Apple Introduces $499 iPad Tablet
Apple’s numbers are pretty amazing.  Last quarter the firm’s revenues were $15.6 billion, net income was over $3.7 billion, and while there’s some allowance for accounting changes, there’s little disputing these were far and away the best numbers in firm’s history. When Jobs took the stage to announce Apple’s latest creation, he first brought us up to speed on other numbers: Apple has now sold over a quarter billion iPods, 75 million iPhone/iPod Touch devices, and by revenue the firm is now the largest mobile devices company in the world.  The App Store celebrated its 3 billionth download, it hosts 140,000+ apps, and Apple runs 284 retail stores that hosted 50 million visitors last quarter.  You don’t have to be a fanboy to be staggered by those stats.  Steve Jobs has without a doubt executed the most breathtaking corporate turn around in modern business history.

Up next is the iPad, a 9.7” (diagonally), 1.5 lb, half inch thick, touchscreen tablet with Wi-Fi and Bluetooth.  Most notable, the device has a 10 hour battery life that can sit one month in standby mode, it sports an ARM-based A4 chip Apple designed itself, and models start at $499 for a 16GB version, running up to $820 for a 64GB 3G version that’ll cost another $30/month if you want the AT&T US unlimited data contract. (also see FastCompany’s cheeky iPad By the Numbers).

Apps will make the device.  While the iPad demoed didn’t run Flash (vital for most web video), super-slick demos showed a special NY Times newspaper viewing app, a racing game from EA, and an Apple-hosted iBookstore launched with titles from Penguin, Simon & Schuster, HarperCollins, Hachette Book Group and Macmillan.  Apple will even offer $9.99 versions of its iWork apps, Pages (word processing), Keynote (presentation), and Numbers (spreadsheet).

What’s the market for this?  For all the talk of Apple selling closed systems, there are 140,000+ apps, so it’s open enough for lots of innovation.  And now those experienced developers have a lot more screen real estate to work with.  iTunes will become a major conduit for video (a far better experience than iPhone movies).  But I really look forward to using this as a magazine & note-taking replacement.  I spend a lot of time reading online text, but more often than not I print stuff out, read it on the train or someplace more relaxing than a compute rdesk, then transcribe highlighted notes.  Laptop work isn’t well suited for casual, comfortable, non-desk settings. It is hard to imagine wanting to type on the iPad, but I don’t want it for email – I want to use this as a research tool that fits in where I want to work (although voice input would be nice).  iPad may be the killer device that ergonomically mimics and improves what we do with ‘dead trees’.  If App developers recognize the unique ergonomic experience of the pad as especially better for some tasks than a laptop or phone, iPad innovation will flourish.

Inside Apple’s New A4 Chip
The fingernail sized A4 that powers the iPad is a system-on-a-chip, integrating the microprocessor, graphics, memory controller, and other functions on one piece of silicon.  The smarts came from Apple’s 2008 acquisition of 150 man chip firm PA Semi and it’s notable because as Apple puts it, this is the first time has used an Apple-branded chip.  Many speculate the chip has ARM smarts inside (like nearly all smartphones sold today), but TechReview says no one has corroborated this yet.  There are advantages in having your hardware & software so tightly tied together.  Expect higher speed and more finely tuned power control.  We already see this as an innovation catalyst on the iPhone.  The reason you don’t have “I Am T-Pain” on Android is that Google’s mobile OS has an abstraction layer that slows down code.  With Apple devices developers hit the hardware unencumbered by intermediate layers necessary to run the OS on various devices.

Amazon, Apple and the book publishers: When Elephants Fight
The eBook market also got a taste of what the new post-iPad competitive landscape looks like when Amazon agreed to ‘big six’ firm Macmillan’s demands to raise eBook prices above $9.99.  Amazon originally pulled the ‘buy’ button from Macmillan titles (both digital and print), but eventually backed down. The January keynote suggests Apple’s iPad bookstore will offer publishers higher prices.

Commentary: Some see this as a victory for publishers, but I’ve got to think that long-term it’ll be the market and not the publishers who set prices.  Look to textbooks to be the first impacted.  Pardon the self-serving plug, but I’ll use my own book as an example.  The leading “Intro to Information Systems” books sell for $180 list.  There is absolutely no justification for a book to be that expensive – none.  My own, competing text is free online and $29.95 in soft-back version.  Demand was so strong we had to do a print run in August for beta-testers.  The Jan ‘10 release includes info too fresh for other publisher timelines (e.g. Facebook’s cash flow positive #s, the rise of Farmville).  A conventionally published text cannot yet offer that level of currency (expect at least one more update of my textbook book before the start of the Fall ’10 semester).  Content owners (e.g. authors) will either use innovative publishing models like Flat World (my current publisher), or they’ll go direct. I use a publisher now because they offer me things I’m not good at: editorial, layout, graphics work, hosting, distribution, marketing, and revenue collection. But ALL of those things are WAY cheaper in a digital world.  No one wants to dance on the grave of publishers – good people will lose their jobs as this industry collapses – but we’ve seen this game play out before.  At some point digital distribution will be preferred and pricing and format pressures will force market changes while the giants struggle to stabilize their markets or avoid free fall.

Amazon’s Amazing Fourth Quarter
Don’t count Bezos out – he is the undisputed god-king of e-commerce with naysayers constantly left with egg on their face.  Amazon reported revenue rose 42 percent to $9.52 billion, with earnings at $384 million. The numbers crushed analysts’ expectations. And while eBay also posted good quarterly results, Amazon keeps gaining. Amazon traffic jumped by 9.8% from a year earlier, while eBay’s traffic dropped 2.5%. The Kindle was a wild success with eBooks flying through the ether.  Says the firm: “When we have both editions, we sell 6 Kindle books for every 10 physical books”. The figure is only for paid books — add in all those free Kindle titles and you’ve got an even higher number

So in our recap we’ve got eBay competing with Amazon competing with Apple competing with Google. Auctions, retail, computers, and search are compressing into one bit-based singularity riding on the gravitation pull of Moore’s Law, cheap bandwidth, and slick software.  Everybody in this fight is still big and profitable.  The 2010’s are gonna be interesting!

Well the Wall Part of the Paywall Seemed to Work
Print publishers have been waffling back and forth between squirreling content behind a paywall or letting it roam free and hoping ad revenues make up the difference.  GMSV offers an analysis of recent experiment by the Long Island-based paper, Newsday. In Oct. the firm moved to a $5 a week paywall with print subscribers getting free access, as do subscribers of Optimum Cable (Cablevision owns both the paper & the cable). The firm spent $4 million on a redesign and relaunch to coincide with the rise of the paywall.  So how many subscriptions were sold since launch? “35. You read right — thirty-five.” The print crowd had better pray the Kindle/iPad/Android Tablet war is good for them.

Foursquare Rewards Social Networkers for Location info

James Cameron may be King of the World, but I’m Mayor of Fulton Hall!  At least I am via Foursquare – the hard-to-describe location-based social networking game (here’s a video describing the service, from the WSJ).  And now the site’s beginning to catch on with retailers, using the game as a sort of loyalty program and coupon mechanism.  The Modmarket eatery in Boulder offers free pizza to users who check in 10 times, and a free drink to the restaurant’s current ‘mayor’ (a distinction earned by ‘checking in’ at a location more than others).  Fatburger offers secret menu deals to those who flash proof they’ve checked in via Foursquare.  And Bravo has just announced a deal whereby the TV network will offer players special badges and other prizes when visiting some 500 locations based on the network’s shows “The Real Housewives,” “The Millionaire Matchmaker,” “Top Chef,” “Kell on Earth,” “Top Chef Masters” and “Shear Genius.”  But while Foursquare is a hipster hit, it may need to grow up.  Some of the surly language associated with one badge in particular will certainly limit the game’s broad appeal unless the firm grows beyond its too-cool-for-school roots. I mean, who wants to see THAT tweeted and Facebooked out? Don’t the Foursquare folks realize anything posted to the Net lingers like an unerasable graffiti tag attached to one’s rep?  C’mon, guys!

Lessons from the Nexus One Launch
It was so fun to be on Google’s campus with our grad students on the day the Nexus One launched.  The phone is beautiful, and Android has risen to have more buzz attached to it than RIM’s Blackberry (this must really get Microsoft’s goat, since Redmond’s been chipping at the phone business for years, only to be elbowed aside in the zeitgeist by Sergey and Larry’s pocket push).  BusinessWeek does a post-mortem on the launch and offers some showmanship and marketing advice to Big GOOG.

Google Reveals Chinese Espionage Efforts
Back in 2006 the New York Times ran an excellent story called “Google’s China Problem and China’s Google Problem)”.  I’d regularly recommend this to our students, as it shows what a real managerial ethical dilemma is like.  James Fallows, a guy who knows a lot about both China and Google, brings the tension up to date in an excellent piece in for The Atlantic.  On one hand, censorship turns the stomach of any free-speech Googler. It’s wrong – period.  Speaking freely gets dissidents jailed, clearly not within the “Don’t Be Evil” rubric.  But history also shows that more access to information has pushed dictatorships, particularly those in East Asia, toward more open, welfare-improving democracy – Taiwan, S. Korea, and even Singapore are offered as examples. For years Google agreed to censor results in China in the hopes that being a force in country would result in quicker, more positive outcomes over the long-term than being away. But when Google called China out as the source for a broad-based hacking attack on the accounts of suspected dissidents, the gauntlet was thrown down.  Now folks are wondering if Google’s Beijing office (which our students visited last May) will be shuttered.

From a technical perspective, the hack was shockingly bold. TechCrunch McAfee’s worldwide chief technology referred to the operation as the “largest and most sophisticated cyberattack we have seen in years targeted at specific corporations” and referred to the attack as a “watershed moment in cybersecurity” that the event has “changed the world”. Another quote: “They are in fact the equivalent of the modern drone on the battle field. With pinpoint accuracy they deliver their deadly payload and once discovered — it is too late. … All I can say is wow. The world has changed. Everyone’s threat model now needs to be adapted to the new reality of these advanced persistent threats”.  Security is front-and center important to today’s manager.  Here at the Heights, BC’s own Prof. Sam Ransbotham (himself a recipient of a Google Grant), will be teaching a new managerially-focused information security course next year.

Netflix Sets Q4 Subscription Record
Man, it’s gotta be embarassing to be a stock analyst covering Netflix.  The firm was widely downgraded in mid January only to shock with blowout numbers and get upgraded less than two weeks later. The Netflix Q4 numbers are stunning. Netflix now has a market cap of $2.8 billion, Blockbuster (BBI) is valued at less than $70 million. Profits are at an all time high, the firm added 1.1 million subscribers, the most of any quarter in its history, subscribers at year end 2009 hit 12.3 million, and the firm expects them to be above 16 million by the end of 2010. Valuations are pretty frothy for a firm with $31 million in Q4 profits, but analysts are now wondering if it’s even possible for Blockbuster to turn around.

While major studios have long worked with Netflix, they’re, for more than a year now, become increasingly concerned with the drop in DVD sales.  Netflix has agreed not to rent the Time Warner studio’s movies for the first 28 days after they go on sale. In return, Netflix gets titles for a reduced fee, and gets more movies to offer via its growing Web streaming service. Netflix CEO Reed Hastings has said he expects the firm to ship DVDs until 2030.  And if you own a Wii you’ll soon be able to stream Netflix titles directly to your TV!  Plus check out this really fun interactive graphic from the New York Times – that shows rental patterns across dozens of zip codes. Oh yeah, and those buyout rumors are back.

Mobile Giving Foundation Processes over $35 Million for Haiti
In the days following the quake in Haiti, the Internet was flooded with appeals to donate via mobile devices, say by texting HAITI to 90999.  The three-year-old Bellevue, WA-based non-profit The Mobile Giving Foundation claims to have raised over $35 million in relief funds from these instant giving efforts that later show up on a user’s wireless bill.  Eagles looking to get involved should check out BC’s Haitian Relief Page.

The Light Bulb Goes Digital
Traditional incandescent light bulbs are being phased out in Europe and Australia, and they depart the US beginning in 2012.  While most stores are filled with the twisty-bulb fluorescents, the likely heir is almost certainly LEDs. Expensive now, LEDs have more in common with the manufacture of your laptop than with the Edison-era bulbs that likely fill your home today.  But move over Moore – it’s Hatiz’s Law that applies here – LED efficiency increases twenty fold in a decade, while costs drop ten fold.  Another bonus – they lack the mercury that’s found in “twisty” bulbs. While GE, Osram, and Philips are kings of conventional bulbs, look to new players like Samsung, Panasonic, and LG to get in on a transition wave as jolting as the switch from film to digital.  Today’s LED bulbs are about twice as efficient as the fluorescent ‘twisty’ bulbs, and they’ve have a 3 year payback.  That’ll only get better as tech improves.  Starbucks & Wal-Mart are among the big firms making the switch today. And the same light output sucks about 80% less juice. How’s that for some Green Tech!

Best Companies to Work for in America
Another tech firm tops the list.  NC-based SAS is the world’s largest privately-held software firm.  But even without stock options, the firms perks are so sweet and employees so happy that even legendary Google modeled their efforts after the tar heel geek shop.

Best and Worst Jobs
Tech jobs snare two of the top three “Best” jobs in a recent study.  Geek up, my friends!

A Different Kind of Capitalism
The NPR program “Speaking of Faith” has done a wonderful series on the challenges of world economic development.  The Jan. 28, 2010 program features Acumen Fund CEO Jacqueline Novogratz, discussing how well meaning conventional aid is ineffective, and how her agency is helping create bottom-up entrepreneurs among those earning $4 or less a day. This is a ‘must listen’ segment for any business student, as well as for anyone trying to sharpen their global citizen thinking to identify real ways to empower the poor. The site has lots of supplemental content, an extended interview with Novogratz that goes beyond what aired, and links to other stories in their international development series. Also note Novogratz’ memoir “The Blue Sweater” has been in hardback for nearly a year and will be in paperback this month.

Why Playfish Sold to EA
Electronic Arts bought the London-based gaming firm for $300 million in November, marking the first move by a major game firm into the app-based social gaming category.  Playfish’s CEO Kristian Segerstrale points out that the sale makes sense since established firms with brand recognition are likely to make big, bold, and impactful moves into the space.  Need justification for the statement?  Look at the Top Grossing Apps link within iTunes (note iTunes will launch when clicked).  As of this writing, 8 of the top 10 top grosser were from large, established firms.  And big game firms were behind six of the offerings.

Are You Fun to Follow?
I feel weird putting this up here because my tweets… well… aren’t really all that good.  I’m sure I step over that ‘not so tough to find line’ and often seem overly self-promoting (happens when you’re passionately pushing a project).  And I’m a shameless booster for BC (my apologies to our friends at other universities who read this blog & follow online. Again, I don’t have much separation between professional and personal enthusiasms).  But I really do admire those who tweet well.  The secret virtuoso behind @BostonCollege is exceptional at striking the right mix of friendly, fun, personal, human, and sharing information that BC’s friends (er ‘followers’) would be most interested in.  @Starbucks does a similarly good job – despite being a gargantuan brand, the tweets seem deeply authentic with a genuine desire to be helpful. A recent piece from BusinessWeek describes good ‘tweets’ as capturing one’s world’s details in ways that others will find interesting and fun”. Read the link above for more tips.

The WePay flagship service is a must for anyone who has had to manage group payments (TechTrek’s using the service to collect diner money).  Setting up an FDIC-insured account is as easy as establishing an Evite invitation (The Bancorp Bank invisibly handles the back-end, while WePay charges modest fees for transactions).  The site sends out ‘bills’ and follow-up notices, so treasurers are out of the ‘nag’ game  Users can share transaction history with approved folks so the audit trail is visible to all and deadbeats are exposed. Payment can be through credit card, bank transfer, or even check. WePay will even arrange for a debit card associated with the group. The interface is strikingly elegant and the market is potentially huge.  WePay will streamline the treasury function of student clubs, sports teams, celebration pitch-ins and more.

Gotta love how TechCrunch sums this up “WePay looks like it could be a winner. The company is solving a problem that nearly everyone has had to deal with, and they’ve got a proven way to make money doing it. Look for their launch [in early 2010].” WePay represents the second BC-affiliated business coming out of this year’s Y-Combinator class (‘09 BCVC winner WakeMate was announced late last year). Another fun fact reported by Kirsner, WePay’s new offices are the former digs of rather successful firm with Massachusetts roots – Facebook.  Thanks, Scott, for the BCVC and Facebook shout out!  More evidence that The Heights has become a hothouse of innovation. Go Eagles!

Honest Hollywood, Netflix is Your Friend
Netflix spends about $240 million buying DVDs, and the firm’s 58 distribution centers process approximately 2.2 million DVDs per day.  Studios let Netflix purchase most of those titles well below what they’d charge Walmart, and in many cases studios get a cut of the subscription take based on a title’s success with Netflix subscribers  But licensing content for the “Watch Instantly” streaming service has been a challenge.  Firms are demanding all sorts of compensation schemes, making some titles unprofitable to license if not impossible to obtain (see the Netflix case).  That’s left the firm with only 17,000 mostly weaker titles available for streaming, vs. the 100,000+ titles available on physical DVDs.  But a Netflix deal with Starz brought the cable channel’s upper-tier content (Spiderman 3, Ratatouille) to “Watch Instantly”.  Studios are eyeing this warily – it looks like an end-run around their attempts to milk coin form every stage and every distribution channel in the release window.  And many studios, in part, blame the rise in subscriber services on the fall in DVD purchases.

Netflix is on track to earn some $111 million on sales of $1.67 billion, a 22% gain over 2008. Even more impressive, NFLX is up 90% this year.  So much for the analysts a few years back who once claimed it was ‘an ice cube melting in the sun’.

And “Watch Instantly” is growing.  42% of its 11.1 million subscribers have tried the service, twice as many as last year, and a host of firms are building streaming into TVs and DVD players.  Netflix insists it needs deals like the one it cut with Starz to compete with the deep pocketed rivals, Amazon and Apple.  But now Warner Brothers and other studios want Netflix to accept the same deal Hollywood has with the cable companies. That’s an expense of about $4 each time a new movie is watched, with studios taking 65% to 70% of that coin. Bonus: Want a look inside a Netflix Warehouse?  Check out this video shot during USA Today’s visit to the firm’s Fremont, CA facility.

SCVNGR Raises $4 Million From Google Ventures
Budding BC entrepreneurs were treated to an electrifying talk from SCVNGR CEO Seth Priebatsch last fall at the offices of Highland Capital.  BC Alum & Highland Partner, Prof. Peter Bell is on SCVNGR’s board, and Bell will be joined by Google Venture’s Rich Miner (our Fall ‘08 TechDay headliner).  The $4 million round is a big endorsement of SCVNGR’s location-based gaming model.  Some of you know the firm from participating in QUEST for Innovation, but the firm’s platform has been used by over 400 clients including Boston College, Princeton, Yale, MetLife, and HSBC, with a whopping 91% client repeat rate.  TechCrunch reports ” the startup has crossed “well over” $1 million in revenue in its first full year in business, with monthly revenue up 40% month over month for the last six months. And it’s now cash-flow positive. In other words, it’s one of the first location-based game companies that’s making money.”  Even more fun, the funding round closed on CEO Priebatsch’s twenty-first birthday. Students looking to get in on more killer talks like Highland Day should reach out to Jenna Kazarian in the BC Information Systems Academy, and check out BCVC.

Spredfast Manages & Monitors Social Media Efforts
Early in December, Social Agency, a five-person startup based in Austin, TX, launched a Web-based software package called Spredfast that helps companies manage their social media campaigns. The software not only measures audience size and engagement but also allows coordinated planning and automated posting across multiple social media platforms.  The web-based service tallies up how many people view an organization’s Twitter, LinkedIn, Facebook, YouTube, and Flickr updates, and can also track posts managed by blogging platforms, that include Moveable Type, WordPress, Blogger, Lotus Live, and Drupal. Spredfast will also measures audience interaction, such as the volume of post comments, link clicks, or retweets.  This leads to all sorts of potentially valuable intel to expose the ROI on social media campaigns.  Technology review quotes Scott McCaskill, Social Agency’s co-founder, saying the service allows organizations to see “whether all the time put into doing those things is really helping build brand or product awareness, which kinds of content are most successful, what days and even times of day result in the most traffic or new followers/friends”. The software’s metrics show the best times to post updates, and Spredfast allos firms to test strategies and schedule blog posts, tweets, Facebook updates, and other campaigns.

eBooks: Averting a Digital Horror Story
Amazon claims the Kindle was the firm’s most gifted item ever, that earlier in the fall the device led Amazon sales across all categories in BOTH total dollar sales and unit volume.  Whoa! And with all those eReaders getting unwrapped on Dec. 25^th, Amazon announced that on Christmas the firm sold more eBooks than the dead-tree kind.  But publishers are starting to grumble that Amazon has droped the price of some digital best-sellers to as little as $7.99, vs. the roughly $35 list many hardcovers command. Publishers Hachette and Simon & Schuster are even threatening to delay the release of some digital versions for several months to avoid undercutting higher-priced hardback sales. Some publishers are experimenting with non-Kindle versions for platforms as diverse as the Nintendo DS, while others are offering digital extras like video clips.  Donna Hayes, CEO of Romance publisher Harlequin, offers a contrary view, claiming eBooks (currently at 6% of firm sales) have actually grown the firm’s business and bottom line.  Inside of three years since iPhone launch, I’d estimate that over half of my students carry a smart phone.  eBooks will eventually crush the $180 textbook market and blow open opportunities for open content.  I expect that by the time the class of 2015 arrives, everyone will carry some form of sophisticated eReader to class.

Facebook COO Sheryl Sandberg Gets Disney Board Seat
Steve Jobs may be the mouse house’s #1 share holder, but now Disney will get even geekier with a dash of social networking from Facebook’s COO.  This ‘most powerful woman in business’ is the right hand (wo)man of Mark Zuckerberg and sits on Starbucks’ board.  Disney has had a strong presence on Facebook (screenshot in our Facebook chapter), and owns its own kiddie network in Club Penguin, among other geek cred. Facebook recently hit #1 in US Web traffic. Look for Sandberg to vault even higher on Fortune’s Most Powerful Women list in 2010.

Top Ten IPO Candidates for 2010
The TechCrunch list includes the amounts raised via the private markets.  Facebook, Zynga, LinkedIn, Glam Media, Demand Media, Gilt Groupe, Etsy, Yelp, Tesla, and Skype make up the list.  Incidentally, Zynga’s CEO Mark Pincus was recently interviewed on Charlie Rose. For those curious about last year’s IPO market, the WSJ offers a quick rundown.

How a 40,000+ Employee Company Trains Employees in Social Media
Telstra, the Australian telecom giant, makes social media training mandatory for all the firm’s employees.  A smart move given the breadth of incidents in ‘09, from the Dominos gross-out to the Cisco Fatty incident.  The firm’s entire social media training guide is now online. Telstra’s policy emphasize the basics, of “The 3Rs” – responsibility, respect and representation, but it provides a great foundation for any firm grappling with how to deal with social media, an out-of-bottle genie that ain’t going back in.

Google focuses attention on the Here and Now
How to search Google?  Type, of course, and if you use the mobile app, you can speak your query.  But now using Google Goggles (demo video) you can take a photo of a landmark, store, or a product, and Google Goggles will attempt to use computer vision algorithms to identify the subject, then return relevant search results. More than 100,000 businesses will get a special QR bar code decal for their door. Snap a pick with your phone & the businesses Google Place site will pop up in the browsers. Android phones with GPS will also get a “What’s Nearby” link.  You may have also noticed the ‘real time’ web feeds that started showing up recently.  Parnterships with Twitter, Facebook, and MySpace have allowed Google to index the freshest feeds from these services, displayed about half-way down the search results page.

Google to do Rich Media Ads in Search
The Search Sovereign will also be rolling out video and picture advertisements in search. The chart shows why (expanded in article) – Rich Media / Video ads are simply far more effective at driving purchase intent (and hence, they’ll command top dollar). Google has experimented with promoted videos, call-to-action overlays, and pre-roll ads, and (as we mentioned last week) has partnered with TiVo in order to get access to data on TiVo’s 1.58 million subscribers, in order to refine television ad serving (yes, Google does that, too).

Boxee Unveils Public Hardware Beta
Earlier this semester BC Alum Bijan Sabet of Spark Capital shared time with our MI021 students.  Investments include Twitter, Tumblr, and Boxee, which unveiled a new, beta version of its open-source software, a platform that promises to be a net video integration hub.  Using a simple menu system, you can browse by content partner (Netflix, Major League Baseball, Wired, but Hulu continues to sit this out), plus play music and videos from the service or your PC.  Users can drop all this content into a single queue, even lining up video uncovered and bookmarked while web surfing  Also announced, the Boxee Box, a <$200 set top box to be demoed at CES & available Q2’10.  NYU’s Tisch School of the Arts showed results of a Boxee Apps contest, including Qurious, which shows all sorts of data when action is paused – actors, the music that’s playing, and more.

The Rise and Fall of MySpace
Rupert Murdoch spent $580 million for MySpace because “young people are watching less television and reading fewer newspapers”.  And the deal initially looked killer.  MySpace once was the most trafficked web property, and the firm quickly inked a billion dollar ad-deal with Google.  In 15 months following the acquisition revenue grew 50 fold.  But the firm is now in free fall.  It’s cut 40% of its staff, closed International offices, and now is about 1/3 the size of Facebook.  This Financial Times’ piece reads like an autopsy of what happens when media folks lack the tech-chops and strategic vision to plot and execute. Look at the old media guys who got burned in vision & execution: Terry Semel (Yahoo), Gerry Levin (AOL/TW), Barry Diller (IAC).  Looks like the real winners are the geeks (Jobs, Brin/Page, Zuckerberg).

Comcast-NBC Deal – The Future’s in Content
Comcast has a pipe into about a quarter of the homes in the US. Now it’s got one of the big four networks, a host more cable channels, and a major movie studio. The $13.75 billion Comcast ponied up for a controlling stake also puts it in the theme park business.  Curious this happens during the same week that another big pipe & content deal, AOL/Time Warner, broke up for good.  All suspect a better result for the Philly-based cable giant.

Intel Hopes 48 Core Chip Will Solve New Challenges
It’s an experimental chip, but it boasts 1.3-billion transistors and 48 core, offering up about 10 to 20 times the processing power found inside current Intel processors. And it can operate on as little as 25 watts, or at 125 watts when running at full tilt.  That’s about the juice required by just two household light bulbs. With a chip like this, you could imagine a cloud “datacenter of the future which will be an order of magnitude more energy efficient than what exists today”. Caveat – it’s not a product, but it does hint at what may come. Intel will give dozens of these systems to industry and academic partners so they can work on the real trick — figuring out how best to program the thing.

Game On: Time Inc. Shows of Tabletized Sports Illustrated
AOL may be gone, but Time Warner is showing off the future of the magazine.  Check out this super-slick must-view concept video, showing the ‘magazine’ of Sports Illustrated delivered via a theoretical tablet.  Video is embedded and the static content becomes a rich multimedia experience. Look for games, in-tablet advertising purchasing, integration with fantasy leagues, and more.  It’ll be fascinating to see what happens to production costs in this model (they’ll go up), distribution costs (they’ll plummet), and ads, subscriptions, and other revenue models (the Google rich-media #s above bode well).

Beware Social Media Snake Oil
Some cautionary examples on the over-selling of Social Media from BusinessWeek.  Social Media isn’t a cure-all, but it is an inevitable dynamic firms will need to engage with.  For insights on crafting the Social Media Awareness And Response Team (SMART), see the Nov. HBR article, and slides & podcasts from our MI021 Social Media lecture (apologies for the rapid pace – we were time-crunched by semester’s end).

Best Buy Wants Your Junk
Of course, Best Buy is a believe in Social Media.  The CEO post questions to an employee site called “Water Cooler”, tracks consumer sentiment on Facebook and Twitter, and tweets as BBYCEO (claiming all this helps him in the role of “Chief Listener”).  Since March, Best Buy has also started taking your e-Waste.  Consumers can bring in up to two items per day per household (appliances & TVs bigger than 32” aren’t eligible for free recycling).  Best Buy will share revenue with contracting recycling partners.  It’s not yet a profit center, but the firm hopes to eventually break event (remember there are more precious metals per-pound in electronics than in mined ore).  The real winner is in generating foot traffic – drop off the junk & load up with new stuff from the register.  Best Buy also purchased DealTree, a website to help you sell off your old gear to make room for the new.

Inside the App Economy
Two year old Zynga, the parent of the wildly popular Facebook app game Farmville (as well as Mafia Wars, Texas Hold ‘em, and many other titles) is now a profitable, $100 million business. At 60 million players last month, Farmville now hosts roughly 20 times the actual number of farms in the US. The game’s $5 virtual sweet potatoes alone brought in $500,000 in just 3 days.  These ‘cloud-delivered’ games can squirt out bug fixes, updates and new features each time you log on.  They spread virally.  And they appeal to a wider swath of the population looking for a quick, casual gaming fix rather than the full-on commitment of  World of Warcraft. While Zynga offers its roughly 500 employees Googly perks like an on-site masseuse and free food, others are also ranking the in dough.  That goofy T-Pain iPhone app?  A million dollar business! The market looks so tasty that EA bought app game firm, PlayFish, for $300 million (plus a $100 million earn-out). iTunes app downloads are now over 2 billion, and while Kleiner’s $100 million iFund to fuel app development was an early leader, RIM now boasts a $150 million Blackberry apps fund, and Verizon promises $1.3 billion to invest in apps & related technologies. Eagles looking to get in on the App economy might take Prof. Muller’s mobile app development class this Spring.

YC-Funded WakeMate Helps You Kiss Groggy Mornings Goodbye
We knew ‘em as WakeSmart – three time entrants into the Boston College Venture competition (video here).  Last year they won.  And last week they launched with a coming out party on the nation’s top tech blog, TechCrunch.  BC’s Greg Nemeth is on leave to start the firm (so is his co-founder, Yalie Arun Gupta – the team also won Yale’s competition just weeks after their BCVC victory).  The $50 wristband / mobile phone app combo leverages a science called actigraphy to identify the optimal wakeup time.  WakeMate “monitors your sleep patterns for the 20 minute window prior to that and sounds your alarm when you’re in the lightest sleep mode, which can help eliminate that groggy feeling you sometimes wake up with”.  Sleep treatments are a multi-billion dollar industry, with estimates suggesting some 70 million Americans suffer from sleep disorders.  Blatant plug for our students – perhaps this is a nice holiday gift for your groggy loved ones?  Mine’s on order.  And a shout out goes to the super-hard working BCVC team!  How great to see in just our third year that BCVC has become a conduit for Y-Combinator and TechCrunch launch coverage.  Way to go, all!

Google & Tivo Make a Deal
TiVo will share anonymized viewing data with Google. Google gets accurate second-by-second data on “which TiVo users of which types are watching which content at which times”. In return, TiVo will get revenue, courtesy of Google’s TV Ads service. By examining which ads people are watching, and how long they watch them before hitting fast forward or changing the channel, Google would be able to help advertisers design more personalized promotions and ones that keep user attention for longer. Important and valuable stuff, as research from our BC colleagues Adam Brasel and Jim Gips shows.  A recent Wired article highlights their research, demonstrating that “many DVR users watch ads anyway, and that even fast-forwarders are exposed”.

Google Redefines Disruption: The “Less Than Free” Business Model
A post by Benchmark VC Bill Gurley and expanded on here by Tim O’Reilly are must-reads for those interested in market disruption, the ‘free’ economy, and standards.  Look at what’s happened in the market for providers of turn-by-turn navigation data.  Nokia paid $8 billion for the #1 firm NavTeq, then GPS-firm TomTom paid $3.7 billion for #2 data provider TeleAtlas. What’d Google do?  Grow it’s own equivilent service to give away free to their partners.  Google even kicked things up a notch by offering Street View.   As Gurley points out, “if a disruptive competitor can offer a product or service similar to yours for ‘free,’ and if they can make enough money to keep the lights on, then you likely have a problem.”  Well with $22 billion in cash, Google can do a lot more than keep the lights on.  “Google’s free navigation feature announcement dealt a crushing blow to the GPS stocks. Garmin fell 16%. TomTom fell 21%.”  Now who controls the dominant standard for future apps?  If you’re a startup with a burn rate, will you pay Nokia or TomTom or use Google’s freebie?

Huawei Rattles Telecom Equipment Industry – Rises to #2
The Chinese networking provider Huawei has been a staple example of our class discussions on globalization for several years now, and the firm continues to be on a tear.  Sure it’s easy for a Chinese firm to grow in the red-hot local market, particularly as the security-conscious Chinese government favors home-grown solutions over the stuff made in the West.  But the non-China biz accounted for 75 percent of Huawei’s $18.3 billion in sales last year.  Profits last year rose to $1.2 billion. Impressive for a firm many insist has close ties with the Red Army (an issue that may, ahem, raise a red flag with foreign governments).  Huawei is now a provider to 36 of the world’s top 50 mobile operators, “including Telus in Canada and Cox Communications, Leap and Clearwire, a WiMax operator majority owned by Sprint Nextel, in the United States.”  This year Huawei sales bolted past Alcatel-Lucent and Nokia Siemens, and the firm even scored the L.T.E. upgrade for Norway’s Telenor – a huge coup given the rollout is right in the backyard of European giants Ericsson and Nokia Siemens.

Community Relations 2.0

The folks at Harvard Business Review have given us a limited number of free digital reprints of our social media article from the Nov. ‘09 issue.  I’m happy to send copies to those who are interested, with the infomercial caveat that you should “act while supplies last”.

Community Relations 2.0
Jerry Kane, Rob Fichman, and I, along with Partners Healthcare CIO John Glaser, have an article in the Nov. 2009 Harvard Business Review offering examples and advice for firms seeking to develop a strategic competency in social media.  Sorry we can’t post a free version online, but follow the above URL and the kind folks from HBR provide a way to purchase the article.  It’s also on p.45 of the issue that should be on newsstands now.  The work grew out of consulting that Jerry, Rob, and I did for Partners, and later expanded to include in-depth research beyond healthcare.  More ideas on developing a Social Media Awareness and Response Team (a.k.a. SMART) capability are detailed in the last lecture I gave this semester, which is available via podcast and PowerPoint slides (we were crunched for time, so topics in these last lectures fly past fast, sorry).  An additional primer on social media and peer production is available in an online chapter in my open source Information Systems textbook.  Let me know what you think!

Steve Ballmer at the Boston College CEO Club (Video)
It was great to see the head of the world’s largest tech firm speaking at a Boston College podium!  Fortune’s “Microsoft Reboots” provides a recap of Redmond’s recent history and predicted trajectory.  While last year the firm missed earnings by $1 billion, and Vista has been widely panned, a tough year from Microsoft still has the firm in a stunningly strong position. Various versions of Windows run on 95% of the world’s PCs.  While the firm needs multi-billion dollar markets to push its stock needle north, Ballmer will spend more coin than anyone to reach that goal.  Microsoft $9 billion+ in R&D spending represents about 3% of the U.S. total.  Windows 7 kicks off ‘a year of product launches unlike any in Microsoft’s history’.  Microsoft may spend 10% of operating income over the next four years on Bing. And while Microsoft is frank about Vista’s shortcomings (MS-sponsored Win 7 launch party that I was invited to came with the e-mail tag “Microsoft Gets it Right”), the new OS has been widely praised.  Tech earnings are already way up (Microsoft, Intel, Google, EMC, Neflix, and Apple are among those crushing expectations), and Win 7 should ignite sales of super-slim notebooks and other products as users who’ve waited buying during the recession seem finally ready to open their wallets.  All signs point to Microsoft having a great year.

Apple: All Systems Go
Of course, Microsoft will have to contend with Apple, which posted another killer quarter and introduced a new iMac, a new Macbook, and a new Mac Mini, among others.  In the teeth of a recession, Apple announced it’s second highest quarterly revenue ever, and a 46% jump in profit over last year.  And Apple clearly senses opportunity with the Windows 7 introduction.  New Mac promotions strike at the heart of the Windows 7 migration – the message – hey, if you’re going to have to make a big switch, why not move to the firm that’s #1 in customer satisfaction?

University of iTunes
I’m in my fourth year of podcasting my biz-tech courses (slides and readings from my open textbook project are also online), and it seems many other b-schools are also capturing their courses and bottling them as bits. CNN highlights the University of Cambridge Judge Business School, Fuqua School of Business, and Yale School of Management content all available within iTunes U.  BC is still evaluating options on making publicly accessible content available within iTunes U, so folks looking for my courseware will need to visit my podcast page for now, but we do have some great content from FrontRow and other sources online.

New Approaches to New Markets: Prahalad’s Bottom of the Pyramid is Paying Off
The U. of Michigan prof’s book on big, profitable markets among the world’s 4 billion poorest is now in a revised, fifth year edition.  Students recognize these concepts from our Moore’s Law chapter, which covers the empowering role of the mobile phone among the world’s most economically disadvantaged.  In this Knowledge@Wharton interview, Prahalad highlights mobile use in emerging markets “All the companies in every one of these areas [sub-Saharan Africa, South Africa, Latin America, India, Southeast Asia, and China] — Celtel, Safaricom, MTN, Airtel, Reliance, Globe — all of them are making money. So the first lesson here is if you can find the right sweet spot in terms of business models, there is a really huge and very profitable opportunity.”  India alone is seeing 12 million new mobile subscribers a month. Millions worldwide are transferring funds using mobile phones, bypassing banks (for more, see The Economist’s recent report on Mobile Money).  It’s likely only a generation or two  of Moore’s law advances until most of these folks tote phones that can tap into the kinds of educational content mentioned in the prior story on iTunes U.  The Prahalad interview is chock full of great examples, like how GE took a BOP (bottom of pyramid) $800 EKG machine and used it to replace a $10,000 product used in the US.  We used to talk how special it was when firms had 50% of revenue outside the US. Now firms like Unilever, Nestle, and P&G are seeing 50% of revenue from emerging markets.

We’ll have more inspiring examples from the empowering force of entrepreneurship when the CEO of the Grameen Foundation, Alex Counts, speaks at BC as part of the Clough Colloqium on Nov. 16.  BC students – spend a summer or semester in an emerging market.  Having studied (then latter worked & researched) in Russian and China in 80s and 90s, I can tell you first-hand these experiences will highlight your time in college and shape your insight as a global citizen.  And thanks to the BC alums behind the McGillycuddy-Logue grants for helping this happen for more of our students!

PS: I Love You. Get Your Free Email at Hotmail
The headline facts in the YouTube video promo for Adam Penenberg’s new book read like a snapshot of slides from my lectures!  I haven’t read the book yet, but it’s been receiving great buzz. TechCrunch excerpts a chapter (and of course, Kindle apps that you can now find for iPhone & soon, PC, offer up the first chapter of Kindle books for free).

Those interested in the topic might also find this Network Effects chapter a useful read, with concrete strategies for competing in markets when viral loops are present.  I was delighted when a member of the economics faculty at the highly-regarded U.C. Berkley recently sent a shout-out on using the chapter in his course.  Thanks!

Can Amazon Become the Wal-Mart of the Web?
That’s the question posed by the NY Times, but it looks to me like they’re already there.  And with blowout earnings (sales surged 69% – in a recession!), they’re positioned  to keep their scale, tech, data fueled assets humming defensibly along.  Amazon is no longer ‘that big online bookstore’.  N. American sales media (books, music, videos) have been eclipsed by non-media sales, and if trends continue, the firm’s global sales will follow this milestone later this year.  Amazon’s worldwide media biz grew only 1% in the June quarter, but electronics & general merchandise were up over 35%. The firm has created separate hubs for sporting goods, cellphones and wireless plans, and purchased Zappos for leadership in footwear (all while taking out a highly-regarded firm that was emerging as a competitive threat). And sales of third-party product listed on Amazon now account for 30 percent of all Amazon’s sales (Amazon takes about a 15% cut on these transactions).  That long tail of product listings makes Amazon a first-stop to search for products, prompting Wal-Mart and others to introduce their own third-party listing services.  And Amazon has begun private labeling its own line of products, that now include kitchen items, cables, blank media discs, and outdoor furniture.  The firm’s operations are a marvel.  The data-rich business is able to predict demand months out, keeping stocks low and inventory turns high.  This lets Amazon sell most products way before it has to pay suppliers for them, creating negative working capital, or float, so efficient that the firm’s inventory accounting looks closer to what you’d find in a grocery store loaded with perishables rather than a big-box retailer.  And those warehouses are stocked in non-traditional ways.  Walk around one of Amazon’s 25 worldwide shipping centers and you’ll see diapers next to TVs, bagel chips next to Beatles Rock Band video games. This minimizes the chances that a warehouse worker will choose the wrong item.  And warehouse workers tool around with software-generated maps telling them the fastest path to get items from stock shelves to shipping.  The model is so radically different than what a traditional big box firm has, that many firms have outsourced to Amazon rather than straddle the market with two parellel yet incompatible inventory facilities (shipping many products to one is very different than shipping pallets of products from warehouse to store).  Yet, Amazon’s growth is now seen as such a threat that Target has announced it will stop using Amazon fulfillment by 2011, continuing an exodus that includes Toys R Us and Borders.  This might not matter – it’s doubtful that any late mover can eat into Amazon’s huge scale, data, brand, and technical advantages in the very different business of online fulfillment.  Perhaps these rivals need to see what BC students learn about strategy and technology!

●     ●      ●     ●     ●

A quick thanks to all those who have written to me about this year’s Boston College PSA.  The great folks in BC’s Public Affairs office did a tremendous job (it takes a lot of makeup and camera work to stop my big, bald head from shining too much).  While I’m hugely honored to be in the BC ‘commercial’ running during this year’s sporting events, I’m humbled when I look around and see so many great stories in our IS department. alone. With Prof. Gips’ continued pioneering work with Eagle Eyes (and with Marketing Prof. Brasel, on tech’s impact on marketing), Prof. Fichman’s national ranking in IS research leadership, Prof. Ransbothamn’s Google grant, and Prof. Kane’s emergence as a social media rock star and one of the nation’s strongest young IS researchers, we’ve got a lot of great stories for us to share.

But a PSA highlighting the field study courses is a chance to share thanks with the BC alumni, parents, and so many others that have helped create world-class programs and opportunities for our students.  And the work continues on The Heights.  This semester alone we’ve had campus visitors from alums who manage search quality for Google, security for Facebook, and who have led investment in Twitter, plus the CEO of the largest social media site in the Northeast (wildly highly profitable TripAdvisor).  The week before Windows 7’s launch some of our MBAs and I spent time at a round-table with Microsoft CEO Steve Ballmer.  Steve was in town as part of BC’s top-ranked Boston College Chief Executives Club (see above).  BC’s ascendancy as a biz tech powerhouse owes a great deal of debt to the contributions of so many who care about our University, and we all remain grateful for the opportunities that you provide for our students.  Thanks, again!

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 1/4^th 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.

Google FastFlip
The new release from Google Laps allows users to quickly eyeball stories, flipping browser pages as quickly as one might thumb through a magazine.  Google places display ads alongside the stories and shares the majority of the takewith publishers.  BBC News, The New York Times, The Washington Post, Newsweek, MIT’s Technology Review, TechCrunch, and Salon.com.  Critics abound, but I really like FastFlip.  While certain sites (Newscorp, Gannett) aren’t in, I find the fast flip delivers more than an RSS headline, but pops up much faster than clicking on various links in Google reader.  And being able to quickly scan for photos, charts, and graphs to supplement my lectures is a big bonus over an RSS crawl.  I’ll likely make a scan of the SciTech and Business sections a regular part of my day.  While the saying goes “you can’t beat books for bandwidth”, if you got this on a Kindle-like device and it’d go a long way to approximating the dead tree experience.  The revenue prospects for the current implementation seems sketchy, though. The ads run along the side of the screen next to the forward and backward arrow and seem strikingly easy to ignore, making it unclear if there’s any sort of industry-satisfying revenue in this first-cut offering.

Times Web Ads Show Security Breach
Of course, if you read those ads on the NY Times, you had to worry about being hacked! Bad guys posing as the telecom firm Vonage switched from running the Vonage ads to ones that displayed virus warnings from user browsers.  According to the NY Times “The malicious ad took over the browsers of many people visiting the site, as their screens filled with an image that seemed to show a scan for computer viruses. The visitors were then told that they needed to buy antivirus software to fix a problem, but the software was more snake oil than a useful program.”  Click the image to the right to see what Times users saw an anti-virus popup ad.  The NY Times has also posted notes on what to do if you fell for the scam.  Sites ranging from Fox News, the San Francisco Chronicle, and British tech site The Register, have also been hit with ad-scams in the past.  In class we’ve discussed how it’s essential for firms to regularly audit their supply chain partners.  It seems this complexity now extends to ad firms, as well.

Massive Study of Net Vulnerabilities: They’re Not Where You Think They Are
A study of 15,000 organizations finds the greatest tech security that organizations face stem from unpatched and insecure applications, and that these, not operating systems, have become the primary target of attack.  While Microsoft products are often cited as being full of holes, vulnerabilities have also been found in Adobe Flash & Acrobat, Apple QuickTime, and even Java, among others.  Even worse – the highest priority often get the lowest attention, with firms taking twice as long to patch these vulnerabilities on average. The study also found that most website owners failed to scan for common flaws in web applications, such as SQL injection and cross-site scripting flaws.  Server-side website attacks accounted for 60% of all Internet attacks, and 80% of discovered vulnerabilities. Put these together and it’s a one-two hacking punch.  Bad guys sneak into a server, then exploit application flaws to compromise desktops and laptops.

Misha Glenny on Global Crime Networks
A stunning TED talk from BBC’s Chief Correspondent Misha Glenny on the global mafia. Organized crime now accounts for 15% of world GDP. With the collapse of the Easter Bloc, some 14,000 people whose chief skills were surveillance, smuggling, and killing people, have flooded the job market.  Glenny claims Congolese warlords & global mafia have driven central African conflict that in Congo alone has led to over 5 million deaths – the biggest conflict since WWII.  And the bad guys are online, too.  Glenny links the worldwide mob networks with a need to promote finance reform.  A chilling must-watch.

Apple Launches New Music Products
Cisco bought the maker of the Flip cam pocket video camera for over half a billion. But now Apple has enveloped similar features into the iPod nano.  Interestingly, the nano doesn’t support stills (the censor’s too big for quality pics), but lower-quality video can be shot in the super-skinny music box. Apple also introduced software upgrades for iTunes, the iPod Touch and iPhone.  And the statistics behind Apple’s dominance remain stunning.  Over 30 million iPhones & 20 million iPod Touches sold.  That means app developers now have a 50 million+, and growing, target to shoot at.  Over 75,000 apps are available, accounting for some 1.8 billion downloads to date (remember, Apple crossed over 1 billion app downloads just 5 months earlier).  And there’s no question that iPods are also enveloping the handheld game market.  21,000 of the apps are games, and a host of developers joined Steve Jobs on stage, including EA, which is launching an AppStore Madden.

Polaris Announces Dog Patch Labs
While we once lamented Y-Combinator’s departure from Boston, alternatives are continuing to sprout up.  The latest is Polaris Venture’s Dog Patch Labs, a startup incubation and geek hangout space in Cambridge.  Check out the list for other area ventures fueling the revitalized Boston-area startup scene, and the new ‘recommended resources’ area on my website.  Also check out Scott Kirsner’s take on the best networking events for Boston-area entrepreneurs.  LIkeminded folks might also want to check out the upcoming innovation-focused scavenger hunt The QUEST for Innovation.

YouTube’s Sea of Red Ink Downgraded to Great Lake Status
So how much is Google losing?  The Google Case covers speculation on this.  But it seems the $360 million/a year loss numbers that were widely quoted a few months back have now been downgraded to somewhere below $300 million.

Intuit Acquires Mint for $170 Million
Mint.com, which launched in 2007, is a free tool for tracking income and spending. A sort of next-gen quicken, the site pulls together electronic information from checking and savings accounts, loans, investments, etc., and offers up nifty charts and graphs to show network, spending trends, and other useful info.  The site makes money by pushing out ads and offers from firms that might improve a user’s financial position.  Mint.com was a previous winner of the TechCrunch 50 – the $50,000 startup showdown associated with the popular online news site.

Google Launches Internet Stats Center
This is hugely fun and very useful to anyone teaching where tech & business meet.  Google’s new Internet Stats site culls through third-party sources and presents ‘Twitter-sized’ factoids. Stats are currently broken down into Technology, Macro Economic Trends, Media Landscape, Media Consumption, and Consumer Trends.

The Cloud Hanging Over Skype
eBay has unloaded all but 35% of Skype.  The buyers include Netscape/Opsware/Ning co-founder Marc Andreessen’s new firm, Andreessen-Horotwitz, which ponied up about 1/6^th of its capital for a stake.  Also included in the buying consortium are Silver Lake Partners, London’s Index Ventures, and the Canada Pension Plan Investment Board.  Last year eBay wrote down about a billion in its initial $2.6 billion investment (often reported as an even higher number).  But the new deal re-values Skype at $2.75 billion, total.  But there’s a potential fly in the ointment.  While eBay owned Skype, it apparently never owned underlying technology.  Instead it licensed JoltID, code used both in Skype as well as KaZaA, the music ‘sharing’ software also developed by Skype co-founders Niklas Zennström and Janus Friis.  And now Skype founders are suing, with the potential that Skype could be shut-down.  Was this deal really as risky as it sounds?

The Crime-fighting iPhone
Back before earning my Ph.D, The Fabulous Mrs. Gallaugher and I lived on the boarder of Pittsburgh’s Shadyside neighborhood.  It was a lovely, tree-lined place.  But recently some dudes tried to spread bad in our former haunt.  Thanks to the iPhone, though, the ‘burgh is a bit safer.  After perps mugged a late-night stroller and stole his wallet and 3Gs, the victim turned on Apple’s “Find My iPhone” feature in MobileMe.  Good Morning Silicon Valley reports MobileMe tracked the evil-doers through their shopping trip to a Wal-Mart, a meal stop at Eat’n Park, and then to the gas station where cops dropped a bag of hurt.

VC Behavior in Board Meetings
If VCs say don’t check your laptop, smart phone, or texts in board meetings, that goes for class, too.

New Gallaugher.com Site
I’ve also updated my website for the semester.  Included are links to my online textbook and a Ning-hosted community for faculty using the book.  Definitely worth a look is the new Recommended Resources page listing must-reads as well as Boston-focused tech/startup events & organizations, and some other features.  I hope you like it!

The Cultural Revolution – Which Side are You On?
A must-read for New England tech-folks.  The Globe’s Scott Kirsner offers a run-down of how Boston’s startup culture, long a distant laggard to Silicon Valley, is being recast.  Kirsner lists a number of organizations, events, meetups, and programs.  Heading out to any of these events?  Drop an e-mail or tweet!  Scott’s become a bit of a local hero, single-handedly initiating the Boston-area Innovation Open House series.  The events can be a great way for folks to get Tech Trek style visits with firms and startups not yet on our roster.  Students as well as firms wishing to sponsor visits should join the Facebook group!

How Netflix Gets Your Movies To Your Mailbox So Fast
Talk about secrecy – if you work for Netflix Chicago-area distribution center, you sign a contract agreeing not to divulge its locale.  But the Tribune was invited in to the undisclosed location (no logos, hidden behind another office park building) to provide the inside scoop on what it’s like inside one of the firm’s 58 hyper-automated hubs.  At the Carol Stream, IL facility, 42 people in the 28,500 facility move 60,000 discs daily. 95% of the firm’s inventory is watched each quarter.  The routine looks like something out of a Japanese factory – red-shirted staffers inspect 650 discs an hour, then each 65 minutes, take an orchestrated calisthenics breaks.  To keep the veil of secrecy, unmarked trucks ferry discs to and from the post office. Netflix can’t have customers dropping off their own discs (many who have discovered warehouse locations have tried) – that slows down the process.  Even warehouse staff have to use the mail.  According to the U.S. Postal Service, Netflix is the fastest-growing source of first-class mail.  Good for the USPS and good for Netflix.  The firm recently saw a 21% revenue jump despite being a consumer-brand operating in a recession.  The 27 image slide show that accompanies the story is a great supplement for faculty using my Netflix Case.

Computer Hacking Made Easy
Russian hackers recently went after a Georgian blogger critical of Russian actions in the former Soviet republic.  Hackers launched a bot-net, marshalling thousands of hijacked ‘zombie’ machines (your PC might be one of them), instructing each to to flood the blog, Facebook, and Twitter accounts of their Georgian Nemesis.  While the Russians were after one guy, the attack hobbled Facebook, blog site Live Journal, and completely shut down Twitter.  Thing is, these attacks aren’t tough to launch.  The nefarious can actually rent bot-nets, cloud computing style.  BusinessWeek maintains the sign-up is as easy as renting servies on Amazon. And since there are now dozens of networks with a million or more hijacked computers, demand has pushed prices south.  Know the right bad guys and you can now rent 10,000 machines for just $200 a day, a tenth or less the going rate just two years ago.  For insights on how crooks have tried to use bot-nets in ad-fraud (and how ad-networks can stop this), see the section Search Engines, Ad Networks, and Fraud, in the Google Case.

Arrest Over Software Illuminates Wall Street Secret
Think geeks aren’t paid much?  Without tech talent, Wall Street couldn’t move greenbacks, euros, and yuan. The former head of markets systems at Fidelity Investments says “A geek who writes code — those guys are now the valuable guys”.  Hedge fund The Citadel Investment Group recently revealed that it paid tens of millions to two top programmers over seven years.  But get caught leaving a firm with some of the code you wrote and expect to do time.  A New Jersey man and former Goldman Sachs coder was recently detained and held on $750,000 bail when logs showed that just prior to resigning, he transferred Goldman code out of the firm and into a German server. The Goldman code allegedly gave the firm a tiny fraction-of-a-second advantage in trading.  But the systems and super-fast networks allow automated trading that can play arbitrage and lock-in pricing before slower firms lumber in with more visible market moves.  While GS has aggressively recruited our technology studies these past several years, the alleged perp was not an Eagle!

New Event Pokes Holes in Startups (but in a good way)
DartBoston runs Boston-area cocktail schmooze fests, but has also launched a new webcast called “Pokin’ Holes,”, where you can watch as an entrepreneur gets expert feedback after presenting an idea.  BCVC teams – tune in and get tips!

NetApp’s Georgens, Warmenhoven see Bright Future
Dan Warmenhoven helmed storage giant NetApp, creating the only multi-billion dollar US hardware firm of the past decade in a half. Warmenhoven was Ernst & Young’s Entrepreneur of the Year, one of BusinessWeek’s Managers of the Year, and led his firm to be ranked first on Fortune’s 2009 list of Best Firms to Work for in America.  Dan didn’t just build NetApp, his generosity helped BC build TechTrek.  He personally delivered nine master-classes to our students over the past several years.  Dan was even a keynote speaker at the E. Coast Boston College Technology Council dinner a few years back. Dan leaves NetApp in great shape as he passes the baton and jumps to Executive Chair.  BC remains grateful for all he’s done for us!

Google Now Able to Diagnose Clogged Arteries
Once upon a time you needed to build a sensor network to get reliable traffic data.  But since all but the most basic new mobile phones will be GPS-equipped in the next few years, Google figures the sensors are in your pocket and you can help it crowdsource the data!  Careful monitoring of opt-in participants (you’ll be anonymized, Sergei and Larry clearly understand the privacy concerns of identified tracking) will allow Google to reveal which back roads are backed up, and which are detour-friendly.  A great example for faculty using the Moore’s Law for Manager’s Chapter.

What’s Really Happening to the VC Industry
Bill Gurley of Benchmark Capital offers a spot-on primer on supply, demand, and institutional risk concerns that are plaguing the VC industry.  A great read for anyone trying to make sense of what’s happening in startup financing and how this impacts VCs, LPs, and entrepreneurs.

Video: Social Media Is Bigger Than You Think
This one’ll give you goosebumps – a great video by Erik Qualman, former Yahoo who now runs Global Marketing for education giant EF over in Cambridge.  Definitely worth showing in class as a jump-start to the Social Media, Peer Production, and Web 2.0 chapter.  Run across any other killer video?  Please share your links & I’ll post for all and add to our Chapters page!

myYearbook Finds Profitability In Hyper-Competitive Social Networking World
Two years back my students and I were privileged to have myYearbook.com co-founder Catherine Cook come speak to us.  Catherine started her site as a sophomore… in high school.  Having raised millions in VC coin and rebuffing several buyout offers, it seems the teen-focused site is now pulling in over $1 million a month.  Once named one of BusinessWeek’s Young Entrepreneurs to Watch, Cook’s success continues to inspire.

The Mercenaries in Facebook’s Midst
Facebook has $500 million in revenue, it’s the fourth largest site in the world, and it grew twice as fast as Twitter in July. New revenue streams (such as ‘real gifts’) loom on the horizon. Still, the firm’s $100 million program that allows employees to cash out up to 25% of options before going public, is oversubscribed. The buyout offer comes through Digital Sky – a firm that invested in Facebook earlier in this year at a valuation of $10 billion. The buyout offers value Facebook at $6.5 billion – a nice bit of arbitrage for the Russian investors. Interesting side note: Sarah Lacy, who wrote the BusniessWeek column above & also writes for TechCrunch states that TC has been valued at $30 million!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Data Asset: Databases, Business Intelligence, and Competitive Advantage
The 11^th draft chapter in my forthcoming book is now online. This chapter covers the managerial value of the data asset. Also introduces how data is organized, how it’s created, how it’s stored, and how it’s used. Mini-cases highlight data leverage healthcare and private sector use, while longer cases, rich in current information, are provided: Wal-Mart (for product retail) and Harrah’s (for service industry data leverage, and where a BC alum is CMO). For those interested, the response.  Here is a download map of the first 24 hrs. after the first draft of The Google Case was posted online. We’re very much worldwide!  Thanks SO much to all who have written.  Your support & feedback are much appreciated.

Data Center Overload
Like fight club, the first rule of data centers is: don’t talk about data centers. Well, it seems some folks have – to Tom Vanderbilt of the New York Times. Follow him past biometric hand scans and through the sensor-laden multidoor man trap to get inside Microsoft’s Tukwila, WA data center. These centers are big! Microsoft’s Quincy, WA facility could hold 6.75 trillion photos. Among the interesting facts: “the electricity on a low-end server will now exceed the server cost itself in less than four years”. Microsoft’s Gen 4 data center in Dublin will be built entirely of containers – no walls or roof – using the outside air for much of the cooling. Interesting info for those teaching with the Cloud Computing section of the Software in Flux chapter. Great slideshow to the left of this link!

Zappos Way of Managing
Inc. recently ran a cover story of the rabidly customer-focused Internet shoe selling giant. The firm booked $1billion in sales in ’08, up 20% from ’07, and has been profitable since ’06. And it’s moved beyond just selling its own stuff. In ’06 Zappos launched an outsourcing program to handle sales, custom service, and shipping for other companies (even more direct competition with Amazon). The last December the firm launched an educational website for small businesses that charges $39.95 a month to tap into Zappos execs for advice.

The firm’s shipping center is impressive, with 70 brand new robots allow the firm to ship a pair of shoes in as little as 8 minutes. Says the firm’s CEO (and relentless ‘Twitterer’ Tony Hsieh (pronounce Shay and tweeting @zappos), the firm’s entire business revolves around happiness. Zappos is regularly voted one of best firms to work for, even though it often pays employees below market rates. Trainees famously offered $2,000 to quit after two weeks of training. Managers are required to spend 10-20% of their time goofing off with the people they manage. The customer-focused Zappos prominently displays its toll-free customer support number, offers personal buying service, throws in free socks – anything to put a skeptical customer at ease and generate the best form of advertising – positive word of mouth.

Zappo’s isn’t Hieh’s first success. When he was 24, he sold LinkExchange to Microsoft for $265 million. His Venture Frogs firm also helped start Ask.com and OpenTable (which went IPO earlier this year).

CraigsList Revenue Said to Top $100 Million
That’s a 23 percent jump from the firm’s 2008 take and up hugely from the firm’s $9 million revenue just five years ago. The firm is still mostly free and not at all interested in going public, but with the majority of content free (it charges for some corporate job listings and some real estate ads), CraigsList has been killing conventional newspapers. Newspaper classified ad revenue dropped 29 percent last year.

Digg’s Amazing Business Model Explained
Video clip of Digg CEO Jay Adelson on Digg’s model. Among the info revealed: “We are getting 10-20 times the price for an ad that a social network will get”. “1.5 billion impressions of those Digg buttons across the Web every month and they are growing by 100 million to 200 million a month.” Digg sends 80 million visits a month to major newspaper websites and is helping them to understand how to leverage social technologies to better monetize these users. Jay also talks about funding and having cash. Highland Capital (where two partners BC alums) led the firm’s Fall ’08 round, and Jay kindly spent time with my undergrads last spring.

Dude – Dell’s Making Money Off Twitter!
Dell claims that it’s netted $2 million in outlet store sales referred via @DellOutlet (>600,000 followers), and another $1 million from customers who have bounced from the outlet to the new products site.

How Twitter, Cell Phones, Facebook Make History
In a week when Twitter and Facebook have been a major tool to organize and disseminate information from Iran, it might be interesting to check out Clay Shirky’s TED video from earlier this year.

Microsoft Sues Over Click Fraud
Using techniques described in our Google chapter, Microsoft uncovers click fraud and takes the perps to court. I do have strong reservations over the article’s claim that 1 in 7 clicks are fraudulent, though. Google’s provided academic papers disputing this (referred to at the end of my chapter). Surprising major media hasn’t challenged some of the high rates they’re hearing from fraud auditing firms.

Sales of iPhone 3G S surpass the 1 million mark in 3 days
Headline says it all. So did the press release – made by Steve Jobs, who is back on the job!