Silicon Valley Watcher - reporting on the business of technology and media

MAXroam is my kind of company, a disruptive mobile telecom firm from Ireland. Founded by Pat Phelan, one of Irelands top entrepreneurs.

I caught up with Pat Phelan on Sunday at a house he's renting in San Francisco for the week. He's in town for the TechCrunch50 conference.

Here's a quick 3 minute chat with Pat:

Exit strategies are tight these days so investors in startups are looking to sell to larger companies. Ribbit "Silicon Valley's Phone Company" last week sold to a phone company, BT, the British Telecom giant.

I'm wondering what's the point in finding and writing about interesting companies if their goal is to be acquired by the very companies that they are supposed to be disrupting?

Is this Silicon Valley's future, to innovate so that the technology can be bought and de-disrupted?

More here on my ZDNet column: Are we seeing a disturbing trend in “blackmail” innovation…? | Tom Foremski: IMHO | ZDNet.com

Toktumi and Adify are two companies that are worth singling out from this week's announcements at Demo 08 and elsewhere...

Toktumi is an interesting telephony startup. I spoke with Peter Sisson, the founder of Toktumi. He described the service as the "Skype of the hosted PBX market." It is focused on the very small business market, 1 to 9 employees is the sweet spot.

Getting started is easy, Toktumi provides a free phone number and you can use it with the Toktumi client software (PC only Mac is coming) to receive calls and call other Toktumi users through a regular phone. Additional lines are $12.95 per month plus 2 cents per minute and it can be set up in less than five minutes.

It has deals in the works with office retail stores so that you can walk in and buy a Toktumi phone and service. Calls go through its own data center so that you never miss a call. And developers can use the Toktumi API to develop telephony applications for small businesses such as dental or medical offices.

Unlike consumer VoIP offerings, Toktumi provides the advanced features businesses require, and a few they've never seen before. Auto-attendant, call transfer, visual voicemail, instant conferencing, and call waiting are all standard. Toktumi's unique search dialing capability allows calls to be placed by typing a name or keyword of the person or product desired. Mobility is automatic: calls ring wherever you login: at home, the office, a hotel, or your cell phone if you are on the road.

More info on Toktumi

Adify enables publishers to create advertising networks and then manage their advertising inventory in real-time and sell a wide variety of online ads according to geography and time of day. It provides clients with a dashboard that shows the performance of individual sites and individual advertising campaigns.

The company has been winning some large publishers such as Martha Stewart Publishing. But it can also be used by smaller publishers (Silicon Valley Watcher ad network coming soon!). Adify takes a cut of 12 per cent to 20 per cent of the advertising revenue.

Also, the company's platform has been certified by the IAB, which makes sure that its metrics accurately count advertising impressions. Only 12 ad serving technologies have this certification, says Joelle Gropper Kaufman, VP of marketing.

However, it doesn't work with RSS only with display ads on a web page. An interesting beta project is the development of widgets for distributing content between web sites within a network to help drive traffic.

Adify seems to be very well positioned for becoming the standard interface for the management of advertising networks.

More info on Adify.

Technorati Tags: adify, toktumi

JAJAH is an interesting telecommunications company that is doing its best to exploit the VOIP technology that the big telcos use to bring down their own costs. Unlike the telcos which do not pass on the savings to customers, JAJAH does, and that enables it to offer domestic and international calling for just 2 or 3 cents per minute. And JAJAH's calling plans use regular phones rather than having to be done through a computer.

This morning, JAJAH released its iPhone web application: http://iphone.jajah.com/

Here is how it works courtesy of Frederik Hermann from JAJAH:

You simply point your mobile Safari browser to http://iphone.jajah.com and
type in the number you want to call. Alternatively you can select the name
in your JAJAH contacts and click on the number you want to call. JAJAH will
call your phone, you pick up, and you will be connected to the desired
international number. You can call any phone anywhere in the world (landline
or mobile) without the need of an international calling plan - the
registration is free, there is no contract and no monthly fee.

It also works on an iPod iTouch.

Niklas Zennstrom, Skype founder, left the company Monday as parent Ebay announced third quarter charges of $1.275bn related to its Skype acquisition.

Mr Zennstrom gave an exclusive interview to Thomas Crampton, a blogger and former journalist with the International Herald Tribune.(Hat Tip Dennis Howlett)

In the interview, Mr Zennstrom says:

“Some people have been critical of Skype, but I am very proud of the company’s growth,” Zennstrom said in a telephone interview with ThomasCrampton.com. “Very few companies can claim to match the growth trajectory Skype is on and continues to be on.”

. . .

Those calling for Skype to further increase revenues from users fail to understand the balance that must be struck between seeking profits and supporting expectations built around free phone calls.
“Some people may want to monetize faster, but the key is to figure out what is the right speed of monetization,” Zennstrom said to ThomasCrampton.com. “If you act too aggressively, there is a real risk you will lose the huge active user base.”

. . .

“I am an entrepreneur who starts and launches companies,” Zennstrom said. “It is time for someone else to take it to the next level.”

“Beyond creating a business, Skype literally touches millions of lives and this is something to be proud of,” Zennstrom said. “I would like to think that we have contributed to making the world a little bit flatter.”
Another achievement not to be ignored was launching a global Internet company out of Europe, Zennstrom added: “It was not easy.”

Read the full interview here: SCOOP: Zennstrom defends Skype while stepping down

This is an interesting partnership: BrightIdea.com, a startup founded by Matthew Greeley, offers an online way for companies to accelerate the development of great ideas through a process called Innovation Pipeline Management. It has teamed up with Mensa Process, a company that employs members of Mensa, which are the 2 per cent of the world's population that score the highest on Mensa IQ tests.

"Brightidea.com is the best platform available for quickly harnessing the wisdom of the crowd," said David Wynett, Managing Director, Mensa Process, "and we manage one of the world's smartest crowds, so it's a natural fit."

Link to: Brightidea.com Partners With Mensa Braintrust to Put Genius to Work

Mensa Process is integrated into BrightIdea's web-based platform. BrightIdea customers get access to Mensa Process online panels on a wide variety of subjects and tasks. BrightIdea engineers said they developed an online tool that captures the "rapid-fire style of brainstorming" that occurs in Mensa Process sessions. Mr Greeley said, "The ideas coming out of these online brainstorming sessions are unprecedented in insight and commercial potential."

Mensa Process participants have a verified genius IQ and are available in online brainstorming panels, in categories such as: Smart Moms, Healthcare Experts, IT Gurus, Marketing Specialists, and many more.

Link to: Brightidea.com Partners With Mensa Braintrust to Put Genius to Work

It'll be interesting to see how companies use this service. In many organizations there is a strong "not invented here" animosity towards ideas that come from outside. But there are also many organizations that have trouble coming up with great ideas that can move their businesses forward. Does a high Mensa score equal prowess in idea generation? BrightIdea lets you find out the answer...

. . .

Watch Matthew Greeley whiteboard the innovation process on ZDNet: Web 2.0 @Work

Technorati Tags: BrightIdea, Mensa, IPM

Andy Lark, Sun Microsystems' former Corporate Comms chief recently joined Dell as VP of Global Marketing and Communications. It is part of Dell's strategy to win back lost ground from its arch-rival Hewlett-Packard.

Mr Lark's appointment will certainly boost Dell and it will be interesting to see if Dell adopts a "new media" marketing approach to galvanizing sales. Mr Lark is one of the earliest bloggers and has a deep understanding of the mechanics of marketing in the many-media world we live in.

HP doesn't have anyone in its senior ranks with comparable experience. If this new many-media world of blogs, wikis, Twitter, Facebook, search marketing, etc, really works in helping companies market their products and services, then Mr Lark is the one to show Dell how to do it right.

In the meantime, HP has been using a combination of new media and old-school approaches. This is a good example: It is a promotional video created and distributed through a Podtech flash video player.

The medium is sharable and can be emailed or embedded in a web site (such as this) but the content is old school marketing--collecting a group of celebrities that say nice things about your products. It is an old tried and tested approach: team up stars with the stars of your product lineup, which in this case is the screaming high performance HP Blackbird and other standouts from HP's 2008 lineup.

Technorati Tags: Dell, HP, Andylark

I meet a lot of companies and most of them are very interesting. Lunarr is completely fascinating and I meet maybe 2 to 3 companies per year that fall into this category.

I recently had the pleasure of meeting with the Japanese co-founders of this Portland, Oregon based company, which has just emerged from stealth mode.

Their presentation was excellent, showing a simple yet powerful application that combines the features of a wiki with group-based email. It has a sparse but extremely elegant user interface.

The company was founded in January 2006 by Toru Takasuka and Hideshi Hamaguchi. Mr Takasuka is one of Japan's youngest and best known entrepreneurs. He created a groupware company called Cybozu, which quickly became one of Japan's fastest-growing software companies. And Mr Hamaguchi worked with the senior directors of Matsushita, one of Japan's largest conglomerates.

Avoiding the Silicon Valley noise

The two used to be colleagues at Matsushita in the mid-1990s. "We started working together several years ago in developing the ideas for a new type of collaborative platform," said Mr Hamaguchi.

The company was founded in Portland in order to have access to the high-tech community there. I asked why not in Silicon Valley where you can be in the middle of the conversations about tech and applications?

Mr Hamaguchi said that they needed the space to think about the concepts and develop their ideas. I can see how Silicon Valley can be very "noisy" and that it is a place of influence that makes it difficult to find the space for original thinking.

The thin-edge of Lunarr

Mr Hamaguchi, who's English is very good, uses a business card to communicate the Lunarr concept. One side of the business card is a wiki-like collaborative online space that can hold any document, graphic, web page etc.

The back of the business card represents email, so that you can share the wiki between just two people or many. The point is that instead of having many people work on the wiki collaborative space at the same time, it can be shared by a subset of the group, and the communications of that subset are kept within that group, yet it is also open to the group as a whole.

Mr Hamaguchi then shows me the thin-side of the business card, "This is the Lunarr application."

Japanese and US collaboration cultures

The Lunarr concept is a hybrid model of the different way Japanese and US workers share their work space. In Japan, offices have communal areas where shared resources such as manuals are kept. In US offices, cubicles with their private areas are the norm.

Lunarr is launching the service through private invitations. It is built on top of a big data center so that the service has plenty of scale. It is free for at least the first year and it carries no branding from Lunarr. It is being completely financed by Mr Takasuka.

I will pass along some invitations, let me know if you are interested. This is the type of deceptively simple concept that could produce amazingly powerful applications--I'm very interested in how groups of people will use it.

Technorati Tags: lunarr

Pat Phelan and his company Cubic Telecom are coming out of stealth mode this week with a killer service that will break the back of the Telco Cartel.

I had the great pleasure of meeting Mr Phelan on Friday evening. I can't talk about the details of Cubic's launch but I can say that I'm extremely impressed with Mr Phelan and his startup. It will break the Telco Cartel and about time too.

My readers know that I'm no fan of the Telco Cartel. How is it that over the past ten years that the Telcos have managed to increase my telco bills while investing in technologies that have dramatically decreased the cost of telecommunications services of all types?

Much is spoken about the "digital divide" but we still have a global "voice divide" where making an affordable voice call is beyond the means of most of the world's population.

Cubic has a wonderful voice and data solution that captures the cost savings and gives them back to the user. I will write more when the service launches later this week.

- - -

Pat Phelan's blog: Roam4free - Notes from the edge of telecoms

More clues on Cubic's launch can be found here:

Free VOIP Solution Free calls Worldwide: Cubic Telecom to offer Free international calls?

Please see SVW:

Why Silicon Valley has to break the Telco/Cable Comms Cartel

The Trojan Horse iPhone: How Apple will Break the Back of the Wireless Telco Cartel and Trigger Silicon Valley's Next Boom Cycle

And:

I, Cringely . The Pulpit . The $200 Billion Rip-Off | PBS

Technorati Tags: cubic, telco cartel

Advanced Micro Devices Monday unveiled its quad-core Opteron server chip also known as “Barcelona.” It is an impressive chip designed for server applications and featuring four-processor cores plus several electric power-saving technologies.

AMD is hoping that Barcelona will help it build on the success of its Opteron server family. And it has lined up hardware partners such as IBM, Sun, HP, Dell, Cray and many others.

Bruce Shaw, director of worldwide commercial and enterprise marketing said, “Data centers that face space and power constraints are prime customers for Barcelona based servers, they can provide more computing for less power.” The chips can switch off large sections when not in use and without causing any lag in performance.

The new chip has been criticized for not being as fast as rival chips. It operates at 2 GHz. However, the clock speed of the chip is a poor measure of overall system performance.

“The type of memory used in the system makes a big difference on power consumption and performance,” says Mr Shaw. The AMD chip offers faster access to memory than in rival Intel chips, and it supports types of low-power consuming memory chips.

The biggest challenge, in terms of driving performance for AMD and Intel's multi-core chips, comes from the software industry.

Both companies make use of Moore's Law which doubles the number of transistors on a chip about every 18 to 24 months. Chip makers have consistently been able to push their production process to keep up with Moore's Law. And by doing so, software automatically runs faster on their latest chips.

Moore's Law and Software Performance

However, with multi-core microprocessors, the automatic performance increases due to Moore's Law start to quickly diminish. That's because the vast majority of software is designed to run on a single processor. Developers would need to rewrite their software to spread the work across two or more cores in order to gain the performance benefits of multi-core processors.

Margaret Lewis, director of Commercial Solutions at AMD, says it is a problem. “My job is to work with the software development community to educate them on developing applications for multi-core microprocessors. But these techniques have to be taught in the beginning, in the classroom, so that developers naturally think about how to create parallel processing within their software.”

Sometimes using compilers and operating systems can help spread the load of an application across several cores. But these offer incremental improvements compared with writing software for multi-core environments. “There are quite a few issues to deal with, such as having the right development tools. Also, debugging the software is more complicated.”

Ms Lewis doesn't believe in a technology breakthrough. “I don't think there is one silver bullet, this is a difficult problem. The solution will come from many smaller silver bullets.” Collecting those silver bullets will take years. In the meantime, Moore's Law will help create 8, 16, and 32 core processors, but the free ride for software developers is over.

- - -

Overview from AMD: http://multicore.amd.com/us-en/AMD-Multi-Core.aspx

Review: AMD's New Quad Core Barcelona

Technorati Tags: AMD, Opteron, Quad Core

Tom Yager, chief technologist of the test center over at InfoWorld (no more paper InfoWorld) wrote an interesting column recently about creating "an unbreakable link between media and its delivery end point."

During a visit to AMD, a representative said new chips "will “block unauthorized access to the frame buffer.”

In short, that means an unauthorized party can’t save the contents of the display to a file on disk unless the content owner approves it.

There is a short list of parties who will be unauthorized to access your frame buffer: You. There is a long list of parties who are authorized to access your frame buffer, and that list includes Microsoft, Apple, AMD, Intel, ATI, NVidia, Sony Pictures, Paramount, HBO, CBS, Macrovision, and all other content owners and enablers that want your machine to themselves whenever you’re watching, listening to, reading, or shooting monsters with their products.

The death of DRM might be a bit premature, as with all the iTunes and EMI coverage seems to imply. (BTW, DRM-free doesn't mean it is legal to share it.)

Mr Yager says that there will will be a distinct benefit to IT from the DRM efforts.

It’s easy to write off entertainment content owners and distributors as a money-grubbing cartel; for the most part, they are. But the technical work they do to protect what they own matters, even that work which we find distasteful given needless extremes of use such as pay-per-single-view. They’ve got the money to drive the science of data and content protection. If they perfect that unbreakable link between the media and the delivery end point, if there’s never another DVD image splattered all over the Internet, then IT will be able to make a promise that, to date, it couldn’t: Nobody can view or copy your data without authorization.

Link to Content in lockdown | InfoWorld | Column | 2007-03-28 | By Tom Yager

I met with Logitech on Tuesday to see their Fall lineup of mice, keyboards, speakers, headphones, and webcams. I cannot write about the specs and the prices of the products just yet - they are under embargo. But I can say that I was impressed by company's consistent ability to each year come up with many new products, and innovations, in categories that you might think were already well served.

There are a couple of flagship products coming from Logitech that are going to be well worth taking a look at. In particular, a high-end mouse with new types of controls, and also a high-end webcam that is bound to be a hit. Logitech manages to hit the sweet spot in pricing, too.

And every year I ask the same question: why don't you make a compact keyboard? I have used notebook computers as my main and only system for more than ten years because I like the form factor. My notebook sits tethered to the same power socket for much of the time, occasionally I take it with me. But it is the form factor that I love, (plus being able to use two screens) and it puzzles me why Logitech and others don't make compact keyboards without the numeric keypad.

Logitech says that people want the numeric keypad and that's why they make keyboards that would take up half my desk space. But surely they are missing the fact that many more people are now using their notebook computers as their main system and that this shows they are choosing a compact keyboard?

- - -

BTW kudos to Logitech for helping to continue the work of the inventor of the mouse, (and much, much more) Doug Engelbart. Here is an account of my meeting with Doug Engelbart a year ago:

SVW: A tribute to one of Silicon Valley's most influential and forgotten researchers at Xerox Parc event

SVW: Exclusive interview with seminal 1960s computer visionary Doug Engelbart -- he's still here and looking for funding

SVW: What if Buckminster Fuller were still alive and looking for funding? I'm still in shock at Silicon Valley's blindness regarding Doug Engelbart

Tune in later this week, after I chat on Wednesday with IBM's top strategist Irving Wladawsky-Berger, vice president, technical strategy and innovation.

Mr Wladawsky-Berger is responsible for driving big changes at the world's largest computer company, and beyond. His influence within IBM and the industry is remarkable and achieved without much fanfare. He has managed to drive some important changes within IBM towards open standards, and very early support of Linux, and many other IT initiatives. And these have had great effect across the IT industry.

I've been meeting with Mr Wladawsky-Berger on a regular basis for many years. Here is my most recent meeting, and tune in for the next one on SVW later this week on ThoughtLeader Thursday.

---
Irving Wladawsky-Berger blog: A collection of observations, news and resources on the changing nature of innovation and the future of information technology.

SVW: The remaking of IBM: A chat with IBM chief strategist Irving Wladawsky-Berger

BrainJams, a project of my friends/colleagues Chris Heuer and Kristie Wells is trying out a good karma evening today (Wednesday July 19), called "Rent an Expert" at the offices of Cnet Networks downtown in San Francisco.

The idea is neat, it is to turn up in a room and offer 15 minutes or 30 minutes of your expertise, for free. And if you offer something of value, and also find something of value, then that is immediate karma.

But even if you give your time, and don't get what you want . . . you'll always get what you need.

Hope to see you there. Here is Kristie's pitch:

Overlaying the digital world on top of the physical is something that is possible these days, in several ways. Today Howard Taub, the associate director for HP Labs will demonstrate a way to do this by sticking a wireless data chip onto a physical thing.

HP Labs will demonstrate a revolutionary new wireless data chip that could be stuck on the surface of any object, bridging the physical and the digital worlds and enabling a host of new applications.

The data chip could store medical records on a hospital patient’s wristband, provide audio-visual supplements to postcards and photos, help fight counterfeiting in the pharmaceutical industry, add security to identity cards and passports and supply additional information for printed documents

It'll be interesting to see if and how HP has reinvented the RFID chip.

About 6 years ago HP Labs talked about a "beacon" concept where future cell phones or pocket computers could be pointed at a billboard, or a storefront, and information from Internet sites would download. This could be accomplished by RFID chips but also by something more sophisticated, we'll have to wait and see.

Also, take a look at Dave Berman's blog HPLablog from the heart of HP Labs.

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.

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.

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

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.

Transmeta today revealed a secret Microsoft (MSFT) project it has been working on for the past 18 months - a special microprocessor equipped with pay-as-you-go security technology called FlexGo.

Microsoft wants to bring cheap PC computing to billions of people who cannot afford PCs and it is promoting FlexGo as a variation on the cell phone pre-paid minutes programs. Customers pay for part of the cost of a PC up front and then pay per minute of use, along with paying off the balance of the PC cost.

Transmeta has produced a special version of its Efficeon low-power consuming microprocessor. Arthur Swift, CEO of Transmeta, told SVW: "We managed to add the FlexGo capability quickly because of the software design of our microprocessors. It would take a lot longer if you were to do it in hardware."

I caught part of Advanced Micro Devices' Tech Day in Sunnyvale on Thursday. AMD has managed to do well with its Opteron server microprocessor by concentrating on extending the 32-bit X86 platform to 64 bits without having to jump to a new architecture, as Intel (Intel is a sponsor of SVW) did with Itanium.

And its focus on lower electric power consumption with Opteron servers was timed almost perfectly, as the price of oil skyrocketed over the past couple of years.

I keep hearing of data centers that would love to add more computing power but they cannot get any more electric power. Opteron servers are one way to pack more computing power into the same electric power grid.

Intel has made some bets that did not work out as well as it expected. The Itanium 64 microprocessor line has been a very tough road for the company, and Opteron has been a thorn in its side.

But once Intel readjusts its course and goes after a market it is very difficult to compete against its ability to crank out millions of chips from very high yields in its chip fabs. This manufacturing prowess is Intel's core strength and it can ramp up the production of large, complex chips more quickly than anyone else.

Since January 2000, AMD, under CEO Hector Ruiz, has beefed up its manufacturing and has improved its yields over the past few years. But low manufacturing yields used to plague the company for many years.

Wall Street analysts will be watching AMD like hawks to see if it can execute on its manufacturing plans and obtain high yields. With a large fixed cost asset such as a $3bn chip fab, it is imperative to obtain large numbers of working chips from each wafer, otherwise the losses can quickly mount.

The pressure is on for AMD to execute extremely well on the manufacturing side, any slip up would benefit Intel and erase any market gains.

The market gains for AMD have been significant--especially in the server market where it has about a quarter of the market. [See BusinessWeek: AMD: Chipping Away At Intel's Lead] But hanging onto those gains won't be easy as Intel makes use of its leading chip manufacturing technologies to shrink the size of its server chips, which also shrinks power consumption, and reduces prices.

AMD also spoke about thin clients/thin computing and understands that there is a trend emerging within corporations, and to some degree in the home, towards a fat server-thin client based systems where the user experience is the same as a full featured fat PC client. However, it talks about offering a family of X86 based microprocessors designed for a wide variety of thin client/thin computing applications.

The X86 architecture is unnecessary in such applications because less expensive, low-power consuming, high performance architectures are available, such as the British ARM microprocessor. There is no need to run applications locally in a thin computing environment therefore no advantage to using a general purpose X86 microprocessor. You just need something which can quickly render video and audio bits.

Intel has a special developer license for ARM that enables it to develop specialized versions. I could easily imagine a rival Intel family of chips based on multi-core ARM designs optimized for thin computing applications. This would be a more potent combination than X86 architectures similarly optimized.

It would be ironic if Intel were to pitch ARM designs against AMD's X86 based designs in the thin computing market. But stranger things have happened.

Next week I'll bring you the perspective of thin computing leader Wyse Technology and my interview with its savvy CEO John Kish. Wyse, BTW, along with its chip partner, Wyse will be launching a six-core ARM based single chip solution for thin computing applications in a couple of months. It will have graphics and audio capabilities and is designed for Flash-less systems. Wyse has demonstrated this single chip solution running 32 video streams.

A single chip solution means thin computing capabilities can be easily embedded into monitors, keyboards, cell phones - anything electronic with a network connection. And you'll get the same performance as a fully configured Windows XP desktop computer thanks to streaming technologies from Wyse, and strategic partners Citrix and VMware. More details next week...

- - -

Dirk Meyer, president and COO presentation:
http://www.amd.com/us-en/assets/content_type/DownloadableAssets/Dirk_Meyer_6-10-05.pdf

By Tom Foremski for SiliconValleyWatcher

Silver Lake Partners, the leading Silicon Valley private equity firm recently took Serena Software from public to private in a $1.2 bn deal. I spoke with Mark Woodward, the CEO of Serena about the move.

Serena provides software that helps companies manage their information technology and has been in business 26 years and has 15 thousand customers. Mr Woodward said that despite several acquisitions, including the acquisition of a much larger company--Serena was unable to budge its market cap valuation.

"We felt that Wall Street didn't understand our business and despite working hard in making the right acquisitions, and more than doubling our revenues, we still had the same market cap valuation. It was very frustrating."

In addition Mr Woodward said that it was difficult to make long term planning decisions because of the constant focus on meeting quarterly numbers. "For example, we wanted to expand our services business as a strategic move but services is a lower margin business and so the market would have penalized us, but it makes sense from a long term perspective."

By Tom Foremski for SiliconValleyWatcher

I arrived at Software 2006 in time to catch some sessions on Wednesday. First, I met with Joe Kraus, co-founder of Excite and now co-founder of JotSpot, the wiki-roll-your-own software company.

Just before I met with Joe I ran into Ross Mayfield, ceo of SocialText--also a wiki-roll-your-own-software company. Both are two of my favorite contacts and very much alike, a kind of Twiddle-dum and Twiddle-dee except skinnier--like their software (Please see "Skinny apps.")

Both Joe and Ross share the same neighborhood, physically as well as in the market. And I enjoy talking with them because they seem to come to similar conclusions as I do, but they get there in different ways, with different thinking.

I walk into the special speaker VIP room with Joe Kraus, and the room is large and has trendy sofas around its edges and in the middle of the room there is a portable fountain (not chocolate).

We sit and chat and ask each other "What do you think of..." It is great hearing other people's take on things and it's also great if you get to the same place--but with different routes.

We talked about Silicon Valley. Joe says, "Sometimes I think that Silicon Valley is just too smart for its own good."

Do you mean the way everyone is running around trying to commoditize their competitor's markets I ask?

"It's the way there is so much faith in technology but if you look at the current success stories such as MySpace or FaceBook they are badly designed, the technology is old, yet they are successful," Joe says. "It's about how you use the technology."

I say you are so right, we have enough technology, the Geeks- bless their souls--have done a fantastic job. We now have almost free technology--now it is all about how you use it, it is all about publishing, it is all about media. I see the world through a media lens or rather I have a media hammer, I tell Joe.

A little while ago, Dave Winer, who I consider one of the original thinkers on the internet, asked on his blog, is media the new technology? I was so thrilled that someone else had spotted this. And yes, media is the new technology. You might not quite understand it yet, but you will in time . . . and it will become very obvious.

Anyway, lots to tell you about my chat with Joe, but at a later time, it's getting late now :-)

By Tom Foremski for SiliconValleyWatcher

Ray Lane used to be known as one of the industry's best software salesmen a talent that helped him become president of Oracle. In his 8 years at Oracle, sales grew from $1 bn to more than $10bn before he left the company in 2000.

These days he might become better known as the best salesman of software companies as SAP, the world's largest enterprise software maker announced today that it is acquiring Virsa Systems. The financial details were not disclosed.

Virsa is founded by Jasvir Gill, who says he used to be a stand-up comedian. I will resist the obvious line about his visit to his bank.

When I first ran into Virsa at a Horn Group PR event, the executives told me they were giving out "get out of jail free" cards at trade shows. The company's Sarbanes-Oxely compliance software offers a great degree of assurance to top executives that their operations are SOX compliant and they won't become the first test court-case.

Mr Gill was very wise to seek out Ray Lane, General Partner at the top Silicon Valley VC firm Kleiner Perkins Caufield & Byers.

When I met with Mr Gill last year, in October he said, "We didn't really need funding but I really wanted to have Ray Lane on our board of directors because he really understands the software business."

Ray Lane told me in October that the first thing he did was to enter into a sweetheart deal with SAP. "SAP has the channels and the distribution so we entered into a sales deal in which SAP gets 80 per cent of the business."

Mr Lane knew that the rewards would come later--and not much later by the looks of it. He also made sure that Virsa adopted a platform agnostic position, and would also supporting the Oracle database platform.

The goal at this early stage of a company is to develop a customer base so therefore a platform agnostic position is the best choice. And Mr Lane knew that by offering sweetheart deals the partner would potentially make a lot of money because its sales force is motivated, and it can quickly see the overall value of Virsa--should it consider an acquisition.

There is the additional strategic benefit that one partner could be played off against the other. And in today's hot M&A enterprise software market, it didn't take long to package up Virsa--the fastest growing private software company--and find a willing buyer.

Which other companies might be in line for the Ray Lane effect? From Mr Lane's bio at Kleiner:

He sits on the boards of Elance, Metamatrix, Virsa, Visible Path, Xsigo Systems, SpikeSource and PodShow. He also serves on one public board, Quest Software.

Here are excerpt's from SAP's announcement:

By Tom Foremski for SiliconValleyWatcher

SAP, the leader in enterprise applications said it is acquiring Virsa Systems, one of the fastest growing private US software companies.

Virsa specializes in software to enable companies to be in compliance with Sarbanes-Oxely and other government regulations.

Here are extracts from the SAP press release, analysis follows in next post:

From the recent FERRIS Journalist Insights. Written by David Ferris at messaging reserch company Ferris Research.

Cell phone operators believe they have the right to levy a fee on the type of traffic that passes over their data networks. The justification is that they've had to invest a lot in their networks and need to recoup those investments. Still, it feels like a protection racket.

By Tom Foremski for SiliconValleyWatcher

Intel, the world's largest semiconductor company, on Monday awarded massive public relations contracts to just three companies. It is part of a large rebranding effort set in motion by Intel CEO Paul Otellini, who was appointed just nine-months ago.

SVW sources close to Intel and within the PR industry said that Burson-Marsteller, Hill and Knowlton and Ogilvy Public Relations Worldwide were the winners of a long and highly competitive bidding process that engaged almost every large PR company.

"There were dozens of senior executives at all the large PR companies involved in trying to win this contract. Millions of dollars have been spent on winning this deal," said one source.

The plum contract is believed to be one of the largest ever awarded by a Silicon Valley company and quite possibly the largest within the tech industry.

By Tom Foremski, Silicon Valley Watcher

Pamela Mahoney from the veteran venture capital firm Mohr, Davidow Ventures (MDV) invited me to stop in and chat with a couple of their in-house entrepreneurs about media technology products they are developing.

Ted Shelton and Nick Chim showed me some of their work and I'm glad I got to see it because I got to glimpse a new class of emerging internet applications that could provide that next, defining edge that is lacking in the morass of so many similar "web 2.0" applications out there.

By Tom Foremski for SiliconValleyWatcher
[It is such a dreary, rainy day here in SF, and I have a touch of the flu, so I've been able to stay-in and catch up with stuff I should have written weeks ago.]

I recently had dinner with Selina Lo, CEO of Ruckus Wireless--a startup developing wireless multimedia IP technology for the home.

Women CEOs are rare in Silicon Valley but I don't think Ms Lo noticed. An organization would have to have a glass ceiling the thickness of a polar ice cap to keep Ms Lo in check--and I don't think that would work for long.

Take a glance at her bio:

Here is a statement from Microsoft and Yahoo. It says that the US government should engage with their counterparts in China and other countries that restrict internet access.

[There's a slight touch of what the British call "gun boat diplomacy" in their statement--something which the Chinese government tends to notice, as it is very much aware of its long history and its past interactions with western nations.]

The statement said that there are companies inside "most markets who would see great advantage in our withdrawal from their countries." And that's why they won't withdraw their services from China.

They also said that they don't have the leverage to foster change in other countries (even though their revenues eclipse those of some countries.

Interestingly, Google thinks otherwise. In November GOOG hired Elliot Schrage as VP of Global Communications. Mr Schrage has a good deal of experience in dealing with foreign governments. A smart move.

Here is the Microsoft-Yahoo joint statement:

The Disney acquisition of Pixar Animation Studios is interesting from a regional point of view. It strengthens growing ties between Santa Clara and Santa Monica tech/media cultures.

Terry Semel came up from So. Cal where he was co-chief of Warner Bros. to run Yahoo. Now Steve Jobs will help run Disney. The two cultures might seem different but they work well together.

The Disney-Pixar deal also highlights the emerging West Coast corridor of tech/media innovation that is forming. From Vancouver, to Seattle, to Portland to San Francisco Bay Area, to Santa Monica, and San Diego--we have a string of formidable tech/media centers that continue to grow, maybe one day forming a near continuous ribbon of innovation along 1400 miles of coast.

This is a formidable regional corridor of companies and individuals that will help determine the look and the feel of the next ten years and beyond, imho.

---

More on my ZDNet blog about Disney and Pixar.

Parents stuck in the office will be able to chat with their kids and their friends thanks to IBM's Lotus group agreeing to combine its Lotus Sametime corporate instant messaging with that of AOL, Yahoo, and Google.

The additional capabilities of Lotus Sametime will help IBM extend the usefulness of its collaborative enterprise platform into the consumer IM space.

IBM says:

My apologies, but I am horribly backed-up on my emails. My first focus is always on reporting/blogging/writing which means I have to hold email blackout periods of several hours at a time, otherwise I'd spend several hours on my emails.

I try and get out and about Silicon Valley everyday, which eats up a lot of time. I try to get those top exec interviews, scoops, news, tidbits of gossip for the locals, and always, always, focus on original and exclusive content--two key newspaper principles that will continue to be important in the new media world.

And that means that in during some busy weeks my email gets terribly jammed up--but please be assured it is not personal--everyone gets mashed up into my Gmail inbox. Also, we had a bounce-back email problem but that should be solved. (We just have a problem with our archive permalinks to sort out...)

. . .

There was no Larry Ellison at the big Oracle customer event about its Fusion IT enterprise push. Mr Ellison had the flu and couldn't attend the San Francisco City Hall red carpet event.

I popped in on my way home from an earlier meeting, thinking I would grab a bite or two at the Oracle event, treat it as a blogger soup kitchen of sorts, and also catch up with some of my media colleagues.

I was very late but the event still had 45 minutes to go--and the drinks and eats were all under wraps. I almost quit but Dan Fost from the SF Chronicle wandered by and we entertained ourselves and made the time pass more quickly until the eat and schmooze-time.

Customer events such as these are dire for any journalists trapped inside the halls of presentations. It seems IT customers are hardened to four hours of jargon and buzz-word filled presentations, and can maintain a steady alert level.

Most journalists at such events feel as if they have landed in pergatory and must endure the suffering, obviously a karmic punishment for something--until the media Q&A at the end with the top execs.

That's why I prefer to go to the evening events where the journalists with day jobs have gone home for the night. And I prefer my purgatory to be in its proper place--in the after-life.

. . .

If you haven't heard yet, Forrester Magazine is no more. It was an interesting attempt at representing Forrester's thought-leadership. Although it didn't quite jell, I think Forrester were onto something. And it might have worked if the format were changed a bit.

. . .

Take a look at Rock-n-Go for some interesting perspectives on the media. Also, you might want to take a look at this post on Rock-n-go about Antonio Gramsci, whose work influences a lot of my thinking. http://www.antoniogramsci.com/

. . .

The new batch of Internet scandals begins? Fast, the Norwegian search company and Europe's answer to Google is in a bit of trouble due to allegations of accounting scandals and other nefarious activities. . . Here is a Computer Business Review article.

. . .

This will be a fun event: February 21 at Stanford University at 10am, I'll be moderating a panel on "The Economics of Sharing" with Scott McNealy, ceo of Sun Microsystems, along with a few other top bods of interest. More details to follow...

'm out at meetings all day but here are a few tidbits three-dot style.

. . .

I missed the Syndicate conference in San Francisco this week, but I hear it was vendor-hell. Too many vendors prowling the halls and sessions. And attendance of some of the sessions was so bad that they had to be cancelled.

It is a shame, I attended the Syndicate conference in New York and enjoyed it. But that was because I was chairing some great panels including a lunchtime panel Nooked and I put together with Robert Scoble, Jon Udell, Charlene Li...and others.

. . .

This week was the deadline for a big contract for public relations from one of the largest tech companies. And only a few PR firms were invited to bid on the contract. As soon as I find out who won, I'll let you know.

. . .

I went to Dogster's fun little holiday party on Thursday. This is Friendster for Dogs (and cats--there is Catster too.) It is a great idea and they had a million votes recently for their coolest pets contest.

But, did you know that no one at Dogster owns a dog? How ironic is that? Again, it proves the hand of a Supreme Being is at work (see Ironic Design proves more than Intelligent Design.)

. . .

My buddy Rok Hrastnik from Studio Moderna in Slovenia was in town this week, and he says central and eastern Europe is a happening place these days. Lots of ideas and energy and excitement in the air. Also, the old media the newspapers, are embracing blogging and other technologies at a much faster rate than in the US, and it is working.

. . .

China, China, China is on everyone's lips. And everyone is scrambling to set up offices or show that they have partners/representatives over there. More on this later...

Tom Foremski, Silicon Valley Watcher

Intel says it will make a big content related announcement in early January at the Consumer Electronics Show, as it seeks to push deep into home entertainment systems markets.

"You will be surprised at who it is," said an Intel spokesperson. The company has about 40 smaller content deals in the pipeline.

The world's largest chipmaker is investing a lot of money and resources into its VIIV home entertainment system business. VIIV is a PC architecture-based system that can handle all home entertainment needs and also help families save money on their communications through PC technologies such as VOIP.

VIIV users will be able to consolidate their entertainment and communications pipes. And add wireless entertainment capabilities.

[More coming--I have to shoot off to the Googleplex...it's Eric's turn to play Santa, Wayne did it last year :-)]

- - -

Here is part 1 of my interview on ZDNet with Intel and Silicon Valley rising star: Anand Chandrasekher senior vp.

Tom Foremski, Silicon Valley Watcher

It's a snow crash kind of world--it's all about the media wars. Because now, we live totally immersed in a media world. Everything is about content, publishing and delivery.

The content is news, services, games, and it is interactive--it carries its own communications within itself.

The content is published on screens--of four kinds: TV, PC, pocket and paper (static) screens. The device that publishes the content, i.e cell phone, notebook, magazine etc, is less important than the content.

Content is a property that is copyrightable, and content owners have great legal powers to lock it down. The Digital Millennium Act gives content owners substantial control over innovation, what types of devices/software/technology can be developed.

In such a media-centric world, Silicon Valley companies had better get hip to the Hill. Washington D.C is where the disrupted industries will wage their last stand.

- - -

Please also see my post on pugnacious Ed Zander leads Tech CEO policy group.

- - -

Here is a book called Snow Crash:

There's some fine analysis of media's plight over on my good buddy SF Chronicle's Tom Abate's blog: mini media guy-a conversation about new media business models

Bringing home the bacon in a startup

Jason Mandell says his friend Jody Thelander...

recently conducted a survey that uncovers executive compensation among pre-IPO companies, providing in-depth data on base compensation, bonus and equity distribution within biotech, medical device and computer technology areas. More than 20 VC firms and 150 companies participated.

Of interest:

It doesn't pay to be a founder/CEO: non founder CEOs are compensated 10-20% more than founder CEOs. Top dog CEOs can have more comprehensive compensation and more equity than the founder. Seems to suggest founders are not nearly as sophisticated in negotiations as well.

Not much difference between medical devices and biotech; people generally presume that biotech pays better.

The number of companies and VC firms that eagerly responded to the survey was impressive. Thought it would be harder to get the surveys completed. This shows that people are very curious about what is “typical” and seeing if their compensation packages are competitive. This includes VCs as well. Showed at the end of day that vc firms and portfolio companies are aligned in terms of finding out what is competitive

Canadians know how to innovate says PwC

Waterloo, Ontario is top innovation center outpacing Canadian and US centers, (mostly) so says a new PricewaterhouseCoopers report.

Lots of interesting numbers such as:

investors in local technology firms received a more than seven-fold increase in shareholder value at the time of exit. . .

The report also found that in the past decade more than $1.8 billion has been spent to acquire 19 successful, privately-held technology companies in the region. Furthermore the Waterloo region is responsible for an impressive 10% of all IPOs completed by technology companies on the TSX over the past eight years. The report points out that a portfolio of Waterloo region public technology companies generated an internal rate of return of 26% since 1994, out-performing both the Nasdaq Computer Index and the S&P/TSX Capped Info Tech Index.

Impressive numbers I have to say. Shame about the spam-like title of the report:

Making Magic in Waterloo Region: A Report on the Exceptional Investment and Entrepreneurial Potential of Canada's Hottest High-Tech Location

http://www.pwc.com/ca/makingmagic

. . .

Bruggeman breaks boredom by blogging

I haven't checked this out yet, but if Whitney Burk says it's good, then I say take a look :-)

Being John Bruggeman has begun…

He breaks the boredom of those long, serious software company meetings by
cranking up the volume on “Hustler’s Ambition” by 50 Cent. He’s the guy
wearing jeans and a t-shirt in a room full of suits. His standards are
high. His patience is short. It took him a week on the job at Wind River to
define a whole new sector of the software industry. Ever heard of DSO?

John Bruggeman is a software executive who’s not afraid to tell it like it
is.

And now he’s blogging.
Being John Bruggeman http://johnbruggeman.blogspot.com/Many faces. More opinions.

Add him to your feed list and find out what’s cutting on his edge.

Read it. Laugh out loud. Think about it. Talk back...

whitney burk

Plus more conversation with Irving Wladawsky-Berger coming up...

By Tom Foremski, Silicon Valley Watcher.com

The complaint filed against Oodle by Craigslist is fascinating. Oodle, an online classified ads aggregator/scraper was recently asked to quit aggressive scraping of Craigslist and it complied.

(See: SVW Oodles of lawsuits--the battle over content will escalate)

I had an interesting chat with Jim Buckmaster, ceo of craigslist, about this issue. Jim said that Oodle was the most aggressive in checking its listings and this was slowing things up for users.

Jim showed me a chart of craigslist traffic and how much traffic Oodle was bringing, and you could barely see Oodle's red line graph coming up off the x-axis, while the blue line of craigslist was flying high up in the logarithmic realms of the y-axis.

"We try and be fair and reasonable but aggregation sites like Oodle put a big strain on our infrastructure," he said. "We don't want our users suffering because of this."

Oodle and all the other google-like search-and-scrape sites insist that they bring traffic to the original content sites such as craigslist. They provide much needed distribution, is their line.

But the data shows that the cost of the tiny amount of traffic driven to craigslist is massive because of the huge amount of bandwidth and server load caused by repeated hits and scrapes of its data.

"I'm sometimes asked how much benefit we derive from a site such as Oodle, and I estimate it is about a minus 0.5 per cent because it slows up overall performance," Jim said.

With more than 3 billion page views each month, 0.5 percent drag on performance is severe--it means about 15m page views are sucked up by Oodle.

Oodle claims it sent 1m page views to Craigslist in September. That is about a 15 to 1 burden that craigslist has to carry, and its entire community has to bear because of slower system performance.

I told Jim my take on all of this: Companies such as Oodle says classified ads customers want as wide a distribution online as possible, but that is NOT true. If customers wanted wider distribution they would have taken wider distribution because there is nothing stoppong them from advertising on many other web sites, including Oodle!

VCs are targeting craigslist

In my view, craigslist acted fairly and responsibly because it is protecting its community from resource-hungry bots that give back a fraction of what they take.

The VC community continually salivates at ways of creating a craigslist. Or better yet, creating businesses that can syphon-off and commercialize craigslist listings. One VC told me about all the money craigslist leaves on the table by refusing to monetize all its traffic, (collecting revenue just for job listings.)

"We are constantly being approached by other organizations to partner in some way or other. But we feel we don't have any responsibility to help other companies become profitable, the only responsibility we have is to our users," Jim said. "And we don't want to be a target for every new startup that wants to be in the classified ads market."

The problem ahead is that creating a search-and-scrape business is easy, and the oodles of googles coming online funded by massive amounts of VC money are going to be hitting and scraping craigslist at an ever increasing pace and scale.

And it is not just craigslist that is the target *ALL* news/blog sites are being targeted--see next post.

- - -

Here are some blog posts from Craig Donato co-founder and CEO of Oodle, who appears mystified by craigslist's complaint.

. . .for consumers trying to sell items. They want to reach the biggest audience so they can get the best deal. Services like Oodle, that help bring prospects to a consumer's listing, are helping them not hurting them.

Check out the post and its comments section :-)

...a few cryptic quickies and all in just one post!

By Tom Foremski, Silicon Valley Watcher.com

Look for Six Apart to announce an interesting partnership on Tuesday to do with something that takes advantage of the latest and greatest from Infinity Loop in a looped way :-)
. . .

Oracle's email takes forever to be sent out, you'd almost think it was being filtered, flagged and read by humans :-)

. . .

Is Corante the next one up for the lipstick and tutu?
. . .

New York Times reporter David Pogue, while testing out the latest vid-pod walked smack-dab...into a steel girder! Please see An iPod worth keeping an eye on

As such incidents become more common, will they be commonly known as a pod-smash or maybe a reality smack?

This is what iSuppli, a chip market research company found when it took apart the new video iPod:

"iSuppli Video iPod Teardown Reveals a Key New Supplier for Apple"

"El Segundo, Calif., Oct. 21, 2005-A dissection conducted this week by iSuppli Corp.'s Teardown Analysis service of the new video-capable iPod reveals an important new supplier among Apple' s semiconductor partners: Broadcom Corp., which is providing its new BCM2722 VideoCore Multimedia Processor to handle the video functionality."

I think "tribes" is a better term than community because is provides some granuality and acknowledges the different self-interests within a community.

Tribes are communities, or groups of people with an allegiance and a self-interest and a specific look, and a distinct culture. That is a more honest way of portraying yourself in context. Using the term "community" implies a unity that isn't real.

The term Tribes was very much in vogue five or so years ago, but it felt too hipster, too foisted, too orchestrated by the Hippie tech philosophers such as Stewart Brand and ilk. So when Tribe.net, the online community formed in 2003, the term already felt spent.

But now it is coming back, and for all the right reasons. It is coming back from the grassroots, from the groups, the cultures that run under the radar (rather than in the underground ;-)

And with the term, Tribe.net is coming back too. Lucaso, SVW's newest and youngest contributing editor has been showing me how his mid-20s-and-up groups of friends are using digital technologies to communicate, organize and meet. For example, instead of business cards, when they meet people they tell them their Tribe.net avatar name: Luke is Lucaso, Amy is Amyliscious, Dawn is MsZigzag...

And it is these artistic and creative groups that are best described as tribes, and they are thriving and creating new cultures; and the technology is an enabler, it is in the background rather than in the foreground. Technology disappears into the tool kit, and into the walls, and environment.

The creativity of human endevours is what becomes the focus, rather than the technology. Finally, the cart is before the horse :-)

By Tom Foremski for Silicon Valley Watcher.com

I met William Jolitz recently, which was a great thrill because William used to be a key player in so many of Silicon Valley's stories--including the development of what we now know as Linux.

William is working with his wife, Lynne on a fascinating venture, which makes making short videos from small digital cameras extremely easy. I was surprised at how easy, so much so, that I sent off for a Canon SD200 to get into the game!

The idea is that you email your video clips to ExecProducer, which processes, compresses, links, and adds captions and background music and within minutes, it is sent back to you and it's on the web.

Look for short video interviews from Silicon Valley Watcher, coming as soon as FedEx delivers :-)

Take a look: http://minutepitch.valux.com/lynne

By Tom Foremski for SiliconValleyWatcher

VeriSign will announce later today after the close of markets that it has sold its online payments PayFlow group to Ebay.

The terms of the deal are not known. VeriSign says that it enables over $100m per day in online transactions.

PayFlow will become part of the PayPal group at Ebay. PayPal cost Ebay $1.5bn.

. . . is it building a massive news and blogs tracker?

By Tom Foremski for SiliconValleyWatcher

VeriSign is about to announce it acquired Moreover Technologies, the San Francisco based news aggregator. The acquisition price is around $25m according to SVW sources.

On Friday, VeriSign said it acquired Weblogs.com for $2.3m, which tracks weblog changes. The David Winer founded site, combined with Moreover, will give VeriSign the ability to track and publish the content of virtually all news producing online sites.

David Winer is one of the pioneers of blogging and a co-developer of the RSS syndication technology. VeriSign now has one of the largest ping servers--an extremely strategic position as RSS use explodes. It also controls the root DNS servers--these link all the web sites on the internet.

The move by Verisign signals an ambition to aggregate a catalog of infrastructure capabilities such as security, content, and authentication services used by many large commercial web sites. The new acquisitions will enable VeriSign to track most new content published online, and track who accessed it and where.

By Tom Foremski for SiliconValleyWatcher

There has been much chatter about San Francisco's plans to offer WiFi to all its residents and businesses, and Google's offer to set up a city-wide hotspot for free.

Here is my proposal for (nearly) free WiFi solution that could be in place this very afternoon:

I realized we already have much of the infrastructure in place. In virtually any location in the city, I can pick up several WiFi signals from local networks. We just need to persuade people in SF with a wireless router to remove password protection and hang their antenna out the window, or place it by an outside window.

We already have the simple technologies to protect individual PCs/notebooks from being hacked wirelessly, which means we don't need to have closed wireless networks. Instant bridging of the digital gap!

What do you think?

By Tom Foremski for SiliconValleyWatcher

KnowNow today introduced its "eLerts" RSS service to the general public which pops up an alert that new content has been published.

And users don't need a news aggregator or a portal to read and manage RSS feeds. It is all done through the tool bar.

The free service is based on an enterprise IT system KnowNow already sells to corporations, except that this one runs on KnowNow servers.

Okay, it does require yet another Explorer tool bar to be installed, but it is worth giving up the screen real-estate because of its simplicity of use.

I downloaded the Beta of eLerts and played around with it and it was pretty much effortless. Drag and drop and click are *all* users should have to know in order to subscribe to an RSS feed.

Enabling such simplicity is a service to the entire community of RSS feed publishers.

. . .

RSS is still an unspoiled communications channel. It is spam filter and virus free, highly personalized and it is opt-in too. Let's hope RSS stays unspoilt because those qualities I just described are what online marketeers dream about :-)

. . .sliding into another winner?

By Tom Foremski for SiliconValleyWatcher

Max Levchin, the co-founder of PayPal, the internet commerce giant, is coming out of stealth mode mid-October with his next big venture: Slide.com, an online photo sharing site.

Mr Levchin has funded other businesses, such as Yelp; but this is the first one, since PayPal was sold, that he is heading as CEO. Mr Levchin, 30 years old, was the former CTO of PayPal, which sold to Ebay for $1.5bn in 2002.

Mr Levchin told Silicon Valley Watcher that Slide.com "is like iTunes for your photographs." It automatically finds photos on your system and organizes them. Users can share their photo albums using very simple one-or-two-click tools to publish online.

Mr Levchin is expected to announce commercial partnerships around Slide.com, and further details of his strategy, later this month.

San Francisco based Slide.com has many aspects that are familiar in other online services such as Flickr, and in social networking sites such as Friendster. Mr Levchin is betting on Slide.com's simplicity of operation, and its combination of "social" network technologies, to attract large numbers of users.

Slide.com is hosting an event on October 14 celebrating the official launch of its service.

This week, San Francisco is the venue for the Web 2.0 conference, where many online services and online companies launch new products.

Foremski's Take:

By Tom Foremski for SiliconValleyWatcher
Wednesday was another good day to be a journalist blogger in Silicon Valley.

I should go to bed; but this medium is sometimes so compelling, and captures the fun of journalism so well, that it is difficult to stop. Some of you know what I mean...

Hitching a ride into the valley

One of the day's challenges was how to get to a showcase of seven startups at Sevin and Rosen Funds, a venerable valley VC institution.

Openwave's David Peterschmidt and how Inktomi saved Yahoo; OQO--caught between a PDA and a notebook is a hard place to be; Gail Redmond, SozoTek's image enhancer; Audio Bar targets the anti-book masses; Lost my Treo brick and found it (sigh); ipsh! text message marketing king.

By Tom Foremski for SiliconValleyWatcher
It is CTIA week in San Francisco, and this wireless conference has brought in a lot of mobile technology companies. Mobile is definitely the hottest space right now in tech, and also the most challenging.

You need powerful software that can perform wonders in a device with limited resources. If you are a device maker, you have to have highly integrated chips that sip battery power yet can handle, Swiss-army-knife style, a wide range of communications standards, display and audio demands.

And you have to have great design too. Because for consumers, a cell phone says a lot about its owner, so the way it looks, sounds and the personal information it contains are important.

This point was made well by David Peterschmidt, chief executive of Openwave, when I met with him Monday evening.

. . .and Java fund was huge success

By Tom Foremski for SiliconValleyWatcher

I just got out from dinner with Ray Lane, one of the lead VCs at Kleiner Perkins and the former president of Oracle. I've got another meeting to rush off to, but I couldn't resist giving you some of the headlines from this meeting--more to follow tomorrow.

-Ray Lane said: Peoplesoft and Siebel talked about merging, and becoming the number 2 applications company in the world, but there was one key sticking point: they couldn't decide on who would run the company. It took Ellison to get them together.

Ray Lane said: IBM should buy SAP; they don't have an applications business, and I don't know why. I said that to Sam [Palmisano] just 8 months ago; and I don't understand why they don't want to be in the apps sector.

On Microsoft, Ray Lane said: Half of me thinks that Microsoft is irrelevant; but the other half reminds me that they still own the desktop. Unless Google can unseat them on the desktop...

...

In SVW, I recently wrote about the RSS VC fund, formed with $100m to invest in RSS related ventures. I got a lot of flack from people saying it was a lame idea. I said it reminded me of the Kleiner $100m Java fund in 1996, to which I got the response that the Java fund was a giant failure. Well, not so. Ray Lane says the Java fund was very successful; and they have published the ROI on that fund. Kleiner isn't ruling out further specialist funds; a China fund is on the way.

More tomorrow...

By Tom Foremski for SiliconValleyWatcher

There was an interesting presentation by Bryan Lewis, chief chip analyst at Gartner Dataquest, at the recent Infineon media and analyst conference. His presentation and discussion with Robert LeFort, president of Infineon North America, indicates a trend against fabless chipmakers. [Infineon is a founding sponsor of Silicon Valley Watcher.]

For more than 20 years the rise of the fabless chipmaker has been a seemingly unstoppable trend. Fabs these days cost $2bn or more and are difficult to operate and you have to run them at near full capacity otherwise you lose lots of money.

It makes perfect sense to outsource the manufacture to foundries, which focus on perfecting the many manufacturing processes during the three month long production process required to create today's advanced chips.

But many chipmakers were reluctant to go fabless. In the early 1990s, T.J. Rodgers, head of Cypress Semiconductor, said "Real men have fabs," and this phrase was taken up by others, including Motorola, Advanced Micro Devices and Intel. It represented a catchy backlash against the fabless trend.

By Tom Foremski for SiliconValleyWatcher

A few weeks ago I was engaged in a debate with John Gallant, Editorial Director of Network World, via our respective blogs, about my assertion that enterprise software markets have become dead boring.

I'd like to change my argument. Enterprise software markets are not dead boring. They are just dead.

Larry Ellison has killed the enterprise applications software industry. It's dead, dead, dead, dead, dead, dead. The Siebel acquisition was the final blow, the stake in the heart.

The losers include the print media, as yet another large tech advertiser disappears.

By Tom Foremski for SiliconValleyWatcher

Just in time for Thoughtleader Thursday, John Gallant, editorial director of Network World, in Boston, takes on my recent post about deadly dull IT markets.

In his column, Mr Gallant says some very kind words about SVW (making me blush), and he argues passionately that information technology is strategic and even exciting.

From NetworkWorld Weblogs: Agreeing to disagree on the future of enterprise IT.

I had met with Mr Gallant and Geoffrey Moore when they were doing the rounds recently to raise interest in their forthcoming Vortex IT conference. Mr Moore has a new book due out early next year.

Mr Moore continues to believe that information technology is strategic. "It just has to be" he said, "otherwise our living standards are in jeopardy." I asked if it was his personal living standards he was worried about, but in fact not, it was all our living standards.

[BTW, I think Mr Moore is dead-on right, all our personal living standards will decline. It is because information technology has helped accelerate the natural processes within capitalism that constantly seek to trade and thus redistribute wealth globally.]

Things seem very simple to me: strategy is strategic, not information technology. Information technology supports your business strategy. In the most cost effective, agile way, ideally. And that means open source open platform.

By Tom Foremski for SiliconValleyWatcher

It's an early start for me Wednesday morning, as I head off from San Francisco to virtually San Jose, for a webcast discussion at Cisco Systems on virtualization technology [it's the older meaning of virtualization, not the server kind.]

For 2,000 Cisco employees, their day will start much earlier than mine, they chose to be present at the first virtual opening of the 34- year old NASDAQ market. That means be in your seats by 6.30am, my webcast discussion doesn't begin until 9.30 am :-)

It should be a fun discussion here is the lineup:

By Tom Foremski for SiliconValleyWatcher

LinuxWorld is in town and I haven't seen this much activity around a trade show in years. Actually, if you think about it, this is not surprising because it is becoming such a bedrock foundation of today's enterprise software world.

Linux, as the spearhead for the open source movement, has also become the metaphor for how to succeed in today's IT world. The metaphor is: take advantage of community property and layer your secret/proprietary sauce on top.

The interesting thing about LinuxWorld, and Linux in general, is the enormous amount of open source applications and technologies that are available. It's not just Linux, it's a ton of apps and technologies. Which means business opportunities in making all of this stuff work together.

The business opportunities are in the integration of stack/apps layers; offering complete ready-out-of-the-box-stacks; and, v. important, a one-stop one-page license (IP management tools.) Plus mixed-systems admin tools etc...

In terms of developing succesful business models based on open source technologies, the questions are: how far can you go in layering proprietary technologies on top of a "commons" infrastructure before you halt the community development process?

By Tom Foremski for SiliconValleyWatcher

Google hired Kai-Fu Lee, former vp at Microsoft, and Microsoft filed a lawsuit, which acted as warning shot over the heads of other drones considering a change.

Microsoft, in my view, should be careful because such actions bring attention to the fact that it can't match the Google pitch.

And the Google pitch is not about money or stock options, it is about vision. Google can pitch a big vision, Microsoft cannot.

People in tech get excited about big ideas--not about big money and stock options.

If you have key people in your organization excited by big money and stock options--rather than big ideas--then that is not a good thing.

Google's pitch is: if you want to change the world, come work with us. Because only we have the scale to enable you to do things on a global stage.

It's a killer pitch.

My advice to Microsoft is put the lawyers back in their kennels and work on your pitch.

- - -

From Cnet News.com Ex-Microsoft employee a million-dollar man

Kai-Fu Lee, Google's newly hired executive at the heart of a dispute with Microsoft, made more than $1 million last year at the Redmond, Wash., software giant, according to a court filing.

By Tom Foremski for SiliconValleyWatcher

On Tuesday I met with Geoffrey Moore, Silicon Valley's leading IT strategy consultant. He was running around with John Gallant, head of Network World, who had just flown in from Boston.

I wrote about their attempts to kick some life into enterprise information technology, make it interesting again, and be recognized as an important and strategic field(here).

Here is part II, some further notes from our conversation:

By Tom Foremski for SiliconValleyWatcher

I'm in Hotel Monaco, chatting with uber Silicon Valley consultant Geoffrey Moore, (Crossing the Chasm, etc), John Gallant editorial director of Network World, and Bob Angus, president of A&R Partners.

They are preparing for the Vortex conference in San Francisco in October, and a Churchill Club event this Wednesday evening: Creating Competitive Advantage Through Information Technology.

We're talking about the IT enterprise market, a topic that is very dull because nothing much is going on. But Mr Gallant and Mr Moore are determined to get the market moving and make enterprise IT interesting again.

"The IT market is mired in a morass and that needs to change. At the Vortex conference we will be bringing the main constituents together, the vendors and the customers. It will be a frank exchange of ideas," Mr Gallant promised, and no PowerPoints allowed. Tough questions and one-on-one interviews, and large amounts of audience participation are also promised.

By Tom Foremski for SiliconValleyWatcher

Will just a few big tech companies end up owning all the cool/hot tech companies? That's the way it's looking right now, and it's going to be a big problem.

That's because the big boys are controlling the valuations of startup companies. With fewer buyers around, it becomes a buyers market. Which means fewer reasons to build more startups.

Thursday evening I met with a bunch of RFID chip experts from Sun Microsystems, Texas Instruments and VeriSign. I know that my sponsor Infineon Technologies is watching this space and is concerned about legislation that could ban radio chip tags in government facilities in California, and similar legislative moves around the country.

The RFID chips are currently attached to pallets of products, and wireless readers can pick up their bundle of identifying information as they speed through the supply chain. Eventually they are expected to be used to tag most products.

Some US politicians have sponsored legislation that seeks to restrict or ban the use of the chips, because of citizen data privacy concerns. RFID chips being used to track people is the main worry.

The RFID experts I spoke with that evening seemed relaxed and unconcerned about the political side of things, which seemed both strange yet typical. US tech companies generally have faith that laws will be rational and will not limit innovation.

By Tom Foremski for SiliconValleyWatcher

Cadence Design Systems is probably one of the largest software companies you've never heard about. Only because they do the work of creating software that is used to design chips of all kinds, and the motherboards they sit upon.

Cadence has never been able to gain much limelight but Mike Fister, the former senior Intel exec now running the company, hopes to change that. And judging by the performance of Mr Fister and his team Monday evening, he might be able to do it. Cadence started looking pretty good as the evening wore on. [And it was more than just the slightly disorienting effect of ingesting the delights of Boulevard's kitchens and cellars.]

. . . Larry was right

By Tom Foremski for SiliconValleyWatcher

Fortune 1000 companies report they are having to increase spending on IT maintenance and repairs at the expense of productivity-boosting IT systems.

This is despite a 9 percent average increase in IT budgets in 2004.

Accenture surveyed CIOs at 300 Fortune 1000 companies.

Larry Ellison must be smiling.

More from the Accenture study:

. . .fantasy corporate mergers

By Tom Foremski for SiliconValleyWatcher

In February I argued that a Hewlett-Packard/Sun Microsystems combination makes sense, [BTW way more than Symantec-Veritas] - and with extensive HP cutbacks/layoffs looming, it makes even more sense now.

By themselves, those two companies don't have enough to compete against IBM. Together, they have plenty of synergies, let me recap:

By Tom Foremski for SiliconValleyWatcher

As media and communications and marketing professionals, we are all taking part in something very interesting: the birth of a new media landscape.

We will never again, in our lifetimes, experience/witness/participate in anything of such scale and importance as what is now developing in our industry sectors. imho.

That's one of the things I said Wednesday lunchtime to a very interesting group attending the monthly meeting of the San Francisco Publicity Club.

Was I being too dramatic? I don't think so, I'm certain it will be seen that way by historians :-)

It's another day and I'm on another panel, and I like taking part in things like this. But what's not to like about being in the Waterfront Restaurant at Pier 7 on a gorgeous day, talking with a smart and ambitious group about my favorite subjects: Silicon Valley and disruptive media technologies?!

My fellow panelists were interesting picks. Event organizer Ellisa Feinstein and colleagues picked Don Clark, deputy bureau chief of the Wall Street Journal; Mark Robinson, a senior editor at Wired magazine, and Lindsey Turrentine, an editor at Cnet's gadgets review section. The panel was a nice spectrum representing old to new media organizations.

The Q&A part of such events is the best part, because that's when talk turns to conversation. And I get to hear stories, concerns and issues.

. . . is the business model sound?
By Tom Foremski for SiliconValleyWatcher

Browster was a hit at the Demo conference earlier this year. It's a nifty utility that lets you search through pages of search links very quickly. You just mouse over a link and a pop-up page of the source web site appears instantaneously.

That means fewer clicks. Compare it with the current alternatives: Clicking on a link, waiting for it to load, then clicking back to the search results, or opening new windows and then trying to find your way back to the search results.

On Wednesday, Browster launched its 1.0 version. I spoke with Scott Milener, CEO and co-founder of Browster.

"Our goal is to enhance the search experience because that has become such a big part of our lives. Search is where a lot of us spend a large part of our day, and Browster makes it possible to speed through many pages of search results," said Mr Milener

When a Browster-enabled web browser displays a page, Browster looks for links and downloads the home page of that web site into a cache on the client.

Mousing over a link causes a pop-up of that web site page in a separate window. The window also displays five text ads in a horizontal row in the tool bar area.

"By using Browster, people can search deeper within Google, rather than stopping after the first page or two. That means users have a better chance of finding what they want," Mr Milener said.

Foremski's Take:

It's a nifty utility - but is it a "feature?" Browster has filed four patents, but how defensible is its IP?

By Tom Foremski for SiliconValleyWatcher

The lawsuit filed this week by Advanced Micro Devices against Intel, claiming illegal anti-competitive business practices, is interesting because it reveals the millions of dollars paid to PC makers and retailers by chip suppliers. The money is for shelf space in stores, co-marketing campaigns, and rebates on chips.

AMD claims that Intel uses such payments to disuade PC makers and retailers from buying and using AMD microprocessors.

The complaint alleges many specific cases in which leading PC makers and PC retailers received millions of dollars from Intel in rebates as long as they did not make or sell PCs with AMD chips.

In some cases, companies that announced plans to introduce AMD-based PCs are alleged to have been enticed by Intel's gold to drop, or not promote, the AMD-based computers.

From the complaint paragraph 49:

Intel also purchased HP's exclusivity for its most popular notebook line. HP captured 15% of the US retail market last Christmas with an Intel-powered 14 1" display notebook (the "DV 1000") with a popular power saving feature called Quick Play. When AMD sought to convince HP to carry a similar AMD-powered notebook, HP declined. It explained that Intel has paid between $3 and $4m to lock up this product line for at least one year.

I'm planning to announce a business line of AMD Opteron based PCs--if Intel is listening :-)

Here is the complaint.

http://www.amd.com/us-en/assets/content_type/DownloadableAssets/AMD-Intel_Full_Complaint.pdf

Here is: An Open Letter from Hector Ruiz, AMD Chairman, President and Chief Executive Officer.

By Tom Foremski for SiliconValleyWatcher

It took four years and $150m of Larry Ellison's money for Pillar Data Systems to emerge from stealth mode with a data storage solution that could be disruptive to EMC, IBM, Network Appliance and others.

I spoke with Michael Workman, CEO of San Jose-based Pillar, about the long trudge ahead, the company's technology and its strategy. It is a market dominated by giants, and by an industry trend that favors providing broad solutions rather than focused IT systems.

The Pillar approach attacks IT costs through using one platform to manage and store all three tiers of data, from high availability Tier 1 data, to archived Tier 3 data that normally would end up on tape.

In the Pillar approach, everything is stored on inexpensive high performance commodity serial ATA hard drives, but on different sectors of the disk. Slower sectors hold Tier 3 data while the fastest sectors towards the outside edges of the disk are reserved for Tier 1 data.

The goal is to provide storage systems with Tier 1 to 3 capabilities for about the total cost of ownership of Tier 3 systems. This is accomplished by using inexpensive hardware within a single fail-safe platform.

The secret sauce

. . . should RFID technology be restricted?
By Tom Foremski for SiliconValleyWatcher

I try to check in with our sponsors at regular intervals but lately we've been swamped with exclusive stories and scoops to write, and we've been neglecting our stalwart supporters. However, it is all thanks to our sponsors, Infineon Technologies, Tibco Software, and Nooked, that we can bring you this unique coverage of Silicon Valley, the world's capital of innovation.

A few weeks ago I visited with Infineon, one of our first sponsors, to chat about what they are watching. I met with Christoph Liedtke, who heads media relations and his assistant, Mansi Agarwal, at the HQ of Infineon's US operations in San Jose.

Top of Infineon's watch list is possible legislation that could limit the use of RFID chips, tiny semiconductors used to tag shipments and eventually most commercial products. Concerns about user privacy has led to some US and Californian lawmakers to support calls for greater controls and limits on the use of the technology.

Can tech firms stop RFID backlash?

. . . too little, a bit late

By Tom Foremski for SiliconValleyWatcher

Larry Sonsini, Silicon Valley's uber-uber lawyer, introduced Carly Fiorina. He said lots and lots of nice things. He noted Ms Fiorina had helped spin-out Lucent Technologies, the largest IPO in history, and she handled an extremely tough job at HP.

Mr Sonsini, looking very debonair, in a well tailored light gray suit, spoke for almost as long as Ms Fiorina. He succeeded in establishing his presence at nearly every critical juncture of HP and Ms Fiorina's story. He was present at nearly every major decision making process. He said Ms Fiorina had to deal with changing company culture, the worst downturn in the tech industry, and executing the largest IT merger.

"Some called it two garbage trucks colliding, but I won't say that," he said, after saying it.

. . . slams Bush administration over United Nations policy

By Tom Foremski for SiliconValleyWatcher

Bill Draper is a towering figure in the Silicon Valley VC community, and one of the most successful practitioners of this art.

He looked tanned and vital; and was eloquent on what makes Silicon Valley unique, and why the Bush policy towards the UN --where he served as head of the United Nations Development Programme-- is wrong.

He shared one of his secrets to finding succesful startups:

By Damien Stolarz for SiliconValleyWatcher

Forbes.com reports, in Sprint And Sirius Sing A Duet, that Sirius will be supplying a subset of its channels on Sprint mobile phones as early as this year.

In a few years, XM and Sirius satellite radio will almost cease to have a technology edge. Wireless broadband, supplied via WiMax or 3G, will eclipse the expensive unidirectional, narrowband satellite channels that Sirius and XM have spent billions to deploy.

At that point, however, Sirius and XM could have as many as 10m loyal listeners, accustomed to satellite radio's exclusive content (or at least predictable, commercial-free content). Offering mobile phone users the same channels they've been used to hearing in their cars will be a way to make money by exploiting the data transfer capabilities of mobile phones.

It will also provide a stronger incentive to switch carriers - and pay for wireless data - than any of the generic, weak-brand content (i.e. RealNetworks) available on mobile phones today.

The hard working John Kuch over at telco apps company Seven pings us to say that Yahoo and Sprint will be branding Seven's push mobile email solution. . . the first blackberry-like service for consumers.

By Tom Foremski for SiliconValleyWatcher

I recently rode shotgun in a Volkswagen Touareg SUV. It's a great car. But this one was extra-special because it drove itself.

I was over at Stanford university conducting an exclusive interview with the engineering team that built the autonomous car, capable of avoiding obstacles and negotiating tough terrain in challenging weather conditions - without any need for human direction.

The car, dubbed Stanley, will compete with 19 others for a $2m prize on October 8, in DARPA's Second Grand Challenge race. The winner has to complete a 175-mile course in 10 hours across rugged desert terrain filled with unknown obstacles.

By Tom Foremski for SiliconValleyWatcher

This week the British have been trying to drum up interest from California companies to locate their European offices in London.

I ran into the dapper Dale Smith, vice consul on trade and investment (think Denzel Washington in a well-tailored blue English blazer) and Rob Hull, bus dev manager at BT Group, formerly giant British Telecom. Mr Smith had recently authored an interesting research note on wireless infrastructure in the UK. Mr Smith noted that London is the world's most unwired city, with 1,200 public hotspots out of about 10,000 across the UK.

I also spoke with Michael Charlton, chief executive of Think London a private promo group. His pitch is that the UK, and London in particular, are especially attractive locations to base California's mobile content/services companies because of the extensive cellular and wi-fi infrastructures. Plus a large and savvy urban population of avid tech adopters.

By Tom Foremski for SiliconValleyWatcher

There was a good turnout at the IBD "Under the Radar" consumer technologies event Tuesday as 32 young startups paraded in front of very skeptical panels of VCs.

The event is partly promoted as one in which startups can potentially raise funds from the exposure to VCs. But at the previous Under the Radar event, VCs told me they would not consider funding any of the startups appearing because they had no exclusivity in the deals.

On "Star Trek: Deep Space Nine," Odo was a shape-shifter, able to rearrange his molecules to inhabit different forms. Now the idea is being applied to computer memory, as Infineon Technologies AG (a SiliconValleyWatcher founding sponsor) has joined up with IBM and Macronix to research phase-change memory, a new technology that stores data in a special material that can change structure, the AP reported Monday.

Research will be conducted at IBM's Watson Research Center in New York and Almaden Research Lab in San Jose. In phase-change, the material changes from an amorphous to a crystalline structure; the technology promises high speed, high density storage. Data could be saved and available even when the computer is turned off.

Link: AP story

By Damien Stolarz for SiliconValleyWatcher

My friend recently got wired up in Topanga Canyon (part of LA county) with Verizon's new insanely fast fiber Internet. I later saw a driving billboard Verizon truck that said "Fios" on it and then I figured out it was their brand name for this service.

[picture courtesy Jacob Riskin]

The monthly prices are extraordinarily low:

5 Mbps down /2 Mbps up = $39

15 Mbps down /2 Mbps up = $49

30 Mbps down /5 Mbps up = $199

(source: Verizon Fios - Packages & Prices)

I participated in a truly mind-boggling panel Sunday in which I joined awesome people like Lee Felsenstein and Greg Brown to discuss whether bringing technology to the developing world was a "boon or bane". Lee, inventor of the Osborne, the first portable PC, and of the pedal-powered PC intended for use in Laos, went first. He had barely introduced the pedal-powered PC concept when the moderator, one Sylvia, who appeared to be channeling Sally Jesse Raphael or some such TV host, accused him of using child labor (kids pedal the bike to power the PC in powerless rural Laos), pulled in her teenage son to opine whether he would like to pedal for internet access, and generally was rude and dismissive of most everyone on the panel.

The Berkeley Blog reports the evening better than I will attempt to do here so I'll pull out a few choice excerpts from their report. But the gist of the argument is that exporting technology is exporting consumerism and destroying local cultures. My argument, which I didn't really get a chance to make (although I fared better than others on the panel), was that by building up tech skills, production skills, and know-how, people in these places will have a chance to control the means of production and will have a voice in deciding what kind of media they want. To sit in Berkeley and sip lattes while bemoaning the MTV-ization of the world is merely to guarantee how it will go down.

So, here are some choice excerpts from the Berkeley Blog report:

Tim Draper, veteran Silicon Valley venture capitalist (Draper, Fisher, Jurvetson), has hit out at the heavy burdens which the Sarbanes-Oxley Act and increased government regulations have placed on U.S. companies.

In an interview in “The Ledger” (an email newsletter published Thursday by his public relations company representative, Launchsquad), Mr. Draper states his suspicion that, when it comes to improving corporate governance, Sarbanes-Oxley (SOX) “will have the exact opposite effect that it intended.”

Mr. Draper is one of a very few speaking out publicly on this issue. Many CEOs have told me that “these regulations are killing us.” The requirements for compliance with SOX financial regulations are substantial, and can typically cost a company at least $2m extra in expenses. This, and health care costs, have become huge burdens and management distractions for both startups and large companies.

Mr. Draper says in The Ledger Interview that “Sarbanes-Oxley made it so that I have dropped off all my public boards, and so will many others. I suspect that it will have the exact opposite effect that it intended. Many good people will leave public boards.”

By Tom Foremski for SiliconValleyWatcher

It won't be long before the personal computer is a dim memory, because the developing trend is to tie together proprietary hardware, software and content.

That's the best business model out there right now, and you can see it developing in many ways. It's being pioneered by Apple Computer with iPod and iTunes. Comcast and the cable companies are doing very well with their proprietary content/hardware bundles. And the cell phone companies are also sitting pretty with a similar approach.

The PC platform has survived to date because it has been an open platform. That situation will change very quickly, and Microsoft will be a key agent of that change.

On Monday, Microsoft discussed its next generation Xbox game console, code-named Xenon.

Jason Kottke has a report on the new Sony Librie that I think is really exciting. The $600 ebook reader is a totally new breed of device that could fundamentally change what it means to read on screen. It uses technology from E-Ink that allows bits to be displayed on paper-like substrates. He says:

By Tom Foremski for SiliconValleyWatcher

Open Media Network (OMN) launched this Tuesday an interesting public service project founded by Mike Homer, the man who co-founded Netscape with Marc Andreessen. Mr. Andreessen is also involved in this new venture, which is based on video-on-demand technology from Kontiki, where Mr. Homer is chairman.

“When we founded Netscape, we always had the goal of helping people easily publish on the Internet. That took a while; and now, with blogging and technologies such as RSS, we are finally there,” Mr. Homer said last week in a pre-briefing about the launch.

OMN allows anybody to upload video and share it. Kontiki uses a type of peer-to-peer distribution mechanism, while at the same time containing strong digital rights management technologies.

Will we see Flickriscious-like groups forming on OMN? Maybe, if it gets enough users. It'll be interssting to see how it is used.

From the press release...

The Ad Tech conference is in San Francisco Monday and Tuesday and Eric Schwartzman of ipressroom.com says there will be podcasts of one-on-one interviews with keynote speakers, session moderators and panelists "so if you're interested in what some of the biggest advertisers and their ad agencies think about where the media business is headed, subscribe to our RSS news feed or register to stream the interviews on-demand at: http://www.ipressroom.com/

Here are the Monday and Tuesday lineups:

By Tom Foremski for SiliconValleyWatcher

UPDATE: [Please see Sony clarifies online strategy]

A top executive at Sony America told SiliconValleyWatcher.com that it has no plans to create an "iTunes for Hollywood" saying that a senior Sony Pictures executive misspoke at a recent conference.

Steve Banfield, senior vice president at Sony Connect, the online music store, said that it had no plans to produce an online movie download store modeled along the lines of Apple Computer's iTunes digital music download store and software. He said that the Sony executive making the claim was not speaking about any Sony project in the works.

Leading RSS-istas converging on New York City in mid-May for Syndicate conference

By Tom Foremski for SiliconValleyWatcher

I’m not sure how many leading lights there are around RSS but it’s not many. It’s early days yet but RSS is very likely going to be the next important application, rivaling email and the web. We definitely want to be in this conversation, and you will see us expanding our coverage to key emerging media technologies, including RSS.

We're also pleased to sign on as a media sponsor for the Syndicate conference, May 17-18 in New York. Produced by IDG, the conference is an indication of how far RSS has come in the past year.

Case in point: ING Groep, a global provider of information services, recently started using RSS to broadcast information to employees using KnowNow technology. ING found that spam filters make email an unreliable medium for corporate communication.

Now that Redwood City-based spyware company Claria has managed to infect 40 million PCs with software that turns them into advertising displays, the company is ready to clue publishers, as well as marketers, into information about how consumers surf, shop and buy. Claria's software has previously been known as GAIN and Gator and is one of the most pernicious spywares because it is so difficult to remove from infected machines.

According to MediaPost, Claria will report on how many pages consumers viewed before making a purchase, the length of sessions, and whether someone will comparison shop or be loyal to a given shopping site. They'll also tell marketers what conclusions can be drawn about consumers -- such as what you're shopping for or if you're a new parent.

By Tom Foremski for SiliconValleyWatcher

Wireless networked handheld multimedia devices are clearly in our future, and our scoop last week about Apple choosing Broadcom’s Alphamosaic chip highlighted an issue that faces smaller chip companies--independence.

Alphamosaic, based in the United Kingdom, was acquired by US communications chip giant Broadcom in September for about $125m. Alphamosaic had raised $9m in a round just five months prior to the sale. That was a nice turnaround of capital for the VCs but it was also likely that Alphamosaic did not have much of a choice.

Google has been testing phishing detection in Gmail. I just noticed it tonight but SVW reader Eric Pederson comments below that he first saw it a few months ago. In their battle of one-upmanship with Yahoo Mail, phishing detection is a huge advantage.

Presumably they can do this because they're scanning the contents of your mail. While this drives privacy advocates nuts [The Register], that fact provides them a lot of power to deliver features that users need. Email providers have a moral responsibility to try to protect their users, and now that Google has shown a way to identify phishing, could other providers have a legal responsibility to offer similar protections?

Infineon Technologies, a founding sponsor of SiliconValley Watcher, is doing some interesting things at InfineonWatch.com. Today, it began to promote the site internally, hoping to involve its employees in discussions and debates.

Since the web site is also public, anybody else can read and involve themselves in the community that develops around InfineonWatch.com. This is unusual since internal web sites are almost always separated from the public Internet. And I haven't heard of anyone else doing something like this; so it will be interesting to see how it turns out.

By Tom Foremski for SiliconValleyWatcher

A British team of chip designers has won one of the most coveted of customers in the chip industry--Apple Computer. SiliconValleyWatcher has learned that Apple has contracted to use the powerful video, image, and music chips designed by Alphamosaic, in Cambridge, UK, in a future multimedia mobile device.

While the kudos goes to the Alphamosaic teams, the money from the deal goes to Broadcom, the US communication chips leader. Broadcom acquired the 57 person Alphamosaic for about $125m in September 2004.

v-Pod or m-Pod?

The branding for the Apple multimedia product is not yet known. Looking at the public specifications describing the Alphamosaic chips, it is clear that Apple could use it to build a family of mobile hand-held digital devices equipped with wireless communications that would be far more advanced than its current iPod family.

From press release dated September 20, 2004:

Building on the success of the VC01, Alphamosaic is now sampling VC02, the world's most advanced mobile multimedia processor. The VC02 can display video on 3.5 inch color LCDs and capture 8 megapixel images, making it ideal for watching TV, making videos or taking studio-quality photos on a cellphone.

At the big cable conference in SF today, Google cofounder Larry Page said the search company plans to put out a call for personal video clips. "We're going to start taking video submissions from people," Reuters quoted Page as saying in his speech. This would be a part of Google Video, a search service that displays stills and closed caption text from broadcast video.

The announcement comes on the heels of the launch of OurMedia.org, cofounded by Marc Canter and JD Lasica, a nonprofit organization dedicated to allowing individuals to create, distribute and market their original content. So will OurMedia gain traction if Google is ready to become the free video hosting and search archive?

Bloggers with jobs were all a twitter when Mark Jen, the "Google blogger," was fired from his job because he posted some complaints about Google's compensation package, compared to his previous employer Microsoft. Mark has landed at Plaxo, a privately held company that offers electronic address book updating services.

Mark is taking the lead on drafting a blogging policy for Plaxo, the current draft of which has been released for public comment. "We want community comment," Mark told me in a phone call. "One of the draws of blogging is to connect directly to the community and open lines of communication. If companies want to use our policy or modify it, that's great."

by Tom Foremski for SiliconValleyWatcher

I had to check to see if I was at the right event; but last week’s SD Forum conference on Software as a Service had no web/software services companies. Each one was a technology “platform.” Not in the old sense of a hardware platform but in the latest, cool sense, a platform for a community of users and businesses.

At the SD Forum, Marc Benioff, CEO of SalesForce.com was the first to call his company a platform company because he was the first speaker of the day. Marc used to run an ASP company, then he was head of a web services company, and now he is chief of a platform company. The same company of course, it’s just that "platform" is where you want to be in the digital thought leadership stakes.

by Tom Foremski for SiliconValleyWatcher

Forrester Research said that rival market research company Jupiter Research is up for sale and that competing bids had been submitted.

Brian Kardon, chief strategist and marketing officer at Forrester would not say if Forrester is taking part in the bidding and he said he did not know who was interested in Jupiter. He said Forrester had more than $130m in cash and if it were to make an acquisition it would use cash.

The sale of Jupiter would further consolidate the market research analyst community, which is down to a handful of companies dominated by Gartner, the largest.

Jupiter has carved out a strong brand associated with the Internet, and online marketing and advertising. Forrester says it has analysts in matching positions. However, Jupiter analysts seem to be more visible.

...Forrester also upsets Computer Associates with evil tag....pre-war IBM a better choice

by Tom Foremski for SiliconValleyWatcher

The Forrester IT analyst group yesterday said that Ford Motor Co. had pulled several hundred thousand dollars of business because of this week's launch of Forrester Magazine, a tech print magazine designed to reach C-level executives and win new business.

Ford complained that the cover feature on evil companies drew attention to founder Henry Ford and his anti-semitic views. The automaker complained that the article disregarded Ford company's many charitable activities.

Forrester refused to change the article citing it a point of journalistic integrity and said that the incident demonstrated editorial independence. It told Ford that information on Henry Ford's anti-semiticism was well-known and publicly available and it would not remove it from the magazine. Ford then cut its business relationship valued at "several hundred thousand dollars" a senior executive of Forrester said.

Forrester Magazine has to prove credibility because of close money links with vendors

The issue of independence and the demonstration of unbiased reporting is key to Forrester Magazine's credibility. The IT analyst community has long been under fire for its cozy relationship with computer industry vendors which pay to be included in market research papers and gain influence on corporate IT buying decisions.

When Flickr CEO Stewart Butterfield took the stage at O'Reilly's ETech conference Tuesday he joked he had an important announcement to make about rumors that the photo-sharing company would be acquired: "The next person to ask me about it gets punched," he said, displaying a slide of a cartoon POW!

As previously reported here, Yahoo! is about to acquire Flickr, the popular photo sharing community web site. It now seems likely that the announcement will be made March 29, along with the official invitation-only beta launch of Yahoo 360, which Yahoo announced this morning after press reports revealed the project's existence.

by Tom Foremski for SiliconValleyWatcher

It’s 11am and a sunny day but I'm in a small windowless room in Cisco building 10, with Dan Scheinman, head of acquisitions.

Interestingly, Dan is also head of Cisco’s corporate PR, a rare combination of executive responsibilities.

Dan is in a good mood, tells me he loves blogs, especially Wonkette. "When you find somebody that shares your sense of humor, it’s a rare thing," he says.

He talks about Cisco's M&A strategy in the post bubble years:

By Tom Foremski--SiliconValleyWatcher.com

+ Our top story this week is an exclusive interview with Dan Scheinman, head of Cisco’s M&A, Senior Vice president of Business Development. Find out why Cisco wants to talk to the venture capital community, and why it believes that media technologies are going to be a driver of the next business cycle.

+ While I was at Cisco, I found out more about Cisco’s online news operation which gets more hits than most business and computer trade news publications.

+ Does Google Adsense make sense for publishers of online news sites? We run through the pros and cons of mainstream contextual advertising networks.

+ The Purity of Search—how the next generation of search engines will prove themselves.

+ BILL-the super-cool-much-cooler-than-TED-not-to-mention-DEMO-and-PCFORUM-conference. Find out more.

+ SVW's the Rooster Club announces the 1st Annual Blogger's Ball featuring the Steel Wheels of Om-the Universal Sound of All that is Broadband. More details will follow.

+ Old media buys more not so old media—some thoughts about About.com and the tail-end of the Internet 1.0 consolidation wave…

+ Is Old Media threatening New Media? The Watcher investigates reported threats against the Blogosphere – (please remain calm…nothing to worry about yet…)

+ Google Foundation seeks head--can it compete against the formidable Bill Gates Foundation in the three Gs: Global Goodness Goals?

+ Fanatical fanatacism at web hosting service RackSpace--the straight-jacket is the only way out (limo and dinner included).

+ If a blogger blogs in the blogosphere does anybody blog it?

+ Solving the Google atom bomb riddle...

+ Wists.com rockets to the moon--no hockey stick for this flickr.iscious universal wishlist.

+ And more, such as where is the Flickr--Yahoo deal? And is it such a good idea for large new(ish) media companies buying up cool net.point.two companies? Let a thousand platforms bloom says we.

-The gold rush for the RSS feeds of blog publishers
by Tom Foremski for SiliconValleyWatcher

Things are heating up around RSS technology as advertising networks and aggregators focus their attentions on technology at the heart of blogging.

Kanoodle, the New York city based online advertising network, today joined with MoreOver, the San Francisco based news aggregator, to offer RSS based advertising with a service called BrightAds RSS.

By Richard Koman for SiliconValleyWatcher.com

Yahoo, the leading Internet media company is in negotiations to buy Flickr, the fast growing photo sharing web site. This follows reports by Om Malik at Business 2.0 earlier in the week, of a possible deal .

A high level source within Yahoo told SiliconValleyWatcher that the two companies are in negotiations over the purchase price and other details, but that as of late Friday night Pacific Time, no final agreement had yet been reached.

The Yahoo source said that industry reports valuing Flickr at $35m or more were too high and indicated the final valuation would be smaller.

The acquisition of Flickr would provide Yahoo with one of the hottest online companies to have emerged in recent years.

Flickr is emblematic of a new breed of Internet companies that have become successful as platforms for a diverse number of communities of users. And often there is no way to predict what types of communities will arise to take advantage of the online services.

The challenge for any new owner of Flickr will be in how to continue Flickr’s growth and monetise its operations without harming the communities of users that grown around the service.

Yahoo might find itself in a bidding war if other online media giants such as Google, AOL, or even Microsoft decide to compete for Flickr.

by Tom Foremski for SiliconValleyWatcher
It was a dark and rainy Thursday evening but duty beckoned me out to a jewel in the in the heart of the Tenderloin, the Fleur de Lys restaurant and Melody Haller’s Antenna Group dinner salon.

I was delayed because of losing a tire on 280 earlier, and everyone was already seated at the table, quietly looking at me as I blustered in and apologized for my late arrival. Melody was seated at the head of the table looking very demure and graceful as she gestured to the empty seat next to her.

The people at the table were a mixture of Melody’s PR company clients and a gaggle of top tier journalists. And it was one of Melody’s best dinner salons in a long time--companies with great ideas...and dare I say it: passion and excitement.

I’ve been fed up with some of the stale and tired pitches from the dinosaur class of companies in the valley, and the walking dead private companies.

CEO has to sometimes stand for Chief Excitement Officer. I’m not saying jump around and be “excitable,” but if you sound bored and tired giving your pitch, guess what--I’m bored. And tired. And god knows how you motivate your teams.

This wasn’t true of the people at the Salon. Many of them were still buzzed from DEMO. My favorite was Jigsaw. This is a genius idea to create a highly accurate shared-contacts database for salespeople. It is up to about 350K contacts and growing at 3K/day.

by Tom Foremski for SiliconValleyWatcher
Where are the investment bankers when you need them? Could somebody please roll up a bunch of these computer security companies? And why isn’t it happening? Are the VCs holding out to get better valuations?

The RSA Security conference is in SF this week and although I tried to avoid it I did get dragged into a few events. The main problem with this sector is that there are way too many security companies. And they try to stand out from each other in two ways: slam the competition, and shout that the sky is falling. That means they are undermining each other’s solutions and the market as a whole, creating confusion and delaying purchase decisions.

Shouldn’t we have some kind of baseline security standard to benchmark against? I bet I could buy every security product out there, and still, someone would come around the next day and tell me I’m vulnerable to some exotic exploit. How do I reliably check those claims?

by Tom Foremski for SiliconValleyWatcher
I ran into a an interesting security company called Green Border at one of the RSA Security conference events. They put a green border around IE and Outlook and this shows that those apps are protected from all types of spyware etc.

I was told that the green border around the apps is there so that it shows users it is working, and that they are safe. Oh, and BTW, it never changes colors, it is always green.

by Jochen Siegle for SiliconValleyWatcher
It’s that time of the year again: DEMOtime in Scottsdale, Arizona. First the old stuff: Lots of very familiar faces are here. Excite co-founder Joe Kraus for example (he still looks like a twenty-something dotcomer.)

DEMO initiator Stewart Alsop regaled us with soporiphic inducing tales about the roots of the event more than 15 yars ago and the "fun” of the good old days. (BTW, Stewart, your on stage chat with DEMO producer Chris Shipley was just dry and not funny at all.)

Spotted at DEMO: Digital graphics pioneer Kai Krause

by Tom Foremski for SiliconValleyWatcher

Valentine’s Day seems a fitting time to celebrate and thank the hardware and software engineers of the world. I use the term Geek with respect. Through your efforts you have worked to bring down the price of IT to virtually nothing.

The chip and process engineers have worked tirelessly to bring down the price of computing through their relentless pursuit of Moore’s Law. Same goes for the communications engineers, who have had to work at an even faster pace. Let’s not forget the hard-drive engineers who also exceeded the speed of Moore’s law to bring us inexpensive data storage (and the iPod).

And a big thanks to the software engineers, especially all of those that have worked to develop a common base of open-source software, and the open-source based software technologies that provide simple, powerful, server-side application development platforms.

by Tom Foremski for SiliconValleyWatcher
If Hewlett-Packard and Sun Microsystems were to merge, it would make a lot more sense these days than a year ago. And the fit doesn’t look too bad either…take a look:

+HP would get Sun’s range of SPARC systems and an impressive future technology roadmap for SPARC microprocessors. IBM has been doing very well with its proprietary 64-bit Power microprocessor architecture. Margins on proprietary hardware are four to five times better than on industry standard systems. Itanium was supposed to be HP’s “Power” play but its slow market build has been further slowed by AMD’s 32/64-bit Opteron.

The day before the Bloglines-Ask Jeeves deal was formally announced, I talked to Jupiter analyst Eric Peterson. Eric said it made a lot of sense for large search engine companies to start gobbling up RSS aggregators.

"It really seems like Google would want to add something like Technorati that uses the relevance mechanism for searching," Eric told me. "When people search they're looking for both widley linked to and new stuff. There's a great opportunity for Google to apply the news.google.com technology to the blogosphere. RSS search would fit well into Gmail's threaded conversation mode.

Google lets you search the Web; Google desktop lets you search your information on your hard disk. Why not search my RSS subscriptions? Or search all the blogs linked to by people I subscribe to? "That's what Google would do well," Eric said. "Microsoft could do that as well. Yahoo already has their rss reader. If you win eyeballs, you win loyalty.

by Tom Foremski for SiliconValleyWatcher
It’s the Fifth Floor and Greg is buying dinner. And why not? I haven’t seen a paycheck since June 2004 and he is CEO of Silicon Valley’s top performing IPO of 2004 (and it’s not Google or Salesforce.com…)

My good friend Annie Kim is with us, and Greg is telling me about living in Montana. “It’s a wonderful place, I love living there, even though I was born in California. I love the hunting, and we eat what we kill,” he says. Well, you might be eating Siebel Systems soon, I think to myself …

But, I’m getting ahead of myself, let me introduce Greg Gianforte, CEO and founder of RightNow Technologies.

His is a web services enterprise software company, and although it is focused on CRM, it is quickly assembling a full suite of ERP capabilities (you’ll be fine Marc … no reason to worry … keep swimming with the dolphins …)

Carly Fiorino was forced out as head of HP today. For several months now, we had been hearing reports from insiders that Carly had been increasingly isolated. And many of her former staunchest supporters had been steadily departing the company.
The Merc has the story:

by Tom Foremski for SiliconValleyWatcher.com

Last week was a very good one for Silicon Valley Watcher with exclusives and scoops throughout the week. We almost ran out of bandwidth again, as the world wanted to read what the Watcher wrote.

We met with the Kanoodle boys, a media savvy gang who rode into town looking for Brin and Larry for a high-noon showdown. An impressive bunch, from Fifth Avenue, New York City, no less. That’s the media capital of the world—(at least for now…).

Geeks versus the Media City Slickers—the prize: a multibillion dollar text ads business doubling every two or so years.

Can the shy, retiring Google Geeks, armed with just software and hardware, take on the Kanoodle team bursting with media knowledge capital, and armed with a straight look in the eye and a firm handshake? Yes. No problem.

Googleplex in Mountain View: Epicenter of the multibillion dollar text ad industry

Kanoodle left town with a boot mark on their rear as Silicon Valley Watcher broke the news that Google will release an API for Adwords. It ruffled the feathers of the Yahoo Overture group too, who are keen to tell us their side of the story regarding APIs.

With access to a Google API, Adwords customer computers can interact with the largest distributed computer system on this planet. And that means advertisers can use Google as an ad server platform with unprecedented levels of control over their text ads delivery. That’s a genius strategy, because Google Geeks don’t need to be media savvy--they leave that to their customers. Google can stick to what it knows best, how to build complex software engineering that is easy to use.

Google doesn’t have to package their text ads programs in neat ways, as Kanoodle does, with a variety of permutations for customers. By giving access to the API, they let the advertisers execute and monitor ad campaigns any way they choose to -- no second guessing needed. Oh, and by the way, you can also track Yahoo Overture text ads too within the same tools.

Yes, it means more work for the advertisers as they come to grips with and integrate the Google Adwords API, as well as figure out best practices. But it will create a large ad monitoring and management tools market from third parties because Google is the largest IT platform, and that carries a a certain amount of lock-in that will discourage sonme customers from switching from the familiar.

But, let’s see it all in action first, and let’s see if Google can match or exceed Kanoodle’s claim of an average double-the-revenues- per-click compared with Adsense.

As I said before, may they both do well, so I and my blogger brethren can do well. And I can get somebody to drag my car out of the Googleplex parking lot where it has been stuck for a month following the holiday media party, (and no, the car is not filled with high-tech listening gear—-we get our scoops the old-fashioned way, people tell us). Another Google scoop coming your way this week. . .but you have to watch the Watcher.

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by Tom Foremski and Candida Kutz for SiliconValleyWatcher.com

Google is about to announce technology that will allow its advertisers unprecedented levels of control over when, where, and who can view their advertising on Google search pages and those of Google partner web sites.

For the first time, the search giant will provide its advertisers with an application programming interface (API), which will enable them to link their computer systems with Google and control parts of the mammoth Google ad delivery system. The API will allow advertisers to self-administer the delivery, the timing and the price they will pay for their text ads.

This raises the bar in the online advertising market as Google turns to technology to try and outwit and pull ahead of media savvy competitors such as Kanoodle and others. Kanoodle says its average click-through revenue is twice as much as that of Google's because it gives online publishers greater control over what types of advertising is displayed ---and at which times--- and is better matched to page content or search terms. (Silicon Valley Watcher meeting with Kanoodle this week: Geeks versus Media City Slickers...)

The release of the API marks a transition for Google, from an online services company towards that of an IT platform for global ad delivery. The types of sophisticated management tools that will be available from Google and third parties should also help tie advertisers into its ad network.

It is but a short step from the global delivery of simple text ads to carrying commercial transactions also. This would pitch it against companies such as eBay and other online retailers.

The Google API is only available to advertisers and not to online publishers carrying Google ads.

Silicon Valley Watcher also learned that Google assembled its global salesforce of about 1800 people in San Francisco this week to brief them on the new technology, and how it will be marketed. It represents a complete revamp of its Adwords/Adsense text ads program. More details are here.

Google and Overture pioneered the development of advertising networks that deliver simple text advertising with a commercial message linked to web page or search content. In Google's Adwords/Adsense advertising programs, the customers bid against each other for choice keywords related to their advertising message. Google collects fees only when someone clicks on a text ad link. The system is highly automated with a low cost of operation.

Access to the Adwords API will initially likely favor larger companies with the technical skills to optimize their advertising delivery. However, a large third-party services market will grow around the Google API and allow smaller companies to run sophisticated advertising campaigns.

However, many online publishers want to control which Google ads are shown on their sites. This has been a sticking point with many large media groups who have turned to Kanoodle and others.

Some media groups are beginning to view Google as a competitor. The large computer industry trade publisher, IDG, has become increasingly hostile to Google. IDG views Google not as a technology company but as a media company and a competitor to its online publishing business. It has urged other publishers not to give Google access to their web content. A lot of online publishers carry Google Adsense ads because Google splits the revenue with them.

Google has a fraction of the publishing costs compared with a company such as IDG. Google publishes pages of links produced by computers, yet IDG requires large, non-scalable editorial staffs to produce pages of content at a far higher cost.

cd2215

by Tom Foremski for SiliconValleyWatcher.com

A three-exec Kanoodle squad is in town this week for a media tour, and within moments of touching down, they were on their way to visit Silicon Valley Watcher—the gateway to Silicon Valley.

Jessica Ryan Schweitzer from Hill and Knowlton brought them over to our deluxe conference meeting rooms, which are fully-staffed 24 hours a day, and feature all-day breakfast (the "Lucky Penney" diner on Geary and Masonic.)

Kanoodle has picked up a fair amount of buzz and momentum lately, with its different packages of text ads on its advertising network that has some large online publishers. Kanoodle directly challenges Google's Adsense network, its fastest growing, and most profitable, business.

The boys were hungry; cheeseburgers were ordered, and coffee came; and it wasn't far into the conversation when Lance Podell, the president of Kanoodle said, "We are a media company."

"Wow," I said, "because Google thinks it's a technology company: there is not a single media professional within the entire senior ranks of Google."

"Yes," he said, "we know." I think I caught a flash of smirk in his grin, but why not?

I've asked this before: Can engineers grow a large media company?

Or does a time come, as was the case at Yahoo, when you have to bring in the media professionals to help grow the next phase ---you can't get there on Geek power alone.

Lance belives that Google won't be able to take a Yahoo-type approach in recruiting media professionals, because Google has become even more tightly entwined into this idea of being a technology company, not a media company, he said. Still, similar things could have been said about Yahoo as well; but it changed, and decided it was a media company ---with great technology.

by Tom Foremski for SiliconValleyWatcher.com

Here was the line up for the Jan 18 Churchill Club's Silicon Valley's New Century Leaders:

Charles Phillips, Jr., President, Oracle
Dan Rosensweig, COO, Yahoo!
Jonathan Schwartz, President and COO, Sun Microsystems.

Sun Microsystems' Jonathan Schwartz: Valley's new century leader

Moderator:
John Markoff, The New York Times

Missed it. Because I'm pretty sure they missed it. All three are solid executives and they'd certainly make the top 100, but Silicon Valley's new leaders? Really? Are you sure? Could you double check?

John, please tell me you had no control over the picks, please. It was probably Tony, right? It's just so 1990s it has to be Tony, his fingerprints are all over it.

. . .

I like the Churchill Club, it has interesting events much of the time. My most recent visit was a lot of fun, here it is if you missed it:
Three funerals and a wedding described mood of Churchill Club CIO panel
dk0836

by Louise Kehoe for SiliconValleyWatcher.com

1997 MacWorld was a memorable event, in many ways. I was sitting in the front row wedged between Muhammad Ali and Ellen Hancock (Muhammad is a large man, the seats were small). This was Gil Amelio’s last MacWorld appearance. He talked for nearly 3 hours. I don’t remember much of what he said, only that Ellen was suffering on his behalf, I was suffering on her behalf and we were all suffering for lack of seating space. Then Steve Jobs walked on stage. He spoke briefly, to wild applause, in sharp contrast to the reaction that Gil received. We all knew then that Gil was on the way out.

Louise Kehoe chatting with Steve Jobs: So what have you been up to, Steve?

by Tom Foremski for SiliconValleyWatcher.com

Here is an excerpt from my good buddy Om Malik's hugely popular GigaOm site, in which the crusty old hack has fun reporting on the Steve Jobs keynote at Macworld--in the style of one of the "Mac faithful."

Quite a few readers didn't get the spoof at first...but, those that have met his Om-ness, the universal sound of all that is broadband, would know that such breathless, enthusiastic reporting could not come from one with such a finely tuned nose for hype and spin. Take a look at these telling excerpts from:

The Steve Jobs Experience
By Om Malik

by Tom Foremski for SiliconValleyWatcher.com

Fredric Alan Maxwell, the author of the book “Bad Boy Ballmer” and a journalist for Newsweek, The New Yorker and Harper’s, claimed Michael Sponseller, head of PR at IDG, the organiser of the MacWorld trade show, stopped him just as he was about to walk into the auditorium where Steve Jobs was to give the keynote speech.

Mr Maxwell said his conference badge was removed from his neck and he was refused access. He had registered for the show about a month ago and was issued a badge earlier that morning. Mr Maxwell was told that there had been a mistake and that there was a limit on the number of authors allowed into the event. Even though Mr Maxwell is working for Penguin Putnam, a major book publisher, it didn’t matter. In his 18 months of research for his forthcoming book on Jobs, Mr Maxwell noticed that three words were common in descriptions of Job’s by his former colleagues: It seems Mr Maxwell was able to verify at least one of those terms.

Did Steve Jobs put out an APB on Mr Maxwell? His book on Microsoft’s Steve Ballmer apparently pulled few punches, something that Mr Jobs might expect is coming his way too when the book is published. My mother always told me you can catch more bees with honey than vinegar, Mr Jobs obviously prefers a preemptive strike with lots of vinegar.
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by Tom Foremski for SiliconValleyWatcher.com

Jim Finn, who recently left as head of Oracle PR, had at least two big disagreements with Oracle president Charles Phillips. No word yet on what those disagreeable issues were. Jeff Lettes from Applied Materials is his replacement.

Mr Philips, a former star Wall Street software analyst at Morgan Stanley has risen quickly at Oracle and is Larry Ellison's current favorite wonderboy. He joined the enterprise software giant in May 2003 and just six months later, he was appointed president and given a seat on the Oracle board.

David Miller, the recently appointed Applied Materials head of Worldwide Media Relations tells Silicon Valley Watcher:

"Since Jeff left I've assumed the head of corporate PR role here at Applied Materials where I worked for 6 years before leaving in January 04 for a short nine month stint at Newport Corporation before being asked to rejoin to take Jeff's role.

by Tom Foremski for SiliconValleyWatcher.com

Steve Jobs and the Apple PR team have been upsetting a lot of media attending MacWorld. I did not go to the show but I’m told that virtually no media access to Apple execs was made available.

Steve Jobs was reported by one person to have acted in a very rude manner towards the press. And Apple’s PR team is providing almost no staff to administer events. In one instance, Apple invited a large group of visiting journalists to a pre-MacWorld dinner and only one company representative was availale to deal with dozens of journalists. All requests to visit the Apple HQ in Cupertino were denied.

See, I told you before, that "Silicon Valley is Back, Baby." The first sign of the business cycle upturn is a marked increase in arrogant behavior by Steve Jobs.

I’ve been covering the valley scene for 20 years and I haven’t caught the dark side of Steve Jobs, but there are plenty of entertaining stories out there.

He seems to shares a trait with Bill Gates in that both cannot be controlled in anyway by their staffs; they have zero patience for people they size up for fools; they will walk out of interviews without any warning, and they can merciless in verbal attacks on others if they feel they are being criticized or not understood. It’s the 1600-pound gorilla syndrome, what are you going to do about it?

Even if he act's badly, you've got to give him his dues, however greudgingly he pulled off three big success stories: Apple twice and Pixar, and four if you count Next, which was bought by Apple in order to get jobs back into the CEO job. He took a buck a year salary and reinvented Apple into this premium brand ofthe computer sector.

The Digital Mercedes of the Internet age—if you want a Windows Chevy--walk around the corner and into the dreary warehouse store.

Or, walk into the art-museum-store-like-natural-light-filled Apple Store in San Francisco on Market Street, right opposite the Virgin Megastore. How quaintly 80s is the term “Megastore” I hear they still sell CDS in that store.

I sometime wonder which of these rock star CEOs, Branson or Jobs is going to make the bigger splash? (I'm not counting any errant hot air balloon rides.) Both are on a collision course of sorts, and both are master brand managers, know just how far they can push their brands into new markets.

by Tom Foremski for SiliconValleyWatcher.com

I got into a discussion over on Cnet's News.com regarding Apple in response to Michael Kanellos' column today about Apple's focus on style, and that he himself might not fit into Apple's target market. "Macintosh: It's a Madison Avenue thing."

See who we watched at Macworld: Steve Jobs chatting with actor Robin Williams (middle), former vice president Al Gore (right) just leaves the scene.

I wrote that Apple is using "style" to make money within a commodity market. And that nobody gives Apple credit for being the most profitable PC company in an industry in which other PC company profit margins are at best miniscule (Dell) or non-existent. (I'm defining the term PC in its original, broader form, as a personal computer based on a microprocessor and operating system--not as just a Windows/Intel personal computer.)

Apple has figured out that style and design are a value-add that has very good margins. And having its own operating system, and developing its own unique application suite, such as iLife, is an additional cherry on the cake that is highly profitable and distinctive.

Since Apple is a niche player, it fits perfectly into a niche market for computer products for upscale/status/design/niche conscious customers. Apple has become the "Sharper Image" of the PC sector, with its own stores too.

Mark Coker represented Symantec competitor McAfee for about four years from June 1993 to July 97. He says there are some lessons Symantec could learn from McAfee's attempts to grow by acquisition-Tom Foremski

by Mark Coker, President, Dovetail Public Relations for SiliconValleyWatcher.com

Symantec's acquisition of Veritas risks paralleling a similar strategy pursued by McAfee Associates in the mid '90s that ultimately failed. In early '94, company management believed their annual antivirus revenues, which were then at around $15 million, would peak soon around $20-$30 million (yes, really), so they decided to use their cash hoard and strong cash flow to diversify their product line by creating an integrated suite of network security and management tools. As inspiration, they looked to Microsoft, who had obliterated its desktop productivity app competitors in the early '90s by coming out with Microsoft Office, an integrated suite.

McAfee made numerous acquisitions over the next few years, leveraging their high flying stock as currency. Acquisitions included network management, additional network security (encryption, firewalls, etc.), systems management, help desk and storage management products, and made an unsuccessful bid to acquire Cheyenne Software. (Cheyenne was then one of the three storage management leaders along with Veritas and Legato. Although the attempted Cheyenne acquisition failed to happen, the industry took McAfee seriously from then on). McAfee ultimately acquired Network General, the Sniffer company, and renamed the combined entity Network Associates. Most of the acquisitions languished or imploded, while anti-virus became the little-engine-that-could and exploded beyond anyone's expectations.

More recently, the company sold off or closed its distracting diversions, returned to its security roots, and changed its name back to McAfee.

Why did McAfee's strategy fail?

by Tom Foremski for SiliconValleyWatcher.com

The New Year has brought in a clean broom at Oracle and Sun Microsystems as their top PR executives depart suddenly. Is this their reward for toughing it out at some of the most challenging jobs in the industry?

In an exclusive story on SiliconValleyWatcher, we reported late Monday that Jim Finn, Oracle’s head of communications is leaving. His replacement will be Jeff Lettes, the recent head of worldwide comms at Applied Materials. Oracle also lost Jennifer Glass just days ago -- she moved three thousand miles away to New York to work with Sony USA.

Andy Lark, head of Sun’s PR, announced his resignation late last week. Are we going to see more turmoil in the communications teams of other top Silicon Valley companies?

The departures from Oracle are interesting. It would seem that Mr Finn and Ms Glass are leaving after all the hard work has been done around the nearly endless PeopleSoft hostile takeover. Maybe a change is as good as a rest.

As for Mr Lark, he hasn’t said what he will do, but, reading his blog there are tons of clues. Here is my take: Andy is going to join a venture that will provide a variety of blogging and media services to corporates. (By the way, we’re going to do that too--as a side consulting business---more details will follow….)

I’m going to see Andy at the New Communications Forum conference on Jan 25 and 26. He is giving the keynote and I’ll be on a panel. You should come along, it’s in Napa and I can guarantee an interesting group of people. Local attendees (we hope lots of our readers!) get a special rate of $595.
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by Tom Foremski for SiliconValleyWatcher.com

Many leading Wall Street analysts have supported the deal but there are serious short-term risks. (I discussed some of them a few weeks ago here: "Symantec's bid for Veritas risks damaging distraction to both at a critical time.")

Tom Berquist at Smith Barney points out some of the risks in his most recent research note, in which he reports on an analyst meeting with the two companies held earlier this week in New York.

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by Tom Foremski for SiliconValleyWatcher.com

While Larry has been busy purging the executive ranks of PeopleSoft, Jennifer Glass, vice president of communications at Oracle for nearly seven years has slipped away to become vp of communications at Sony USA.

I’m hearing that it’s not just Jennifer that Sony has snagged—it’s quietly building up a formidable comms and exec team and seems to be gearing up for a big push this year. And why not? Everybody is chattering about the digital home, digital entertainment systems, consumer electronics, etc. And the Sony brand remains a very strong brand, despite some missteps in recent years.

I’ve worked with Jennifer many times and she is very good. She’s had to leave San Francisco and move to New York, but's she’s from that part of the world anyway. Jennifer’s promised me an interview next time she’s in town.

I bet she’s got some interesting Larry stories to tell, but then again, who doesn’t? I didn’t register LarryWatch.com for nothing…it cost me $8…coming to a website near you very soon.

by Tom Foremski for SiliconValleyWatcher.com

2004--Search engines: This was certainly the year of the search engines, the big G and all the other little ones being funded and the old ones --Yahoo, Microsoft, AOL -- finding search again. It will be interesting how the older media companies do in search. Google has a very good trusted brand -- it doesn’t matter that other search engines are just as good, maybe sometimes better. It’s the brand that counts. But, if Yahoo, AOL, Amazon, and to a lesser extent Microsoft, can convince people to switch, they have a lot of their own content, services, and products they can wrap around the search results. I’d put my money on Yahoo being able to recapture some of its former search glory.

Yahoo Search: Interesting to watch how older media companies do in search

2004--Chip industry: Chip sales and chip equipment sales have had a shorter than normal upturn — especially the chip equipment industry. The chip equipment companies are likely suffering from greater capital efficiency thanks to the rise of the chip foundries. These third-party build-to-order chip makers can make sure that their production lines are running at almost full capacity, resulting in much more efficient use of capital investments. Very important when a fab is approaching $3bn apiece. Moore’s Law however, seems to be definitely slowing, despite Intel's protests to the contrary, as chip makers search for new types of materials that can stop electrons from “leaking” away and dealing with other tricky nano-scale effects.

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by Tom Foremski for SiliconValleyWatcher.com

2004--Enterprise Software Old School: Oracle’s battle for PeopleSoft was mildly entertaining. Er, that’s about it . ..

2004--Enterprise software New School: The Salesforce.com IPO was a key turning point, despite CEO Marc Benioff’s last-minute gaffs. I like Marc -- he is a larger-than-life character and Silicon Valley needs more like him -- it would give me plenty to write about.

Marc Benioff: The valley needs more larger-than-life characters

Also, let’s not forget RightNow Technologies' IPO, one of the hottest performing IPOs of this year, and kudos to RightNow for not taking an acquisition offer from a much larger rival this time last year. Too bad Diane Greene at VMware didn’t do the same, and accepted EMC’s $635m acquisition bid a year ago. At least she insisted on cash. Still, web services are definitely the future, and so is virtualization, lots of virtualization.

2004--Outsourcing/offshoring: Everybody’s doing it. Nobody wanted to talk about it though. It was a hot political topic so everyone kept their heads down.

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Mark Coker, President of Dovetail Public Relations, tells SiliconValleyWatcher.com readers...

...I'd like to share a personal story about my agency that describes a dilemma I think many good tech PR agencies face...

by Tom Foremski for SiliconValleyWatcher.com

The Seagate IPO did well but Seagate hit hard times this year, along with the rest of the hard drive industry -— again. What is the point of consolidating an industry from more than 40 companies to about 5 and not being able to enjoy the promised fruits of consolidation? Is this a warning to other consolidating sectors? Wall Street calls it a profitless prosperity. Well, didn’t Wall Street drive the consolidation trend? Where is the reward? Maybe somebody can tell the drive makers.

2004--Microsoft gives back money: Microsoft announces large shareholder dividend, gives billions back to investors. To me this says: We don’t know what to do with this money and we do not have a good track record of investing this money in our business or other businesses. You, our investors, can probably do better than we can.

Bill Gates: Finally MS gives billions back to investors

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