Silicon Valley Watcher - reporting on the business of technology and media: A Top Story Archives

Will private equity funds gobble up tech and then the rest of corporate America?

A short series of posts on the fastest growing trend in Silicon Valley (and the rest of the world): examining the potential consequences of mergers and acquisitions by massive private equity funds.

- IBM and large Silicon Valley companies are obvious acquisition targets as private equity firms readily raise multi-billion dollar funds.

Click here to read . . .

. . .

- Will companies emerge leaner and meaner from private equity acquisitions? Or will they be weakened from higher debt loads? Their temporary owners know much about financial engineering but what about strategic positioning?

. . .

- Small investors are cut out of the lucrative deals pursued by private equity funds because only the very rich are allowed to invest. Yet many small investors will end up on the wrong end of those deals.

They face a likely scenario that their employer will be acquired by private equity funds and that their new owners will ask for salary and other restructuring concessions. It builds on stress between the super rich and those that aren't.

. . .

- Will we witness the failure of Sarbanes-Oxley (SOX) regulations and the populist movement for greater corporate transparency?

The expense, and the management distraction of SOX compliance is a prime reason for taking public companies private. Plus, private companies suffer less from public scrutiny, a distinct competitive advantage.

. . .

- What is the future for NYSE, NASDAQ and other stock markets?

With the prospect of fewer public companies as private equity firms snap them up and take them private, the stock markets will have to do something. They will have to merge to maintain liquidity, which is exactly what they have been trying to do.

. . .

More on this topic later today and later this week. .. .

Posted by Tom Foremski on January 23, 2007 2:40 AM | Permalink | Comments (1) | TrackBacks (0)

Press releases are not blogs - social media discussion

By Tom Foremski

There has been quite a bit of discussion lately about the "social media press release" following a panel I was on at the Third Thursday event last Thursday. Stowe Boyd later raised some good points about the PR industry and its use of the word "social" and "audiences" in the context of blogging.

The problem lies in the terminology that the PR industry is using. It wants to use the blogging platform to distribute press releases but these are not blog posts. And the way the PR industry uses "social" is far different from what has been the accepted understanding.

Many people have gotten hung up on the terms being used and that is understandable. And that is why I prefer more neutral terms that won't snag people's cultural sensitivity, that's the point of communicating clearly. However, we aren't going to get rid of the term "social" in the PR context and the discussions are good because they promote and educate others on what is being talked about.

When it comes to companies communicating with their customers, partners, communities, their staff, a blogging platform is a perfect vehicle for press releases because Movable Type or Wordpress has all the tools and features built in for discoverability by search engines, and by others. It has links, tags, keywords, it has trackback and talkback, it can accumulate information over time, it is a type of free-floating document on the internet.

These days, we don't publish to a web site or sites, we publish to the internet. We publish conversational documents.

And the reason documents published through blogging platforms work well is that Google loves blogs. The googlebot loves fresh content that has lots of links, especially from blogs because they are useful sources of great information. Which is another benefit companies get from using a blogging platform for press releases, the content gets into the Google index really fast.

What happens when the googlebot starts picking up corporate press releases launched from blogging platforms and finds out that this is not regular blog content? It won't take much to filter it out.

That's why publishing regular corporate press releases through a blogging platform won't work for long. The content has to change, it has to show that it can initiate and carry a conversation. It has to become a good member of the online society. Otherwise it becomes the dull person seen in the corners of parties, unable to engage with anyone. That's where "social" has meaning.

- - -

Here is Mike Manuel's report on the discussion :

Third Thursday Raises Stink

A new year of Third Thursday meetups kicked off earlier this week, the topic was the social media press release. A quick thanks to our guest speakers: Shel Holtz, Brian Solis, Tom Foremski, and Joel Tesch. Also, special thanks to Chris Heuer for leading the discussion. It was a good introductory chat. The entire thing was recorded as part of the ongoing NMRCast series, you can grab the feed over here.
Of course, if you haven't seen this already, Stowe Boyd thinks our talk just proves (to him) that PR folks still have a lot to learn about social media, and he says so in a kick-to-the-nuts sort of way.
He makes some valid points, the kind those of us stuck inside the PR echo chamber need to hear from time-to-time. I'll give him that, but I also think Stowe makes some bullshit assumptions about the PR industry and the changes many of us are already working to incite. For example, why he misses (or dismisses) efforts to form a standard PR microformat for press releases (i.e., hrelease) in his diatribe about the social media press release is, well, strange to say the least....
Read Chris Heuer's retort for balance. Brian's too.
Update: Stowe responds point-for-point to the link hords. A must-read for anyone. Technorati Tags: socialmediapressrelease, thirdthursday

Some additional links:

http://www.stoweboyd.com/message/2007/01/enough_already_.html.

The Long Tail: Long Tail PR: how to do publicity without a press release (or the press)

http://www.briansolis.com/2007/01/social-media-killed-press-release-star.html

Posted by Tom Foremski on January 25, 2007 12:18 PM | Permalink | Comments (0) | TrackBacks (0)

SVW interview: John McHugh head of HP's ProCurve Networking - second largest network company

On Tuesday Hewlett-Packard's ProCurve Networking, the second largest enterprise network equipment vendor, will announce its vision for the next five years: Adaptive Networks.

I recently met with John McHugh VP and general manager of ProCurve Networking. This HP business has been growing at about 25 per cent per year over the past five years, a fast pace of growth under the leadership of Mr McHugh, a 25 year HP veteran who joined straight out of college.

It is an impressive achievement, especially since few people associate HP with network equipment. Yet it is precisely this fact that has helped ProCurve build its business. Looking at Mr McHugh's business card, the HP logo occupies a tiny piece of the real-estate, and that is done on purpose.

Mr McHugh's insight was to keep the HP name low-key, knowing that that would help ProCurve establish a distinct identity and communicate an image of a singularly focused business.

"I didn't want to make the same mistakes that others have done, such as Dell, where its network business is seen as ancillary to its main business. ProCurve is full of people that are veterans in the network business, we speak the same language as our customers. And we re-invest about 12 per cent of our revenues in R&D. These things are very important to network equipment buyers," said Mr McHugh.

ProCurve's focus comes at a time when market leader Cisco Systems is moving into consumer and other markets. Cisco also talks about the network being the computer, a tag that was often used by server vendor Sun Microsystems and brings up associations with processing rather than networking.

ProCurve is sticking to its core mission, to make better networks.
And Mr McHugh credits Procurve's focused strategy for some large wins from companies that used to only buy Cisco equipment.

Procurve prices are less than those of Cisco, and there are no annual maintenance fees--factors which play especially well in educational and government sales.

"We are less expensive than Cisco, but that's not why people switch. We have to do more for less, it is not enough just be cheaper," Mr McHugh says. "And we have to show customers that we have a vision, that we have the technologies and the foresight to be able to help them deal with issues now and several years away."

And that's where the unveiling of the Adaptive Networks vision comes into play. It is about placing more intelligence at the edges of the network; it is about having management systems that make complex networks easier to administer; and increasingly, it is about being able to implement business policies across an entire IT infrastructure because of regulatory and audit requirements.

And because ProCurve has had to grow up within a world that required its equipment and systems to be able to interoperate seamlessly with that of other vendors--its Adaptive Networks strategy is one that can be integrated existing networks.

Announcing a clear strategy to network buyers now, is also good timing. A lot of companies upgraded their networks to deal with the millennium bug. Companies refresh their network equipment between five and ten years, with seven years being the average, that means many networks are now ripe for replacement.

ProCurve has benefited from keeping the HP name low-key and from taking advantage of its HP connection. For example, it deploys sophisticated security technologies developed within HP Labs. And from the development of powerful switching chips that add a lot of intelligence into the edges of an enterprise network. Those chips are adaptive in that they can be reprogrammed on the fly, essential in being able to adapt to changing security threats, changing regulatory demands, and changes in business applications.

However, predicting the future is notoriously difficult, and there is one technology that could derail the network industry from building more intelligence into networks, and send it back 20 years into the stone age of dumb data routers.

This potentially disruptive technology is called IPsec. It allows computers to create an encrypted communications channel that tunnels through a network system. It carries its own intelligence and therefore the network is just shuttling packets.

IPsec is part of Microsoft Vista, the next big upgrade to Windows, and it is turned on by default. Corporate Vista buyers get an intelligent software based networking technology for free. IPsec could be used in a way that could extend the life of existing networks.

Mr McHugh says "I'm keeping an eye on IPsec, especially since we don't yet know how people will use it."

ProCurve's strategy is to be able to work with IPsec and to become the larger "wrapper," adding capabilities to IPsec streams and thus be able to hang onto the value-add intelligence piece of the network equipment market.

[Coming up: John Roese, recently appointed CTO of Nortel talks to SVW about Nortel's "burn the boats" business strategy.]

-----------------------------------------
Additional info:

ProCurve announcements in 2006:

» ProCurve Networking by HP Climbs to No. 2 in Enterprise Networking Revenue and Ports—November 27, 2006

» ProCurve Networking by HP Joins Ethernet Alliance to Drive Adoption of Ethernet in the Enterprise—August 1, 2006

» ProCurve Networking by HP Delivers Secure, Unified Wired and Wireless Network—May 15, 2006

» ProCurve Networking by HP Expands Functionality at Network Edge with New Intelligent Switches—February 13, 2006

Posted by Tom Foremski on January 26, 2007 11:20 AM | Permalink | Comments (0) | TrackBacks (0)

The battle for a Publc Internet (PI): San Francisco activist groups rally against Google/Earthlink "monopoly" deal for free WiFi

Several San Francisco activist groups and non-profit internet companies have joined together to protest a proposed deal between the city and a Google/Earthlink partnership to provide free WiFi.

Called the Public Net San Francisco coalition, the group issued a statement Friday insisting that the city government kill a multi-million dollar pending deal with Google and Earthlink. Instead, the coalition says the city's existing high speed fiber optic network has plenty of spare capacity to support a high-speed Internet network open to every resident regardless of income.

Bruce Wolfe of the San Francisco People's Organization, said that the proposed Google/Earthlink free WiFi network would be too slow to support many common Internet uses, such as telephony and online video. It would leave San Francisco residents "in the digital dust."

Eric Brooks, with the activist group Our City, criticized San Francisco's Department of Telecommunications and Information Services (DTIS) for rushing through a contract process with little public input.

"After nearly a century of San Franciscans suffering rip-offs and incredibly bad service under the monopoly control of our public utilities by corporations like PG&E, Comcast, and AT&T, it amazes me that DTIS can stand there with a straight face and try to convince us that we should let a multinational corporate partnership own and control our new public communications system," said Mr Brooks.

The city already has much of the infrastructure in place to build a WiFi network as much as 100 times faster than the snail-paced Google/Earthlink WiFi technology. It's a "clunker" said Tim Pozar with United Layer, a free Internet services provider. "If we go for municipal ownership of a system that makes use of all the City's public assets, including the high speed ring of fiber optic cable lying only half used right under our feet, we can get a vastly superior, and 10 to 100 times faster system."

The city's high speed fiber-optic network is already people owned claimed Ralf Muehlen, of the non-profit SFLan. "We already paid for the City's fiber with our taxes, we should now put it to good use."

Foremski's Take: The Google/Earthlink deal with San Francisco could potentially establish a model for municipalities across the US and in other countries. It would be the start of a massive new market for giant Internet companies such as Google and Earthlink.

It would put them in the forefront of a race with competitors for the next big market opportunity: the gold rush to monetise local markets. (Please continue in news analysis...)

Links:

http://Public.FreeMuni.Net is the central location for all things San Francisco Broadband.

http://www.our-city.org"
http://www.sfpeople.org"
http://www.sflan.org"

- - -

Here is the full statement from Public Net San Francisco:

Continue reading "The battle for a Publc Internet (PI): San Francisco activist groups rally against Google/Earthlink "monopoly" deal for free WiFi" »

Posted by Tom Foremski on January 27, 2007 12:14 AM | Permalink | Comments (1) | TrackBacks (0)

The power of PI: The rise of community owned Internets

From the news story: "San Francisco activist groups rally against Google/Earthlink "monopoly" deal for free WiFi "

Several San Francisco activist groups and non-profit internet companies have joined together to protest a proposed deal between the city and a Google/Earthlink partnership to provide free WiFi.
Called the Public Net San Francisco coalition, the group issued a statement Friday insisting that the city government kill a multi-million dollar pending deal with Google and Earthlink. Instead, the coalition says the city's existing high speed fiber optic network has plenty of spare capacity to support a high-speed Internet network open to every resident regardless of income.

The Google/Earthlink deal with San Francisco could potentially establish a model for municipalities across the US and in other countries. It would be the start of a massive new market for giant Internet companies such as Google and Earthlink.

The San Francisco deal could put them in the forefront of a race with competitors to dominate the next big business opportunity: the gold rush to monetise local markets.

It has long been my opinion that communities will increasingly seek to own their "Internet airspace." Why should the local hardware store pay Google or Yahoo to reach its customers just a mile or two away? Why let Internet giants thousands of miles away become the gatekeepers for local commercial transactions? It sucks money out of a community.

But there is no need for a middleman, there is no need for a GOOG or YHOO tax on people engaged in their daily interactions with their neighbors. As offline and online world's become better integrated through a plethora of Web 2.0 social network applications, it will enable a People's Internet (PI).

Communities will succeed in owning their regional Internets because they can-- the technologies are inexpensive and incredibly powerful. And there is a lot of value in their community.

The most valuable emerging Internet companies are no longer technology companies but communities.

YouTube, the video sharing site was bought for $1.67bn. It certainly wasn't bought for its technology, there are many dozens of Internet sites using the same technologies. YouTube was bought because of its amazingly large and active community.

What kind of value is there in San Francisco's community of about 800 thousand residents? It's not only well-heeled but also influential, which means viral opportunities for the savvy. Whoever owns the regional online space for the San Francisco/Silicon Valley community has a goldmine--they can observe the online habits of those people, they can sell highly targeted ads, and also sell, and exploit emerging behavioral trends that could spread nationally and beyond... And of course, opportunities to influence the community.

The world's largest online advertising companies such as Google, Yahoo, Microsoft, AOL, plus dozens of startup companies, are all geared up for this opportunity. For years they have been developing ever more sophisticated technologies that can target and track a specific Internet user--and deliver custom crafted commercial messages.

Such technologies can easily be used to deliver custom crafted political messages too. And the means to do that involves collecting highly identifiable data on users.

Although most online companies say that they don't collect personal data and that they are only interested in aggregate online behaviors, with no user name attached, the data itself is filled with personal details.

In August of 2006 AOL leaked a database of search queries by thousands of its users over a several month period. Each user account was tagged with meaningless numbers instead of names. But by reading the thread of messages associated with each numbered account, in many cases it was possible to identify the household, and identify the users. Please see: The unguarded thoughts of the digital haves...

Commercial companies will still have a place within a People's Internet, providing services such as managing infrastructure operations, and keeping out the malware. But it is the ownership and governance of a PI that is important, it determines who gets what slice. Who gets the largest piece of the pie becomes important to every community and it ensures fair and ethical use of a vital communal resource.

The ownership of an online commons by their communities will be seen as essential in guaranteeing free speech, the freedom to associate, and to have unrestricted and uncensored use of the Internet. That's because online worlds will have to carry the same basic freedoms as in the offline world, it is where we will spend a lot more of our time and it should be seamless--and protected.

Governments around the world are increasingly spying on Internet users, restricting and censoring content, and mining Internet data to arrest dissidents.

Community owned Internets could potentially stymie such activities, especially if their charter were such that could not carry any monitoring technologies--no commercial or government spyware. It could be all be filtered out in the regional PI gateways.

-----

Please also see SVW:

Are Google, Yahoo, EBay and AMZN fast becoming the digital Wal-Marts of the emerging Internet 2.0 era?

Are Google, Yahoo, Ebay , Amazon (and maybe MSFT and Craig's List too) becoming the Wal-Marts of the digital age? It's an important question as they roll out more of their "local" products and fight...

Posted by Tom Foremski on April 18, 2006 4:00 AM

YouTube acquires Google

Google's acquisition of YouTube for $1.65bn stunned many in Silicon Valley. Some thought it was way too much to pay for a startup with hardly anything in revenues and it indicates a bubble...

The future transparency of our lives and poisoning the database

Anybody who runs a blog or a web site usually peeks at the search terms that visitors input. It's fascinating stuff because sometimes you can find clues to breaking stories or emerging issues/trends....

Posted by Tom Foremski on August 16, 2006 12:46 AM

The unguarded thoughts of the digital haves...

The most compelling content on the Internet, by far, is AOL's release of search terms linked to individual users. This is a glimpse into the human condition that goes way beyond anything else...

Posted by Tom Foremski on August 15, 2006 2:25 AM

Posted by Tom Foremski on January 27, 2007 4:36 AM | Permalink | Comments (0) | TrackBacks (0)

Intel says it has secret materials that make chips faster and smaller

[Intel is an SVW sponsor.]

[UPDATE: Please also see: IBM says Intel not alone in solving 45nm chip roadblock]

People mistake Intel for being a microprocessor manufacturer. That's just an application of what it does best: it knows how to make the world's most advanced chips in massive quantities.

Late last week Intel briefed reporters and analysts on what is likely the most significant breakthrough in chip making since the late 1960s.

Intel said it had discovered materials that would enable it to make the world's tiniest chips in high volumes--and place it years ahead of competitors seeking to do the same.

With the its new materials, Intel is able to make chips with geometries of 45 nanometers, half the size of most leading edge chips at 90nm.

Intel shares a lot of its chip research but it said it will keep these materials secret. If the information leaked out, it would enable competitors to shave years off their R&D efforts and enter lucrative chip markets years earlier.

Quite rightly, Intel is racing to take advantage of this lead. It is building three giant chip fabs which will use its secret process on silicon wafers the size of large dinner plates, 300mm (12 inch) across.

By the end of this year two fabs will be completed and ramping into high volume production, closely followed by a third in Israel, in early 2008--all using this advanced chip making process. This means servers, desktops, and notebooks will run faster and cooler and will be less expensive.

With more smaller chips being able to be squeezed onto giant silicon wafers Intel will be able to do a combination of several things:

Existing chip designs will run faster because of shorter distances between transistors.
Power consumption is reduced because of the smaller size of the chip.
More transistors can be crammed into the same sized space which means larger memory caches-a performance bottleneck.
Manufacturing costs are dramatically reduced. It costs about the same to process a silicon wafer in any process. More chips per wafer means more product for the same cost. Intel can choose to lower prices or pocket the productivity increase. (It always lowers prices but it can decide the rate.)

Intel makes microprocessors because they are the most profitable high volume application of its core ability: to make chips cheaper, faster, smaller, and in vast quantities.

All of the above means that rival Advanced Micro Devices is in for a tough time. It won market shares against Intel in server markets because it spotted a trend in low power consuming microprocessors. That was great because it brought Intel into that market and now server buyers have a choice of two very good server chip families.

Mind the Gap

But the gap between the two server product families is set to widen into a chasm. Quite simply, AMD cannot fight it out with Intel on the basis of design.

The chip business is always talking about making chips in smaller sizes because:

the laws of physics automatically provide faster performance by shrinking the size of chips.
the laws of economics provide greater profit margins by shrinking the size of chips.

AMD's manufacturing prowess is good but not great. Manufacturing prowess has historically been a highly volatile characteristic at AMD.

Yes, clever designs can boost performance incrementally, but fundamentally, it is the laws of physics that govern every performance characteristic of a chip. And the laws of physics can only be exploited by knowing how to manipulate the material world.

It is through chemistry that we manipulate the material world. Intel co-founder Gordon Moore is a chemist. Andy Grove has a degree in chemical engineering. (BTW, I have a chemistry degree :-)

Moore was born in San Francisco, California. He received a B.S. degree in Chemistry from the University of California, Berkeley in 1950 and a Ph.D. in Chemistry and Physics from the California Institute of Technology (Caltech) in 1954. (Source: Wikipedia.)

Chemistry is something that Intel knows very well. And like an alchemist of yore--it has succeeded in transforming baser materials into gold, lots of it, it is a highly profitable company with margins that sometimes approach those of a software company.

I think it is safe to say that the chip industry uses more of the periodic table of elements in its production process than any other industry in the world. Because it has to, it has to develop new types of materials in order to make ever smaller chips.

Elements are the fundamental building blocks of the physical world. Elements combine to form material compounds, and each compound has specific physical characteristics.

The chip industry needs materials that can guide electrons at high speeds through an incredibly complex maze of wires just a few atoms wide.

But as everything shrinks in size, materials behave differently. For the chip industry to move to a smaller chip size, 45nm, it needed to find new materials that behave in the correct way.

Finding these materials for 45nm had stumped the industry. It threatened to slow Moore's Law.

Top chip experts had been predicting that 2010 would be the earliest date for a solution to be found. Which means Intel could very well be more than two years ahead...a huge achievement.

That's why Intel's discovery of these materials constitutes what must be the most valuable secret in the world today. Because it dramatically improves the fundamental performance of all silicon chips--the bedrock and building blocks of our current and future worlds.

A two or more year lead into the future is an incredible competitive advantage, imho.

----

Additional info from Intel:

Continue reading "Intel says it has secret materials that make chips faster and smaller" »

Posted by Tom Foremski on January 27, 2007 2:47 PM | Permalink | Comments (7) | TrackBacks (0)

IBM says Intel not alone in solving 45nm chip roadblock

(Intel is an SVW sponsor.)

IBM says it has matched Intel's chip breakthrough with the discovery of materials that can make chips smaller and faster.

"Until now, the chip industry was facing a major roadblock in terms of how far we could push current technology," said Dr. T.C. Chen, vice president of Science and Technology, IBM Research. "After more than ten years of effort, we now have a way forward.

IBM's East Fishkill fab in New York will start producing 45nm chips in 2008.

. . .

Foremski's Take: IBM is one of the only chipmakers that can take on Intel in bragging rights around leading edge chip technologies.

IBM has pioneered a lot of important chip technologies. For example, It figured out a way of using copper in chips so that the metal wouldn't contaminate the entire wafer. It also pioneered silicon-on-insulator (SOI)--a technology that boosts the speed of chips. (Intel won't touch SOI, it says there are better ways to achieve a similar performance boost.)

The difference between the two chipmakers is that IBM is in the foundry business, it makes chips for whoever pays the invoice. Intel is not, it works only for itself.

Using IBM to make your chips gives you access to leading edge technologies but it doesn't come cheap. And that is the challenge that the AMD/IBM alliance faces: to be able to match Intel's 45nm process at a comparable cost of production.

Here is IBM's announcement:

Continue reading "IBM says Intel not alone in solving 45nm chip roadblock" »

Posted by Tom Foremski on January 28, 2007 10:43 AM | Permalink | Comments (0) | TrackBacks (0)

Reposting due to server problems...

The server over at TotalChoice Hosting has been going down all week and has erased all of this week's entries and comments. I'm reposting some of the entries but I don't have copies of all the comments, my apologies.

Posted by Tom Foremski on February 2, 2007 10:06 AM | Permalink | Comments (0) | TrackBacks (0)

Harvard Business Review's 20 counter-culture breakthrough ideas

The Harvard Business Review has a list of top 20 "Breakthrough Ideas for 2007." Some interesting, ideas here that are counter-culture in that they challenge accepted thinking in many different areas. Siobhan Ford from HBR says that the list is free to read for all of February and that the most popular ones so far are:

The Accidental Influentials—Forget the Tipping Point. New research shows that ordinary people, not influentials, are the best word-of-mouth marketers.
Living with Continuous Partial Attention—The increased “coping mechanism” we’ve adapted to keep up with information flying across our radar 24/7, thanks to the endless bandwidth of technology. Can a backlash be far off?
An Emerging Hotbed of User-Centered Innovation—Customers aren’t just voicing their needs to companies that are willing to listen; they’re inventing and often building what they want.
The Folly of Accountabilism—Accountability has gone horribly wrong, tricking people to believe they can control their lives by adhering to specific rules of right and wrong.
The HBR List Breakthrough Ideas for 2007

I also found #2, #9, #10, #11 and #14 fascinating.

Here is the list with links to the individual articles.

Continue reading "Harvard Business Review's 20 counter-culture breakthrough ideas" »

Posted by Tom Foremski on February 2, 2007 10:34 AM | Permalink | Comments (0) | TrackBacks (0)

US Tech Firms Lame Excuse on China Business

U.S. Tech Companies Urge Washington to Confront China on Internet Censorship
WASHINGTON (AP) -- American technology giants urged the U.S. government Tuesday to do more to confront China and other countries about Internet censorship.
Microsoft Corp., Yahoo Inc. and Google Inc. also defended themselves against accusations that they have helped governments such as China's crush dissent in return for access to booming Internet markets.
Andrew McLaughlin, senior counsel for Google, told a State Department-sponsored conference on Internet freedom that his company is trying to use its presence in countries that are restrictive to provide communication options, such as e-mail and blogs, for people who may not have other ways to talk to each other freely.

Give me a break. What a flimsy excuse for GOOG's China business.

What's so noble about providing email and blogs in China? There are plenty of providers of such services.

And communicating freely in China is not to be encouraged because these US companies will turn you over to the Chinese authorities in a Silicon Valley nanosecond, if asked.

They want the US government to take on China on Internet censorship. Usually tech companies want to keep the government out of anything to do with anything. It's easier to pass the buck than act in an ethical manner.

Do No Evil? How about Do Some Good. I know that some of the the employees of YHOO, GOOG and MSFT feel that way, and maybe the rest too. How about the management?

Posted by Tom Foremski on February 2, 2007 11:07 AM | Permalink | Comments (6) | TrackBacks (0)

Yahoo Media Group reorganizes to monetize major brands - with or without permission

Yahoo's top media execs came up from Santa Monica Tuesday to Yahoo HQ to present a new strategy for monetizing audiences of major entertainment brands such as TV's "Lost" and Nintendo's Wii.

Vince Broady, head of Games and Entertainment, Scott Moore, head of News and Information, and David Goldberg, head of Yahoo Music, presented their strategies at a lunch event for top media.

One of their largest initiatives is "Brand Universe" which pulls together Yahoo users in message boards, Flickr photos, Yahoo Groups, and other Yahoo sections into one location. This makes it easier to sell advertising because of the larger aggregated numbers.

Vince Broady, is in charge of Brand Universe. "We will pick 100 of the top entertainment brand names and highlight and promote those brands on Yahoo. We will work with the brand owners but we can do this even if some companies don't want to work with us."

Mr Broady said that Yahoo already knows what TV shows, music, films, games, game consoles will likely succeed, and which brands have momentum just from studying its users. "We saw very early on that Nintendo Wii would do well and so Wii became the first brand that we rolled out as part of Brand Universe."

David Goldberg from Yahoo Music said, "We can tell with 100 per cent accuracy which songs will fail within seven days of their release."

Yahoo said it would share its "Yahoo Pulse" data on which brands are doing well with brand owners because it would help them craft their content for broader commercial appeal.

Foremski's Take: It's a savvy move for Yahoo and a big change from organizing around broad generic properties such as Yahoo Finance, or services such as Yahoo mail. Yahoo's reach is such that it can create a dominant online site around a brand with a ready made community--just from pulling together it's users and their interests, from various sections of Yahoo.

For example, people tag their Flickr photos with a band name, they discuss a band in Yahoo message boards and in Yahoo Groups, and they watch band videos in Yahoo Video. Now, Yahoo can aggregate all those people and sell them to advertisers who are always looking for the largest relevant audience.

But there is a collision course ahead because brand owners will resent a third party making money off their brand, with or without them. Here's why:

Yahoo is creating an online site that aggregates more of the brand audience than the brand owner can create. Yahoo controls the online presence of a brand, especially since its search engines can point to its properties.

Yahoo is getting a free ride. Usually the brand owner, for example, the producers of the TV show "Lost" sell to TV networks who then monetise that content by selling advertising around it. Yahoo doesn't have to pay a penny to "Lost" because it is monetizing Yahoo users who are interested in "Lost." Advertisers don't care, they are buying an audience with a demographic--the larger the better because of the benefits of scale in marketing messages.

Yahoo doesn't have any loyalty to the brands. If they start to fall away and drop out of the Top 100 and Yahoo latches onto the next rising star.

Yahoo doesn't have to invest in building brands and taking a risk on which will be successful--as TV networks do when ordering pilot series. Yahoo can potentially aggregate and sell a larger audience around a TV show than the TV networks. Because online advertising is trackable, ROI is increased which means more advertising money will go online than to TV and elsewhere. So then TV networks have less money to pay the content producers.

So who pays for creating the content of a brand and building it up?

So what if Yahoo is helping to build brands through its online activities, and traffic to a brand's websites increases?

More online traffic doesn't mean anything if you can't monetise it. And Yahoo can monetise online traffic much better than the brand owners whose business model is selling content.

Posted by Tom Foremski on February 2, 2007 11:11 AM | Permalink | Comments (0) | TrackBacks (0)

FAST AdMomentum: Publishers Can Throw Out the Third-Party Ad Networks

FAST Search and Transfer, the European based search giant, today announced software that allows online publishers to serve contextual ads to their readers.

The FAST AdMomentum software could increase ad revenues by more than 200 per cent for some publishers, compared with large advertising networks such as Google AdSense and Yahoo Publisher Network.

This is a software package installed in a publisher's data center. FAST says that it could also be used by a third party to offer a ready made online contextual advertising network that could be used to service many smaller online publishers such as blog networks. This means it could be used to compete with up and coming advertising networks such as FM Advertising, and AdBrite.

Publishers collect between 30 per cent to 70 per cent of the revenues that their advertising network partners receive--an amount that varies according to each deal. Google doesn't disclose the revenue split.

With AdMomentum, large publishers can establish their own advertising networks that support contextual ads, and also offer a wide variety of other types of advertising revenue such as impressions, pay per click, and also auctions.

Advertisers have a self-service interface and the software API is compatible with current advertisement tracking tools.

More than a dozen large publishers around the world have been beta testing the software.

Perry Solomon, VP of strategic market development at FAST, told SVW: "AdMomentum can be used to target ads to specific groups of people. One of our customers in Norway is using it to target ads to people on a street by street basis."

"This is a way for publishers to capture the share of the revenues that have been going to the advertising networks," he added. "The publishers already have advertisers, and they have the content, they don't need the advertising networks. We can provide them with a revenue engine."

Nearly one-half of Google's revenues in the past, have come from its AdSense network, which serves advertising on sites owned by online publishers. Large publishers such as New York Times, Knight-Ridder, and Time-Warner use AdSense.

Foremski's Take: This is potentially a game changing product and it brings back the advertiser relationship to the publisher--where it belongs.

For example, I've always wondered why the New York Times would run AdSense on its online front page, and the AdSense ads carry a text link at the bottom "advertise on this site." That says to everyone "we have no clue how to monetise this space and have handed over the customer relationship to a third party." That is suicide in today's world.

The advertising networks take a huge cut considering that they establish self-service advertising interfaces and run a bunch of servers and some software. Well, now the publishers can now do the same and cut out the middleman.

I can also see AdMomentum being used by local newspapers to essentially become the "AdSense" for their regions. They could sign up smaller online publishers within their local towns and neighborhoods and provide a much better targeted service to businesses and residents.

Additional Info:

FAST is headquartered in Norway and is publicly traded under the ticker symbol 'FAST' on the Oslo Stock Exchange. The FAST Group operates globally with presence in Europe, the United States, Asia, Australia, the Americas, and the Middle East. For further information about FAST, please visit www.fastsearch.com.

Posted by Tom Foremski on February 5, 2007 2:41 AM | Permalink | Comments (5) | TrackBacks (0)

As San Francisco ponders its Public Internet, FON gives away 10,000 routers

Public Internet San Francisco holds the first of a series of public hearings at City Hall on the municipal Wi-Fi Google/Earthlink Project: Wednesday Feb 7 at 3pm City Hall, Board Chamber, room 250, Budget and Finance Committee.

First District Supervisor Jake McGoldrick has sponsored a resolution on the project.

San Francisco Budget Analyst report:

"Fiscal Feasibility Analysis of a Municipally-Owned Citywide Wireless Broadband Network."

San Francisco Examiner has an editorial by on the SF Wi-Fi deal by Supervisor McGoldrick saying it should not be rushed through.

S.F. should not rush free Wi-Fi deal

When The City selects one company to take over our public assets to provide service, the only guarantee is that the provider will dictate the quality and cost of service. The consumers lose. Government loses its governance. And taxpayers are subsidizing EarthLink/Google’s businesses by paying for its infrastructure while being charged for their services. EarthLink/Google should not reap the benefits of the public’s use without giving much in return.

. . .

Another way to offer public Internet access is through FON, a company that sells routers that have a public and private WiFi channels. Users share their WiFi connection with anybody within range while keeping a secure private connection.

To celebrate its one year birthday FON is giving away 10,000 WiFi routers for free in the US. FON is backed by Google, Skype, Sequoia Capital and Index Ventures and has more than 250,000 users in 140 countries.

Please see SVW:

The battle for the last-mile heats up as GOOG, Skype and VCs fund startup FON

. . .

Randall Stross a professor of business at San Jose State University wrote an interesting article in the New York Times about WiFi in municipal applications. Using street lamps to perch WiFi transmitters can cost $75,000 to $125,000 per square mile.

An alternative comes from Meraki Networks, in Mountain View, CA:

...rather than starting from outside the house and trying to send signals in, Meraki starts from the inside and sends signals out, to the neighbors.
Some of those neighbors will also have Meraki boxes that serve as repeaters, relaying the signal still farther to more neighbors. The company equips its boxes with software that maintains a “mesh network,” which dynamically reroutes signals as boxes are added or unplugged, and as environmental conditions that affect network performance fluctuate moment to moment.

SF WiFi: NY Times - Wifi without towers

. . .

From October 5, 2005:

Silicon Valley Watcher proposes free WiFi solution for most of San Francisco. . . and it could be done this afternoon!

Silicon Valley Watcher proposes free WiFi solution for most of San Francisco
Free Wi-Fi.jpg . . . and it could be done this afternoon! We just need to persuade people in SF with a wireless router to let it all hang out.

Posted by Tom Foremski on February 6, 2007 2:26 PM | Permalink | Comments (4) | TrackBacks (0)

Jobs welcomes the death of DRM

Steve Jobs blows the lid off the music industry's dirty little secret in an essay called "Thoughts on Music." Actually, it's no secret at all but Jobs' logic is so obvious and clear-headed and so unexpected from someone in his position, it really blows like fresh air.

...DRMs haven’t worked, and may never work, to halt music piracy. Though the big four music companies require that all their music sold online be protected with DRMs, these same music companies continue to sell billions of CDs a year which contain completely unprotected music. That’s right! No DRM system was ever developed for the CD, so all the music distributed on CDs can be easily uploaded to the Internet, then (illegally) downloaded and played on any computer or player.
... So if the music companies are selling over 90 percent of their music DRM-free, what benefits do they get from selling the remaining small percentage of their music encumbered with a DRM system? There appear to be none.

And he imagines a DRM-free world:

Imagine a world where every online store sells DRM-free music encoded in open licensable formats. In such a world, any player can play music purchased from any store, and any store can sell music which is playable on all players. This is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat. If the big four music companies would license Apple their music without the requirement that it be protected with a DRM, we would switch to selling only DRM-free music on our iTunes store. Every iPod ever made will play this DRM-free music.

He concludes with a swat at all those European lawsuits against Apple. They are essentially antitrust suits, charging that Apple is unfairly controlling the music market by ensuring that music bought on iTunes can only be played on iPods. But of course this is what Microsoft and Sony do as well. And there's a reason for it, he says. Apple is contract-bound to shore up any holes in its DRM or risk losing the entire catalog. And, since DRM is a cat and mouse game, Apple (and any player) has to control the whole environment.

Apple has concluded that if it licenses FairPlay to others, it can no longer guarantee to protect the music it licenses from the big four music companies. Perhaps this same conclusion contributed to Microsoft’s recent decision to switch their emphasis from an “open” model of licensing their DRM to others to a “closed” model of offering a proprietary music store, proprietary jukebox software and proprietary players.

So much for European calls for licensing of the FairPlay technology. Steve has another suggestion for the European governments:

For Europeans, two and a half of the big four music companies are located right in their backyard. The largest, Universal, is 100% owned by Vivendi, a French company. EMI is a British company, and Sony BMG is 50% owned by Bertelsmann, a German company. Convincing them to license their music to Apple and others DRM-free will create a truly interoperable music marketplace. Apple will embrace this wholeheartedly.

Cynical? One could argue that Jobs knows this ain't gonna happen and this essay allows him to claim some moral high ground without risking Apple's monopoly. But viewed from another perspective, his is absolutely the most important voice in online music with the power to affect some change in this direction. He has a duty - a corporate duty if not a moral duty - to use that voice in Apple's interest. And what he proposes would not only be good for consumers, it would wildly expand the money-making potential of Apple's music operations.

Posted by Richard Koman on February 7, 2007 7:27 AM | Permalink | Comments (0) | TrackBacks (0)

State considering $20m subsidy to Tesla

Far and away the hottest car in the world is a Tesla, which boasts Google's Larry Page and Sergey Brin as investors. The Tesla Roadster is an all-electric two-seater that does 0 to 60 in four seconds and delivers the equivalent of 135mpg. This baby goes for a cool hundred grand.

Tesla Motors is ready to dive into a more affordable part of the electric market - a four-door sedan that will sell for only $50,000. The company is considering locating the assembly plant for "Whitestar" project in California, New Mexico and Michigan.

To help Tesla choose California, Assemblyman Kevin DeLeon (D-Los Angeles) introduced a bill to fund a clean technology fund by adding $4 to the auto registration fee, which would produce $45 million in tax revenue. Politicians want to give $20 million of that to Tesla as an incentive to build in California, probably in Pittsburg.

That public investment comes on top of an investment by the state's big pension funds - CalPERS, CalSTRS and CalCEF - into venture capital firms. One

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

Former Financial Times journalist Tom Foremski and team reporting on the business of technology and media . Silicon Valley is becoming a Tech Media Valley.

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