Facebook Passes MySpace with Global Boost
Thanks to global growth, Facebook is now bigger than MySpace. When asked about it, Rupert Murdoch (who’s NewsCorp owns rival MySpace) quipped that Facebook was the “flavor of the month“. A bit of May-December trash talk from the septuagenarian to the 24 year old, eh?

Commentary: There are lot of folks wondering if Facebook is the next Google. This should be followed with the question’s second part “or the next Skype“. By that I mean, is Facebook (like Skype) another big, important, impactful business that will earn a sustainable profit, but not Google-esque, coin? Facebook boasts nearly 124 million users worldwide. Skype has over 309 million registered users – both amazingly large numbers (Skype’s active user #s are much lower, but it handles nearly 5% of int’l phone traffic). While Skype will never have substantive ad revenue, in one metric, Skype is better off because its service is peer-produced. Skype calls are forwarded peer-to-peer style, with the users acting as part of the infrastructure. There’s a very small computing footprint needed to support Skype’s huge user numbers. But at Facebook, all that great peer-produced content is stored on Facebook servers, racks and racks of processors that get hot enough to warp the encasing Plexiglas. Facebook is now the largest photo-sharing site online, and receives some 14 million new photos each day, and is already a top video destination, but those are resource-hog services to run. In May, the firm raised another $100 million, with the CFO saying it will go entirely to servers.

And let’s look at how those Facebook ad numbers shape up in mid-2008. The difference between Facebook & Google’s ad prospects comes down to the Hunt vs. the Hike. Google is like a hunt, a task-oriented expedition with a goal in mind. Users click on Google ads enough for this to be the single most lucrative activity among Internet pure-plays. The firm brought in $16 billion in revenue and $4.2 billion in profits in ’07, almost all of this from PPC ads.

But users go to Facebook like they go on a hike. They have a rough idea of what they’ll encounter, but they’re there to explore, look around. They allocate time for fun and they don’t want to leave the terrain when they’re having conversations, looking at photos or videos, and checking out updates from friends. Some reports have Facebook ad rates, which are charged mostly on cost per thousand impressions (CPM) at around 1.5 cents per thousand. That’s terrible! Mashable charges $7 to $33 CPM, Technology Review as much as $70. Granted, audiences for the latter are focused, and Facebook will likely benefit from targeting, but that’s a LOT of ground to make up. And while Facebook is bigger than MySpace, much of that growth came from overseas. MySpace is still twice as big in the US, where ad spending is much higher, and they’ve got $900 million from Google guaranteed over three years (although Google has said they’re having trouble with social networking ads, although the situation may be improving).

I’ve spent a lot of time asking my students how they use Facebook. There is no question that the service is as important to many as Google. And once everyone carries a location-based mobile device (iPhone?) these kinds of utilities will be bonded into how nearly everyone arranges their social lives and contacts. But so far there’s no evidence that really Googly-sized money is in Facebook. Maybe they won’t need it. Even with the Facebook hiring spree, the firm will likely have just 800 employees at year end (there are over 19,000 Googlers). Perhaps Zuckerberg can run lean enough. With two-thirds of users logging on each day, and over half of them spending 30 minutes or more, Facebook has an envious user base, For years, Yahoo has made a fine business out of selling ads to big audiences. But with the Facebook revenue high-end predicted around $350 million this year, it’s tough to see the ‘next Google’ hopes panning out anytime soon. Zuckerberg’s got the cash to experiment & build a compelling model. He’ll need the to grow into the valuation, but give the guy some credit - at 24 he really has built a game changer.

Speaking of which, the $15 billion Facebook valuation figure we’ve heard so much of is almost certainly an overestimate at this point in time. Reports dismissing attempts by Harvard folks claiming Zuckerberg ripped them off let slip that Facebook’s internal valuation is much lower (for info leading up to the decision, Rolling Stone did an interesting background story on the Battle for Facebook). And others have invested at a lower rates since the MS deal.

Once You’re Lucky, Twice You’re Good
Summer Reading Note: I’m usually not a fan of business books (most are too long-winded - for my time I get a better signal-to-noise ratio from the trade press & blogs), but when I run across one that’s entertaining and informative, I’ve got to give it a shout out. Sarah Lacy’s “Once your lucky, twice your good” is a great pick for folks looking for a balance between the interesting back stories and the substantive insight on what’s different about the latest crop of Silicon Valley entrepreneurs. There’s great discussion of how many of the new crop of Web 2.0 entrepreneurs (a term nearly all of them sneer at) have cast a different relationship with the venture community – at times skipping them entirely. It’d make a great supplementary class textbook for any course with heavy Web 2.0 component. I was skeptical. I know the Twitter crowd was really rough on Sarah Lacy during her SXSW interview with Mark Zuckerberg, but the former BusinessWeek writer and personality on Yahoo TechTicker, has done a great job. Highly recommended! I smiled when my copy arrived and I saw Andy Kessler blurbed the back cover (Kessler is also at TechTicker, and his books are required reading in my field study courses – another author I highly recommend).

Jobs WWDC Keynote
The Keynote happened a while back, but there are some items worth mentioning. The fact that the 3G iPhone will be a third the price of the original while offering nearly 3x the speed, is big, but the real story is in the tools. No question Apple sees iPhone as becoming a major platform.

Tools for developers are uniformly praised as being robust, easy to use, and reliable. I’m not a gamer, but game demos were amazing. From the quality of SuperMonkey Ball and Cro Mag Rally (both used the accelerometer for navigation), to a sort of Rock Band for iPhone developed part-time by an insurance company IT guy from the UK, it’s very clear that the iPhone and iPod Touch are about to invade PSP and Nintendo DS space.

Developers have easy access to core location services, so look for a deluge of apps that know where you are, either via the new GPS, or WiFi triangulation for the iPod Touch. Loopt showed a free buddy finder that displayed dots on a map to see who was near you. Click to call. The CEO quipped that the free app means that you never have to eat lunch alone again!

Apps are sold over the App Store in iTunes, available to every developer & every user. Freeware will be passed through at no cost, Apple will keep 30% of any commercial sales – passing the other 70% to the coder. This means a guy in a garage can hack away and get immediate distribution. If the app is good / popular, no marketing budget needed, no sales force, no distribution or inventory issues. Enabling buys from the phone is a key move (apps can be bought over 3G as long as the App is 10MB or less). Imagine being stuck in an airport, with iPhone. Bored? Download a new game & you’re entertained. Winning on the platform is about network effects. That means move early with a killer platform that’s easy to develop on (SDK - check), get them money (iFund - check), and get the product into the hands of as many users as possible (wait ‘til July 11^th).

The rollout will include 70 countries. China wasn’t on the list, but this past May when I was in Beijing I could already data-roam over China Mobile with an affordable plan upgrade from AT&T. Japan will be accessible next year, but Korea was also a no-show (my iPhone was an iPod Touch in Seoul & Tokyo). For the curious, Hong Kong also worked fine. And the rumors about iPhones showing up in Beijing despite official sales are all true. Several executives I spoke with were packing iPhones and mentioned that they’re regularly asked to bring back iPhones on their trips home. BTW: the markets dipped when some speculated Steve Jobs may be sick again (he’s a survivor of pancreatic cancer). Fortune did an interesting article, suggesting no need to worry.

Gates Without Microsoft
Fortune did a great piece on Gate’s career on the eve of his shift in duties (he stepped down from day-to-day operations at the end of June). For a walk down memory lane & a look at what the greatest philanthropist of our time is up to next, check it out.

Why such demand? Mobiles change lives for the better. Think about the farmer or fishermen who can find out crop prices and knows buyers will be at a market, the laborer who was mostly unemployed but with mobile is now reachable by those who have day-to-day work, the mother who can find out if a doctor is in and has medicine before walking three hours with her sick child, or the housekeeper who was “more or less an indentured servant until she got a cellphone”, enabling new customers to call and book her services. A 2005 London Business School study found that for every 10 mobile phones per 100 people, a country’s GDP bumps up 0.5%.

Last WiG we mentioned Mohammed Yunns, the Nobel Peace Prize winner behind the microfinance movement. Microfinance loans helped fuel carrier Grameen Phone Ltd., a firm that has helped over 250,000 Bangladeshi “phone ladies” lift their incomes by helping their communities become more productive. Phone ladies buy a phone on microcredit for about $150 each. The special long-life battery phones allow them to become a sort of village operator, charging a small commission for sending & receiving calls. People are connected if they can’t even afford a phone and whole villages are better off. Grameen Phone now has annual revenues of $1 billion and is Bangladesh’s largest telecom provider. In another ingenious scheme, phone minutes become a proxy for currency. The NY Times reports that a person “working in Kampala, for instance, who wishes to send the equivalent of $5 back to his mother in a village will buy a $5 prepaid airtime card, but rather than entering the code into his own phone, he will call the village phone operator and read the code to her. She then uses the airtime for her phone and completes the transaction by giving the man’s mother the money, minus a small commission.” South Africa’s Wizzit and GCash, in the Philippines, allow customers to use mobile phones to store cash credits sent from another phone or purchased through a post office or kiosk operator. So phones can be used as currency for purchases or payments. Who needs Visa? Vodafone’s Kenyan-based M-Pesa mobile banking program landed 200,000 new customers in a month – they’d expected it’d take a year to hit that mark. With 1.6 million customers by that time, the service is spreading throughout Africa. The ‘mobile phone as bank’ may bring banking to a billion unserved customers in a few years.

Another fascinating trend shows poor spend more for telecom services as their incomes increase than any other category, including health, education, and housing. “What people are voting for with their pocketbooks, as soon as they have more money and even before their basic needs are met, is telecommunications.”-

Inside Microsoft’s War Against Google
Carl Icahn is trying to get Yahoo to bring Microsoft back to the table (the guy’s everywhere - he’s also trying to bring together Blockbuster & Circuit City), but Redmond is on to other things. Specifically, the firm is pushing what it believes is the world’s most sophisticated ad-targeting software, one that can win a share of the growing display ad market. Microsoft feels it has a chance in display ads. It’s getting trounced in search advertising, where Google holds 77% of the market vs. Microsoft’s 5%. Microsoft’s online properties lost $1.5 billion over three years. Microsoft’s 180 person ad sales force is now pushing the firm’s edge, citing particular strengths in targeting ads on remnant space (infrequently-viewed pages several clicks deep), and skills at following clickstream through ad response, customer acquisition, and even customer activity (e.g. did that E*Trade ad produce a higher percentage of active traders?).

Commentary: Balmer has said Microsoft will acquire 20 firms a year for five years. With the mature Windows & Office business gushing $1 billion a month in cash, Microsoft is wise to milk those cash cows to explore markets like SaaS and ad-supported software before others gain big leads. Perhaps instead of shopping in the US, Steve should look to China. China now has more Internet users than any country in the world. And no one knows more than Microsoft that the biggest markets attract the most developers. Not only is there the risk that China giants will crop up with home-grown, out-of-nowhere market changers like Google, Facebook, PayPal, and even Skype (5% of int’l phone traffic, even if it doesn’t gush cash), it’s also important to learn how China’s different. Google doesn’t dominate in China. eBay flubbed its first effort & had to seek a local partner. And Yahoo China is 60% owned by China’s Alibaba. Look to the middle kingdom to learn, diversify, and establish new beachheads in markets that will only grow richer. And DON’T kill those firms the way Yahoo has so many of it’s own acquisitions. Let the successful Chinese firms be fonts of innovation.

With Microsoft, OLPC May Finally Succeed
Speaking of emerging markets and Microsoft: the OLPC ($100 laptop that’s really close to $200, currently) will soon run Windows. Microsoft will offer a version of XP for about $3/box (Windows laptops will be about $10 more & initially require an additional card). A smart move if this can keep millions of Linux-using kids from pushing the penguin as they become skilled. It’s a great move for the OLPC folks, too. Governments that were reluctant to spend coin on training kids in technology used by few desktop consumers in industrialized nations can now see those boxes as a bridge to high-demand skills.

How the RIAA Catches Campus Music Pirates
Ever wonder how the music industry nabs errant students who “share” music? The RIAA contracts a firm called Media Sentry, a sort of bounty hunter that, takes a list of copyrighted songs, automatically runs searches LimeWire, checks a song’s digital fingerprint known as a “hash” to verify it’s a copyrighted tune, then looks at the serving computer’s IP address to see if it’s on a university network. The automated searches bag hundreds of violators a day. Flaged students may receive a threatening “prelitigation settlement letter,” that, as Good Morning Silicon Valley states, comes “with an offer to forget the whole thing in exchange for several thousand dollars and a promise to behave”. The RIAA sees college studnets as soft targets -”The automated takedown notice program we have right now is solely university-focused”.

Stolen Laptop Catches Crooks on Camera
When crooks (pictured) stole the Mac owned by Kait Duplaga, an employee at the Apple store in the Westchester mall, we see that even the bad guys have gotta be geeks, or risk the hoosegow. Duplaga used the “Back to my Mac” feature on her laptop and snapped photos of the thieves, then sent the pics to her e-mail account. “It doesn’t get much better than their bringing us a picture of the guy actually using the stolen property,” Daniel Jackson, the deputy commissioner of public safety in White Plains.

CBS Goes All In
The “Eye Network” acquires CNet for $1.8 billion. This follows a round of several big deals that include HP’s purchase of EDS for $13.2 billion, a deal that would move the firm from fifth to second (behind IBM) in tech services. Comcast has bought Plaxo in a perplexing deal aimed at allowing users to share their love of video with friends. And Intel, Clearwire, Sprint, and Google pledged $14.5 billion in a deal to hasten the rollout of nationwide WiMax (it’ll be neat to see how this plays with Android – the demo I saw this week suggests the platform has the chops to make a real run at the smartphone space).

An Interview with Lenovo’s Chief Procurement Officer
A quick read as we head to Lenovo in Beijing (and for those I’ve taken there in the past). China watchers may also be interested in the interview with the CEO of controversial Chinese carmaker, Chery.

IS Dept. Wins TWiN Award
The IS Dept picked up honors for instructional innovation at this week’s Teaching with New Media (TWiN) awards at BC. Also honored, the Professors Olivieri for work on nursing video podcasts, and IS Professors Kane and Fichman for pioneering work with wikis. Special thanks to those who nominated me, as well. I also picked up a TWiN for the second year in a row. The plaque will grace my new digs overlooking the quad. The IS Department (and my personal office) moves to Fulton 460 this summer.

Side Note: Yunnis was one of 25 visionaries recognized by the Tech Museum of Innovation this past year. In 2006, my Dept. Chair, Prof. Jim Gips, stood on the same stage (alongside Bill Gates) and was recognized as part of that year’s innovators for his pioneering work with EagleEyes.

Google Your Way to a Wacky Office
Includes Video: The Googleplex, Google’s headquarters in Mountain View, CA, is a geek playground, sporting 17 free gourmet cafeterias, a T-Rex skeleton in the courtyard, and Spaceship One model hanging from the lobby rafters. But the new Zurich office shows euro-Googlers have it goin’ on, too. Visit and you’ll see meeting ‘pods’ in the style of Swiss chalets and igloos, fireman poles between floors, a slide to the cafeteria, a library resembling an English country house complete with fireplace, and an aquarium where geeks can escape in a red foam bath and watch the fish. We’ve got several Europeans in this year’s MI021 – perhaps Zurich is calling? Also note: this Friday (April 11) will be “Google Day” at BC, with a several talks from an alum from our Cambridge office (9am, 10am, 1pm, and 2pm in Fulton 250). Students should arrive early.

Also – Google has begun offering developers access to its vast computing resources. The new Google Apps Engine will allow developers to write a web application in Python, upload it to the App Engine, and let it run. The first-gen service is meant to be administration-free, processor scaling and load balancing. There’s lots of talk about ‘cloud computing’ lately. IDG (via the NY Times) offers a quick crib sheet on what ‘cloud computing’ really means.

Apple’s Consumer Market Share Now 21%
Piper Jaffray analyst Gene Munster says that in the consumer PC market, Apple’s market share is up to 21% in the US and 10% worldwide. With the iPhone poised for a corporate invasion, will Macs share make headway in the boardroom, too?

iTunes #1 in Music
iTunes has sold 4 billion songs and has surpassed WalMart to be the US’s largest music retailer – online or off. The rundown: Apple = 19%, Wal-Mart (both online & off) = 15%, Best Buy = 13%, and Amazon (online & off) = 6%.

AdWars: Google’s Green Light
Google now owns DoubleClick, the display ad powerhouse that serves graphical ads on sites ranging from Sports Illustrated to MTV. While much of Google’s market share growth has come at the expense of display ads (whose share of online ads fell from 58% in 2001 to just 21% today), buying DoubleClick makes it kind of display ads, too. The combined Google / DoubleClick now controls 69% of the online ad market. Even if Microsoft & Yahoo came together, they’d still represent less than 22% of all online ads. Despite the market reach, DoubleClick’s revenues are likely under $200 million a drop in the bucket next to the $16 billion Google should rake in this year, but the graphical display ads DoubleClick serves may be key to reaching users who spend more time in social networks and are more likely to notice a banner than click and jump away via a text ad. While DoubleClick is known for observing user surfing patterns and targeting ads across its network, Google has no plans to mix DoubleClick user data, which it says is the property of DoubleClick’s clients, with Google search and user data.

Out of Print
The New Yorker offers a stunning stat – the Huffington Post has an online readership that larger than all but eight newspaper sites. Newspapers are clearly dying. Independent, publicly traded newspapers have lost 42% of their market value in the past three years. McClatchy is down over 80%, the New York Times is down 54%. The Washington Post has saved itself largely due to diversification into areas like Kaplan Test Prep. Even among those sites that have created thriving web groups, revenue doesn’t come close to offsetting ‘dead tree’ losses. And in a world where China-growth sucks up resources, there’s no sign that rising ink, print, and distribution costs will level off. As early as 2004, Newspapers were ranked as the least preferred source of news among young people. To be sure, blogging doesn’t replace the foreign bureau, but blogger influence is on the rise. Talking Points Memo won a Polk award for its tenacious coverage of the US Attorney scandal – one that eventually led to the resignation of Attorney General Alberto Gonzales. On the right, bloggers took down Dan Rather. And refugees of the MSM (mainstream media) are ending up in blogging outfits. The Huffington Post hired Thomas Edsall, a forty-year veteran of the Washington Post, while (the now defunct Fortune Magazine-affiliate) Business 2.0’s Om Malik and Erick Schonfeld are now both full-time bloggers (Malik for his own GigaOm empire, Schofield co-edits TechCrunch). I gave a talk last week where newspaper execs were in the audience. When asked how they can survive I was at a loss. The short-to-mid-term future looks grim.

When a Buyout Goes Bad

The DoubleClick deal shows how private equity firms hope their investments go. In 2005, Hellman & Friedman took DoubleClick private for $300 million. The $3.1 billion sale to Google (and the prior sale of two DoubleClick units for over $500 million) netted H&F over 10x. BusinessWeek’s cover story on the Freescale buyout (Motorola’s old chip unit) shows how ugly things can get when a buyout goes bad. Freescale’s price tag was $17.6 billion, then the biggest tech buyout ever. Very risk when the brutal chip business can see 25% sales swings in a single year. Freescale sales are down 10%, and more doubts linger as Motorola splits off the weakening phone unit (a big Freescale customer). Freescale is burdened with $9.5 billion in debt to pay for the deal, and the firm must come up with $375 million in interest payments every six months. Freescale’s junk-debt now trades for as little as 69 cents on the dollar. Staying competitive in this industry is also expensive, and it’s not clear where this coin will come from. To stay current the firm says it’ll need to spend $1.2 billion on R&D and $400 million for capital expenditures each year. It’s got $1.2 billion in cash on hand, but wont book orders on next-gen mobile phone chips ‘til 2010. Looks like those finance guys could have used a few tech/strategy courses.

VCs Adjust to More Competitors – Fewer Companies
As BCVC (Boston College Venture Competition) gears up for their annual business plan competition on Tuesday April 15th, Wired offers insight into the new VC reality. Last year looked solid for venture capitalists - VCs raised $35 billion in new funds, invested nearly $30 billion, and cashed in $53 billion. But angel investors are elbowing into early-stage companies. In 2006, angels invested $26 billion into 51,000 startups, up from $18 billion in 2003. Large firms are also buying startups – particularly Web 2.0 firms – before they call for a second or third funding round. The result? Deals are smaller & exits return less than the spectacular IPOs of years gone by. Battery Ventures Partner Roger Less is quoted as saying “The companies VCs are putting $500,000 into this year we might have been putting $20 million into in 2000“.

Lecture Notes Infringe on Copyright
Einstein’s Notes runs HowIgotAnA.com, a site that pays students to write down what professors say in class so that the notes can be re-sold to other students in advance of exams. But University of Florida Professor Michael Moulton, who teaches a course on “Wildlife Issues in the New Millennium” that’s cribbed by Einstein, claims the website infringes on the professor’s copyright. The courts have to decide if the service is ‘fair use’, or if it’s an illegal resale of ‘derivative works’.

Twitter as Early Warning Sign for Brands
TechCrunch’s Michael Arrington lost Internet access for 36 hours. Arrington, who runs the 2nd most popular blog, began Twittering about it. Says Arrington “Within 20 minutes of my first Twitter message I got a call from a Comcast executive in Philadelphia who wanted to know how he could help. He said he monitors Twitter and blogs to get an understanding of what people are saying about Comcast, and so he saw the discussion break out around my messages”. But it’s not just Twitter. Bloggers post faster than newsroom deadlines. User-generated Wikipedia entries often show up in the top three search results for major brands. And don’t get caught editing your own wiki pages or your firm’s credibility will be torpedoed. Has your firm considered these issues? Perhaps it’s time for a marketing-IS summit to set policy, response strategy, and pro-active engagement strategies. Even the Department of HHS is war-gaming how bloggers will respond in a flu pandemic. Like it or not, user-generated content will be a fire hose of rumor and fact, error and correction. Organizations ignore these trends at their peril!

Commentary: Free as a business model is hot. Wired’s Chris Anderson (the ‘Long Tail’ guy) recently penned a cover story on “Why $0.00 is the Future of Business”, and our most recent TechTrek had us meeting with execs at Sun, SocialText, Actuate, Google, and several other firms that have free offerings as substantive parts of their business models. The value of ‘free’ and ‘sample’ software versions (trialability) was empirically demonstrated in a paper I co-authored a few years back (warning, like most ‘A-tier’ academic research, it’s dreadfully unreadable – although I suspect ‘free’ will someday change this model, as well). Former students may also remember the example of Seth Godin’s early free eBook - an effort that helped establish the Net guru’s popularity. Expect my forthcoming IS text (chapters & cases) to be made available as a free online version. Look for announcements this Fall. And of course, the course podcasts are always online.

Help Wanted: Adults on Facebook
New privacy controls will be welcome for undergrads who, by senior year, are mortified that employers may have access to their Facebook photos and wall scribbles. Zuckerberg’s firm is on a global growth tear, with two thirds of the site’s 68 million users hailing from outside the US. Get this – Facebook crowd-sourced the site’s translation into other languages. According to Fortune’s David Kirkpatrick (who deserves a shout-out as perhaps the best journalist covering business tech) “Engineers have collected thousands of English words and phrases throughout the site and made each one a separate translatable object. Then members are invited to translate those bits of text into another language. Members then rate translations until a consensus emerges as to which translation is the best.” 1,500 volunteers cranked out Spanish Facebook in a month. It took two weeks for 2,000 German-speakers to draft Deutsch Facebook. How does Facebook ‘poke’ translate? “Dar un toque” in Spanish, “anklopfen” in German, and “envoyer un poke” in French.

For more on crowd-sourcing, see Wired’s article on the NetFlix Prize, another example I often use in class. Also, here’s a Fortune video featuring Accel Partner’s Jim Breyer on investing in Facebook. Says Breyer – “When we’re looking for true break-out companies we will look for entrepreneurs in their 20s. More often than not, those are the 100x-like opportunities”. And Fortune’s Kirkpatrick also recently offered an overview of Web 2.0 for corporate users.

Storming the Campuses
Have you heard of GXC (GoCrossCampus)? The game, founded by four Yale and one Columbia undergrad last September, is a Risk-like offering allowing the virtual invasion of campuses and other locales. Teams march across virtual maps and can include hundreds or even thousands of players. It’s now spread to 24 universities and high schools. The New York Times reports that “[n]ext month, Google will bring GoCrossCampus to its New York office, pitting sales departments against engineering groups over a map of the company’s Manhattan campus.” Armies Representing John McCain, Barak Obama, Hillary Clinton, Ron Paul, and Steven Colbert have also mixed it up online. TechCrunch reports the controversy with rival startup Kirkland North, a Y Combinator backed firm with a similar effort called “Turf”. The NY Times posted a follow-up in the “Bits” blog mentioning Turf, as well.

How do they count you? Let us track the ways
Marketers take note – the NY Times offers a great overview on how websites & ad networks are able to track you online. Why are so many ad dollars flooding online? The Times reports that traditional media “isn’t even in the same league” when it comes to understanding users and targeting ads at those most likely to be receptive to a message. Your IP address and browser cookies allow you to be tagged like an animal, and you’re being watched. Firms are transmitting data back whenever pages are displayed, queries are executed, videos played, and ads displayed. Advertising networks can also track where you go across sites. Google, for example, can follow you wherever AdSense ads are served. Yahoo, Google, Microsoft, AOL and MySpace record a combined 336 billion transmission events in a month, not counting their ad networks. A ‘transmission event’ is when consumer data is sent to the companies’ servers. According to the Times “Yahoo came out with the most data collection points in a month on its own sites - about 110 billion collections, or 811 for the average user. In addition, Yahoo has about 1,700 other opportunities to collect data about the average person on partner sites like eBay, where Yahoo sells the ads.” The tables & graphics in this & the additional article “To Aim Ads, Web Is Keeping Closer Eye on You” are worth a look.

Verizon & AT&T Big Winners in “C” Block
Google didn’t win the “C” block auction, but since the bidding broke $4.6 billion, any carrier using this space has to open their network to third-party devices. Carriers will, of course, still get to charge for their service. What carriers must give up is the ‘Walled Garden’ in which they previously dictated which devices & services could run on their networks. All this is good news for consumers, and likely good news for anyone with a mobile service or hardware platform (Google especially, but also Microsoft, Palm, and after the exclusive AT&T contract expires, perhaps even Apple). Verizon, which ponied up $9.4 billion, won enough spectrum to cover every state except Alaska. EchoStar’s Frontier Wireless nabbed nearly enough licenses to create a nationwide network. That’ll make an interesting combo offering with DirectTV. AT&T also won $6.6 billion worth of small licenses. The government’s total take? $19.6 billion.

The Economist reports how stunningly cheap these networks will be to operate: “One 700-megahertz transmitter costing $150,000 can cover an area of over 1,000 square miles. To do the same using the mobile-phone carriers’ existing 1,900-megahertz equipment requires four cellular towers, and no less than nine for 2,400-megahertz transmitters… building a cellular network with 700-megahertz gear requires anything from one-quarter to one-ninth the normal capital outlay”. Firms should recoup their capital outlay in a year rather than the usual seven.

Now that Google’s gotten its way on “C Block” spectrum, they’re pushing (along with several other tech vendors) for open access to the ‘white space’ between television channels. Technical hurdles in making devices work in this space have yet to be overcome, but more available space is always good for choice, and will likely catalyze innovation.

BC Leaps in Best Business Graduate Schools
Congratulations to Dean Ringuest, and all the other fine folks in the Carroll Graduate School of Management! Our latest US News ranking (#34) is the third-best in Boston and the highest in the MBA program’s history. The Evening MBA program (#15) has been in the top 20 nationally for five years straight.

CBS Facebook Backlash
For a look at how a bad app can snowball into an angry digital mob and a PR nightmare, check out the flack CBS is getting over the Facebook March Madness app. Warning – if you click through to see TechCrunch’s comments you’ll catch some pretty salty language from disgruntled sports fans. Serves as a stinging reminder not to overlook testing & quality assurance before launch. Ouch!

10 Most Disruptive Technology Combinations
PC World offers their take on the most disruptive tech combinations. While they might not meet the Christensen definition of disruptive tech, most of these have had sweeping industry impact. One example worth mentioning that’s not on the list (probably b/c it’s stand-alone) is CraigsList. A quote I regularly use in class is from Scott Herhold of San Jose Mercury News, a paper which saw classified ad revenue drop from $118 million in ’00 to $18 million five years later. Says Herhold, “Craigslist disemboweled us”. Unlike eBooks vs. print, a digital classified ad is way better than a dead tree version. Add in ‘free’ (the price of most of Craigslist listings) and the old way gets crushed.

Long Distance WiFi
Intel figures out a way to beam WiFi signals up to 60 miles out at 6.5 Mbps (any further & the solution runs into problems with the curvature of the earth). A total solution would be about $1,000 & targeted at serving rural areas that are impractical or too expensive to reach/maintain via long haul cables or other technology. The solution has been tested in India, Panama, Vietnam, and South Africa so far and is scheduled for commercial roll out later this year.

Wal-Mart Shuts Down Linux Experiment
Free only goes so far - apparently there was no demand for the free OS on Wal-Mart’s super-cheap Linux desktop offering. Linux still is now where near making a dent in the desktop market. Network effects & switching costs rule. Until the Penguin runs Windows apps flawlessly, or offers Mac-like innovation, it’ll be a non-player on end-user machines in developing countries.

With New Software, iPhone Breaks from the Pack
In just 8 months, Apple’s is now #2 in smart phones with a 28% share, second only to Research-in-Motion’s Blackberry. Amazing, given Microsoft and Palm have been in this space for years. Now Apple’s going for the RIM juggler, and using Microsoft as a partner to make it happen. Come June, iPhones will connect with Microsoft Exchange, corporate software that serves up e-mail & calendar to a huge chunk of businesses worldwide. Lose an iPhone filled with corporate secrets? The new iPhone software will allow IT to remotely ‘wipe’ a phone clean.

Also demonstrated was the iPhone SDK. Apps ranged from the corporate (Salesforce.com and Epocrates for physicians) to games (EA’s Spore and Sega’s Super Monkey Ball). Developer have access to the iPhone’s motion sensors, so games can respond to tilts and jiggles. One demo showed an ‘undo’ was executed when an iPhone was shaken like an Etch-a-Sketch.

Here’s the strategy angle. Firms that make games (Glu, EA) may have to code two to three dozen for all the various handsets out there. But with 4 million iPhones and a projected 10 million by year-end, plus all the iPod Touches, Apple has created a big, feature-rich platform for developers to shoot at. iPhone and iPod Touch programs will be available through the App Store, with Apple taking 30% on the dollar for everything that’s not free. For developers, consider the attach-rate for the mobile store to be 100%. It’ll be an icon on all iPhones & Touches within the next few months.

The final killer? John Doerr, perhaps the Valleys’ best known venture capitalist, gave Jobs a big bear hug on stage prior to announcing the iFund, Kleiner’s $100 million (yes, nine figures to the left of the decimal) investment cache for budding iPhone centric entrepreneurs. This is watershed – a huge platform, a store in every hand, and the money to push the envelope of innovation. And we’ve only seen Gen One of these products. Also worth noting - Fortune now ranks Apple as the ‘Most Admired Firm in America’.

Web 2.0’s Long Road to IPOs
With a recession looming, Facebook, LinkedIn, Slide, and many others are focused more than ever on building lasting businesses rather than running for the IPO exit. But Digg may buck the trend. Several sites have reported that Google and Microsoft have made overtures in the ‘less than $300 million’ range.

Google Sites: Wiki Collaboration
In 2006 Google bought Jotspot wiki. Now the technology has been foled into an effort called Google Sites, a free group collaboration service that will be part of its online software suite Google Apps.

Students Trek to Tech Mecca
The first week in March saw 24 BC undergrads give up Cancun and Fort Lauderdale for a series of 21 visits with over 45 senior executives. The Boston Herald recently profiled BC’s TechTrek, the most extensive program of its kind at any university. We remain deeply grateful to the alumni, parents, friends of BC, faculty, and staff who make TechTrek possible. Our students had a great experience & did us proud!

Best Undergraduate Business Schools
Speaking of which, BC again ranks #14 among the nation’s leading undergraduate business programs.  This puts us ahead of Georgetown (not that we’re counting). The callout states “Real-world lessons, helpful career-services staff, and active alumni network give BC the edge”. Way to work as a team!

Game of the Year
Glad so many of you wrote to say you enjoyed the tip on “World Golf Tour”. Here’s another for the gamers: What’s the best selling computer game of all time? Will Wright’s The Sims. The entire Sims franchise has netted EA over $2.5 billion. Up next? Wright’s latest creation, Spore. And who says gaming is a guy’s world? Spore’s executive producer is Lucy Bradshaw. Looks like Will & Lucy have a hit on their hands – Spore is already winning awards, and it’s not even released yet! Spore will be out for the PC, Mac, Nintendo DS, and some mobile phones, with first versions expected mid-year. Some analysts predict it’ll sell as many as 5 million copies. It had better arrive soon. It’ll be a year late, and (at $35 million to produce) way over budget. The videogame market grew 43% last year, generating almost $18 billion. If Spore is a Sim=worthy successor, look for EA to snag solid growth in ’08.

Toshiba Concedes Defeat in the DVD Battle
The battle for the next-gen DVD format is over & the winner is BluRay. Toshiba, the lead backer of rival HD-DVD, threw in the towel this week, saying it will no longer produce the players. What caused BluRay’s win? The market tipped. Customers sat on the fence until it looked like there’d be a clear winner, and when Warner moved to BluRay, followed by Wal-Mart & NetFlix announcement to back the standard, it was clear Toshiba’s gambit had lost. Another network effects battle for the ages. Looks like Sony (who bundled BluRay players in its highly subsidized Playstation 3) learned from the Betamax failure decades back.

Piggybacking on Facebook
I’ve got to admit as a happily married middle age guy (with two great kids) I always feel weird writing or doing case studies on dating sites, but this article from the NY Times shows how Facebook applets can launch rivals with very little investment. Without spending any money on marketing, Snap’s Facebook dating applications “Are You Interested” and “Meet New People” land higher traffic than established rivals Match.com and Yahoo Personals, all without ANY marketing. Credit the Facebook ‘feed’ feature to spread the word that friends have the app installed, plus the site’s dating demographic sweet spot. 8.6 million people installed the applet, which increased traffic on Snap’s IAmFreeTonight.com dating website twenty fold.

Starbucks to Offer Free WiFi
Chris Bruzzo, the super-smart Starbucks CTO, announced that soon, anyone with one of the firm’s cards set to auto-reload will get 2 free hours of WiFi a day. When I’m on the road with students it’s always been interesting to see nearly two dozen laptop luggers congregate around the free WiFi café. ‘til now it’s never been a Starbucks, where you had to pay for T-Mobile service. With the new AT&T-powered deal, there’s beaucoup incentive for everyone to get an auto load Starbucks card and bring their business to the mermaid. A fast cup & free WiFi, is not only a great value proposition that will drive sales, Starbucks is leading the way for retail WiFi to pick up where municipal efforts have failed. Look for a cascade of free WiFi, particularly if Apple makes it easier to offer location-based couponing ala the super-slick Starbucks/iTunes integration profiled in an earlier WiG. And have you seen the games with the ‘socialize’ option at http://games.starbucks.com/? Pretty neat.

Microsoft will Open ‘Key’ Products
Microsoft is posting some 30,000 pages of technical documentation detailing how Windows, Office, and other products communicate and share information. This kind of information was previously only available under a trade secret license. The European Commission, which has been pushing Microsoft for more openness, issued a skeptical statement. Speaking of the EU, many remain skeptical of whether Europe would allow a Microsoft-Yahoo merger, too. In more openness news, Gates himself announced the Microsoft DreamSpark program. 35 million college students in the U.S., China, Belgium, Finland, France, Germany, Spain, Sweden, Switzerland and the U.K., will get free access to the firms development and design tools. Students get access to the real deal, SQL Server, Visual Studio, and Windows Server, among others. The program will soon be expanded to high schools worldwide, eventually becoming available to as many as 1 billion would-be developers.

Commentary: This is a very smart move. Developers who cut their teeth on Microsoft products are likely to choose those products first when coding. And more software attracts more users, attracting more software (cue the virtuous cycle)… While being proprietary can create lock-in, the Google case actually shows that users stay with remarkably low switching costs, as long as they perceive they’re getting value. Look how easy it is to leave Google – yet no one has done it. By being more open, Microsoft likely doesn’t sacrifice much of the favoritism that existing users will show the firm, plus it gets to bask in the benefits attracted by having a more connected and open product.

BTW: did you catch the Fortune profile on Melinda Gates a few weeks back? What a hero! While her work is just utterly inspring, I must confess that I took particular pleasure when the article revealed Melinda decided on Duke when a Notre Dame professor told her “computers are just a fad”.

Will Ferrell and the End of Media As We Know It
In its first three weeks Funny or Die patched together with just $17,000 in seed money from Sequoia, drew almost 3 million unique visitors, a figure that exceeded the monthly averages of Comedy Central, the Onion, and CollegeHumor.com. Much of this was driven by a clip called “The Landlord”, in which tenant Ferrell is berated by a foul-mouthed toddler (the little girl is the real life daughter of Adam McKay, Ferrell’s Talladega Nights collaborator). In FunnyOrDie’s model, viewers weigh in on whether a video is good. If not, it’s banished to the crypt. Management envisions the model will work beyond laughs, and has launched a skateboarder site ShredOrDie, and a Jeff Foxworthy-esque site MyBlueCollar.com. Some A-list comics, along side a slew of amateurs, have contributed clips to the site. But of the 16,000 videos online nothing has approached the 50 million+ views “The Landlord” has garnered. By August the monthly unique visitors had plummeted 73% from 2,896,000 to 775,000, placing the site outside Nielsen’s top 10 humor destinations. Still, ad revenue for web videos has $776 million, nearly double the ’06 figure. We’re a long way from an end game, one can imagine a site that learns your sense of humor from your ratings and leverages collaborative filtering to the equivalent of an SNL-length clip set where you laugh at every bit.

PC Power in Your Handheld
Nearly all of the world’s smartphones are based on technology from Britain’s ARM. Intel used to provide ARM-based chips, via a technology called xScale, but sold this business to Marvell (which TechTrekkers recognize as a firm founded by Partners from Tallwood Venture Capital). Why would Intel get out of the fast-growing mobile business? To re-enter it with a technology compatible with the same chips in PCs and Macs. Intel’s vision is for code running on laptops to shrink into UltraMobile devices. The first power-sipping x86 chip for mobile devices is code named Silverthorne & is expected to appear in devices the second half of this year. Within two years look for a chip code-named Moorestown. That one will cram 3 chips into one – an x86 processor, a graphics adaptor, and other support functions.

The Blogging Czar of Moscow
The fourth largest website in Russia belonged to a firm started in San Francisco which did nothing to bring it to prominence. LiveJournal, started by SixApart, is so hot that Russians often refer to the word blog by saying ‘zhe-zhe’, a shorting of Zhivoy Zhurnal, or LiveJournal in Russian. In December, Russia’s SUP acquired LiveJournal for an estimated $30 million. Why are blogs so popular in Putin-land? Some say they are “the only platform for free speech in Russia”. Blog on, comrades!

Japan: Google’s Real-Life Lab
Google’s partnerships with the two largest Japanese mobile firms (KDDI & NTT DoCoMo) give it access to some 82 million mobile power-users who turn over their handsets like fashion accessories. The user base is perhaps the world’s most demanding, and Google plans to leverage what it learns overseas to improve mobile experiences like search & messaging for all. I’ll be in Tokyo with our students in May, and look forward to comparing what I see there with my visit to Seoul just a few days later. A visit to Google Korea is planned.

Lenovo Builds the Perfect Laptop
We’ll be back at Lenovo in Beijing this year, too. China’s first global brand (and first World Wide Olympic Sponsor) landed on the cover of BusinessWeek this week, with the ThinkPad x300. While not quite as slim as the MacBook Air, in some configurations the device is less than 3LBS. It was approved the day Jobs announced the Air. BusinessWeek reports a Lenovo exec called out to a secretary ‘get me an envelope’. It fit (barely - its not Air-slim), but it does have an Ethernet jack. BusinessWeek says the only thing slightly less than perfect is the bottom - too many vents & stickers.

Lessig May Run
The Boston Herald phoned the other day to ask me about online politics, and (although this quote didn’t make the paper) I’d mentioned the most interesting thing I’d heard recently was Larry Lessig’s pitch to run for Congress in California’s 12^th District. Check out the YouTube video in the TechCrunch link above. The pitch from Lessig, a Stanford Professor specializing in all things CyberLaw (and frequent Wired contributor), is perfect for the geek set. Deconstructing the video, Lessing makes the case that is akin to “congress has a bug in it, and that a users, we have a responsibility to squash the bug”. The bug is the lopsided influenced of special interests. Look for more from change-congress.org, a movement that will likely catch fire even if Lessig himself doesn’t make the House.

Weird Scholarships
GMSV recently pointed to ScholarPoint Connect’s list of the Weirdest and Wackiest Scholarships You Never Heard Of. The site is frequently down, but is worth a chuckle. Klingon Scholars, anyone?

As for those missing iPhones – we got a WiG report from BC Alum and Nanjing Talk Show Host, Keith Galinelli who says “It is true that here in Nanjing you can pick up [an iPhone] for about 4000RMB and it is cracked to work with China Mobile, no problem. My friend has one and loves it - you can get online and use almost all of the features.”

Media Note: Ted Reinstein and the kind folks at the Chronicle TV program stopped by Fulton Hall last semester to film me “talking geek” with my students. It seems this will make the Wed. 2/6 show. Tune in to Channel 5 at 7:30 pm to catch it.

Microsoft and Yahoo – Happily Ever After?
In Q2 of ‘07 a milestone was achieved: Google’s revenues exceeded Microsoft’s Windows PC sales. Granted, Microsoft earns 74% margins vs. less than 30% for Google, but the rapid growth of Google’s business is astonishing – and attractive. If Redmond wants to move its stock price, it needs new billion-dollar businesses, and it’s put up the cash to play. Microsoft first spent $10 billion building a web business, but has seen its search share steadily decline over the last two years. Last summer, Microsoft spent over $6 billion for aQuantive to get into (among other things) the kind of display ads that will counter Google’s $3.1 billion DoubleClick buy. Now in the boldest move in Microsoft’s history, Redmond is ready to fork nearly $45 billion for Yahoo. While Microsoft’s got a lot of coin – over $21 billion – even they can’t make the purchase without adding beaucoup debt (although the $1 billion a month Windows earns will make it up quickly). And remember, through all this Yahoo wasn’t standing still. During the last year it acquired ad firms RightMedia and BlueLithium, all while rolling out its new Panama ad platform.

So here’s a quick score card: In Google’s favor, the firm has a great brand (it’s a verb), scale (big server farms), and controls 60% of search & that’s where the coin is. Even if firms match Google’s infrastructure, rivals’ smaller numerator (market share) means lower margins. Plus Google has the largest number of text advertisers, and the biggest network of third-party sites in its ad network. There’s no indication at all that this biz is under threat. Now the minuses – lump together AdWords (search ads) and AdSense (Google ads on third-party sites like my own & the NY Times) and the firm is a one trick pony. Granted, it’s a trick that in Q2′07 was more profitable than all of Disney, but at this point text ads are pretty much all Google’s got. GMail is a distant third in e-mail, maps are slick but contribute next to nothing to net income, and outside of search, the firm controls precious few sites that run its ads (e.g. limited distribution channels for ads). Recall Google spent $900 million to run ads on MySpace, and spent nearly $1 billion to install Google tools on Dell PCs. Google’s recent stock swoon is at least partly because it claimed these kinds of investments weren’t as lucrative as hoped. And while no one’s leaving Google, the firm does have low switching costs. Nothing keeps users bolted to Google search, advertisers can take their pocketbooks elsewhere, and third-parties can move from AdSense to a rival (like MS adCenter) by modifying just a few lines of HTML code.

The benefits for Yahoo & Microsoft? Rationalizing costs. The separate data centers these firms rely on are so expensive that they’re being built next to cheap-power hydro plants in the remote Pacific Northwest. If these huge fixed costs can be combined, margins will go up. Also, Microsoft has lots of tricks. Windows & Office gush billions a year, so Redmond can afford a long and costly campaign. Cons: even with a combined 30% share, margins won’t match Google’s anytime soon. Yahoo’s share is sinking and there’s no evidence that’ll change. And while the fixed cost of server farms and some management functions might be rationalized, there’s a lot of redundancy, too. MSN and Yahoo have several competing sites (news, sports, finance). Will these get melded together quickly, holding share while shaving costs? Then there’s the challenge of bringing two very different corporate cultures together. Other than cash, Microsoft’s biggest potential weapon against Google is its distribution channels. If MS can embed search into MS product lines (Windows, Mobile, IE, MSN, and more) without raising anti-trust concerns, it could snare share. This is a big if. The Europeans, almost certainly, won’t stand for this kind of integration. Recall that Europe forced the unbundling of Windows Media Player from Windows, and played a role in making it easier to switch the default search in Internet Explorer. The deal might also be bad for startups & their backers. Where once there were three big, cash-rich net firms as acquirers, there may soon be two.

Google has boisterously opposed the deal. While some reports have it lobbying behind-the-scenes for alternatives, it’s not going to buy Yahoo & likely no one else will pony up the 60%+ premium that Microsoft is willing to pay.

A final note on the bad coverage of Google & sustainable advantge. To be sure, Google is a great firm. The pundits who claimed this was a commodity business back in pre-IPO ‘04 got it wrong. Google now has scale, brand, and at least some degree of lock-in with advertisers & firms running Google ads on their website. Now many of these same pundits are claiming strong Google network effects in search, but they might want to listen in on the podcasts to the left of our site for some 101 on tech strategy. We can say Windows has strong network effects because more Windows users attract more developers who write Windows programs, which in turn attracts more Windows users (a two-sided effect). There’s also a single-sided benefit in that Windows users easily communicate with one another (sharing files, sharing PCs without learning different commands, etc.). What about Google? Well, more searchers attract more advertisers, which attract… hmm … Not much of a feedback there. It’s the rare person that’ll admit they go to Google ‘because of the ads’. There is some network effect for Google’s AdSense business: more advertisers attract more third-party sites wiling to run the firm’s ads, which attract more advertisers - but Google’s users are outside this loop.

Where are those Missing iPhones? Everywhere!
Jobs says Apple has sold 4 million iPhones. AT&T says it’s only activated about 2 million. So where are the rest? The NY Times says employees at big city Apple stores regularly see foreign buyers picking up multiple versions, and comments from Rio to Beijing claim unlocked iPhones are on the shelf worldwide in multiple, unauthorized sales outlets. I’ll be in Beijing, Tokyo, Seoul, and Hong Kong in May, so I’ll pop around electronics stores to see if I can verify reports. If ture, there’s good and bad here. The bad – Apple is said to make roughly $10 per month from each AT&T subscriber. Unlocked iPhones mean no additional revenue. The good news? This shows heavy worldwide demand for the device, even as an EDGE offering. The newly released 16GB iPhone is likely just the first upgrade we’ll see this year. An informal survey of my students shows many ready to buy one as soon as 3G becomes available. Some doubt whether Apple will hit 10 million units by year-end, as promised. If a 3G version hits, they’ll blow by that number.

Amazon Buys Audible
$300 million nets Jeff Bezos Audible, a firm with an 80,000 title lineup, magazine content like the NY Times, and the exclusive audio book firm on iTunes. The Times reports that all audiobook sales in ‘06 were $923 million, with Internet downloads accounted for 14%. ‘07 numbers are surely even higher. More good news – the Kindle has exceeded all forecasts – they can’t keep ‘em in stock. Not bad for a gen-one product. And as further evidence that Amazon sees its future increasingly in bits, not atoms, it has sold off its Netflix-like UK and German DVD-by-mail business. Too bad the Street didn’t appreciate Amazon’s analyst-beating numbers. Full-year profit was up some 150%, to $476 million on sales of $14.84 billion. Analysts didn’t like narrowing profit margins, but this is the same group that has consistently misjudged the firm for years.

Oracle & Sun - Two Software Paths that Converge
Oracle is buying enterprise middleware maker BEA Systems for $8.5 billion, up from an initial bid of $6.7 billion. Also in an acquiring mood, Sun lightened its wallet by $1 billion for an Oracle competitor, open-source database firm MySQL, of Sweden. MySQL is the real deal, powering big chunks of Facebook, Google, Yahoo, and YouTube. Two interesting parts of the angle: 1) Oracle doesn’t control SQL, it’s an open standard, so MySQL is a much greater threat to Oracle than, say, Linux is to Windows. 2) Sun is a big Oracle partner, with lots of Oracle product running on Sun boxes. Silicon Valley is the world epicenter of coopetition.

Google, Facebook Competing for CS Grads
According to TechCrunch, Facebook is said to be offering $92,000 for computer science undergrads, and Google has increased some offers to $95,000. Google offers students with a Masters degree in CS as much as $130,000. Future’s so bright you gotta wear shades.

Online Golf Game Handicaps Productivity
Fortune points out that Internet gaming is what drove Activision into Vivendi’s arms a few weeks back, creating the largest videogame publishers in the world (World of Warcraft plus Guitar Hero, among others). Now the magazine predicts the next big thing – perhaps you’re using it already - is the free & addictive multi-player web-based game, World Golf Tour. The beta site is just a nine-hole prototype, but it goes live in about six months, first with a pixelized Ocean Course at Kiawah Island. Six more courses will be online by year-end, all rendered at $200,000 a pop from shots taken at multiple angles by helicopter or radio-controlled drones. That’s cheap compared to the cost to animate a typical high-end video game. The site hopes to make money through advertising, sponsorships, and premium offerings. You can meet your buddies online for a foursome, no matter where they are, as long as they’ve got a browser. In the Valley you’ll often hear geeks refer to the 9 million member, $1 billion a year, World of Warcraft as the ‘new golf’. Well, the new, new golf may be a form of the old golf.

Students Skip Tijuana for Google
The Heights profile’s BC’s TechTrek experience. Student demand now exceeds slots in both the grad & undergrad program. The undergrad program is 50% female – a rate higher than the IS concentration and the entire School of Management. More evidence of IS appeal at BC – Information Systems enrollments have nearly tripled over the last three years. ComputerWorld, are you getting this? Where’s our feature?

More Kudos for BC

• Undergrad applications topped 31,000 for just 2,250 slots.
• The BC CEO Club was named #1 speaker forum in the country.
• BC ranked #1 in reputation survey.

Each January, the hottest ticket in Technology is for Steve Jobs’ Keynote at the MacWorld Expo in San Francisco. And for the fourth year in a row, Boston College MBA students had VIP access.

The highlight of the show was the MacBook Air. The $1799 base configuration runs an ultra thin 0.16 – 0.76 inch wedge with 13.3 inch screen and 80 GB hard drive (a much more expensive all flash option is available). Also launched, free iPhone software updates and $20 iPod Touch updates that include location-based maps (found via WiFi triangulation), iTunes movie rentals that can be share across devices. And the Time Capsule – a $299 half-gig combo WiFi and backup hard drive that’ll snapshot all the machines in your house via Leopard’s “Time Machine” auto backup & recovery software. Apple TV was upgraded (release two). It now sells for $229, includes rentals, 50 million YouTube streams, and a snappy search & preview interface. CEOs from Intel & Fox were onstage, with Fox announcing DVDs will ship with Apple’s DRM so files can be quickly copied to iPods or streamed over Apple TV.

The event capped the Carroll School’s Graduate TechTrek field study course, a for-credit experience combining class work with a two week field study to Seattle and Silicon Valley. The most extensive program of its kind, the 2008 Boston College TechTrek offered over 25 ‘master class’ sessions with senior executives, entrepreneurs, and financiers, all focused on studying how firms grow from startup to blue chip.

Music Industry Embraces Amazon
Now that Sony BMG has signed with AmazonMP3, Bezos’ firm has every major label offering DRM-free tunes on its site. Apple only has EMI’s unprotected offerings. The NY Times quotes an anonymous music industry exec as saying his firm is prepared to keep copy restrictions on his label’s songs on iTunes for six months to a year while Amazon establishes itself.  Four years ago, Pepsi and Apple teamed up to offer 100 million free iTunes songs. Now it seams Pepsi and Amazon will offer up to 1 billion free songs, as well as other prizes. The effort will almost certainly prompt users to try out Amazon and load the code that’ll dump these free songs automatically into iTunes. The Times says Amazon will pay record companies roughly 40 cents a track vs. Amazon’s usual payment of 65 to 70 cents. CD sales slid 19% in 2007 last year. Even when adding in the 50 million digital albums sold, overall music sales were still down 9.5%. The labels (who we recall settled on charges of price fixing CD sales a few years back) seem willing to penalize their fastest growing channel partner simply to gain more bargaining power.

Buying iTunes Songs at Starbucks
While on the Seattle portion of our TechTrek I had the opportunity to try out the in-store iTunes purchasing system at Starbucks. The system is by far the slickest example of opt-in, location-based marketing I’ve ever seen. Take out your iPhone or iPod Touch, press the iTunes icon, and a Starbucks icon appears in the lower-left of your handheld (image at left). Cover art and album info for the tune being played at that Starbucks immediately shows on your iPhone. During my visit I could check the store’s ‘Recently Played’ list, as well as recommendation lists titled ‘Must Haves’, ‘Coffeehouse Sound’, “Tunes for Toasting”, among others. Starbucks locations featuring the system also sport an LCD screen showing the cover art of the tune being played (left). One click downloads the song. All data are cached locally, so the digital squirt comes at maximum iPhone WiFi speeds. During separate visits I scarfed the Ray Brown Trio song shown, as well as toe-tapper from ‘The Velvet Fog’, Mel Torme. Each was on my iPhone in less than 20 seconds. With songs costing less than a BC vending machine candy bar, Starbucks has turned music into an impulse purchase. A confirmation receipt appeared in my e-mail within a day, even though I hadn’t launched iTunes from my Mac during iPhone recharge. Kudos to the superior work of Chris Bruzzo’s team at Starbucks. Marketers interested in leveraging the iPhone have a world-class example to follow. If you live in a major US city, your Starbucks should have this by year-end 2008.

British Telecom Gets First XBox 360 IPTV
Microsoft’s IPTV software, Microsoft Mediaroom, has reached one million installations worldwide via 19 different providers including AT&T. While these installations all came through more traditional set-top boxes, British Telecom will soon offer Microsoft’s IPTV service through XBox. Those who have seen the service say it’s super-quick, suffering none of the channel surf delays.

Favorites from CES
The Merc’s Dean Takahashi offers up his faves from the Vegas show, including the combo Taser/MP3 player. iPod Stun?

Decode your DNA for $1,000
Sergey Brin isn’t the only entrepreneur in the family. His wife, Anne Wojcicki, has a new startup, 23andMe, which will take a vial of your spit, then offer up an analysis of your chromosomes (you’ve got 23 pair, hence the name). The web-based report indicates ethnic origins, genetic propensity for certain conditions, and IDs mutations that may mean less medical risk. 23andMe isn’t in the diagnosis business - they won’t tell you if you’ve got a disease.  But the site does offer an ‘odds calculator’, among its extensive user-education tools. Also - it’s important to remember that the offering is nowhere close to comprehensive. The 1,400 conditions currently tested represent only about 5% of developed-country diseases. Many conditions are multi-genic, resulting from the ’subtle interplay’ of several genes. We have no idea of the complex relationship between genes and environment that likely determines most conditions. And you might still be just plain lucky or unlucky, regardless of the odds suggested by your specific pattern of A, G, T, and C. Still, for someone with no available genetic history (e.g. adoptees like myself), 23andMe can be compelling, if you can get over the scariness of perhaps learning you’re prone to something nasty and untreatable. Coming soon, social-networking features allowing those with specific genotypes to share findings and insights. And since the test is done on a chip, expect it to get both cheaper and more comprehensive over time. It’s Day One of patient-initiated, gene-based health-care, and this technology will rock the entire healthcare industry, shifting power in the patient-doc relationship, challenging the insurance industry, and forcing legislation.

Google’s Next Big Dream
A BusinessWeek cover story chronicles how Googler Christophe Bisciglia used his ‘20% time’ (the free time Google engineers get to pursue pet projects). This initial side-effort, which started as a ‘Google 101′ class at the University of Washington has morphed into an industry partnership with IBM, backed by the CEOs of both firms. The idea behind the class was to teach students how to solve complex problems by harnessing the increasingly massive computing power of the ‘cloud’, networks of internet-accessible computers programmed to work in parallel. This is how Google ‘works’. Teams of commodity processors are specifically programmed to deliver super-computer results to devices as slim as cell phones, doing everything from hunting down search results to zooming in on satellite images. And this massively parallel computing is being enlisted tackle tasks such as developing medications, predicting weather, fighting spam, simulating crash tests, and finding ads you’ll respond to. Most computer science students don’t know how to code for these problems, but expertise in harnessing cloud-style computing is in desperately high demand. Google’s cloud has perhaps a million or more servers. Four new data centers were added in 2007 alone, at an average cost of $600 million each. BusinessWeek points out that “the cloud never ages. When its individual pieces die, usually after about three years, engineers pluck them out and replace them with new, faster boxes. This means the cloud regenerates as it grows, almost like a living thing.” Google and IBM aren’t alone in this space. Microsoft and Yahoo are also building vast server farms all over the world. Amazon is making a business out of renting computing & storage space on a utility-style payment basis, more akin to an energy utility than a web retailer. And the phenomenon is global. IBM is helping Vietnam develop cloud resources, while Microsoft has a mega cluster going up in Siberia. Are we heading toward a world that leverages one big, massively-parallel computer network? My favorite comment on this comes from Clay Shirky (via Tim O’Reilly). Shirky recalls the (perhaps apocryphal) story of IBM’s Thomas Watson who allegedly said at the birth of the mainframe, that the world would need perhaps five computers. Says Shirky “[Watson] overestimated by four“.

Wired Unmasks Founder of VC Slagfest The Funded.com
Serial entrepreneur Adeo Ressi isn’t a household name, but he’s built and sold three businesses. Over holiday break 2006 he also built a social networking site where entrepreneurs can anonymously rate, rank, and provide feedback on venture capital firms. The once pseudonymous “Ted”, Ressi recently managed his unmasking in a Wired Magazine exclusive. Like any review site, comments on TheFunded.com run the gamut from thoughtful to axe-grinding vitriol. Some data is viewable to all, but full membership in the private community of 3,000+ is approved through a four-point vetting process. The community give-and-take is valuable not only to entrepreneurs, but potentially to the LPs that invest in funds (pensions, endowments, wealth-managers), as well as the host of attorneys, consultants, and advisors that cater to entrepreneurs. And VCs may want a peek at what others are saying about them and their competitors. Wired’s story reveals the heated battle between the haters and cheerleaders. Ressi claims more than 80% of the site’s members are starting their second or third venture-backed company, and have had at least one liquidity event. While there’s no excuse for cruel, crude, or brutish behavior, all VCs are going to disappoint the overwhelming majority of entrepreneurs since such a small percentage of pitches result in deals. And I can tell you from personal experience – if you’re a ‘hard grader’, you’re going to get lower evaluations. Wired offers a great quote from Josh Kopelman, a well-reviewed partner at First Round Capital:”We have looked at 2,000 businesses and said no to 1,980 of them. [TheFunded is] like having a Zagat guide where 90 percent of the people who are writing reviews can’t get a restaurant reservation.”

Commentary: Yet another information asymmetry, flattened by the Net. The rise of sites like this raises interesting questions about long-term social impact. Are these sites likely to produce a generation that is more savvy, more sincere, or more cynical? When nearly everyone is subject to Yelp-style feedback, does this mean we’ll develop thicker skin and a super-sophisticated BS-radar? Or are we likely to become increasingly emotionally fragile? Will we be more self-promoting? Keen to ‘game-the-system’? Will we be more honest or less, perhaps for fear of the increased exposure to taking controversial and unpopular positions?

Apple: More Than Just a Pretty Face
Ahead of MacWorld, BusinessWeek offers new data on the rocket ride that is Apple, Inc.  While sales of electronics rose just 2.7% this past holiday season, Apple is projected to see a 29% during the same period. The Mac operating system now totals a record 8% market share. Since 2004, the catalog of iTunes content (songs, TV shows, films) has increased 600%,. The number of iPod accessories have increased tenfold, to 3,000, with Apple collecting a fee from fees from third party products sporting the “Made for iPod” logo.

Amazonmp3 Scores Majors for DRM-free Music
The labels want more control in pricing. Amazon wants a credible presence in digital music downloads before CD sales crater. So by being price flexible and ‘not Apple’, Amazon has managed to score DRM-free downloads from every major label except Sony. Warner Music, the firm’s latest catch, brings artists from Aretha to Zeppelin to Amazon. And while the firm’s 2.9 million songs are about half of what’s on iTunes offering, Amazon’s top 100 songs are a dime less than iTunes, the top 100 albums are a buck cheaper. Amazon also pays affiliates 4x more than iTunes.  Using the easily installed Amazon MP3 downloader, songs can be dropped directly into iTunes or Windows Media Player. It’s not as elegant as the sublimely integrated iTunes, but it’s still very easy to use. It will be interesting to see how this “minor savings but with a minor inconvenience” impacts market share. Amazon is clearly in digital media for the long haul, and the firm has a solid record of strong, iterative improvement. Their interface and recommendation engines are gold-standard good. But even if Amazon’s share increases to a solid and influential slice of digital downloads, there’s no evidence that consumers will abandon their iPods, or that anyone is closing the innovation gap with Cupertino. Amazon seems to recognize this, too, offering up $15 in free downloads accompanying any digital music player it sells (including iPods). Indeed, iPods were once again the electronics hit of Amazon’s killer-good holiday season. So if Amazon benefits from iPod success, and there’s no real threat to iPod sales, who really gets hurt here? Is it media firms that lose digital sales the longer they keep certain products away from Apple users? NBC’s insistence on pulling TV content off of the #1 platform for portable media looks like the “Biggest Loser”. With the writer’s strike about to drop us into reality-TV hell, why squander a chance to increase interest through downloads by blocking easy access by iPod users? As long as users can’t conveniently download NBC shows on iPods, the content is trapped in a share-limiting prison.

NetFlix, LG Partner for SetTop Box
Reed Hastings announces NetFlix will partner with LG to offer a set-top box capable of downloading movies on demand. NetFlix offers over 6,000 titles via streaming (a fraction of the 90,000+ available via US mail), but streamed titles can only be viewed using a PC. One novel wrinkle: the LG deal isn’t exclusive, so NetFlix hopes other consumer electronics firms will offer boxes with a sort of ‘NetFlix’ channel built into all sorts of gear, from cable boxes to DVD players. The kingmakers in this game would be Cisco (Scientific Atlanta) and Motorola, the two largest cable set-top box providers. But offering NetFlix-ready gear may repel cable firms that would rather keep all content flowing through their own video-on-demand offerings.

Also in the world of video standards battles - Warner Bros. backs Blu-ray, in a potential knock-out blow to rival HD DVD.

IBM Makes Chip Speed Advance
By replacing the wiring connecting multiple cores inside a microprocessor with pulses of light, IBM is on track to shrink supercomputers down to laptop size within a dozen years. Chips may soon contain ‘hundreds, even thousands’ of cores, while requiring only about as much power as a light bulb, a miniscule slice compared to the juice needed to run today’s massively parallel systems.

Intel Looks Beyond Silicon
It’s still about a decade away, but Intel belives new chips will rely on compound semiconductors, material made from a combination of elements from the third and fifth columns of the periodic table. Compound semiconductors made with indium gallium arsenide and indium aluminum arsenide are so promising because electrons zip through these chips faster but requiring less voltage than silicon counterparts. This means chips run cooler and can be shrunk smaller. Moore’s Law outlives silicon!

Amazon: Reinventing the Book
Amazon’s launch of Kindle snagged a Newsweek cover story. At $399, the device is pricy, but Bezos is quick to point out that Kindle is a service as much as a hardware product. The reader itself sports a super-crisp, low-power electronic ink display that sips a fraction of power to redraw the screen. It weighs just 10.3 ounces, has a built-in keyboard, has a tapered width to emulate a book’s binding bulge, and doesn’t run hot, whirr, or beep like a computer. It offers 30 hours of read time on a charge, and fully charges in two hours. Perhaps most impressively, Kindle operates entirely independently of a computer. It leverages a Sprint’s EVDO Whispernet, so users can buy books and get content from just about anywhere a Sprint phone works. The thumb-friendly keyboard can be used to browse books, reviews, and personalized recommendations, as well as to post reviews on Amazon. More than