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June 2006 Archives

June 30, 2006

Chris Heuer is the project lead: Signups for the new media press release (really!)

By Tom Foremski for Silicon Valley Watcher

I've been working with the PR industry to figure out a better way to create press/news releases that are more useful to reporters and others, in this multi-media channel world we live in. Why limit press releases to the standard text only format and with only one link, or none?

We need a vehicle that can easily integrate podcasts, vidcasts, text, and company information that is labelled and tagged so that the right information can quickly be pulled together. We have the technologies to do that, to partly preassemble the information needed in preparing a news story.

The key, however, is to have all the PR agencies and media/comms departments in corporations to agree to a baseline standard new media press release format. We need to make sure that everyone uses the same labels/tags for things like "company founded date" or "CEO today said" etc. And agrees on other aspects of the format.

To help things along I've agreed to offer a neutral third party platform. The PR companies are very competitive and won't take the lead from each other and so we will end up with a tower of babel of different labels/tags and different formats, and we won't be much better off than before.

I've found someone with the ideal abilities to coordinate this new media press release project, Chris Heuer. Chris knows the business world, he knows the marcoms world and he knows the geek world. He's a new media renaissance man and he has agreed to coordinate this project.

I have already received many requests from people to join me in this project, and I will pass those onto Chris but please sign up again just in case. And anyone else that wants to be involved please join this discussion newsgroup.

Chris will choose the collaborative technologies we'll use to take this project further. By the way there was a nice write up about the new press release in BusinessWeek and Shift Communications' efforts, Julie Crabill and Todd Defren in pushing things forward.

Richard Edelman, head of the largest independent PR agency in the world is a strong supporter of the new media press release. Winning the support of global giants such as Edelman is key because it validates this new approach to communications. Edelman and the other giants such as Ogilvyetc have the muscle, and the influence to educate companies and individuals on how best to communicate in a multiplicity of media worlds and communities.

What will be interesting is how the PR companies and others, use the new media press release format to differentiate themselves; how they make the content compelling and available in a multiplicity of media; and how successful they are in explaining to their clients the need for new ways of communicating. Here is Chris Heuer to explain more.

June 28, 2006

US is losing its lead warns chip industry -- but business is good

By Tom Foremski for Silicon Valley Watcher

Tuesday late afternoon I walked into the Businesswire offices on top of a highrise in downtown San Francisco for a briefing with George Scalise, head of the Semiconductor Industry Association (SIA) and a team of top communications execs from the largest chipmakers Chuck Malloy from Intel, Dan Larson from Texas Instruments, Vineeta Durani from IBM and others from Advanced Micro Devices, Analog Devices and the research institutes SRC and Sematech.

I meet with the SIA every year and it was good to see a lot of familiar faces. And the briefing was interesting, a good news/bad news type of situation.

The good news Mr Scalise said is that the chip industry is doing well, forecasts have been raised for this year and the SIA is expecting revenues of about $250bn. And in all chip markets demand is good and growing at a steady rate. "There is nothing that we can see that is a problem, even the high fuel prices haven't hurt consumer demand."

Consumer markets now account for more than 50 percent of global chip revenues, so consumer spending and sentiment is closely watched by the SIA. And since consumer spending accounts for more than 60 per cent of the overall economy, there is room for chip revenues to continue to climb just on the dynamics of that sector alone.

Inventories of chips are low, and utilization levels of the chip fabs are very good, about 92 per cent, which means there is room to expand without causing shortages but high enough that price pressure remains low.

The bad news is that US is likely to lose its lead in chip manufacturing expertise and that could be catastrophic to the US economy. The SIA and the chipmakers and other groups are lobbying hard in Washington D.C. to make sure that the US funds more basic research, invests in education so it has a highly skilled workforce, and can provide new ways to finance multi-billion dollar fabs.

"There is no other industry like the chip industry that has created so many jobs, and has contributed so much to the GDP of this country," said Mr Scalise. So far so good, I said. Why should we be so concerned about the future when the US chip industry is doing so well?

Mr Scalise and the others, pointed out that it is becoming more difficult to manufacture in the US because of fewer science and math students, and the economic incentives are much less than those offered in other countries. Yet each chip fab provides significant economic value to the host country because of the infrastructure that grows around it. Many other countries recognize that benefit and are offering significant incentives for chipmakers.

One worrying trend is China. Mr Scalise and his team recently returned from a fact finding trip to China. He said that the country's largest chip maker, SMIC, is able to take advantage of sweetheart financing deals. The government of a large province in China is building billion dollar fabs and it will lease them to SMIC. This means SMIC doesn't have to raise billions in capital markets to finance its expansion. This is a significant competitive advantage for SMIC.

I asked if this is a World Trade Organization issue, but subsidies of various kinds are allowed. The US chip industry enjoys subsidies on a smaller scale from US regional governments, tax holidays, etc.

How will US state governments compete against deals of the SMIC-type? I can't imagine Arizona or New York state governments raising money to build billion dollar fabs and leasing them out. "Well, we can be creative in other ways, and we'll have to be," says Mr Scalise.

China is also training masses of engineers, narrowing the skills gap with the US. The SIA wants the government to make it easier for foreign-born student engineers to obtain green cards so that they can stay here in the US instead of returning home after completing their studies.

The problem is to convince US politicians to make the legislative changes that improve education, fund more basic research, and provide for ways of accessing cheaper capital. Dan Larson, director of government and media relations for Texas Instruments said, "We have had a good response to our message but getting the legislation passed is a long process and can be derailed by other factors."

I was glad to hear that the SIA and the chipmakers are doing a lot to try and raise educational standards in their communities. It's one thing to lobby in Washington, but its another to work locally and walk the talk where you live and work. The chip industry spends nearly a quarter of a billion dollars a year on educational ventures. Texas Instruments and IBM for example, encourage thousands of their engineers to get involved in local schools and colleges.

But it is a tough situation for the US chip industry to say the sky is falling when its business is pretty good . . . and getting better.

June 27, 2006

Green Border: The need to rebuild confidence in consumer online shopping

By Tom Foremski for Silicon Valley Watcher

I recently met with GreenBorder Technologies, a security software company that offers an easy solution to virus, spyware, and trojan threats by isolating each Internet session from the rest of the PC and earlier Internet sessions.

The beauty of the Green Border Pro software is it doesn't need to be updated to guard against new virus signatures or new types of malware. It creates a secluded, virtual Internet session and when you are done, it flushes everything away, in your cache and in temporary files, etc. Once installed it does its work transparently--except for a green border around the page to indicate it is a safe Internet session.

For the past year it has been an enterprise product but it is now being rolled out to consumers, which is a good idea because it is one of those install-and-forget applications. Most of us are fed up of running tech support for our families, guarding home networks against infection and dealing with all the other support problems related to viruses and spyware. If Green Border does its job, that would free up a lot of family time.

I spoke with Bernard Harguindeguy, CEO, he said that he hopes that banks, ISPs and other online companies will help evangelize the product because it helps stop identity theft, stop trojans attacking web sites, and makes security easier.

"With most consumer security software the user is often asked to make security decisions during installation or during use. And that means they can make inappropriate choices. With our product it works in the background and the user is safe from any malicious software," says Mr Harguindeguy.

Jim Fulton, vp of marketing says that the year the product spent in enterprise environments has helped improve the software. "The consumer version doesn't require the same levels of control as the enterprise version making it simple to install and use."

Green Border is offering 10,000 free downloads then it intends to charge an annual license fee. It hasn't decided on pricing but it is considering a $40 per PC annual fee. That seems a bit steep to me, especially when households typically have many PCs sitting around on home networks, that can be a $200 annual bill for just one utility. Even if it is as good as advertised that's a chunk of change that most households won't be able to afford.

Green Border could provide a lot more value if it became part of a say a Yahoo, Google, or an Amazon toolbar. It could protect e-commerce transactions and guard against identity theft on a far larger scale than selling individual consumer licenses. And the big online sites would be able to encourage safe e-commerce before more and more people get burned and stay away from online shopping altogether.

Green Border won't protect from things like phishing, and the Nigerian scams, which are based on social engineering to con money out of people. The social engineering threats are best tackled by educating computer users, and Green Border has materials that show users how to identify and avoid scams and other nefarious activities.

About GreenBorder Technologies
Headquarters: Mountain View, California
Founded: 2001
Funding: Private
Investors: Texas Pacific Group (TPG) Ventures,
Sevin Rosen Funds,
Labrador Ventures
Management: Bernard Harguindeguy, Pres. & CEO
Joanne Syben, VP Engineering
Jim Fulton, VP Marketing
Babak Salimi, VP Bus. Dev.

Download Green Border here.

Press release is here: GreenBorder Launches Web Security Software.

The PC-ization of the comms industry - Intel changes tack with chip group sale

By Tom Foremski for Silicon Valley Watcher

Intel's (Intel is an SVW sponsor] sale of its cell phone and handheld computer chip business to Marvell Technology Group for $600M, announced earlier today, represents a change in its strategy to apply the economics of the PC industry to cell phones, smart phones, and communications equipment markets.

In the mid to late 1990s, Craig Barrett, the former CEO of Intel, led efforts to expand the company's business into the fast growing cell phone and communications equipment markets. Through a series of large acquisitions totaling more than $11bn Intel built one of the world's largest communications chip businesses to become the leading provider of Internet infrastructure components.

Mr Barrett and his team saw that PC markets were maturing, and that server markets would become part of a global interconnected communications infrastructure. Intel's strategy was to extend its pole position--to providing silicon for the entire global digital communications infrastructure; and everything connected to it.

Intel wanted to provide silicon for every type of edge device, such as pocket computers, cell phones, PDAs, cameras, notebooks, PCs. And also provide the essential chips for servers and communications equipment that create the connecting foundation of the Internet.

Intel knows that investing during downturns is a wise strategy--that's what it does during the boom and bust cycles of the chip industry. And despite the dotcom crash, growth of the dotcom economy would return, and along with it the massive infrastructure investments by the telcos and others. Intel knows we are still at the beginning stages of the Internet and that the real growth is still to come.

But timing is everything in the tech industry where being too early can be the same as being wrong. Nobody would argue with Intel's long-term view of the future and its strategy, but managing a huge company on Wall Street expectations based on quarterly performance makes it doubly difficult to tune strategy to short-term market changes.

Also, Intel's comms business strategy was based on the assumption that it could apply the same economics that worked well in the PC industry. If it could produce powerful, off-the-shelf components that could be easily adapted to many different types of communications products, it would quickly win customers.

Intel expected that comms companies would ditch their custom chip efforts because they would be able to get to market faster using off-the-shelf Intel components, as the PC industry had done.

But Intel had trouble gaining traction in its comms groups. It reorganized them several times and sent in its best trouble-shooter, senior vp Sean Maloney.

For a while Mr Maloney's efforts seemed to be working and Intel was able to start publicizing some important design wins. But momentum was difficult to build, and the comms industry seemed to slow to adapt and adopt, the economics of the PC industry.

Intel thought that cell phone and comms equipment makers would quickly embrace the standard components practice that helped the PC industry grow at phenomenal rates in the 1980s and 1990s.

Microsoft, Intel's longtime partner in the PC business also expected to establish its operating systems in cell phones, PDAs and other comms gear such as set top boxes.

The barrier to adoption of standard platform was partly due to the specialized nature of comms gear but also due to the cell phone makers and comms equipment companies taking a look at the PC industry. It was easy for anyone to see that that profit margins for the PC makers were very low.

Dell, Hewlett-Packard and other leading PC makers were battling to eke out profit margins in the low single digits. Consolidation was rife in the PC industry as PC makers struggled to remain in business, and then IBM, the developer of industry standard PC platform exited the market.

Most of the value in the PC industry was captured by Intel and Microsoft. Intel's profit margins were in the 60% and above range. Microsoft's profit margins were in the 80% and above range on its PC operating systems and applications. While PC makers competed for slivers of the pie.

Could this happen to the cell phone and communications companies too? Probably, if they adopted a similar approach to the PC industry and used standard components and software.

The reason why Intel and Microsoft were not been able to "PC-ize" the comms industry is easy to understand if you looked at the PC makers as proxies for the future of the comms companies.

And that is why the industry standard PC platform that built the massive PC industry will likely be viewed by historians as an aberration that was caused by IBM's rush into the PC market in 1981, forcing it to use off-the-shelf components and operating systems. IBM didn't have the time to pursue its normal proprietary strategy of developing its own chips and operating systems.

Although the sale of the cell phone chips group is a bitter pill for Intel, it still remains deeply embedded in the comms business as a leading supplier of chips, and has key Wi-Fi and WiMAX wireless technologies.

Also, CEO Paul Otellini, in his second year, has demonstrated that he can make tough decisions. Sometimes large companies will drive themselves into the ground because they cannot overcome long established layers of legacy thinking and execution.

Mr Otellini can always draw on the advice of 40 years of Intel leadership; Craig Barrett is chairman, former CEO and chairman Andy Grove is senior advisor, and Gordon Moore is chairman emeritus.

Even though its comms business has been restructured yet again, Intel has managed to return return a huge amount of value to its shareholders since 1968, it is still an incredible cash machine, and it still manages to execute on many billions of dollars in bets in building cutting edge chip manufacturing facilities--the most complex manufacturing systems of our industrial age.

Plus, Intel still retains the ability to attack client and infrastructure comms markets in many different ways because of its ability to integrate masses of IP into ever smaller slivers of silicon.

- - -
Q1 2006 Investor Fact Sheet

Marvell to Purchase Intel’s Communications and Application Processor Business For $600 Million

Rivlin tries again to return to Manhattan; Volgelstein's fortune is at Wired; Rafat Ali's fortune is coming; Warren outsources his philanthropy; Om My God! plus: a summer evening escape to SF MOMA

By Tom Foremski for Silicon Valley Watcher

...Take the man from Manhattan but he usually returns

Gary Rivlin reporter for the New York Times is giving up the Silicon Valley beat for a dream job as a feature writer for the business section of the New York Times. Saturday night I joined him and his elite group of buddies (Markoff etc ;-) at his penthouse apartment in the heart of San Francisco's trendy Mission Street.

I, and some other volunteers, helped Gary in a valiant attempt to empty his drinks cabinet, so's he would have less to pack. It's fortunate people here are so caring, not like in New York . . .

I couldn't tell if Gary was lamenting or boasting that he might never be back in these parts again. He told me he has spent 14 years in the San Francisco area and this will be his third attempt at a return to New York city, and it feels like it will be his last.

He said the job is a dream job and the offer came just days after his return from about ten months on the New Orleans beat--one of the most challenging stories around. Good luck to Gary, I know he'll be back, but with a return ticket in his pocket, as he researches many features about the new golden age emerging in Silicon Valley :-)

...Fred Volgelstein gets Wired

Fred on TV I hadn't noticed that Fred Volgelstein, former Fortune senior writer is now at Wired magazine. He did flirt with the idea of leaving the tree-killing business. But a salary in the hand is better than two birds in the bush because you get to keep 50 percent of it.
[Mashup metaphor #27 :-) ]

...VCs buy a piece of PaidContent.org

The excellent PaidContent.org publication raised an undisclosed sum of funding from VC firm Greycroft Partners. I'm a huge fan of PaidContent and founder Rafat Ali has done an excellent job in reporting on the business of the media industry with scoops and exclusive interviews.

Some call PaidContent a blog, I call it a news organization covering the media industry produced by media professionals. Just as SVW is not really a blog...

But why raise money this way Rafat? There are less risky ways to do it that don't require term sheets, large lawyer fees, and someone that is not a founder owning a piece of you...

I hope you ticked the box and opted for some cashback out of the deal Rafat, it's time for a couple of weeks of languid and liquid pleasures in some exotic place after all the hard work you and the team have put into the venture.

From Journalism.co.uk

ContentNext Media, owner of new media news websites PaidContent and MocoNews, has won expansion funding.
The company has received first round investment, of an undisclosed sum, from Greycroft Partners.

Alan Patricof, a founder of Apax Partners and managing director of Greycroft, has previously financed Apple, AOL, and NTL, when those companies were in their infancy.

Backing from Greycroft could prove to be validation of blog-style news sites as a primary source of revenue.

Writing on PaidContent founder Rafat Ali said:

"Our opportunity is to take some money, organise and solidify, choose the right partners, and expand/accelerate what we're doing.

"In the end, keep our heads down and keep doing what we do best: write, report, bring the industry together to discuss and help them do business… in other words, keeping it real."

As well as hiring more backroom staff, ContentNext plans to recruit a New York-based reporter, redesign all its sites and later in the year launch a UK wing.

Also, my good buddy Andy Plesser over on Beet.tv has a vidcast interview with Rafat.

...Nice work by Warren Buffet on outsourcing his philanthropy

NEW YORK (Reuters) - Warren Buffett on Monday signed over much of his $44 billion fortune to the Bill & Melinda Gates Foundation, uniting the world's two richest people in a bid to fight disease, reduce poverty and improve education.
The roughly $30.7 billion donation doubles the Gates Foundation's size to $60 billion, five times larger than any other U.S. charitable group and bigger than the gross domestic product of Kuwait.

"Uniting the world's two richest people..." does the writer mean Bill and Melinda? Surely Melinda must be one of the richest people in the world and she is already united. Otherwise uniting Mr Gates and Mr Buffett provides for an uncomfortable image. And where is Bono in all of this? I bet he had a hand in it... [Did you see the Time "man (person) of the year 2005" cover? If not, here it is...]

...Good luck to his Omness!

Elizabeth Safran, the PR maven of the security software industry, points me to this article from Private Equity Week:

Om Malik has made a name for himself as a chronicler of Silicon Valley. This summer, however, he joins the legions of entrepreneurs about which he has written about, having raised “several hundred thousand dollars” from the partners at six-month-old True Ventures to turn his highly popular blog, GigaOm, into a full-fledged online media property of the same name.
In an interview last week, Malik told Private Equity Week that he was leaving his current full-time job at the Time Inc. monthly Business 2.0, effective June 30. He expects to finalize his deal with True on June 28.

Robert Scoble is another high profile writer recently leaving his employer, Microsoft, to do a startup.

(Hey, I left the mothership two years ago to do a startup... what's the big deal ;-)

... A summer breeze at SFMOMA

I popped into Antenna Group's very interesting clean tech salon last Wednesday.

It was a perfect summer evening in San Francisco and my meetings and events were perfectly spaced in time and geography. Melody Haller's salons are always worth a visit and the location at the Varnish Gallery was the perfect staging ground for the Matthew Barney opening reception at SFMOMA.

I managed to persuade Darcy Provo, senior exec at the Antenna Group, to join me in breaking away from anything IT or business related for an hour or so.

The Matthew Barney exhibition is challenging, provocative and defies description but these types of opening events are not about the exhibits, they are about those that exhibit themselves at such events...

The mood and the energy of the place was great and it became very enjoyable very quickly. We were soon bumping into other refugees from the Silicon Valley business/IT scene.

Michael Tchong, the noted trendwatcher, of UberCool and other ventures, was there. He told me he is soon launching a new site, trendwatching.com. I told him watching is a growing trend...I like to watch Silicon Valley.

there were encounters and conversations with others too, as we stepped around white piles of plastic forms. And before too long, Darcy had acquired a large following :-). And before too long, I was next door in the St Regis bantering away with a bunch of people I barely knew 20 minutes earlier... A perfect evening to finish a long day.

June 26, 2006

Intel says it will win back server market share from AMD

By Tom Foremski for Silicon Valley Watcher

Intel (an SVW sponsor) got a good turn out from the media Monday morning when it presented a roadmap on how it would stay ahead of rival Advanced Micro Devices in low power consuming high-performance server chips.

The chips are strategic to Intel (INTC) keeping its dominance in server chips as data centers turn to computing systems that use less electric power--the single most limiting factor to expanding computing facilities. AMD's Opteron has managed to win support because it use less electric power and offers good performance.

Monday also marked the first day that Intel is shipping its first Opteron-killer product, the 5100 Series Xeon microprocessor.

Tom Kilroy, Intel vice president presented a broad message that Intel is going to maintain a power and performance lead over Opteron because it can make the chips smaller; it has fast buses and other system technologies such as virtualization; and it has long established relationships with thousands of vendors, developers, customers, etc.

There was lots of discussion about Intel's lead in 25 key benchmarks, lots of technical discussion about buses, memory controllers and shared caches etc. There were also a lot of questions on the subject of benchmarks, making apples to apples comparisons, etc.

One important point was that the socket for the new 5100 Xeon chips would remain the same through to the end of 2009. This means faster chips can be inserted without having to swap out all the other components or buy completely new systems.

The new Xeons use 40 per cent less power yet offer about a 3 times performance increase compared with one-year ago Xeons. But it is not just the microprocessor it is other system components and technologies that are also important in reducing power consumption. Intel said it is working with many other third-party companies to help reduce overall power consumption.

SVW Take: AMD will have trouble maintaining its share of the server markets simply because of Intel's massive manufacturing prowess which is a full generation and more, ahead of AMD. Intel can also leverage long established business relationships in enterprise vendor markets while AMD is still very new to this space. Intel also has a large ecosystem of software tools and support that it offers customers.

The subject of benchmarks and making a fair comparison against Opteron chips is a subject that many journalists have focused on lately. Nathan Brookwood, head analyst at Insight64 was advocating a type of cook-off between Intel and AMD with both optimizing their systems to their fullest degree.

Benchmarks however, are not the way data center managers typically make purchasing decisions. They usually run their own tests because of the different designs,implementations, and application loads that servers carry.

Greg Brandeau, VP at Pixar, the computer animation studio said he preferred plugging a system into the wall and using a commonly found wattage meter to measure electric power consumption. He said that Pixar uses Opteron systems and he would continue using them alongside the latest Xeon servers as an easy comparison. He praised Intel's software development tools which he said helped optimize Pixar's graphics software.

Enterprises are traditionally conservative and Intel offers a safe bet that it will be able to deliver on its multi-year roadmap and leverage its long standing industry relationships to continue to produce highly competitive server systems.

AMD is a newcomer to enterprise hardware markets and it will have to work hard to build the relationships and trust that it needs to do compete against Intel. AMD could try to cut prices to gain market share but it is a dangerous game to play against Intel, which can pump out more chips per wafer. And since chip manufacturing costs are constant, more chips per wafer means a lower manufacturing cost for Intel. Plus, AMD has to expand its chip manufacturing fabs, and move production from 90nm to 65nm - a tricky process but one that Intel has already achieved.

AMD will maintain a position in server markets because IT customers like choice and they know it will keep Intel on its toes. But the question becomes will AMD's slice of the server markets be large enough to pay for the design and manufacturing that goes with it.

_ _ _

Intel's benchmark site: http://www.intelstartyourengines.com/

AMD Opteron site

From SVW:
Intel + HP 's data center push - saving power and saving labor

AMD Tech Day: Forecasts continued gains against Intel

June 25, 2006

Intel intros its Opteron killers

By Tom Foremski for Silicon Valley Watcher

Intel (an SVW sponsor) today will introduce its Opteron-killer Dual Core Xeon server chips which use less electric power and provide more performance in key benchmarks.

Advanced Micro Devices' Opteron servers have become popular because they use less electric power than equivalent competing microprocessors. This allows computer companies to pack more computing power into the same amount of space.

The low-power data center is a top goal of enterprise vendors and that's why Advanced Micro Device's Opteron has done well. Data centers are being limited by the amount of electric power their local utility can offer, and many are operating at their top limits. Some cannot install more computing power because they don't have the electric power to run the extra equipment.

To expand computing capacity, data centers are turning to low power consuming servers, the fastest growing segment of the server market. More computing power can be installed per kilowatt of energy, or customers can choose cooler systems that need less cooling and create substantial savings on electric power. Large data centers can spend tens of millions of dollars on annual electric power costs.

Intel (INTC) will discuss details about its Core Xeon server chips at a press event in San Francisco Monday morning. They represent the first of a family of new chip designs that are optimized for low-power consumption. They are also built in smaller geometries which further cuts power consumption.

Intel estimates its new chips use 35 per cent less electric power and provide as 80 per cent performance boost against comparable prior chips.

I recently met with Lisa Graff, general manager of server platforms at Intel. She said that the benchmarks of the new chips will be much better than for Opteron. There is an Intel site offering performance benchmarks at http://www.intelstartyourengines.com/

It can be difficult to directly compare AMD and Intel server chips because of different server designs and the application loads on the servers. But it is the overall power savings of such systems, rather than small differences between the two competing brands, that will drive sales. The vendors that have low power servers on the market first will benefit the most.

Intel and AMD are rapidly expanding production of their server chips. The competition between the two will become about which company can meet market demand. Making the chips is difficult and requires high yields per wafer in order to to be profitable. Intel has the edge in manufacturing technologies but AMD has made big progress in raising production yields per wafer over the past five years.

Google, the search engine company, is among the customers for such servers. It operates some of the largest data centers in the world and it is very concerned with electric power costs. It is building a huge data center in Oregon in an area where there is cheap hydroelectric power. Places where there are aluminum smelters--which require larges quantities of electric power to refine the metal--are sites that are becoming increasingly attractive to Google and others because they indicate places where there are cheap local electric power resources.

June 22, 2006

Sabrina Horn: Celebrating 15 years of the Horn Group

By Tom Foremski for Silicon Valley Watcher

I recently interviewed Sabrina Horn, the head of the Horn Group, one of Silicon Valley's largest independent PR companies. The Horn Group this month is celebrating fifteen years in business and Ms Horn has seen many of Silicon Valley's business cycles.

Over the past three years she has been working from the company's Manhattan office. She has returned to the East coast where she was raised. She has two young girls, five years and eight years old.

Ms Horn spent 20 years on the West Coast but she says that after the dotcom bubble burst she wanted to "get back to my roots, I needed a new challenge, even though managing a company through the downturn has been very challenging."

I asked her about some of the cultural differences between the East and West coasts. "East coast has more of an attitude of being no nonsense, direct, get the job done. But the Web 2.0 companies out here are very much like their counterparts in Silicon Valley, they have very similar cultures and you wouldn't be able to distinguish the from each other."

One of her goals was to diversify the company away from enterprise software and towards other industries and services. For example, in New York she created a business group that helps companies with web site design, and related services. Now that group brings in about 25 per cent of total revenues and she expects it to bring in 50 per cent within five years.

This is all part of a future for PR/communications that helps companies get their stories out and also publish them. "The Internet is such a visual medium that it makes sense to help companies improve their online presence."

Ms Horn is very much aware of the power of blogging and the new media/social communications technologies that are pouring out of Silicon Valley. Podcasts, vidcasts, new media oriented press releases, and the many different ways companies can communicate are readily apparent from her vantage point. But she admits that it is often difficult to convince clients on best strategy and good practices because they are often stuck in the old way of doing things.

She also recognizes that for PR companies to be more effective at what they do, they have to be recognized as strategic consultants and important partners, rather than subservient to the whims of the current marketing director.

[I've always considered it strange and unhealthy that marketing departments run the communications. Corporate comms should have it's own seat in the C-level suite. That's true in very few companies. There should be a chief Conversations/Cultural Officer or something like that because businesses exist in a society and they need to have the appropriate understanding of the conversations, the culture of that society. That's why SVW reports on the business and culture of Silicon Valley.]

Ms Horn also understands that in today's world PR firms have lost their ability to control the message, and that's a very important realization. Because it means readjusting and accepting the fact that we live in a very different media world today.

[For example, I tell companies that they cannot control their message because the world will tag/label them in anyway it wants, and in all sorts of ways. The new control comes from having the discipline to repeat a message a hundred times and more, making sure that everyone in an organisation understands and articulates a consistent message, time and again. (You'd be surprised at how rare this is!)]

Remaining an independent PR firm is tough in today's world where clients want global reach and representation. But it could be argued that smaller, independent PR companies provide more value, attention and can leverage existing partnerships in other regions to provide comparable services to the mega-agencies.

Ms Horn says that she receives offers to buy her company on a regular basis but she says she is having too much fun to take those offers seriously. "If you are passionate and involved in something, you cannot just walk away from it. I love coming to work everyday," she says.

She shared with me three rules she has learned from running her business:
-The day you think you know it all is the day you need to quit the job.

-There is always far more that you don't know you didn't know.

-Always make sure that the check clears the bank.

We need competition not net neutrality otherwise Web 2.0 dies on the vine

By Tom Foremski for Silicon Valley Watcher

Wednesday I managed to catch up with Sean Garrett, one of the co-founders of 463 Communications, an agency that represents tech firms in Washington D.C on tech policy issues. Obviously, net neutrality was a topic we discussed, and Mr Garrett mentioned that the telcos were out spending everyone by enormous amounts on the net neutrality issue.

But this issue is a red herring because there is no way that legislation can force a pipe owner to carry all packets, including its own, on an equal basis. As Mr Garrett pointed out, the real issue is competition, "If we had real competition then the whole net neutrality debate would go away."

That is very true, it's because our access as consumers to the Internet is controlled by the telephone or cable TV companies and we don't have any choice. Efforts by municipalities to provide WiFi for local residents have often been blocked by the telcos yet this is clearly blocking competition.

If we had a broad range of competitors we could choose, and choice is good for consumers, it's also good for the vendors of the infrastructure, Intel, Cisco Systems, Hewlett-Packard, Sun Microsystems etc.

Choice would be great news for the many hundreds/thousands of startups, the so called Web 2.0 companies that are based on the premise of equal access and equal performance on the Internet. Without this capability they will die on the vine--it will wipe out the promise of this next wave of innovation.

The net neutrality debate is bogus because there is no way to mandate/regulate that the communications network owners provide equal access and performance. Because the telcos and cable TV companies want to pump torrents of bits through their pipes in the form of their own services but more importantly, in the form of high definition (HD) TV/video.

HD will squeeze everyone else to the margins and marginalize the entire Web 2.0 generation. That means thousands of small startups, plus the many thousands of VCs and other investors in those companies, will be drastically affected by this net neutrality issue. But Mr Garrett says it is difficult to get the startups interested in political issues that affect their future, that has to change.

So how do we break the local duopoly? And it is a federally regulated duopoly which means the government is part of the barrier to competition.

WiMAX, the Wi-Fi technology on steroids that has a range that can be measured in tens of miles could vault over the walled gardens of local Internet providers. But that technology is not yet ready for commercial use and it might be couple/several more years before it is ready.

In the meantime, HD will kill the Web 2.0 generation by pushing them out of the pipes, IMHO.

- - -
Please also see:

Tom Abate at The San Francisco Chronicle just finished the first in a series on net neutrality, over 200 hours of investigative work: Speed Bumps on the Information Highway

The 463 Blog: Inside Tech Policy which is also a good resource pointing to other good sources on tech policy issues.

Horn Group's salon on top of the Clift

By Tom Foremski for Silicon Valley Watcher

We live in an AlwaysOn world, Tony Perkins was right. I just wish he had named it AlwaysOn- except- Friday- afternoons- and- most- of- the- weekend- until- Sunday- evening.

This week has been very interesting and very always-on, especially Wednesday. Here's a 24-hour slice, published in parts between running around SF/Silicon Valley and trying to be a dad too.

Missed Voce

Tuesday evening I was hoping to get down to the Voce Communications summer event in Palo Alto but I just couldn't get away from the demands of my blogs. I like the Voce people: Mike Manuel is one of the few top PR bloggers not [yet] working for Edelman; co-founder Rich Cline and Matthew Podboy plus colleagues Dave Black, Janet Martin and many others I've worked with on stories.

I like the Voce people because they cottoned onto this new/social media stuff early on. Mike Manuel and Matthew Podboy and myself, are also part of the think tank: Society for New Communications Research, co-founded by Jen McClure, the Executive Director. The think tank group consists of some of really interesting and diverse people that have been involved in the early roots of this new media evolution.

Over at the Clift

I couldn't get to Voce but I did manage to get to the Horn Group's salon Tuesday evening at the top of the Clift hotel because it was only about about a mile or so from where I live. The Horn Group is celebrating 15 years in business and Sabrina Horn, the founder was there. She's been based in New York the last three years so it is interesting to hear her talk about some coastal differences and similarities. [I have an interview ready to roll with Ms Horn from last week.]

I caught up with some of my contacts from RightNow Technologies, which is one of the top CRM firms and run by one of my favorite CEOs Greg Gianforte.

I also came across Transera, which provides a virtual call center in the cloud - VOIP powered of course. I met Trensera's Prem Uppaluru CEO and co-founder who told me that selling his service to telcos is easy because they don't have to make any capital investments. It's a performance based business model.

However, working with telcos must be a bit tricky, because if you are successful, they will try to reverse engineer your business or change the revenue split. And they have plenty of IP laying around, plus lawyers, plus deep political contacts on the Hill, that they can use in various ways to their benefit.

I also ran into Jamie Lerner, CEO of CITTIO, an any-type-of-network-monitoring software company. Jamie was beaming because he is a recent dad, and just celebrated his first Father's Day--congratulations! It's always good to chat with Jamie, his HQ in San Francisco is truly a unique space, more "old western" than newdot[com]. And it has a working bar or two too(!)

Sabrina Horn spoke a for a few minutes and she talked about the changes happening in the PR industry and the challenge of change, which was refreshing because too many times agencies nod their heads about new media yet continue doing business as usual.

I spoke for a few moments about the challenges in the professional media sector and also pointed out that these are good times to be in the media and communications business.

At no other point in our professional lives will we experience the media/comms industry in such disruption. So this is a chance to do new things, try new things, and help create the rules, the formats, and the definitions of the new media/comms sector that will hold for the next decade and maybe beyond. That's very exciting, IMHO.

After the Horn Group event I managed to spend some time with a friend who knows nothing of my industry, the people, or about SVW. It's always good to add some balance to the company we keep and I'd love to add more of it.

[Part 2 follows on Wednesday.]

June 21, 2006

Intel + HP 's data center push - saving power and saving labor

By Tom Foremski for Silicon Valley Watcher

I met with Hewlett-Packard and Intel (Intel is a sponsor of SVW) recently to talk about the new blade servers coming from HP including Itanium based servers. Scott Stallard, senior vp and GM for the enterprise group says the company has a lot of pent up demand for its Itanium systems which is good news for the Intel/HP designed 64-bit microprocessor.

Itanium has had a long and rocky road from development to production systems and now the more advanced generations of Itanium based systems. That's to be expected in creating the large ecosystem that's needed for a new microprocessor architecture. You need the compilers, the development tools, and the system design is more challenging than for PC clients. And the road has been longer than some industry analysts expected, and a lot harder to travel than Intel and HP expected.

The new Itanium systems will be up against the best POWER and SPARC based systems so it will be interesting to see how they perform in the market for heavy-duty scientific number crunching. Itanium is designed to process big computational problems such as predicting global warming effects, protein folding, drug discovery and many other grand challenges. We are going to need all the help we can get to deal with some very challenging environmental and healthcare problems.

Lisa Graff, general manager of server platforms at Intel says that Itanium's prior problems with speed and power usage have been solved and the latest systems provide benchmarks that exceed IBM's POWER and Sun's SPARC based systems.

Benchmarking such large systems is notoriously difficult because of the different types of applications that this type of "big iron" runs, but Intel has stayed the course with Itanium to make it into a competitive product against long established architectures and it now this seems to be paying off. However, it will be a considerable while longer before Intel will have its ROI.

Mr Stallard gave the familiar data center pitch that Sun, IBM and others give: data center constraints are electric power, therefore to pack in more computing power you have to have low power consuming systems that are built as blades--easily slipped into data center racks. Then you need good management technologies to automate as much of the admin as possible; also you need virtualization technologies so that you can improve server efficiency from abut 30 per cent to as much as 70 per cent.

It's a familar pitch but HP does have some interesting data center technologies that could set it apart in the market. One of these is its Virtual Connect Architecture which automates the many different connections between blade servers and all the other equipment that they communicate with. This means equipment can be deployed more quickly and redeployed according to different business requirements.

All this greater efficiency in server utilization could lead to customers buying/needing fewer servers. But Ms Graff points out that there is no such thing as needing less computing, organizations will find plenty of uses for the freed up computing cycles, and that will drive more sales. She also said that the new Intel server microprocessors coming out this summer will exceed the performance, and have lower power consumption than Advanced Micro Devices' Opteron server chips.

Intel has been late coming into this market and challenging Opteron. This opened up an opportunity for AMD to get into the lucrative data center server business, where it previously had no presence. But Intel is like a very large supertanker and course corrections take time , and once they happen Intel can bring its massive manufacturing prowess to bear and win back market share. Its ability to be among the first to integrate leading edge chip technologies and quickly ramp up chip production in its fabs is formidable. AMD knows this and is rapidly expanding its chip fabs in Dresden, Germany - it will be an interesting race to follow.

June 20, 2006

UPDATE: Gmail outage... GOOG's sagging infrastructure breaks down

Is anybody else having problems today with Gmail today? I can't seem to get in at all, and there have been other errors popping up the last couple of days, at least in my account. Is Google's infrastructure groaning at the load of all of its services, including unlimited video storage?

UPDATE: I still cannot get into Gmail. It has been four hours since I posted on this problem and others are reporting it too (please see comments section.) I use Gmail exclusively and my business depends on it. I don't mind a five or ten minute outage, occasionally, but this is ridiculous.

Google risks losing me and plenty of others as users.

Gmail is still in beta does that mean Google thinks it can get away with a less-than-reliable email service?

Why hasn't it taken the steps and the investments, to make sure this doesn't happen? Does GOOG think that because Gmail is a beta product we will cut the company some slack? Hours of slack for a mission critical component of most people's lives?!

What's strange is that my son can access his Gmail but when I tried to log in through his machine I got the same server error. Then when he tried to log back into his account he got the same server error. He had to delete his cookies to get back in...

And why is there nothing posted by Google about this problem? At least, I couldn't find it...

Sun layoffs announcement coming this Thursday

Sun Microsystems (SUNW) will on Thursday announce a large round of layoffs in a bid to cut about one-half billion dollars in annual costs as it transforms itself into a broad based computer software and services company.
Jonathan Schwartz, CEO of Sun will make the announcement to staff and investors on Thursday, said a Sun source. The cuts are expected but the timing was not known.

From my post on ZDNet: IMHO

June 19, 2006

Craigslist founder responds on Cox/Craigslist block

Craig Newmark, founder of Craigslist responds on the problems caused by security company Authentium in blocking Craigslist on Cox networks:

"First, I want to thank members of the Cox abuse team, I've worked with some myself to go after bad guys. I honestly have no idea as to the role of Cox management in this.

"I guess I'm real disappointed in Authentium, it's taking an extraordinary amount of time to fix this. As you see, it'll take at least six months to just start to deploy the fix."

Here is the full post: An update on the Authentium/Cox craigslist blocking situation

Also, here is Craig Newmark's email exchange on this problem.

June 15, 2006

Leaving Microsoft: First Robert Scoble then Bill Gates...what's going on!?

By Tom Foremski for Silicon Valley Watcher

Bill Gates' gradual departure from Microsoft over the next two years comes at a time when the company is facing its largest challenges. It is way behind Google and other companies in transitioning to the online era, and it faces large problems with staff morale.

Just a few days ago, Robert Scoble, a hugely important and popular Microsoft evangelist left the company. And it has lost other key people. This makes it doubly hard for it to recruit its next generation of leaders.

Mr Gates' departure might be a way to bow out before the company's problems come home to roost. A company of MSFT's size has plenty of business to carry it through the next few years. And it can remain very profitable if it cuts its losing business groups. But its long term future is anything but bright, as Mr Gates claimed at the press conference today: "The road ahead for Microsoft is as bright as ever."

Microsoft must make some very hard decisions and reinvent itself as a company. The power of the founder to make such changes within an organization can be very significant.

Steve Jobs, CEO of Apple Computer, returned to the company when it was facing huge challenges and he managed to remake the company he co-founded. Bill Gates could also bring that type of capability to Microsoft during a time of huge challenges.

Clearly, Mr Gates is no Steve Jobs.

- - -
From Cnet: Gates stepping down from full-time Microsoft role

Bill Gates announced that over the next two years he will gradually step away from his daily responsibilities, handing the reins to CTOs Ray Ozzie and Craig Mundie.
Bottom line:
Analysts are speculating on how critical the loss of Microsoft's chief architect will be as it fights to stay competitive in the changing software-industry landscape.

Why is there no British Google? A top British politician asks...

By Tom Foremski for Silicon Valley Watcher

A reader (www.elleeseymour.blogsite.com) writes:

Belated congratulations from over the pond. Bloggers in the UK do not have sponsors but advertisers, what advice would you give to them about this? I would like to write a post about it tomorrow, so a response would be appreciated.
Also, what are your views about this story in The Times about why the UK cannot develop the Yahoos and Googles cyberspace company. I think you will find this of interest.
http://www.timesonline.co.uk/article/0,,6-2222386,00.html

Thank you Ellee. Let me address the article in the Times, written by George Osborne, a British [politician and shadow chancellor, which means he is in the Conservative party and part of the "shadow cabinet" of senior Tory politicians.

Here is the intro:

We may have invented the internet but it's the Americans who have colonised it. It's time to stake our claim WHY IS THERE no British Yahoo! or Google? Why are we not home to fast-growing community websites such as MySpace, the fifth most visited site on the world wide web? The internet may have been invented by a Briton, but it is a sad truth that not one of the leading internet companies is British. I am in Silicon Valley to find out why, meeting not just the people who run these internet giants, but also the venture capitalists who turn their bright ideas into great businesses. I want to know what we can do to make sure Britain has a slice of the future.
There was nothing pre-ordained about America dominating the online world. Many of my contemporaries at university packed in traditional jobs in the 1990s to launch start-up companies and claim their stake in the internet boom. Now almost all have gone back to careers they left behind.

To broadly summarize, Mr Osborne asks why are there no British Internet companies on the scale of a Yahoo or Google? He talks about a recent visit to Silicon Valley and the vibrant, supportive infrastructure here. And he says Britain must do something similar otherwise it will fall ever further behind. He identifies it as a key economic/ competitive issue.

SVW's take:
The reason there are no British Googles or Yahoos or EBays is the same reason there are no British Apple Computers, Intels or Seagates. Silicon Valley is not something that can be copied, Israel's Silicon Wadi is the closest copy, and then everything else around the world could be described as being variations on: a business park built next to a university.

What's different is that here is different.

It's different because this is a place that tolerates massive amounts of failure. One in 20 startups make it beyond five years, venture capitalists want that ten-bagger, that massive return on investment. But they are prepared to fund ten or twenty startups that fail.

In Britain, Mr Osborne does not have that culture of tolerance of failure. And the rest of Europe is pretty much the same. If you fail once you are a failure evermore.

Here, in Silicon Valley, they let you back into the game, time and time again. I know plenty of people who "made it" but they failed six or seven times before that. This is the only place in the world that has such high tolerance of failure.

---

And as for sponsorships versus advertising? Sponsorship is more akin to being a patron, having the wealth and the interest to promote new things because it creates a mutual, a community benefit. This is in stark contrast to trying to sell advertising.

Sponsorship doesn't come with the same type of controls that an advertiser might be tempted to exert over a media company. My sponsorships are usually for a 12 month term. Advertising contracts are for much shorter periods and thus there are many opportunities for advertisers to influence their media partners. I've seen it many times during my 25 years in the media industry.

That's why a sponsorship is a more ethical model for a new media publisher - and a more efficient model. I can direct the resources of Silicon Valley Watcher to building a team and producing great content instead of having to build a large sales team. I can focus on the journalism rather than advertising.

And my sponsors will learn about the new media, they will work with me and my teams and their teams, on figuring out some of the many questions about the best practices in this emerging, fragmented, two-way media world. And we will be involved in trying out new media formats, and applications of these fascinating media technologies that are bursting out of Silicon Valley. It is an exciting time to be in the media/communications industry.

Sponsorships will work as a business model for Silicon Valley Watcher but I know it is not something that can be applied widely. We still need to develop a type of Google AdSense on steroids that fairly rewards content producers rather than aggregators. And I'm not sure if Google et al, the aggregators are on our (the content producers side).

We need that a content-reward technology to make a success of this emerging Internet 2.0 world. By content-reward technology I mean that organizations producing compelling, truthfull content will be rewarded by lots of money. To enable them to continue to provide great content. Unless we can figure out what is one of the most challenging computer/online problems of our time--we will be toast. And....tens of thousands of startups will fail. We wil not have an Internet 2.0.

Maybe Britain could help? I hope Mr Osborne is reading this post and he can galvanize Britain's elite researchers and its smartest bus/dev teams and create a content-reward technology for content producers that pays back more than the pennies Google's AdSense ad network, (and the other online ad networks...) pay. And the money will be invested back into yet more great content... producing a virtuous cycle.

Something like that would be bigger than Google and Yahoo and WalMart combined, IMHO.

June 14, 2006

SVW crypto-scoops and the New York Times...

By Tom Foremski for Silicon Valley Watcher

Take a look at my crypto-scoop published December 1 2005 and today's story in the New York Times by John Markoff. (I had to publish it cryptically because I wasn't allowed to publish it directly :-)

From Silicon Valley Watcher:

-Cryptoscoop: The GOOG is prophetic, rather than superstitious, about its interest in the power in the places associated with the 13th fundamental building block of the Original Design.

It refers to Google's interest in building large data centers in places where there is abundant cheap electricity and those places are where aluminum is made. Alumininum is the 13th element of the periodic table (which lists the elements which make up our physical world). It takes enormous quantities of electricity to make aluminum.

From New York Times article: Hiding in Plain Sight, Google Seeks More Power

THE DALLES, Ore., June 8 — On the banks of the windswept Columbia River, Google is working on a secret weapon in its quest to dominate the next generation of Internet computing. But it is hard to keep a secret when it is a computing center as big as two football fields, with twin cooling plants protruding four stories into the sky.

... Local residents are at once enthusiastic and puzzled about their affluent but secretive new neighbor, a successor to the aluminum manufacturers that once came seeking the cheap power that flows from the dams holding back the powerful Columbia. The project has created hundreds of construction jobs, caused local real estate prices to jump 40 percent and is expected to create 60 to 200 permanent jobs in a town of 12,000 people when the center opens later this year.

Hot new vidstars mix with hipsters and geeks at vidblogging fest

By Lucaso for Silicon Valley Watcher

All right, so Vloggercon in San Francisco this past weekend was hot... and not just 'cause RocketBoom's Amanda Congdon was there, dig? Either the geeks are getting hip or the hipsters are going geek... either way, a new era of media is taking Hollywood and traditional video media by storm.

And why not? You've got a camera... you've got a story to tell... you're a superstar! And, now, the tools to distribute your video are here, such as YouTube and a hundred more free vidhosts.

New media superstars, like Congdon, are well on their way to becoming international celebrities (Rocketboom's audience is as large as some small cable channels after only a year and a half) while Hollywood scrapes to understand what's going on.

We've seen the blogging phenomenon put a dent in traditional print media. Now, imagine that same dent in traditional television media. That's what's happenin', dig?

Lucaso in the balcony at Vloggercon. Photo by Scott Beale of Laughing Squid.

Ok, so back to Vloggercon...

Hot 'cause we're now seeing some cultural integration, as evident by the crook in every geek's neck when 88slide's host Rachel walked into the conference hall (look out Amanda!). A new age of diversity is coming to geekland and we'll be seeing more young, new-media superstars popping up on the radar over the next year as well as some old school geeks