C. called "Beyond Blogging 2006: The future of communications." (I didn't realises there was anything beyond blogging :-)

. . .

You can take the man out of Manhattan...and put him in Mountain View. That's what I learned last week when I met with Joshua Schachter, the founder of del.icio.us, the social bookmarking site. It explained why he had that New Yorker's expression on his face which can be summed up as slightly horrified.

On learning Mr Schachter's plight, I offered my condolences. He said he was still looking for decent restaurants in Mountain View, and he had heard that some places might even be open until midnight.

He told me he had spent 10 years in Manhattan and loved the place. After Yahoo acquired his company, he moved to Silicon Valley. "At least people here have heard of del.icio.us."

He says that Yahoo people ask a lot of questions but let him run the business group as he pleases. Yahoo provides the technical infrastructure, which is a big help. I couldn't get too much out of Mr Schachter on the record, but he says to look out for an interesting announcement this summer.

. . .

I recently spoke with Andy Plesser, from New York based Plesser Holland Associates and he tells me his video blogging venture over at Beet TV is doing well. One of his latest posts features Silicon Valley's most famous publisher, Tony Perkins, now at AlwaysOn.

And you might even see myself on Beet.TV very soon...

. . .

The Outcast CEO dinner last week is always an event worth attending. It didn't have quite the same energy as last year, but a lot interesting people showed up. I got to catch up with one of my favs, Satish Dharmaraj from Zimbra.

And the dinner-time show was provided byPeter Hirshberg from Technorati. Mr Hirshberg's presentation was funny and very insightful. I particularly loved his "Who wants to be a VC" a video that featured a group of 11 year old girls presenting business ideas to each other and deciding on who would get funding. I have an 11 year old daughter, Sarah, so I can relate very well. BTW, I recommend VC firms hiring a few 11 year old girls as consultants--they asked better questions than some of the real VCs :-)

. . .

I was sorry to hear Blake Barbera, is leaving the PR industry. Blake's WetFeetPR blog rapidly became one of the best sites on the subject of PR. Good luck in your next job Blake!

The future of PR is in the hands of Blake's generation and often it is these younger people in the PR agencies that know more about this emerging world of new media/new communications than their older colleagues. They haven't yet been taught what can and cannot be done, and they often have unique insights on PR and some of its ludicrous and wasteful practices.

. . .

I was thinking about how everybody seems to have a different way of communicating with the world. Some prefer email, others swear by instant messaging. I think we should all publish our own API to the world.

In the same way that an API (Application Programming Interface) tells software developers how an application or web service interacts with other software/services, a personal API would do the same.

I'm not sure what the right format to express a personal API would be but mine would be something like this:
Tom Foremski API

Email: Good but because of volume I sometimes miss emails and other times it can take days to answer. You can resend to make sure I saw it but please no phone calls. I have to impose daily email blackout periods of several hours at a time because I need uninterrupted time to write.
IM: Don't use it.
Cell phone: Good, please use especially when urgent or time related. It's okay to call anytime, I will answer if I can.
Desk phone: I don't give out this number.
Meetings: I like meetings and prefer them instead of email or phone in establishing relationships.
FAX: I don't use it.
Mail: Only for checks.

. . .

The Other Cinema recently released "The Net: The Unabomber, LSD and the Internet." It's an interesting documentary by a German team and it's fascinating to see how our tech culture in Silicon Valley/Bay Area became intertwined with that of a serial killer.

There are some great interviews in the DVD extra section. Stewart Brand and John Brockman offer several interesting stories on how part of the the computer industry became affected by the counter-culture movement in the early 1960s and the connection to the Beat writers.

For a really unique insight into the Internet, its creation and organization, the interview with Paul Garrin is fascinating and well worth buying the DVD to see. Mr Garrin has a truly unique perspective and his insights certainly set me thinking about things Internet-related in new ways.
From the description of "The Net."

This exquisitely crafted inquiry into the rationale of this mythic
figure situates him within a late 20th Century web of technology – a
system that he grew to oppose. A marvelously subversive approach to the
history of the Internet, this insightful documentary combines
speculative travelogue and investigative journalism to trace
contrasting counter cultural responses to the cybernetic revolution.

http://www.othercinemadvd.com/net.html

May 18, 2006

RightNow: The Microsoft of Montanna and the philanthropy of success

By Tom Foremski for Silicon Valley Watcher

I'm a big fan of Greg Gianforte, the CEO of RightNow Technologies and I was mortified that I almost missed him the other night when he was in town. Somehow the meeting time didn't sync up with my Treo, fortunately I was downtown and we managed to connect.

Mr Gianforte is a serial entrepreneur; RNOW is his fifth startup and is one of the leading CRM software-as-a-service companies and is going like gangbusters. It recently reported another blowout quarter.

His greatest passion is in starting companies and giving startups advice. He has given me plenty of great advice.

One time at a conference, a few people over heard some of the pearls of wisdom he was handing to me, and very soon there was a crowd of entrepreneurs around him, following him around the hallways, asking him questions about the many intricacies of leading teams and building dreams. He loved it, and I didn't hear him say "RightNow" once in more than two hours....

You might say that Mr Gianforte isn't keen on venture capitalists, and that would be a kind way to phrase things. You can find out more by reading his book, published late last year: Bootstrapping Your Business: Start And Grow a Successful Company With Almost No Money

RightNow is headquartered in Bozeman, Montana; it also has offices in Silicon Valley and overseas locations. And it is growing fast. "We're hiring on average one person per day," Mr Gianforte said. I said great, maybe I can run some job ads for you, I've been meaning to start a jobs board (coming very soon).

The other thing I like about Mr Gianforte is that he isn't afraid to challenge his competition in the media, and on the speakers circuit. Not everybody has the cojones to do that, or to challenge him (unfortunately.)

The other thing I like about Mr Gianforte is that as he grows more successful he takes on larger social projects. He is a spiritual person and somebody that wants to create a lot of value in his community. For example, he estimates that RightNow's payroll in Bozeman has reached more than $300m and each $1 bounces around about five times within a community. That means more than $1.5bn in products and services--a huge amount for a state where average salaries in rural areas are just $11K per year.

Mr Gianforte's latest social project is to retrain people in small Montana towns to become specialists in various HR functions. The idea is to encourage companies to "outsource to Montana" and help revitalize some of the towns in the state.

"Even if only some of the people in these towns find work, that money will make a big difference in those communities," he says.

That's a characteristic of many entrepreneurs, I've noticed. They like being successful, making money--but they love being able able to make a big difference in the world, especially where they live.

- - -
Related stories:

Startup advice (you have to read this!)

Most startups should avoid venture funding, not pursue it

Some of Greg Gianforte's thoughtleader columns in SVW :

Water into wine: monetizing open source via on demand

Serial advice from a serial entrepreneur

RightNow, right time, right place...tales of the newrules enterprise

You can also purchase his latest book, "Boot Strapping Your Business,"
through our affilate link.

May 17, 2006

Next week: I'm speaking at PRSA Counselors Academy in Savannah

By Tom Foremski for Silicon Valley Watcher

I'm looking forward to next week when I'll be speaking at the PRSA's Counselors Academy conference in Savannah, Georgia. I've never been to Savannah, but I've seen the city in a movie and it looks fabulous.

The conference collects some of the most senior people in the US public relations industry and I'll be speaking on the topic of the new media and the new roles for journalists and PR people.

As communications professionals we are all involved in fast changing times, and there is a lot of fear and misunderstanding out there on the new media, how to interact with bloggers, how do companies change their communications strategies, what are good practices, what not to do, and many other issues. I hear the same questions wherever I go, and although I am a media entrepreneur and my main interest is in launching media ventures, I am increasingly being asked to provide consulting services to companies, public relations firms, and also large media groups.

And that's what the Leader Sponsors of SVW will receive, first access to my consulting time, which is a limited resource.

I hope to see some of you in Savannah!

Cherry picking advertising and not paying for the journalism

By Tom Foremski for Silicon Valley Watcher

Cherry Pickers.jpg Google can sell advertising for much less because it doesn't have to pay for any journalism. Newspapers, TV and radio sell advertising so that they can pay for the journalism.

Craigslist can operate a global classified ads business with just 18 people and do it on a shoestring because Craigslist isn't paying for journalism. It can cherry pick the classified ads business from newspapers and do it insanely cheaply because it doesn't have to pay for the journalism.

So who will pay for the journalism?

Google News cherry picks the best of 4,500 global news sources and it doesn't even want to monetize the business. Therefore there is no way in hell that other media companies can compete against that--because they have much higher costs--and the largest cost is paying for the journalism.

So who will pay for the journalism? You might ask why do we need a professional media class, when we could empower a citizens army of amateur journalists, as some are trying to do.

The reason we need a professional media class is because amateurs do an amateurish job. And that is bad because our society, our economy, depends on high quality information.

In the IT industry, all software engineers know GIGO. This stands for garbage in, garbage out. It refers to the quality of the data that a software program processes. If the data is corrupted in some way, or the source is unreliable, then the end result will also be the same.

We need high quality media in abundant quantities so that we aren't harmed by GIGO.

Professional journalism is a vital pillar of our society, it is sometimes called the Fourth Estate, right up there alongside the Church, Government and the People. Yet professional journalism is fast disappearing because the business models that supported it are disappearing.

I've been asking for more than a year, "what happens if the old media dies before the new media learns to walk?" Media is how society "thinks" it is how we figure out solutions to important problems.

And we have some very big problems ahead that demand the best, high quality information. There is Bird Flu, there are huge political issues to deal with, there are enormous ecological challenges ahead.

Yet we have a sick media sector that is getting worse.

So who will pay for the journalism? Last week Eric Schmidt, Google's CEO seemed irritated in answering the question "when will you monetize Google news?"

But this is an incredibly important question because if Google was determined to monetize Google news, then it would associate some value to the content. Then the content producers could charge Google and any others, and funnel back the money to produce high quality news media.

That would be a virtuous cycle and Google News would be supporting an extremely important and extremely vital resource that is a pillar of a healthy society: high quality professional journalism.

Instead, it cherry picks the best and refuses to try to monetize the news it copies, which compounds the problem because it associates no value to it. Yet our society, our businesses, associate a tremendous amount of value to high quality journalism.

Google is inadvertently blocking the ability of news organisations to monetize their work. That harms our ability as a society, and as an economy, to make the best decisions.

We need to have a vibrant professional media, competing to produce the best, high quality news media. Because then we are likely to make the best decisions, and choose the best future.

I'm hoping Google will recognize that "Don't be evil" means nothing and that "Do some good" is what Google founders and employees would rather be doing (that's probably what the Founders meant so say).

Google has a chance to do some good on a massive scale. And Googlers love big challenges; the Gordian Knot of this next phase of the Internet is how to pay for the journalism we need. Google could become the saviour of the Fourth Estate rather than one of its pall bearers.

- - -
[Published in an experimental format across different sites, the first part is here, the second part is here.]

Bad Competitors and Cherry Pickers - a lethal combination

By Tom Foremski for Silicon Valley Watcher

Cherry Bot Pickers.jpg As more and more business products and services become digital, they become vulnerable to what I call "cherry pickers." Competitors can target highly profitable businesses because those businesses provide a high price umbrella.

IBM for example, spawned a massive "IBM mainframe compatible" industry three decades ago, because of its high price umbrella on mainframes.

Those companies with highly profitable business groups are sometimes using those profits to help support less profitable, sometimes rarely profitable, business groups.

Hewlett-Packard, for example, has over the years managed to use its highly lucrative printer business to help it support its PC business, and its information technology business. It could be said that H-P's sales of printer ink, at various times over the past decade, have subsidized its other business groups for many years.

And that's why H-P's most valuable intellectual property is the design of its printer ink cartridges--which prevents copycats providing printer ink at sharply lower prices.

H-P has managed to stop cherry pickers from running off with its printer ink business and allowed it operate large, rarely profitable business groups. Those business groups have provided a lot of value, to customers, to employees, and to their surrounding communities around the world.

But other companies, other industries, haven't managed to stop the cherry pickers. That's especially true for the media.

Google News is a good example of a media cherry picker. When launched in 2001 Google News quickly became a fabulous success. It was the first aggregation of news stories copied from thousands of news organisations, and published in a very accessible user interface. Google News scans thousands of mainstream media news sites, copies and publishes the headline and the first paragraph and a photograph. It is a very good service.

It's an extremely low cost for Google, the news stories are harvested by machines, and they are presented by machine. At the bottom of the Google News home page you will find this text proudly displayed:

The selection and placement of stories on this page were determined automatically by a computer program.

Google News was one of the first services it launched, one of many dozens today, yet it does not monetize this service. At last week's GOOG press day, its executives were asked if they would monetize news, the answer was that it was on the list, but that there were some more important projects that would be monetized first.

One of the journalists asked, where on that list is Google News? Eric Schmidt showed a little exasperation when he answered, saying, that it is obviously below the cut off point...

(Please continue reading...)

May 15, 2006

Could nationalism limit Google's ambitions?

By Tom Foremski for Silicon Valley Watcher

It was not ethical for Microsoft to drive out companies in its adjacent businesses. Yet time and time again, Microsoft moved into markets which had established companies in them and they took over those markets leveraging its dominant position in PC operating systems.

Apart from the conviction on illegal anti-trust charges, there seems little to distinguish MSFT and GOOG business strategies. And that is something that Google should be careful about.

In the 1980s, the US semiconductor industry managed to persuade the US government to make it illegal for foreign companies to sell memory chips below their cost of manufacture. It was called "dumping" and it was a practice that harmed the chip industry, led to lost jobs and threatened the future of many semiconductor companies.

Google is "dumping" lots of online products onto global markets. What is to stop say, China or France, from blocking Google's online services because they are being "dumped" onto their markets? I'm sure it wouldn't take much to prove that Google's actions are harming some small Chinese or French competitors.

And it is dead easy to block data packets. I can't see any nation allowing large foreign online companies to dominate the online worlds of their domestic commercial sectors. Old-fashioned nationalism comes in handy sometimes. And I predict that Google's limitless business plan will run into limits far sooner than it expects.
. . .
More on this subject on Tuesday.

[This is an experimental publishing format, a distributed column across different web sites. The first part is here. The second part is here. The first part leads you through all three sections.]

The limits of Google's limitless business model

(A distributed column.)
By Tom Foremski for Silicon Valley Watcher

Is it OK for Google to launch numerous businesses and not seek to monetize those businesses? Is it OK for Google to take advantage of its huge scale, its global operations to muscle into new markets and create businesses and not monetize those business groups?

Is GOOG acting in a similar way to Microsoft, when it used its huge scale, its global operations to muscle into new markets and businesses and not monetize them?

When I was at the Googleplex HQ last week for the annual Press Day, Google announced four products. It already has a multitude of products, ranging from web based email, to desktop applications, and even drawing and photo management software. Also, sophisticated web analytics, web site creation software, maps, instant messaging, news, and lots more.

Only a tiny fraction of those products are monetized, the rest are free, and free of advertising. Larry Page, co-founder called them "experiments" and said that they are "beta" products.

He can call them what he wants but each one of those products competes with many much smaller companies, and the fact is that the smaller competitors cannot compete. Because Google has the scale, it can integrate those products into a global operation and global platform because of its size.

And it can continue doing this again and again. Its organizational structure is that its engineers spend one-fifth of their time creating new online products and services. Its development teams are self-forming, and don't require any extra investment, Google already pays their salaries for their regular jobs, it gets the innovation for free.

This means it will continue to produce ever more products and services, again and again. At the Press Day event Eric Schmidt, the CEO announced a "limitless" business model for Google, he said the company saw no limit to its expansion and predicted that it would become a $100bn revenue company.

(Please continue reading part two....)

May 12, 2006

Google's garden lunch press party...

By Tom Foremski for Silicon Valley Watcher

I've been thinking about Google since the Press day. And thinking how much I still like the company, and that more and more of my friends are now working at Google. Not to mention the fact that I've seen Google, just like Yahoo, grow up from a two-room operation into a mega-media company.

And I've known these people, such as Eric Schmidt, many years--before Google was even a twinkle in Larry and Sergey's eyes.

And the Google Press Day was a familiar thing, familiar faces on the media side, and on the Google side.

When we broke for lunch, we sat outside in the gorgeous Norther California sunshine, around umbrella sheltered tables, enjoying being amongst each other, acting in the same way the other groups of people do when they know each other, and like each other. And that's how a lot of the media and the Silicon Valley companies interact.

A free lunch in pleasant surrounding doesn't mean that media coverage of Google or any Silicon Valley company will suffer. I takes more than that to buy off the media than a very fine cafeteria lunch in the sun, and everybody knows it. Such gatherings and interactions are essential for both groups get to know each other, and develop professional relationships so that fewer misunderstandings and mistakes occur.

To outsiders, to the readers of the media that were represented at the Google Press Day, it might seem like a cosy situation, maybe a tad too cosy.

However, I can assure you that journalism has a long tradition of biting the hand that feeds it, even pausing to put some steak sauce on it, and resuming the meal with gusto.

That's why you will see some great stories some good, some not, about GOOG coming out of the press corp. I've got one or two sizzling hot pieces in the works myself and you'll see the first one in a day or so.

May 11, 2006

Howard High: Join in this live tribute to Intel's retriring chief spokesman

By Tom Foremski for Silicon Valley Watcher
This is a live, online tribute to Howard High, chief spokesman for Intel, who is retiring from the world's largest chipmaker. Howard won't be gone for long though, I'm betting he'll be back in Silicon Valley within a few months, waist deep in setting up one of the most important ventures we've ever seen.

For myself, his retirement strikes an important note in my life because Howard's name has been a familiar part of my everyday world for 25 years. Because that's how long I've been covering US technology companies as a reporter for London-based magazines, and then the Financial Times. It seemed that on every important Intel press release, the contact information always listed Howard High.

And as a young reporter in London, it was sometimes intimidating for me to call Silicon Valley, and try to hold a smart and educated discussion. But Howard was always patient, and took a lot of time to educate me on the science and the chemistry of semiconductors.

In fact, talking with Howard I realized that I have a University degree in Chemistry from London University! Strangely, I tended to forget this fact because my chemistry education was sublimated by my other experiences--but now, chemistry became relevant again.

Anyway, I have lots more to write about Howard and how wonderful he is. And please use the comments section of this page to leave your message, article, photo, whatever. We'll evolve this page further, and after a while we can combine the material into a Wikipedia entry.

I look forward to your involvement in this live online tribute...

Here is part of a bio I found from the Hartford-Institute where Howard has been featured as a guest speaker:

Mr. High has held a variety of positions covering company products (i.e. microprocessor products) and corporate capabilities (i.e. chip design, sub-micron VLSI manufacturing, environmental, health and safety, and financial issues). He has worked with business, broadcast, trade, and foreign press in addition to industry analysts, financial analysts and government officials over the years. He has significant international experience.
Mr. High has served as Intel's representative on the Semiconductor Industry Association's (SIA) Communications Committee for the past decade and a half - serving as that committee's chairman during 1993 and 1994.

He is a graduate of California State University, Hayward. Mr. High received a B.A Degree, Cum Laude, in 1976. In 1998, Mr. High was named one of Upside Magazine's 100 Most Influential People of the Digital World.

Mr. High is also the Chairman of the Board of Trustees of California State University, Hayward's Educational Foundation and will speak to everyone as an integral part of the CSUH educational community.

Here is Tom Abate, San Francisco Chronicle's veteran business reporter:
From a recent article: http://www.sfgate.com/cgi-bin/blogs/sfgate/detail?blogid=19&entry_id=3953

Intel Corp. spokesman Howard High retires today after 27 years of fielding questions from tech reporters like me. Obviously the chip giant has prospered through far more important turnovers, starting with the passing of its guiding light, Robert Noyce.
But the character of a big company is a many-faceted jewel that is cut, in part, by the interactions of its public relations staff and an often-skeptical press corps. I've dealt with Intel on tough stories over the years. Howard High always set the standard of behavior for the PR side of the news divide.

Big ideas like Silicon Valley are like mosaics assembled by many little hands. One of those honored old hands steps out of the game today. It's only fitting that those of us who remain send best wishes his way.

May 10, 2006

Mass media masses at the Googleplex

By Tom Foremski for Silicon Valley Watcher
[To skip to the Google presentation report click on the extended entry...]
Google's Press day started at 9.30 am but it was closer to 10am by the time I got to the Googleplex H.Q, an hour away and a traffic crawl from San Francisco. One of the security people kindly let me slip in through a side door and into the large, darkened auditorium where CEO Eric Schmidt was wrapping up his talk.

In the gloom of the room I managed to find an empty seat and when the lights came up I noticed I was sitting right in front of my good buddy Om Malik, his Omness, curator of the very fine news blog GigaOm. Om was looking good, there was something debonair about his demeanor. I later found out that it was because of his recent trip to New York where he managed to disengage from the online world and reengage in some traditional therapeutic offline pursuits.

[I've long maintained that when bloggers start engaging in therapeutic offline pursuits, then we will know that blogging has finally arrived. I'm hoping to become a test case myself... BTW, Adam Lashinsky, senior writer at Fortune, noted that if this trend continues, it could reduce the number of blog posts--which is another benefit ... :-) ]

I also found myself sitting next to my old boss at the Financial Times, Richard Waters, which was great because I hardly ever get to see any of the old gang. We joked about how no FT journalist that has ever worked in the San Francisco bureau has ever gone back to London. Richard said it would happen, one of these days.

And I was also sitting next to Karsten Lemm, the German reporter for the top magazine Stern. Karsten noted the irony that the Google wi-fi network in the room was down, yet Google wants to provide free wi-fi to San Francisco and other municipalities.

And there were many other familiar faces in the room. Obviously, David Krane, one of the long time senior communications people was there, and I got the scoop on the second Google-Yahoo joint venture, which is scheduled for delivery in November (congratulations!). The first joint venture is now 14 months old, how time flies.

It was a pleasant surprise to see Courtney Hohne, a new hire on the GOOG comms team. Courtney was working at Outcast Communications and was one of its veterans, spending more than three years at this San Francisco boutique PR agency. I told Courtney I had recently lunched with her former Outcast colleague Emma Wischhusen, now at Hewlett-Packard. Apparently both Courtney and Emma turned in their notices the same day.

It's not easy replacing people with the abilities that Courtney and Emma bring to an organization. I've known Margit Wennmachers and Caryn Marooney, the founders of Outcast, for many years and I'm sure they are pleased to see that Silicon Valley's leading companies recognize the top quality caliber of their staff. [Are you done brown nosing yet....? Ed.] Yes.

Then we had lunch outside in the sun. But, let me tell you what happened in between. Here are some quick takes, and quick picks, more to come later.

I got up and asked about click fraud, and Alan Eustace, head of engineering said that click fraud was not a significant problem and that the company was able to deal with it. I asked if GOOG would allow an independent third party, such as Fair Isaac the credit card fraud monitoring firm, to monitor click fraud rates, he said no.

I asked Omid Kordestani, senior vp of global sales [GOOG's first business operations employee] about the continuing trend of smaller proportion of GOOG's advertising revenues coming from third party web sites, such as the New York Times, that are members of its AdSense advertising network.

It used to be about half of ad revenues came from it's own sites (AdWords) and half from third party sites (AdSense.) He said that AdSense would continue to decline as a percentage of total advertising because the company had already signed most of the big content providers and so the potential for expanding AdSense money was constrained by the supply.

Eric Schmidt, CEO said:
-GOOG sees no limit to growth. It has adopted a limitless business strategy. [This means no business is safe from Google.]

-No plans to monetize Google News.

Alan Eustace, head of engineering said:
-GOOG's index is three times larger than anyone's, more than 8bn pages but wouldn't say how big.

-GOOG is investigating complaints about Big Daddy, the nickname for the latest crawl of the Internet using a new set of algorithms. Lots of web master complaints about lost or lowered page rankings.

-Link exchanges and leaving links in the comments sections of high ranked web sites "doesn't work and hasn't worked for a long time." [I wish Google would publicize this, it would stop a torrent of comment spam that is plaguing millions of web sites.]
-GOOG is developing technologies to outsmart smart operators of web site networks using unspecified high tech methods to game GOOG's PageRank system.

-Every time GOOG completes a crawl it finds up to 20 percent new content.

-about 25 per cent of search queries are brand new.

-Google's PageRank algorithm, which determines the importance of a web site, monitors about 200 different "signals."

-More than 1,000 computers are used in processing a single search query.

From the exec panel, the final presentation, featuring the co-founders Larry Page and Sergey Brin. Mr Brin was in his trademark black T-shirt, and Mr Page in a striped shirt.

-Mr Brin and Mr Page and Mr Schmidt said:
-Microsoft is a convicted monopolist.
-We don't spend much time thinking about Microsoft. We don't see much value in focusing on what someone else is doing. We want to focus on innovation.
-We want to solve new problems not old ones.
-There can be many winners in markets.
-We've probably abused the term "beta."
-GOOG is becoming more open and transparent about future plans to stop rampant speculation.
-Openness does not extend to guidance on future quarterly financial reports.

Also: Google launched four products today including new Desktop applications, etc. Google is grabbing for more of the PC "real estate" with products such as Google Gadgets which creates mini- internet applications. [This allows it to move beyond the web browser since no browser is needed to use them.]

Google needs more content so that it can sell more advertising and one way is to get experts to point to the best web sites on specific subjects (I thought Google's algorithms were supposed to figure this out?] Google Co-op is a way groups of experts can collaborate around specific topics (too bad for Seth Godin's Squidoo. Here he is in February, sharing his wisdom with Google...]

Google Trends is a way to query GOOG's search results. This will be very interesting and will put Google at the heart of any cultural analysis of our online behavior.

More to come later...

Here is the Press Day webcast.

From GOOG on new products:

- Google Co-op is a way for users to help us improve search. It lets people and organizations label web pages and create specialized links related to their unique expertise. Whether it's information about a hobby, a profession, or an unusual interest, everyone can contribute to making Google search more relevant and useful for the entire community.
- Google Desktop 4 gives you another way to improve search, by personalizing your desktop. New "Google Gadgets" deliver an array of information--ranging from games and media players to weather updates and news--straight to your desktop.

- Google Notebook (which we'll be launching next week) is a personal browser tool that lets you clip text, images, and links from the pages you're searching, save clippings to an online notebook, and then share notebooks with others.

- Google Trends builds on the idea behind the Google Zeitgeist, allowing you to sort through several years of Google search queries from around the world to get a general idea of everything from user preferences on ice-cream flavors to the relative popularity of politicians in their respective cities or countries.

Google Media Day: What questions would you ask?

By Tom Foremski for Silicon Valley Watcher
Wednesday morning will come very quickly, I will be up, bright and bleary eyed, a little too early for my normal work schedule, because it is Google media day.
[I sometimes joke that crypt-space is a lot cheaper than crib-space especially in SF...]

I'll be there at the Googleplex in Mountain View, which is a stone's throw from San Jose, the US city with the lowest murder rate because everyone is very sleepy.

I'll be up and active with the best of the San Jose-ians because Google is a fascinating, mesmerizing company. And I want to ask Larry, Sergey, and Eric Schmidt, some tough questions. But before I go, please let me know what you would like to ask them.

Click fraud is one question that I'm sure GOOG will need to reckon with. I will certainly bring it up. And you know what? I bet click fraud is a lot worse than anyone is admitting. Because you can mask any internet address, it is so easy, only the obvious amateurish click fraud gets caught and counted.

But I think GOOG, YHOO and maybe even MSFT can beat click fraud. Especially GOOG because it has its web server analytics software already installed on huge numbers of web sites.

That means it can track clicks and traffic in a myriad of detailed ways. It has the means to not only avoid attempts by search engine optimization companies to trick its spiderbots into recognizing a site as being more important than it is, but it can also track a lot of traffic, where it originates and where it goes next.

If Google can track where the traffic originates by means of its resident web analytics software--combined with its spiderbots roaming the Internet--then it could be streets ahead of its competition in weeding out click fraud. (There is one another company that is better positioned to tracking IP traffic: VeriSign [VRSN]--I will reveal its secret business strategy in a future post . . . ;-)

In the meantime, let me know what questions you'd like to ask Eric and the team.

May 9, 2006

More chatter about Bad Competitors ... and the New Media Age

By Tom Foremski for Silicon Valley Watcher
[One of my replies was getting long so I thought I'd turn it into an entry (I love this format!)]

This relates to my Bad Competitor series, part one and part two.

David Tebbutt commented:

It was good to spend time with you last night. Not enough for all the subjects we wanted to talk about.
Kind of you to mention me in the blog. You're right about 'veteran' but it sounds a bit ageist. I guess I'll get used to it. :-)

I'd like to suggest a minor tweak to your words:

"Bad competitor startups will succeed because what they have is so much better than what is available, it is a no-brainer."

I'm not sure "because" is correct. I'm sure there are some lousy startups with indifferent products and services. It reads to me as if "bad competitor" automatically means "better".

I've noticed a similar tendency in the arguments about the blogosphere and journalism. (A subject close to your heart. And mine.) A lot of people try to assert that blogs are better than MSM just because they're blogs.

Fair point David. I was using Bad Competitor as describing a company that had already attained such a status although only one in 20 startups will get to be a BC...
PS: Regarding your age, I could have used "old fart" instead of veteran :-)

Anyway, I think most of my colleagues in the media are very veteran, with 15 to 25 plus years experience. And there aren't that many able to replace them, I could get excellent first mover advantage if I could persuade them to join me...unfortunately journalists are extremely risk averse.

This is a pity because now is the dawning era of the technology-enabled journalist, the Media Engineer! The days when Geek gods ruled the world are over--we have plenty of technology and plenty of geek engineers from an alphabet soup of countries.

I thank them all for all the wonderful technologies, the super smart and super easy development tools (that even a journalist can learn in a weekend or so...) and the almost free server and bandwidth infrastructure.

For $40 per month I have the publishing power of a small country.

Now it is about publishing: back and forth, ... Internet 2.0 is a push-me-pull-me technology that magnifies the value of the Internet tremendously.

And that's where media engineers will prove their worth: they will produce and technology-enable the content.

To succeed in the new world you need great content and an understanding of how to use the new media technologies to competitive advantage. It's all about the astute use of technology to distribute, present, and involve an audience.

But you also have to create exclusive, smoking-hot compelling content--and that's not that easy.

I bet there would be a considerable first mover advantage to the first new media company. For example, you could corner the market in top journalists for very little money. You could employ at least two for the price of one geek engineer (Robert Scoble) :-)

Soonr: How to make (almost) free cell phone calls to anywhere...

By Tom Foremski for Silicon Valley Watcher

Soonr, a startup that gives you access to your PC applications from any cell phone, recently introduced a cool way to use Skype to make extremely cheap international calls on your cell phone, and also very cheap domestic calls--if you have the right calling plan.

I got a briefing on it last week from Soonr CEO Martin Frid-Nielsen: you download a little app onto your PC then using your cell phone you use Skype on your PC to place a telephone call. Within a few seconds, you get a Skype incoming call to your cell phone connecting you and your target phone number. In this way, you can make international calls on your cell phone for pennies instead of the 40 cents and above rates your cell phone network charges.

In my case, it is even cheaper because I get free incoming minutes on my Sprint calling plan, which means I'm not using up my monthly minutes.

But won't the cell phone companies get a bit upset with this, I asked? "Most people will be using up their monthly minutes, so it helps to drive their revenues," says Mr Frid-Nielsen. Check it out here, it's free. http://www.soonr.com/

More from Soonr release:

SoonR Talk works with a person’s PC like a switchboard to set up their calls. Users simply click on the buddy they wish to talk with and SoonR Talk tells their PC to call their mobile phone using SkypeOut, then instructs Skype to call the buddy and places the user into a conference. SoonR Talk can even create calls with multiple users from the mobile phone. Just like on the PC, SoonR Talk shows which buddies are online and if they are not there, a user can IM them so they can see the message the next time they are using Skype. SoonR Talk fully supports Skype chat.

SoonR Talk is the latest offering in SoonR’s line of services that delivers the power of a person’s PC to their mobile phone. Other SoonR service features include SoonR Desktop, that lets people search and access the files on their PC desktop and SoonR Organizer, that lets people check their Outlook email, calendar and contacts – on any mobile phone with a browser, without the need for synchronization or installing software on the phone.

Open copyright - use as much as you want of my work

By Tom Foremski for Silicon Valley Watcher

I've decided to remove any restrictions on my copyright on Silicon Valley Watcher. Anybody can use my work freely, and they can make money off of it, as long as I am recognized as the author and all links in the article including back to SVW remain in place.

That's all I ask, if you want to use my work then please give me the proper attribution. Don't just grab it and use it as a honey pot for Google AdSense and strip out my authorship and the links in the article. I'm letting you use it for free and all I ask is attribution--doing the right thing won't cost you a penny and it will avoid any legal issues too.

Why am I doing this? I'll give you one half of my answer: there is no decent business model for online journalism right now...

Part 2: More on Bad Competitors...Silicon Valley is full of them

By Tom Foremski for Silicon Valley Watcher

[Here is Part 1]

There is a strange phenomenon that I've encountered and it seems other people have had a similar experience [I was talking with veteran UK journalist David Tebbutt (Thinkerlog blog) last night about this].

I will sit down to write an article on a topic and I know what I'm going to write....yet I end up with something completely different. It's as if I'm "thinking" through my fingers. Until I sit down and start writing, I never know what is going to be the end product because the act of writing can change the article.

So, with the "Bad Competitor" post on Monday, I've been engaged in some online debate on this topic and I've realized a few things. I've realized that Silicon Valley is full to the brim with bad competitors.

By bad competitors I mean other companies trying to commoditize your business while defending their core business, thus everyone is vulnerable to a bad competitor, someone that can provide a product or service at a fraction of your costs.

So for the newspapers, an excellent service such as Craigslist, which monetizes less than one percent of its business, is a "bad competitor." There is no way newspapers can compete.

And there are thousands of startups in Silicon Valley that would absolutely love to be the "bad competitor" in their target market. In fact, that has to be the base line for any startup--that it can provide the product or service that is ten times as good for one-tenth of the price. Okay, this is just my rule of thumb, but you get the picture, the startup's solution has to be massively compelling to overcome adoption/switching costs.

Bad competitor startups will succeed because what they have is so much better than what is available, it is a no-brainer. And that is the way capitalism works--money finds the path of least expense--if it is allowed to.

And so the future leads to a form of capital entropy. Anything that has a cost structure high enough, that can be attacked, will be attacked. Any business that has high profit margins is extremely vulnerable to attack by a "bad competitor."

But bad competitors are only bad to the victim companies--the market loves them because the customers benefit. However, after many millions, billions of these challenges to accepted business models, at some point, we will reach a interesting point in the evolution of our global society. We will have come to a point of maximum efficiency--what happens then?

Let me put it another way. About 12 years ago or so, I remember the thrill of interviewing Dr. Eric Drexler, one of the pioneers of nanotechnology. And the interesting thing was that Dr. Drexler was not much interested in the mechanics or the science of nanotechnology.

He said that the way our industries are progressing: manufacturing, chip industry, chemical sciences, biological sciences etc, we would get our nanotechnology society sooner or later. At the time, he estimated about 15 years. Clearly, it might be another 15 years from now, but whatever--it is not a long period of time.

What struck me was this: he said, what happens when we can make anything ten times better for one hundredth the cost? How will that affect our society?

And that is exactly the path we are headed--what happens when we can make any product or offer any service for one hundredth of the cost and at least ten times the quality? What kind of society will we have?

Clearly, it will be a society that will be completely and utterly a