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The Week in Geek – July 31, 2009

The WiG continues to publish less frequently during the summer hiatus (and as I wrap up the book and enjoy our newborn).  Look for more at the Semester’s start!
Microsoft-Yahoo: A Rival for Google?
In a 10 year deal, Yahoo handles ad sales, Microsoft brings search tech (Bing), and Microsoft can leverage Yahoo’s search tech, as needed. Yahoo expects a half billion dollar increase in operating income, a $200 million cut in capital expenses, and $275 million in improved cash flow. Google’s share 65%, Yahoo/Microsoft’s combined share 28%. Enough to allow the deal to get through the DoJ? We’ll see. BTW: Yahoo’s newly appointed CFO is a BC grad.  Eagles now hold top-tier Sr. Exec. slots at Apple, Google Europe, HP, Yahoo, and more.

Twitter 101
Twitter offers up a neat resource for explaining the service to the business-focused twtiter newbie. The case studies are particularly interesting. Some more resources:

  • Katherine Boehret’s “Software that Makes Twitter So Much Tweeter” provides a great overview of the various Twitter clients.   From a business perspective I find this a fascinating example of how openness can spur innovation, but create business model challenges. All these new clients are free-riders, essentially piggy-backing on Twitter’s infrastructure and service, while offering nothing in direct revenue compensation to the no-revenue startup.
  • The NYTimes piece on “Managing an Online Reputation”, by Kermit Pattison, contains a great quote: “Social media for business now is life or death”.  Some good advice in the piece, although stay tuned for a forthcoming, more comprehensive article this fall by several of us from the BC IS Dept.

BTW: I’ve found Twitter to be a great way to stay in touch with WiG readers, and to more quickly learn and share. Do feel free to follow at I’ve also been impressed with how BC has started using new media. See and BC’s Facebook Fan Page.  And my son *really* liked The Boston College Football Experience with “your name” inserted into the streaming video!

Netflix Challenge Ends, but Winner Still in Doubt
After struggling mightily since 2006 to beat Netflix’s Cinematch recommendation engine accuracy by 10 percent (curse you, Napoleon Dynamite!), two teams vaulted past the threshold last month. First across the line was BellKor’s Pragmatic Chaos: a combined team of prior top-performers that included a pair of coders from Montreal; two U.S. researchers from AT&T Labs; a scientist from Yahoo! Research, Israel; and a couple of Austrian consultants. But with less than 24 hrs. to go, combined efforts billed as “The Ensemble”, popped atop the prior leader’s score, with the Netflix leaderboard showing a 10.10% improvement vs. BellKore’s PC’s 10.09% bump. The NYTimes suggests BellKore may still win, when results are verified against a separate, private Netflix dataset. Look for an Sept. ’09 award ceremony.

BTW: Netflix posted a strong Q2: revenue up 21% from a year ago, 10.6 million subscribers, churn up slightly (4.5%) and revenue per subscriber down slightly, but the firm has raised targets for subscriber & revenue growth for ’09, despite the horrible economy. The trend is opposite what the industry is experiencing: Home-video sales dropped from $15.9 billion in ’07 to to $14.5 billion last year. Movie rentals remained flat. And 20% of Netflix users are using the streaming service. The WSJ has great charts, plus video chat with Reed Hastings. Also check out the Inside Netflix video segment, from WLOX, showing the firm’s Memphis processing center. Great background for those using our Netflix case (to be updated, soon).

Crowdsourcing Closer Government Scrutiny
A fascinating video from TechReview demonstrating the new, publicly-accessible Government IT dashboard. Useres can view IT spending across government agencies, chart how this has changed over time, and see the success rates for various agencies as they attempt to meet milestones and goals. Also a neat class example of dashboards, particular for anyone using the Data Asset chapter.

Amazon Taps its Inner Apple
A must-read cover story from FastCompany. Kindle’s a stunner – blowing past most pundit estimates. It’s on track to be a $1.2 billion business by next year (the book publishing biz itself is a $24 billion a year industry). According to Bezos, “Kindle e-books add 35% to a physical book’s sales on Amazon whenever Kindle editions are available”, so it’s not surprising nearly all of the NY Times bestsellers are in the Kindle store. The device sucks down a book in less than a minute via a 3G network with no bandwidth charges. Those titles usually run less than half the price of a conventional hardback. A single Kindle can hold 1,500 books. And the Kindle store lets you read the first chapter for free at your leisure, then buy from anywhere.

Amazon has between 10 and 15% of all book sales, but an 80% share online. Markets like this migrate to standards – open or closed, they’re often won by whoever dominates first. Some speculate that if Amazon wins this market, it can crush the distribution channel and redefine the publishing industry. Dead trees go away, costs drop, author royalties skyrocket, and Amazon rakes in huge coin for zero inventory – perhaps taking 20 percent and sharing the rest with authors who no longer need bookstores or publishers. Other firms are scared and rushing rivals to market. Barnes and Noble (which followed Amazon by nearly two years w/e-commerce and never recovered) has recently introduced it’s own reader. Hearst is planning an e-reader for magazines. Murdoch is investing in Plastic Logic. And of course, Apple does have a patent application for multi-touch e-book technology.

And unifying two cover stories from thsi year, Amazon bought Zappos for about $850 million, absorbing a growing competitor that was branching out into other forms of e-commerce and fulfillment services.  TechCrunch’s Sarah Lacy shows just how lucrative the deal was for various parties involved.

Sony Gives Blessing to Viral Wedding Video, Rings Up Sales
Jill Peterson and Kevin Heinz got married
on June 20th. Perhaps you’ve seen their entrance into the wedding chapel? It’s been viewed over 13 million times since it was uploaded YouTube two weeks ago. The too-cute wedding party surprises guests by busting a move to Chris Brown’s “Forever”. Smiley wedding fun, but Sony could have requested the video get pulled from YouTube. Instead, Sony had the Google unit put in a click-to-buy overlay. FINALLY a media company gets it. Click-throughs were twice the average for similar ads, “Forever” vaults to #4 on iTunes and #3 on Amazon. The couple and wedding party even recreated their groove on the Today Show. Mazel tov Jill, Kevin, and Sony!

The iPhone App Economy – Who’s Making Money?
The iTunes AppStore has surpassed 65,000 apps, downloaded 1.5 billion times. With Apple taking 30% of fee-apps, the AppStore alone might surpass YouTube’s revenues by 2010 (for the record, recession-proof Apple posted sales record sales – up 12% this past qtr – and $1.23 billion in profits).

XO Laptop Two Years Later
Wired provides a great overview of the One Laptop Per Child initiative: 825,000 PCs to kids in 24 countries, with continued growth. Congrats to a personal hero, my former BC professor, Charles Kane (President and COO of OLPC), and the rest at the effort.

Chuck spoke at Tech for Good last Spring. We also heard from Bob Metcalfe on Energy Tech, and Jamie Heywood on PatientsLikeMe. I’d welcome your suggestions for future Tech for Good speakers! BTW: as a Save the Date: The Fall 2009 Clough Colloquium will feature Alex Counts, President and CEO of the Grameen Foundation and author, Small Loans, Big Dreams; How Nobel Prize Winner Muhammad Yunus and Microfinance Are Changing the World, Monday, November 16, 2009, at 4:30 p.m., The Heights Room, Corcoran Commons.

Ghana: Digital Dumping Ground
While so many are trying to change the world with Tech, a terrible undercurrent, led by deceptive “recyclers”, is also polluting the planet. All our students gain background in source-to-EOL eWaste issues via our open-source Moore’s Law chapter (soon to be updated for 2009). The Frontline documentary above, combined with last Fall’s 60 Minutes expose on e-waste in Guiyu, China, will prove powerful teaching aids for anyone using the e-wate module in our course materials.

Chrome vs. Android
Businessweek provides a brief overview of Google’s second OS initiative: Chrome OS. Google must unify or clearly distinguish OS brands (PC firms committed to using each), or risk MS-esque brand gaffes MSN/Live/Bing, Windows Portable Media Center / Zune.

Facebook Lures Advertisers at MySpace’s Expense
Social networking ads are down 3.1%, MySpace ads are down 15.5%, but Facebook ads are up 9.5%. And yes, these stats will find their way into the soon to be posted 2009 update of the Facebook case.

The Great Wall of Facebook
Facebook / Google comparisons look weak on the surface. Facebook burned through $350 million last year, while Google earned $4.2 billion on $15.8 billion in net revenues (take that, recession). But Wired’s Fred Vogelstein (who’s doing some of the best tech-business coverage) points out that much of what happens on Facebook is in the dark web, out of the reach of Google’s crawlers. The 250 million Facebookers (enough to make the site the 4th largest ‘country’ in the world), share 4 billion pieces of information each month, including 850 million photos and 8 million videos. Facebook Connect is fast becoming the ‘single sign-on’ that everyone from Microsoft to Sun to Yahoo failed to create on their own. And Open Stream API is bringing content streams out of Facebook, too, albeit with serious free-rider concerns (see Twitter discussion above).

But is Facebook’s content enough to create value via a referral network, win over users via ‘dark content’ search of your private friend data, or leverage other benefits? According to Facebook research cited in BusinessWeek earlier this year, “an average Facebook user with 500 friends actively follows the news on only 40 of them, communicates with 20, and keeps in close touch with about 10”. Some experiments show value in ‘friend targeting’, but we’re a long way from proving Facebook is the next Google.

Why is Obama’s Anti-Trust Cop Gunning for Google?
Last year, Christine Varney referred to Google’s rising anti-trust concerns, stating “I think you are going to see a repeat of Microsoft”. Varney’s now the DoJ’s top cop on anti-trust. Does Google deserve this kind of scrutiny? It’s based on open software. It fiercely promotes open standards. And it doesn’t have tight switching costs or user-driven network effects (want to switch to You save two letters!). Sure, there’s a network effect on the ad-side (more advertisers attract more content providers with more niche-targeting opportunities for said advertisers), but advertisers and content providers can pursue other ad networks all while working with Google. Those backing a Google probe say it’s time to examine how Google integrates its own property results into PageRank (the algorithms used for organic search). If the firm showed favoritism in promoting its own maps, news, and other services ahead of rivals, that may be akin to court-pursued bundling advantages linking Windows to IE and Windows Media Player. I’m skeptical a Google case will hold water, particularly with Yahoo-Microsoft showing credibility. Wired suggests DoJ action is likely at least five years away. Google shows that bigness will bring scrutiny, even for firms that fiercely try not to ‘be evil’.

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