The Week in Geek – Sept. 24, 2009
Netflix $1 million Research Bargain
The photo on the left is of the medals awarded to the winners of the Netflix Prize. And the winner was the Belkor Pragmatic Chaos group mentioned in a July Week in Geek (a team that included researchers from AT&T, Yahoo Israel, and a group of Austrian alpha geeks). Talk about a nail-biter! The second place team in the $1 million Netflix Prize posted identical results to the winner, but submitted just 20 minutes late. Opera Solutions, a New York consulting firm that had top researchers working on the runner-up effort these past two years claims their firm has already reaped $10 million in benefits from participation. The payoff for Netflix was pretty sweet, too. Says CEO Reed Hastings “You look at the cumulative hours and you’re getting Ph.D.’s for a dollar an hour”. Not to mention the boatload of free publicity the firm received from the media’s prize coverage.
So how’d they win? Wired’s Epicenter reports “Teams that had it basically wrong — but for a few good ideas — made the difference when combined with teams which had it basically right, but couldn’t close the deal on their own.” Winning formula came from diverse ideas. Yet more ammunition for diversity in your brain trust!
Netflix used the prize award ceremony to announce a new contest. This time no individual movie ratings data is offered up. Instead teams will use anonymized demographic and behavioral data, including ages, gender, ZIP codes, previously chosen movies (although genre ratings are included). Contestants have to to predict movies that these customers would like. There’s no accuracy target. Netflix will instead award half a million dollars to the leader after six month, and another half million bucks to the leader at 18 months.
Netflix Everywhere: Sorry Cable, You’re History
I’d disagree with the title of this Wired article (this person obviously never watches live sports – ESPN remains one of Disney’s most lucrative properties & live sports aren’t likely to be replaced by streams served from the red envelope guys), but the piece is otherwise loaded with great factoids useful to faculty teaching with the Netflix case. Among them: by the end of 2009, some 10 million Netflix-equipped devices will be scattered throughout living rooms worldwide, including stream-ready TVs, Xboxes, and Netflix-equipped DVD players. Getting rid of the mail infrastructure & postage could be a boon for Netflix, which spends roughly 1/4th of the firm’s revenue on mailing costs. But streaming is hampered by windowing agreements. Cable stations like HBO and Showtime spend a combined $1.7 billion a year for exclusive rights to show movies to their subscribers. The Oct. 2008 deal Netflix cut with Starz helps given them access to lots of content that would otherwise be locked up by the cable network, but lots more remains out-of-reach. Another neat fact is revealed on streaming vs. network TV revenue: Fox loads up each 30 minute prime-time slot for the Simpsons with 18 commercials, earning 54 cents per viewer, but earns only 18 cents per viewer from the 3 spots that run on Hulu – a site jointly owned with NBC & Disney.
Facebook Shuts Down Beacon
When studying the Facebook Case, we take a look at Beacon, the firm’s botched attempt to post Facebook user purchase data from third-party sites to their Facebook feed. Rent a video at Blockbuster, say, and Beacon would show this in the feed. Unfortunately the service was initially opt-out, too much was revealed (including Christmas gift purchases), and the effort was re-tooled as an opt-in program. Now Facebook is extinguishing Beacon, agreeing also to fork over $9.5 million for the creation of a foundation to promote online privacy, safety and security. The lawsuit, filed Aug. 2008, shows what could go wrong with systems that aren’t thoroughly tested. Not only was Facebook mentioned, but also Beacon partner firms, including Fandango and Overstock.com. The firm’s subsequently-launched Facebook Connect corrects many of the Beacon gaffes, operating as an opt-in service that let users share Facebook data with other sites. Facebook has also launched an effort with Nielsen, called Neilsen BrandLift. The polling function (also opt-in) will measure awareness, ad recall, brand favorability, and purchase intentions in quickie one & two question surveys. Collected data will be aggregate and won’t be identifiable with individual users.
How Facebook Copes with 300 Million Users
Facebook handles about a billion chat messages each day and, at peak times, serves about 1.2 million photos every second. Just rendering a user’s page requires real-time querying all of the databases that make up the ‘social graph’, serving this up in a second or less. And this is performed several billion times a day. A conventional database query would be too slow, so Facebook keeps major database work in RAM, enabling it to return a core set of results much more quickly than via conventional storage. The architecture also has to be highly connected. Add a new feature such as “like”, and a whole new set of real-time interconnections takes place. And turning on that feature theoretically pushes adoption from 1 percent adoption to 100 percent adoption in a day – all while demanding no perceived drag or downtime. For content stored on drive storage, Facebook has built their own storage system called Haystack that’s completely built on top of commodity hardware.
USB-IF Sides with Apple, Spanks Palm in iTunes Spat
For those teaching with network effects, the chapter mentions that firms with dominant standards might seek to keep their standards free from imitation. An updated example (likely to make the next version of the book) is Apple’s blocking the Palm Pre from syncing with iTunes. Some might wonder if this is legal. According to AllThingsD, The USB Implementer’s Forum “dismissed Palm’s claim that Apple has violated its USB-IF Membership Agreement. Worse, it took issue with Palm’s alleged use of Apple’s vendor identification number, which it says violates USB-IF policy.”… “the USB-IF goes on to suggest that Palm itself is violating its Membership Agreement by using Apple’s Vendor ID number to disguise the Pre as an Apple device.”
Tech Companies Getting Rich Quick
Gonna be an investment banker? Be prepared for Tech M&A. Tech stocks have outperformed the broader market in the past few months, largely as cash-rich firms bulk up for more growth (especially important for those firms in maturing markets). Dell bought Perot Systems for $3.9 billion (a 67.5% premium), Adobe recently bought web analytics firm Omniture for $1.8 billion (a 24% premium), and there’s bags of geek corporate coin out there for more deals. Cisco has $35 billion in the bank, Microsoft $30 billion, and Apple & Google each have about $20 billion.
Intel Plans to Replace Copper Wire
USB and similar peripheral cables are cheap, but slow. They shoot electrons over copper. But if you could shoot light over glass using fiber optics, you could speed things up significantly. At the Intel Developer Forum (IDF) in San Francisco, the chip giant announced a new type of cheap optical cable that will replace conventional cables linking peripherals to your PC. By 2010 the new Light Peak cables will allow the equivalent of a Blu-ray DVD to be squirt from one device to another at speeds of about 30 seconds. That’s a perky 10 Gbps! Intel also plans tinier circuits, with 22 nanometer chips, packing 2.9 billion transistors in an area the size of a fingernail, due out the second half of 2011.
Courier: First Details of Microsoft’s Secret Tablet
The late-stage prototype uses many of the gestures familiar to iPhone users, but the hinged, two-screen ‘booklet’ style device has lots of wow. Definitely check out the video!
For faculty teaching with my Textbook, I’ve launched a Ning community where others are sharing links to video, images, and articles that supplement material from the book. Any professor using the material (either the free, online version or the for-fee print version) is welcome to request access.