The Week in Geek – August 27, 2006

New Gallaugher.com Site Coming – E-Mail Subscribers May Need to ‘Activate’
My BC website will soon be migrated to gallaugher.com. The new site will distribute the Week in Geek (WiG) in RSS format, as well as e-mail. It’s the WiG’s most significant upgrade since going live in 1997 (I suppose that means we served a ‘blog’ before the term was coined, although I prefer the phrase ‘news digest’). E-mail will be migrated from Microsoft (which costs me a bundle) to FeedBurner. E-mail subscribers may receive an e-mail from [email protected] asking you to “Activate your Week In Geek subscription” (please re-subscribe so we don’t lose touch. Just click the soon-to-be e-mailed link & you’ll be set). A special thanks to former student Ken Yarmosh as well as my GA Pete Monaghan and undergrad Brian Frye for their extensive help in getting the site up and running. Ken, who went to UPenn for a tech master’s after finishing BC, now runs Web 2.0 consulting firm Technosight. His site’s worth a visit!

Strategy & Technology
This is what I hope will be the first of many chapters and cases distributed on gallaugher.com. The chapter provides an introduction to thinking strategically about tech, and includes several mini-case examples familiar to my students. Faculty should find the chapter an effective (and free) replacement for the popular yet flawed HBR articles “Strategy & the Internet” by Porter or “IT Doesn’t Matter” by Carr. Visitors will notice that the chapter and some areas of gallaugher.com run a small number of AdSense ads. So far I’ve resisted writing a traditional ‘dead tree’ textbook, and this is currently just an experiment; but charging students $100 for an IS textbook written a year before publication isn’t a very good model for either faculty or students. My hope is the AdSense-funded model will allow the material to be more widely distributed (my primary goal) and will be a viable alternative to the publisher-skewed textbook price/royalty system. I will update the content each semester to keep the material fresh, but consistent. It’s a long piece, but if you read it, let me know what you think!

Google’s Big Deals with MySpace, and MTV
Speaking of reasons to replace that old Porter article, the guru of strategy clearly hadn’t envisioned MySpace when he wrote that Network Effects were costly to create and that online advertising was in decline. 18 months after its founding, MySpace hadn’t spent a dime on marketing, yet had acquired nearly 30 million users and had become the Net’s 5th most trafficked site. Last year Rupert Murdoch’s NewsCorp ponied up $580 million for the site. Naysayers claimed MySpace would be a Friendster-like fad, but Murdoch (who made the cover of Wired during the WiG’s summer hiatus) claims the site is more profitable than expected. MySpace adds a mind-boggling 280,000 new users every day – the equivalent of the circulation of a big-city US newspaper. Daily pageviews have passed the billion mark, second only to Yahoo. Despite the surge, experts had thought the firm would earn only 5% of Yahoo’s revenues, but those estimates are out the window now that Google has agreed to pay MySpace $900 million over three and a half years – effectively paying Rupert back all the cash he shelled out for the site (and then some). A sweet deal that makes the 75 year-old seem like a Net genius. Still, Google will need to prove content ads work in the fickle and mischievous (consider clickfraud possibilities) world of MySpace. Google also struck a deal to syndicate video clips from Viacom’s MTV Networks to about 200 youth-focused Web sites. The clips will include advertising, with Google and Viacom sharing revenue with participating sites.

Online Scams Create Yahoo Millionaires
Fortune profiles a loaded 14 year old from Lagos, part of a multi-million dollar crime network that that buys consumer electronics for resale from phished credit cards & other scams. Goods are bought in the West, then shipped to Nigeria where they are fenced locally. The BBC builds on the hysteria, claiming Nigerian scamsters are pulling private banking data off PCs dropped off for recycling in Britain, saving them many hours of crafting e-mail bait for for the easily duped. Gadzooks! Better use a program that scrubs your hard drive clean before your PC leaves your hands for good (of course, this function is built into Mac OS X).

How This Kid Made $60 million in 18 months
BusinessWeek’s cover story on Digg serves as both a tale of meteoric rise as well as a bit of a media hype warning. The Digg rise is indeed impressive. With 1 million daily visitors, Digg “is now the 24th-most popular Web site in the U.S., nipping at the The New York Times’ (No. 19) and easily beating Fox News (No. 62)”. The site, which is doubling in size every 3 months, is just breaking even at $3 million in yearly revenue. Still in today’s Web 2.0-hyped world, that’s estimated to be worth over $200 million. YouTube (which serves up 100 million videos a day) is thought to be worth half-a-billion. The hype is in the text on BW’s cover. Since Digg has NOT BEEN SOLD, founder Kevin Rose (the guy on the cover) has yet to net any real coin. Said Rose in a podcast following the story “I’m not a multi-millionaire, I’m not a millionaire or even a thousand-aire. … I can’t even afford a couch in my new apartment.” To poke more fun at the Web 2.0 hype, check out Web 2.0 or Star Wars Characters? and the Web 2.0 redux of established logos .

Video of Sony Mylo
Sony’s Mylo is interesting in that it offers glimpse of how iPod and competitors will likely evolve. The $350 device (video & review) offers WiFi, Google, Skype, IM, and music playback. Users can share tunes with others in their area. Skype integration could be a huge accelerant to Skype adoption and boost mobile VoIP as a phone replacement. Someday a killer successor to this device will sport a lens, real mobile phone network access, and with Apple’s help, an elegant interface. Apple, doubtless is preparing a response now that music has surpassed cameras as the #1 service driving sales of advanced mobile phones. Nokia (already the planet’s largest camera manufacturer) recently purchased Loudeye, a firm that manages the backend of online music stores. Some Nokia systems now integrate with iTunes (although not for purchased music), so expect big moves from Apple before the firm’s switching cost / network effect lock begins to erode.

Sprint Goes NextGen Wireless
Sprint Nextel has decided to commit to WiMax, a high-speed wireless data technology that promises speeds about five times what’s currently available. The firm will spend some $3 billion over two years building out a WiMax infrastructure, and is partnering with Intel, Motorola and Samsung in the effort. When complete, the network will provide huge hotspots with bandwidth perky enough for full-motion video.

Frank Walks!
Frank Quattrone, investment banking’s biggest tech IPO dealmaker of all time (he did more deals than the next two rival firms combined) struck a deal that would avoid a third trial and would eventually allow him to return to the iBanking business. Holy Cow! This is a guy that nearly everyone thought was headed straight for the ‘gray bar hotel’ after urging the investment bankers who worked for him at CSFB to “catch up on file cleanup” at a time when the firm was being investigated for improperly distributing shares of plum IPOs. So much for obstruction of justice. Folks looking for background on Quattrone & the iBanking mess of the 90s should read Andy Kessler’s excellent, funny, and irreverent Wall Street Meat.

The End of Medicine
I’m a guy who hates business books – most are too long, too vague, and too dry. But Kessler (who also wrote Running Money, the exceptional account of his time leading a top-performing bubble-era hedge fund) pens zippy, anecdote-rich, and insightful books that are easy to devour in a cross-country flight or beach weekend. That’s what makes him a perennial favorite of our TechTrek experiences. I also highly recommend his recently released book, The End of Medicine. Tech & Medicine are clearly on the Valley’s agenda. On the ’06 TechTreks we regularly heard from Cisco, Intel, NetApp, and others about how medicine was tech’s next frontier. In his book, Kessler exposes system shortcomings and uncovers trends pointing to immense promise.  He visits with cancer care’s doctors, researchers, and hero-benefactors while trying to find out if he carries a genetic time bomb. Kessler fans may also be interested in the Instapundit podcast featuring Kessler, and Andy’s take on the “Net Neutrality” debate.

Jon Stewart on Net Neutrality
Kudos to The Daily Show for exposing the frightening boneheads who are making our policy. Special note: one of the few voices of reason & one of the most knowledgeable voices on telecom policy has been Net Neutrliaty advocate & BC grad Ed Markey. Go get ’em, Ed!

Kazaa, Skype, and now Venice Project
Skype’s another one challenging the Porter piece. 3 years, 75 million users, no advertising, a projected $200 million in ’06 revenue, and a $2.6 billion sale price to eBay. While the ultimate value is yet to be seen, the numbers are astounding. As KaZaa founders, the Skype-heads Niklas Zennstrom and Janus Friis only recently felt secure in visiting the US since KaZaa has settled with the RIAA. Now comes word of their next venture, “The Venice Project”, targeted at replacing traditional TV & movie distribution. At this point details are sketchy, but it’s clear that a Bit-Torrent-like scheme on a set-top box, linked with collaborative filtering to help you find the stuff you want to see, would be a killer. Content providers could make their entire libraries available with little infrastructure, since P2P sharing would liberate them from server capacity issues (a key hold-back on current Video on Demand services). Like Skype, Venice will be developed by tiger teams of coders scattered around the world. Announcements on the project (and possible media deals) are expected this fall, but will the industry really play with guys who until this summer, were regarded as two of Hollywood’s ‘ten most wanted’? Clearly Apple, Microsoft, and Cisco have their eye on this business, and all three of these firms are likely to bring much needed hardware to the experience, as well.

NetFlix Profits Triple, Stock Plunges
On the topic of movie distribution, poor Reed Hastings can’t catch a break. The NetFlix CEO announces profits that cream estimates, but the stock dropped like a brick. 2Q ’06 estimates were for 18 cents a share, but the firm came in with 24 cents a share. Why share plunge? The street watches revenue as well as earnings and even though revenue was up 46%, this was slightly below analysts’ expectations. There is some concern over churn which was up two tenths of a point to 4.3% (still near an all-time low and way below last year’s predictions), plus subscriber acquisition costs are rising. Still, the firm ended June with 5.17 million subscribers, adding 303,000 last Spring (Blockbuster online had 1.3 million subscribers as of March). Good odds state that what will kill NetFlix won’t be Blockbuster, Wal-Mart, or even Amazon, but new technology for VoD-esque services, and big announcements will likely happen in the next 12 months.

Verizon Brings Ultra High Speed to Homes
Verizon’s making a big glass gamble laying fiber to millions of homes. So far, Wall St. is skeptical, draining 20% of VZ’s stock price since since the debut of it’s FiOS fiber-to-the-home (FTTH) technology. Fiber is 15 times thinner than a human hair and running glass can be expensive – any kinks or bends can squirrel up a connection. But unlike DSL, fiber is immune to crosstalk, interference, and nearly immune to rain. And capacity is seemingly limitless. The single laser beam carrying video has more capacity than an entire cable coax, and VZ shoots three beams to residents. That means image quality is better since digital TV channels don’t need to be degraded with a lossy codec to save bandwidth. Verizon now squirts 20Mbps to residents, 30Mbps to businesses, but the theoretical capacity tops 644Mbps. At those speeds the last mile is no longer the bottleneck. Verizon spent $1,400 its first year pulling fiber down the street. Even if it hits the target cost of $890 this year, that’ll still mean the firm spends half its earnings deploying fiber infrastructure. Home installs are targeted at $715/household, but Verizon’s still above targets here, too. Verizon & cablecos are in a stats war over the success of the rollout, with VZ claiming a 6.5% adoption rate in the first three months in some towns, while Cablevision says it’s more like 2%.

Delivering DVDs in Seconds
NTT DoCoMo (a previous BC IME Asia host firm) is testing a network that would allow 2.5 GBps downloads to mobile devices. That’s enough to wirelessly download a DVD in two seconds, even when a passenger is traveling at (albeit slower) speeds of up to 20 Kph. Stop at a traffic light, download a movie. The bit blast is performed using MIMO (multiple input, multiple output), a technology leveraging several antennas to squirt multiple signals that are combined to form a virtual fat, wireless pipe. More data streams also increase data redundancy, reliability, and range. Technology Review also offers details on QAM, an additional technology to pack more bits in each data stream. So when will you see 4G? Moore’s Law plays a role, since faster (and less power hungry) processors will be needed to combine signals. Also, providers aren’t ready to shell out for new infrastructure when the current upgrades haven’t yet paid for themselves. Of course, at these speeds, 4G could supplant physical telco cables.

Everything You Wanted to Know About Getting a Job in Silicon Valley
A must read for would-be TechTrekkers (particularly given that past students are now at Cisco, Google, and NetApp). Also, jobseekers beware. Recruiting firm Execunet states that in a recent survey of 100 executive recruiters, 35 percent said they dropped a job candidate because of information uncovered online. Yikes! First impressions are being formed way before candidates meet the team. So you might want to think twice about that making that snarky post, starting a flame war, or putting something in MySpace or Facebook that you wouldn’t want showing up alongside your resume.

G:Drive Exposed
If the Writely screen shots are to be believed, G:Drive is in testing & will offer backup, recovery, file sharing, synching between machines, and local availability (e.g. access freshest downloaded copy while on a plane & re-synch when net-connected). For all of Google’s innovations, this may finally be the killer growth app needed to keep the nosebleed stock price, although privacy advocates remain wary, given the NSA’s recent and repeated reaching into telecom firms. And is the virtual desktop really a place for AdSense revenue? Proponents say that if G:Drive scores a huge base of regular users, even miniscule click throughs could add up.

Google Aims to Speed Checkout Line
Eagles are on the team that developed “what the media refered to as Google Wallet”. The product, Google Checkout (video), is now out. On the surface it seems to offer less than PayPal since it’s not a stored value system. But Checkout provides a single stop to establish your identity, store your credit card information and manage the communications you get from retailers. As the SJMN states, Google Checkout brings Amazon’s One-Click convenience to any merchant in the Checkout alliance. Google ads for vendors accepting Checkout will show a shopping cart logo, an effort designed to fuel adoption among advertisers. If it works as planned, the abandoned shopping cart problem is reduced while impulse purchases go up. To jumpstart network effects, Google will offer a $10 discount on initial purchases for users, and for vendors it will waive some or all of the transaction fees for companies that buy Google advertising. CEO Schmidt says the firm is willing to lose money on transaction fees, thinking Checkout will pump ad spending. Scary thought if your bacon comes from processing credit cards.

Cell Phones: The New Platform for Social Computing
US mobile networks are terrible, but so is the content. Up until last year, most carriers kept services behind ‘walled gardens’, prohibiting or making it terribly difficult for third-party software providers to access the ‘decks’ (start pages) of mobiles. Now the U.S. wireless firms have opened up their decks and, more importantly, their billing systems. Perl River, NY-based Q121 shows an example of the new experimentation. Users can upload their favorite songs, videos, and photos to the site, then send them to the cell phones of other registered users. Order premium content? It appears on your mobile bill. Thumbplay, the most popular ringtone vendor in the US, has also cut billing sharing agreements with wireless firms. Pundits have long predicted the advent of the mobile wallet. CapitalOne once referred to the cell phone as a ‘credit card with an antenna, and NTT DoCoMo has 60,000 stores participating in phone-based wallet programs in Japan. Perhaps we’re nearly there in the US.

Good to be a Geek
While I would not claim to be a national spokesperson for the geeks, the Orlando Sentinel asked me for some blurbs about my peeps 🙂 Former students will notice the familiar refrain from day 1’s class talk.

Parallels Runs Windows in Mac Window
I’ve got a Macbook Pro. BC offered up the extra hardware thanks to my podcast experiments (about 10,000 dls in a semester despite my initial slapdash effort) & work on the new field study videos in production for TechTrek and other efforts. I’ll give an update on my Mac experience later in the semester, but so far Parallels seems to flawlessly run all my old Windows apps. And unlike Apple’s bootcamp which requires you to run either Windows or OS X at a time, the Parallels user can tab from one OS to another (but no cross-OS cut & paste, yet). The MacBook Pro screen is beautiful, and the iLife suite is amazing. I burned a TV-playing DVD of a photo slideshow, complete with fade effects and music, in about 20 minutes with zero prior experience. Of course, with both Mac and Dell laptops in my office, Fulton Hall could spontaneously burst into flames any day. My favorite quote on the Sony battery gaffe comes from Good Morning Silicon Valley. They caught this quip from Thomas Forqueran, a guy who lost a 1966 Ford F-250 that he inherited from his granddad due to an incendiary Dell Inspiron: “I see Dell commercials half a dozen times a night, saying ‘What can we build for you today?’ And I say, ‘Grandpa’s truck’“.

Newsweek Names Boston College one of 25 ‘New Ivys’
Lots of pride on the Heights this month, where BC was named Ivy-quality by Newsweek, and moved to 34th in the US News rankings, 29th as an undergrad business program, and even appearing on the “Great Schools, Great Price” list.

Ian’s Cow Website
A personal point of pride. My son finished kindergarten last June & decided that a website would make a good summer project. He’s putting up pics, commentary, and ratings (already a critic) on his visits to all 117 cows in the Jimmy Fund’s Boston Cow Parade. Every keystroke and mouseclick is his own. Warms the deepest geek recesses of my heart.