The Week in Geek™ – April 10, 2010

WePay’s Hassle-Free Group Payments Platform Launches To The Public
BC alums Bill Clerico and Rich Aberman have opened the doors to their widely acclaimed group payments service, WePay.  The site can handle the treasurer / money collector function in any situation where payment is shared.  As TechCrunch puts it “So with PayPal, your account is tied to your name, without any way to separate the payments associated with a group. On WePay, you can create a unique, FDIC insured account for each group”.  The site nags deadbeats, exposes those who don’t pay (if you want that kind of transparency), and WePay, users can send emails with electronic bills (which can be paid with bank accounts or credit cards) and allows designated users to spend funds with a WePay VISA prepaid card, paper checks, or electronically (with settings that can expose the audit trail for spending, as well). Think PayPal as e-mail (one to one) while WePay is Facebook (groups sharing payments & info).  Another TechCrunch quote “all signs point to WePay being a winner, and viable competitor to PayPal in the group payments space”.  As reported earlier, the site is backed by A-list investors including PayPal co-founder Max Levchin, Facebook & Google Angel Ron Conway, PayPal alum Dave McClure, Intuit Alum Eric Dunn, FriendFeed co-founder Paul Buchheit, and August Capital.  Undergrad TechTrek followed the Grad’s lead and dropped by WePay’s digs (in former Facebook offices) last March.  It was a highlight & inspiration to all. BC also offered coverage of the WePay launch in “Web Alternative to $1 Trillion Check Writing Industry”.  Support our Eagles and make your life easier – get your club, team, sports league, bachelor party, or roommates on PayPal.

Apple Introduces iPhone OS 4.0
Less than a week after the iPad started showing up in stores, Apple announced an update to the iPhone/iPod Touch/iPad OS.  The developer preview is available now, the OS will be officially released this summer, with an iPad version to follow in the Fall.   Some highlights: Apple sold some 450,000 iPads in the first five days. Users downloaded a quarter of a million iBooks and a million iPad apps on iPad Day One. 3,500 iPad apps were in the App store within days of launch.  The WSJ offers a neat rundown (and video) of some of the cooler iPad apps that hit this first week. Jobs showed the Netflix & ABC apps that support high quality streaming. Many suggest enthusiasm for the new Netflix iPad app sent Netflix stock up to an all time high. Uber-VC Kleiner Perkins loves iPhone Apps so much they’ve doubled their iFund for app developers to a cool $200 million.

As for iPhone apps, Jobs announced the App Store has broken the 4 billion download mark, with over 185,000 apps now available. 50,000 of these are game & entertainment titles, compared with 2,477 for the Sony PSP and 4,321 for the Nintendo DS. iPhone’s browser usage market share is 64%.  Everything else added together is half the iPhone. Over 50 million iPhones  have been sold to date. Count iPod Touches and there are 85 million devices running iPhone OS.  As Jobs says “If you’re a software developer, that’s a plum market to go after”.

As for the new OS, it delivers over 1500 new APIs for developers & 100 new user features. Multitasking is implemented in a way that requires developers to ‘bake’ this into apps. While this requires developers to modify their existing apps, it allows Apple to avoid the sluggish phone performance & battery drain that would occur if a full app ran natively in the background.  Developers will be able to stream audio (e.g. Pandora while you do other things), VoIP (Skype, which across all platforms now connects 1 in 9 international calls on the planet, was demoed, complete with inbound call notifications while phone is locked), location (for turn-by-turn instructions), and various notification services.  For developers, upgrading apps should be easy.  Pandora (which now adds over 30,000 new listeners a day just on the iPhone & delivers 25% of streaming minutes over the device) took just one day to make the app fully background aware. There are other bonuses: wallpaper, a unified inbox, folders, iBooks (which, like the Kindle, sync across devices to keep your place & bookmarks), and enterprise features (it was reported that 80% of Fortune 100 firms are using iPhones).

iPhone OS’s new Game Center features add social gaming (challenge friends), automatic matchmaking (find opponents with similar abilities), leaderboards, and achievements.  But the big bombshell was likely iAd – Apple’s new mobile advertising platform. Apple maintains that apps, not search, is where ads are going to work on mobile.  Some more stats on potential: the average iPhone user spends over 30 mins every day serving apps on their phone: an app every 3 minutes, 10 ads a day (like a TV show), over 100 million devices, is a billion ad/day opportunity!  In app (as opposed to quick-through & leave the experience) ads are the goal & Apple showed several mock ups of what to expect. Jobs showed a ToyStory 3 ad that popped up in an app, offered a game, video clips, downloadable wallpaper, theaters where movie was playing, and allowed you to buy an app-game from within the ad – all without leaving the original app. Apple also showed Nike ads with video, the ability to flip through a product catalog, integration with NikeID custom shoes, and more – very slick (see the last 5 mins of keynote linked in this headline). A Target ad also showed how an app can be used to build a shopping list, buy stuff within the app, deliver coupons, and send info via e-mail. Jobs later acknowledge the importance of Highland Capital-backed Quattro Wireless (purchased for $275 million in January), saying “We tried to buy this company called AdMob and Google came in and snatched them from us. We bought this other much smaller company called Quattro and they’re teaching us”.  Our students had an opportunity to hear from BC Law Alum and Quattro CEO (and now Apple VP) Andy Miller last November at the Highland offices (thanks to Highland Partners Prof. Peter Bell and Dan Nova!).  It was right after Google’s AdMob deal – an incredible time to hear from a CEO in the midst of the hottest deals in tech, and another example of the special opportunities our alums help provide for our students!

Facebook CEO in No Rush to ‘Friend’ Wall Street
The Wall Street Journal claims Facebook isn’t over-anxious for an IPO.  Some interesting tidbits: Facebook’s 2010 revenues are estimated to land between $1.2 and $2 billion.  As our Facebook Case points out, network effects have kept Zuckerberg in remarkably strong control of the firm.  He owns 25% of the stock and controls 3 of 5 board seats. As Facebook grows, the firm has switched away from options and instead grants RSUs or Restricted Stock Units to employees.  This allows Facebook to keep under the important 500 shareholder limit, preventing them from additional financial disclosure filings. And as we covered during our ‘Globalization lecture‘ this week, Russian investment firm Digital Sky (DST) made a large private investment in Facebook last year, buying $100 million shares from existing employees and investing another $200 million in new coin for a measly 3.5%, a $10 billion valuation that barely dilutes Zuckerberg’s holdings.  Well played, Mark!

H.P. Sees a Revolution in Memory Chip
Memristors or memory resisters will enable new types of high rise-style “stackable” chips (of the type mentioned in our Moore’s Law & More chapter).  These devices can be used both for processing and storage, maintaining what’s in memory even in the absence of electricity. Researchers think that within three years they’ll have a memristor competitor to flash memory that stores 2x as much storage as flash should at that time. Today’s most advanced transistors are of the 30 to 40 nanometers variety. H.P. now has working 3-nanometer memristors (by contrast, a biological virus is about 100 nanometers).  Getting his full geek on, “Kurzweil-style”, HP Scientist Dr. Leon Chua says “Our brains are made of memristors,” (referring to how synapses work). “We have the right stuff now to build real brains.”

A Personal Cell Phone Tower
Major US mobile network providers will begin offering a sort of personal cellphone ‘tower’ that looks more like a wifi hotspot.  Such so-called fentocells will provide capacity inside buildings or in other areas of poor service.  Fentocells are small enough to be installed just about anywhere, including on telephone poles, street lamps, in old phone booths, and indoors (see photo at left).  Some anticipate this technology may one day provide a 10x boost of 3G speeds.  AT&T will start selling what it calls “MicroCells” this month, offering ‘5 bar’ coverage in a roughly 5,000 sq. foot footprint for approx. $150, $49 if you have a broadband or in-home calling plan, and free if you subscribe to both (kudos to Moore’s Law & scale economies, which pushed these costs down from around $500 two years ago). Sprint offers it’s Airave, billed as a mini cell tower, for $99. Verizon’s “network extenders” are $250. Such devices could have a big impact on places with spotty mobile coverage, like NYC, San Francisco, and Chestnut Hill!

Fresh Direct Goes to Greenwich
The Fresh Direct case (scroll down to ‘Different is Good’) has long been a staple in my classes.  The firm has 600,000 customers in the Greater NYC area, will pull in $300 million in revenue this year, and it’s iPhone app brings in 2.5% of sales.  The firm is so dominant – with lower prices, greater selection, and vastly better margins, that roughly one in three groceries in NYC closed within five years of Fresh Direct’s launch.  Now communities surrounding Greenwich, CT can in on the culinary awesomeness as FreshDirect moves East.  The firm says its raising private money for a new expansion. Here’s to hoping it’s Greater Boston!

Twitter’s Ad Plan: Copy Google
Twitter users rarely visit the site. Most active users post and read tweets using one of the dozens of free applications provided by third parties, such as Seesmic, TweetDeck, and Twirl.  If users don’t visit Twitter.com, that lessens the impact of any ads running on the site.  This creates what is known as the “free rider problem,” where users benefit from a service while offering no value in. The new ad scheme would encourage software and service partners to accept ads for a percentage of the cut, and this could lesson the free rider problem.  Another issue: when users don’t visit a service, it also makes it difficult to spread awareness of new products and features. In a sign that Twitter is reaching out to capture more of its distribution channel it’s just purchased the parent of popular client Tweetie and plans to give the Twitter client away for free.

Fox & Sony Throw Blockbuster a Lifeline
Bummer for Netflix – Fox and Sony are allowing the near-bankrupt Blockbuster to have access to many movies at DVD release day.  Netflix has to wait 28 days post-DVD-release before it can distribute content from the major studios.  Perhaps the studios want a strong rival in the DVD-by-mail space.  There really is no credible competition to Netflix in this space, and I’m not convinced it’ll do much to help Blockbuster in the long term – the firm’d be lucky to survive a bankruptcy restructuring.  Netflix’s success is yet another sign of the winner-take-all / winner-take-most impact when tech runs roughshod over old business models.

Death of a Printer Salesman
We’ve got Software as a Service (SaaS).  How about Printer as a Service?  HP has a growing division offering pay-per-use products that it will keep stocked & healthy.  So far the services business has grown to the point where HP manages 19 billion pages per year. The total value of all managed print services contracts stands at about $5.5 billion, a figure big enough to warrant its own breakout from other printer operations.

Google and Partners Seek TV Foothold
The NY Times says that the search sovereign is developing an open, Android-based platform called Google TV, aiming to bring Web content and services to the living-room screen with the help of hardware manufacturers and software developers. On board already, according to the report, are Intel, which has been looking to get its Atom chip into next-generation TVs; Sony, seeking a jump on its competitors; and Logitech, tapped to work on peripherals, including a keyboard-equipped remote.  Extending Google ad strength to the TV could just be the multi-billion dollar opportunity needed to keep GOOG stock moving up and to the right, even after paid search ads hit their inevitable maturity. As we’ve learned with our TiVo discussion, the key will be securing distribution channels (currently dominated by set-top boxes).  While many of us use ‘TiVo’ as a verb for recording television, few really use TiVos.  There are 1.5 million TiVos and 30 million DVRs. The question is – are TiVo’s patents strong enough to make it an acquisition target? TiVo (which lost over $23 million last year) has, as of this writing, a less than $2 billion market cap That’s just a snack for Google ($24 billion in cash), Apple ($40 billion), or Microsoft ($40 billion) – all who might need to license those patents for genuinely slick TV UI.  TiVo would like to be the Google of television, but I think Google would also like to be the Google of Television.  If TiVo’s IP is a gateway to implementation (and holding it would dumb down rivals), then we might just see that ‘verb’ snapped up by one of the many firms that wants to deliver your smarter TV.

Buzz Kill: FTC Urged to Investigate Google Privacy Flap
When Google introduced it’s Buzz social networking features earlier this year, many users were horrified that their most frequently used Gmail contacts were automatically added to Buzz, allowing others to see who you’re communicating with.  As one report explained, “Suddenly, journalists’ clandestine contacts were exposed, secret affairs became dramatically less secret, and stalkers obtained a new tool to harass their victims. Oops.”  Digital Daily recounts the growing complaint list against Google Buzz. In February, the Electronic Privacy Information Center asked the FTC to investigate, claiming Buzz violated U.S. consumer protection law. Then, outgoing Federal Trade Commissioner Pamela Jones Harbour said Buzz’s rollout was “irresponsible” and accused Google of attempting to “stretch the privacy envelope.” Eleven U.S. lawmakers are now asking the FTC to investigate Buzz, too.  Let this be a lesson on how not to do an IT rollout.  Gotta keep the ‘people’ and ‘procedures’ side of any information system top-of-mind, especially when privacy and sensitive data is concerned.

How I’d Hack Your Weak Passwords
Creepy – read it & see how an expert would hack into your accounts.  Then change your passwords, stat!