Silicon Valley Watcher - conversations and observations at the intersection of technology and media

[Matt Grimshaw offers a weekly roundup of news affecting the largest US tech industry.]

By Matt Grimshaw, Editorial Director, Future-Fab International

Change seems to be the only constant left in this age of double caffeinated, taurine infused hyper-communication. Icons seem to be a thing of a bygone era, now the world is populated by sharks; to stop swimming is to die. The Chip industry in particular is facing several key infliction points in parallel.

We’re entering an age of exponential change, in everything we know and take for granted, and the chip industry is no different. In fact it’s the chip business that is the catalyst for most of the changes; well what do you think runs your gadgets, laptops, TV’s and the like?

Well you haven’t seen anything yet – if some of the Star Trek Tech that I see coming from Universities is anything to go by prepared to not only accept change, but have that change happen to your physical being – for an idea of that which I speak take a look at this presentation by Juan Enriquez speaking at TED.

The News This Week…

[Matt Grimshaw offers a weekly roundup of news affecting the largest US tech industry.]

By Matt Grimshaw, Editorial Director, Future-Fab International

It’s been a whirlwind of a week… you know the sort; you wake up on Monday go to work and then it’s like some sort of Hollywood blur/FFWD cut scene…then POW it’s Friday and you’re left with a distinct sense of “what the hell just happened??”.

During the blur, flashbacks of memorable occurrences stand out; things like distinct conversations and hanging out in a bar with three PR gurus (names omitted to save them) mid week to discuss that favorite subject of Tom Foremski’s – the emergence of New Media and the struggles of Old.

The Semiconductor industry is not immune to the effects of this trend. Although it isn’t what you’d call a trend setter, hell it’s not even a fast follower being more akin to an arthritic tortoise plodding along in the dust cloud of a rather speedy hare muttering things like “pesky kids…when I were a lad we did things differently” etc.

Friday 8am Silicon Valley news report:

Microsoft's John Schappert coming back to EA -SFGate

The return of Schappert is the latest in a number of EA-Microsoft moves. Peter Moore, the former head of Microsoft's Xbox business, left Redmond in 2007 to become president of the EA Sports label. Don Mattrick, a former EA president, made the jump to Microsoft earlier that year and eventually replaced Moore.

Ballmer: We Should Have Built Search Sooner -WSJ

“In our industry, the No. 1 mistake that people make is that they quit too early,” Ballmer said during comments to the Executives’ Club of Chicago. “If you look back at any great technology business, it took a while to build up.”

Thursday 8am Silicon Valley news report:

U.S. wireless providers debate about competition -Reuters

The issue of exclusive agreements among some of the biggest companies like Apple Inc's (AAPL.O) iPhone and service provider AT&T Inc (T.N) is at the center of some lawmakers' concerns about whether such practices hinder competition and innovation.

Wednesday 8am Silicon Valley news report:

Stanford scientists discover a possible successor to silicon -SiliconValley.com

The researchers found that electrons in a chemical compound called bismuth telluride have a unique property: They can travel without resistance, losing no energy. This suggests that there might be a new way to carry more information than silicon-based chips can handle.

Tuesday 8am Silicon Valley news report:

Use Their Work Free? Some Artists Say No to Google -NYTimes

“When a company like Google comes out very publicly and expects that the market would just give them free artwork, it sets a very dangerous precedent.”

Monday 8am Silicon Valley news report:

Hanging on for dear life -TechCrunchIT

With Oracle swallowing Sun, the enterprise dynamics have swung hard to right, past cloud computing, and directly into the mobile identity landrush. It’s easy to pigeonhole smart phones as the latest version of Studio 54 society politics, but in fact our identities are being consolidated around the SIM chip, with our social graph around the Follow/Track architecture of Twitter and its subsidiaries.

[Matt Grimshaw offers a weekly roundup of news affecting the largest US tech industry.]

By Matt Grimshaw, Editorial Director, Future-Fab International

It seems as if the chip industry is working its way through the procedure to recover from a heavy night….It woke up with a bad hangover, memory loss and for some strange reason; random street furniture on or around it’s bed (take your pick; traffic cone, street sign, car tyre etc).

Then it had its black coffee, whilst sifting through broken memories of the night before and now feels strong enough to face some food…

Nervously picking through a pile of eggs & toast hoping that it can hold it down long enough to get its blood sugar levels back to something nearing the standard classification of ‘alive’.

I’m not sure why, but this week seemed to indicate a sense of normality (if there is such a thing in this business) returning, an emergence from the fog of earnings (or lack of) announcements and a recommencing of the usual lunacy surrounding the tech business that allows all other tech businesses to exist in the first place…

Friday 8am Silicon Valley news report:

Reconciling social computing with the enterprise -ZDNet

Jeff Jarvis and Michael Arrington made similar points over the weekend about process vs. product, ostensibly about their particular industry (journalism) and how social processes are competing — often more effectively, though very differently — with traditional, non-social “product” creations, namely news stories.

Henry Blodget was the poster boy Internet analyst that everyone loved to hate during the Internet mania years. He could and did move markets with his analysis. He often chose outrageous targets for companies such as Amazon and he was often right.

But when the dotcom boom turned into a dot bomb he became the most visible target for the backlash to all the Internet hype and tears of many broken investors. And he also became a target for an army of lawyers.

Mr Blodget was barred from the securities industry and forced to pay a $4 million fine.

A lot of people took pleasure in his downfall. The British love to use a German word "schadenfreude" to describe that peculiar aspect of human nature.

Yesterday, that whole affair came to a close. The fines that Mr Blodget and top Wall Street firms had paid into a fund had been paid out to qualified plaintiffs, and there was money left over.

Mr Blodget wrote about this on Silicon Alley Insider, a New York based news site that he founded and that is very successful. (The site is a testament to Mr Blodget's continued analytical prowess.)

As most of you know--and as some of you are fond of observing when I say something you disagree with--back in 2003, I was named in a civil fraud complaint the SEC brought against Wall Street after the dotcom research and investment-banking scandals. As you may also know, I paid $4 million (oof) to settle my share of that charge, and I got booted out of the securities industry.

There follows an interesting account of what happened to his $4 million (plus $200K interest - the headline gives it away :) Blodget's SEC Fine To Reduce National Debt By $4.2 Million

But it's the comments that added a lot to his post. People are sharing how they were trading in those heady days and the huge effect of Mr Blodget's words on the market -- and on their fortunes

For example:

Thursday 8am Silicon Valley news report:

Free broadband won't entice all -BBC

Some 42% of adults said that they had no interest or need for the internet. This so-called self-excluded group tended to be older or retired, with 61% confessing to never having used a computer.

Wednesday 8am Silicon Valley news report:

U.S. Presses Antitrust Inquiry Into Google Book Settlement -NYTimes

The Justice Department has sent the requests, called civil investigative demands, to various parties, including Google, the Association of American Publishers, the Authors Guild and individual publishers, said Michael J. Boni, a partner at Boni & Zack, who represented the Authors Guild in negotiations with Google.

Tuesday 8am Silicon Valley news report:

Apple unveils faster iPhone with new features -SFGate

Tim Bajarin, an analyst with Creative Strategies, said Apple is migrating the iPhone even more toward becoming a true mobile computer, in the process distancing itself from rivals who are having trouble keeping up.

Monday 8am Silicon Valley news report:

Ozzie at the Bat -TechCrunchIT

Ozzie knows this is the line in the sand Google is trying to draw with Wave, Chrome, and Android: that open standards will force Microsoft to comply with standards-based technologies that will reduce IE’s control of the browser landscape. Yet throughout his Valley sojourn, Ozzie reflected a confidence

Intel Exec Points Up Quirks In the Mobile Market -WSJ

Rather than always relying on a wireless router or access point as a shortstop for making Wi-Fi connections, Intel is backing software to make it easier for laptops to communicate directly with Wi-Fi-equipped cameras, electronic picture frames, printers–and even a robot that appeared on stage with Eden.

Hacking Traction: The Dark Side of Marketing Optimization -GigaOM

Multivariate testing and other optimization schemes can be a great way to make a good product even better, and they are underutilized by many companies. But too many startups have begun misusing such traction techniques as a strategy rather than as a tactic, inadvertently destroying the feedback needed to build a great product.

Search (and Destroy) Engines -h+

It has been suggested that this recent rise in online vigilantism was unique to China, partially because so many involved are educated but underemployed. For thousands of years, China was the source of social innovations, and with the world's biggest crowds and a new focus on crowdsourcing "justice"; China may again have generated a civilization-wide advance in governance.

Microsoft exec sees lower margins from "cloud" -Reuters

Friday 8am Silicon Valley news report:

Suspense builds ahead of Apple extravaganza -Reuters

While many analysts believe Apple has a variety of new gadgets in the pipeline -- from new iPhone models to a long rumored, so-called tablet mini-PC -- the company has said the conference will focus on important but less sexy software operating system upgrades.

Bain & Company released its 12th "Bain’s Management Tools & Trends Survey." One of the findings was that tech and telecom execs were the least concerned about long-term impact from the recession and are the most focused on innovation. 70% said they could "dramatically" boost innovation through collaboration.

Financial services execs were the most pessimistic about their outlook, believing the recession will alter consumer behavior for at least three years.

Here's a few more findings from the Bain survey of 1400 top executives worldwide:

Thursday 8am Silicon Valley news report:

U.S. Video Views Up 16% in April to New High -NYTimes

While the number of U.S. video viewers continues to hold at something like 78 percent of the country’s Internet population, the number of videos they’re watching continues to soar.

Wednesday 8am Silicon Valley news report:

Oracle CEO wants more Java on netbooks, devices -Reuters

"You'll see us get very aggressive with Java, and developing Java apps for things like telephones and netbooks," he told programmers attending a Java users conference in San Francisco. "There will be computers that are fundamentally based on Java."

Tuesday 8am Silicon Valley news report:

APNEWSBREAK: US military tweets -AP

Many military commands and individual troops have long used social networking sites. The Air Force and Army have Facebook pages, as does Gen. Ray Odierno, the top commander in Iraq. But the new effort in Afghanistan is the first in an active war zone to attempt to harness the power of social networking sites as a primary tool to release information.

Microsoft, with its new Bing search service should get some cheer from Nielsen Online. It surveyed "heavy searchers" the top 20 per cent of users that generate 80 per cent of all searches. It found that 72 per cent use 3 or more search engines per month.

Nielsen also found that nearly one third (30 per cent) of those using Google, also use MSN/Windows Live. The company says that this "disloyalty" means Microsoft could have a smaller hurdle in getting users behind Bing. It also likes MSFT's focus on key verticals such as travel, shopping, health and local search as being a good strategy rather than "simply trying to make a better Google."

Foremski's Take:

There's nothing "simply" about making a better Google. Nielsen doesn't say anything about who are the heavy searchers and why they do so many searches.

Heavy searchers are not necessarily heavy spenders. MSFT needs to convince a large number of the 80 per cent of regular searchers to use its search services. And that's tough because it must become a user habit rather than an occasional foray to find cheap travel deals.

The Deal Pipeline reports that the Department of Justice is investigating a possible pact between top US tech companies not to poach each other's top executives. If true, it would be a violation of the 1890 Sherman Anti-Trust Act.

Cecile Kohrs Lindell, reports :

According to Washington antitrust lawyers, the Department of Justice antitrust division's networks and technology section, led by chief James Tierney, has sent letters to at least a dozen major computer hardware and software companies. Google Inc., Yahoo! Inc. and Apple Inc. are believed to be among the recipients, as is at least biotechnology firm, Genetech Inc.

. . .The letters suggest that antitrust division lawyers suspect that some of the targeted companies have agreed not to poach each others' employees. Such an agreement, if DOJ lawyers can prove it exists, could be a violation of the nation's oldest antitrust law, the Sherman Act of 1890, which prohibits agreements among competitors that result in restraint of trade.

Foremski's Take:

The DOJ, under the new leadership of Assistant Attorney General Christine Varney, seems to be determined to find some type of anti-trust behavior by top US tech firms, especially Google. But this investigation seems to be clutching at straws. Even if true, it would probably not result in a criminal prosecution. The Deal Pipeline reports that the letters are in the form of a Civil Investigative Demand.

Critics of large companies such as Google are quick to accuse it of violating anti-trust because of its dominance in online advertising markets and its role on the Internet. However, there is no law against success. Anti-trust laws are designed to prevent criminal business activities.

Monday 8am Silicon Valley news report:

Does Social Media Need an ROI? No and Yes. -elites tv

Just as a consumer will “tune out” interruption marketing that is too company-centric, corporations will eventually fatigue of soft programs that can’t be tracked to something: improving reputation, increasing awareness, and ultimately driving sales).

This one surprised me: Chas Edwards, a co-founder of Federated Media Publishing, an ad network pioneering "conversational marketing," announced he is leaving to join Digg, one of FM's clients.

Recently, John Battelle, another co-founder said he would step down as CEO but remain on staff. These top level changes come during tough economic times but most ad networks seem to be growing and doing well. (Please see: Adify: Everything Is Hunky Dory In Online Advertising.) It is not clear if the changes at the top have anything to do with FM's performance since it is a private company.

Mr Edwards was considered by many in the industry to be FM's most valuable asset because of his long experience in online advertising markets, especially his work at CNET.

Here is his farewell note:

In the coming weeks I’ll be joining some old friends and business colleagues at Digg, to be its publisher and chief revenue officer.

Time for a New Adventure

Friday 8am Silicon Valley news report:

RumorMill: Amazon to Open Web Services API's? _CloudComputing

From a legal standpoint this would help negate some of the concerns around API liability. Amazon is known to have an extensive patent portfolio and in past has not been afraid to enforce it. A clear policy regarding the use of their API's would certainly help companies that up until now have been reluctant to adopt them.

News Corp hopes for broader ad deal with Google -Reuters

According to recent media reports, Google is seeking to renegotiate the deal at a significant discount to the current terms, which popular IT blog Tech Crunch pegged at $300 million a year.

Microsoft CEO Steve Ballmer: Bing! -AllThingsDigital

Does Bing mean that your interest in Yahoo (YHOO) is waning? Ballmer jokingly recites the standard bullet points. “I think there’s a lot that can make sense in terms of a search partnership, not an acquisition,” he says in a monotone. “Whether such a thing will happen I don’t know.”

Bloodied by Google, Microsoft Tries Again on Search -NYTimes

The stakes for Microsoft could not be higher. Search has become the central tool for navigating the Web, and ads tied to search results are becoming an ever more important piece of the advertising market.

Thursday 8am Silicon Valley news report:

Free as in Android -TechCrunchIT

Streaming video servers will become the gas stations of the near future, parking enough bits to finesse the look-ahead of new video as it hits the network, perhaps caching your favorite sites or follows based on your and your affinity cloud’s behavior.

Wednesday 8am Silicon Valley news report:

What if the new name for Microsoft Live Search is ... Yahoo? -ZDNet

Microsoft quietly registered a limited liability company (LLC) last week, which points to the company being poised to make an acquisition or joint venture.

Monday 8am Silicon Valley news report:

The Coming Superbrain -NYTimes

The concept of ultrasmart computers — machines with “greater than human intelligence” — was dubbed “The Singularity” in a 1993 paper by the computer scientist and science fiction writer Vernor Vinge. He argued that the acceleration of technological progress had led to “the edge of change comparable to the rise of human life on Earth.” This thesis has long struck a chord here in Silicon Valley.

Friday 8am Silicon Valley news report:

Microsoft: No defense hearing in EU case -AP

"We believe that holding the hearing at a time when key officials are out of the country would deny Microsoft our effective right to be heard and hence deny our 'rights of defense' under European law," said Dave Heiner, Microsoft's deputy general counsel.

Thursday 8am Silicon Valley news report:

Ray Ozzie Asserts Microsoft’s Position In The Cloud -TechCrunchIT

...every company, every ISV is going to have some blend of software that runs on-premises and some that runs in the cloud, and everyone wants tools that they can use to in essence deploy some apps to part of their organization that might be in the cloud, another part of their organization that might be on-premises, to do that on an application by application or region by region by region or program by program basis.”

Wednesday 8am Silicon Valley news report:

Is there any ‘turning it off’? -SiliconValley.com

Ironic that Eric Schmidt, CEO of Google, exhorted University of Pennsylvania graduates in a commencement speech yesterday to turn off their computers and phones to “discover all that is human around us.” Google has many of us so deeply invested into its offerings that some of us are practically paralyzed when we can’t access its services for a few hours.