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

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...

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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