It is a sad ending for Xdrive, which now will be best known for giving birth to MySpace (both Tom Anderson and Chris DeWolfe worked there). In an e-mail to staff explaining why AOL is powering down Xdrive and other businesses, EVP Kevin Conroy explained (bold added for emphasis}:

The changes described below are in no way a reflection of the hard work and creativity of the people who built and maintain them.

- Personal Media: Bluestring, Xdrive and AOL Pictures will be sunset. These consumer storage products haven???t gained sufficient traction in the marketplace or the monetization levels necessary to offset the high cost of their operation. We have found that building media management applications within the context of a social experience is a more rapid and effective way to grow the business. For example, today the Bebo audience is uploading over three million photos per day. To effectively grow the XDrive online storage business we would need to focus on subscription revenues vs. monetizing through advertising revenue, and this business model is not in strategic alignment with our company???s goals. We are exploring plans to migrate our users assets to ensure the best possible transition experience.

Subscription businesses are so AOL, circa 1999.

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The project, which combines the music from three of the four major labels (Sony BMG, Universal Music Group and Warner Music Group) with $120 million in cash from MySpace along with MySpace’s existing music properties, is set to launch in September.

Music download sales are just one revenue stream for the property. In addition to sales of DRM-free music (singles, albums, playlists), MySpace Music will likely also offer ring tones, concert tickets, merchandise (tshirts, etc.) and branded advertising campaigns.

But downloads are going to be a big part of total revenue, and while margins on music sales are low, the volume could be massive as MySpace directs its traffic to the new site. The big three music providers are likely the only partners who can handle that kind of flow. And Amazon and Rhapsody need market share to effectively compete with market leader Apple/iTunes.

Another factor in bidding is likely the ability of the partner to easily handle signed, independent and unsigned artists. MySpace has 5 million bands with a presence on the site, so the long tail is a factor.

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Twitter may be experimenting with a new design, but even its new interface still leaves something to be desired. Tweenky, a new mashup that launched in private beta last week, is looking to offer Twitter users an alternative. The site sports an AJAX-heavy design that borrows heavily from Gmail (which isn’t a bad thing), and integrates a number of features that should appeal to Twitter powerusers. To get one of 200 invites, go here and enter the word “techcrunch” as the invite code.

Users send new tweets from a form at the top of the page that includes integration with link-shortening sites snipurl.com and is.gd. The familiar left sidebar is broken into shortcuts, folders, and a list of hot topics taken from search.twitter.com (formerly Summize). Each folder represents a collapsible lists of keywords and Twitter users that you’ve subscribed to. The site also emulates Twitter’s Track function, which lets you keep tabs on a certain keyword over IM or SMS (Twitter used to have this feature, but disabled it earlier this year).

Tweenky isn’t doing anything revolutionary - all of its features are available elsewhere, either from twitter.com or TwitterSpy, which also provides Twitter’s lost tracking feature. But it brings everything together in a cohesive package that is much more intutive than most other attempts we’ve seen. For more information, check out Orli Yakuel’s introduction to the site.

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Piczo, a social network with a strong teenage following, has launched a new developer platform that allows users to quickly generate content from partner sites while helping brands increase their exposure on the network. Piczo has never reached near the popularity of mega-networks like MySpace and Facebook, but it continues to draw a sizable audience, primarily from the teenage demographic. In conjunction with the platform, the site is also launching “Piczo Powered Pages”, which effectively integrate the social network’s features into other sites. Users can try one out at eSPIN, a social network owned by Hearst Magazines that has already made use of Piczo’s featureset.

Included in the API are three new features: “Post to Piczo”, “Create a Page”, and “Piczo Toolbar”. The “Post to Piczo” function allows users to post items to their Piczo accounts from external partner sites, which include Meebo, Widgetbox, and Clearspring. “Create a Page” allows users to use pre-designed templates to generate new Piczo pages containing partner content. Finally, developers will now be able to partner with Piczo to become part of the page editor’s toolbar, which the site says allows them to become an “integral part of the Piczo product.”

Unfortunately, this new platform doesn’t share much in common with the dev platforms seen on Facebook and MySpace. Instead, it’s more like a handicapped API that doesn’t have much flexibility. The site may well expand this functionality over time, but for now, don’t expect to see a developer community spring up around Piczo.

That said, the new features should help make Piczo more competitive with the larger, more popular social networks like Hi5, Facebook, and MySpace. ComScore data shows the site slipping off over the last year, dropping from 12.9 million users in April 2007 to 8.4 million globally in June 2008. However, the site has seen impressive growth in the United States, growing from 655 thousand to 1.4 million in the same time span.

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TheFind, a technology-heavy shopping search engine, is introducing an iPhone application for the site that it says should launch on August 4. The application allows users to search for stores in a region that are selling a particular product (the site claims a database of over 200,000 retail locations).

Because the app hasn’t been accepted to the Apple App Store yet, TheFind is going to hold a beta using Apple’s Ad Hoc application distribution program. If it works well, we hope to be able to offer similar beta programs in the future for other App Store developers.

The first 100 users to go here will be able to sign up for the beta. After submitting their iPhone’s unique device identifier (UDID), users will be able to download the application from the site itself. Typically Apple requires users to download applications through the App Store, but this Ad-Hoc distribution system allows developers to distribute their apps before they’ve been approved to a maximum of 100 users.

TheFind launched in its current format in 2006 (it was previously known as FatLens, a ticketing and shopping site). The new site is a shopping discovery engine, geared more towards finding new products than locating a price for a particular item. In 2007 the site acquired Glimpse, a womens’ shopping destination.

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This follows the news of budget cuts at AOL’s blogging properties earlier today.

At the start of this year I committed to providing frequent updates on the state of our business and our plans going forward. Additionally I have said that we will continue to evaluate our product portfolio and discontinue projects when necessary in order to focus our resources in the right areas. In that spirit, I want to give you an update on the essentials project, an exercise we undertook to help our organization focus on the things that will most effectively contribute to the financial health of our company.

There was a time at AOL when the strengths of our aggregate portfolio of products more than compensated for the weakness of an underperforming product. The realities of the industry and market shifts in online advertising no longer make that possible. Simply put, every product makes a direct impact on our bottom line. With two quarters behind us, it is fair to say that results across the AOL products team have been mixed. And while I expect 2008 to finish stronger than it started, the current situation is that some of our products are doing very well while some continue to struggle. Being responsible to our company and its financial goals means taking a very hard and honest look at each of our products and making the tough business decisions necessary to ensure the long term viability of AOL.

The changes described below are in no way a reflection of the hard work and creativity of the people who built and maintain them.

- Personal Media: Bluestring, Xdrive and AOL Pictures will be sunset. These consumer storage products haven???t gained sufficient traction in the marketplace or the monetization levels necessary to offset the high cost of their operation. We have found that building media management applications within the context of a social experience is a more rapid and effective way to grow the business. For example, today the Bebo audience is uploading over three million photos per day. To effectively grow the XDrive online storage business we would need to focus on subscription revenues vs. monetizing through advertising revenue, and this business model is not in strategic alignment with our company???s goals. We are exploring plans to migrate our users assets to ensure the best possible transition experience.

- MyAOL will complete its HP deployments by the end of October and will transform the MyAOL platform from proprietary to industry open standards. The team will provide ongoing platform maintenance support for our 70 plus HP partner sites.

- Mobile: We have decided to halt further investment in AIMWorld and will sunset MyMobile next year in order to focus on our core revenue producing products (ie, mail, messaging, portal and mapping). Along with these core products we will focus on developing for key devices like the iPhone and the Blackberry. We will also leverage open services through OpenMobile to engage third party mobile developers in order to create new applications and experiences, which will expand distribution without additional internal development costs.

- Video Portal: The AOL Video Portal has seen significant success in growing organic search traffic to about 15 million SEO referrals per month. That said, there is an opportunity to align resources throughout the company and grow advertising revenue by merging the video portal with AOL Programming Video Experiences to deliver a higher value product inside of the AOL Programming channels. The work to merge the two products is currently ongoing and will be completed in early Q4.

We are also aggressively seeking revenue growth opportunities and have identified the following areas as opportunities:

- Toolbar: Accelerate the distribution and monetization of toolbars to drive revenue derived from search and recirculation.

- Desktop: Develop and launch desktop software promotion push to drive increased ROI through the acquisition of new free software users.

- Mail: Increase effective monetization of mail while pursuing distribution opportunities to grow audience and engagement. Drive growth though new ad inventory (Quigo, etc.), ad packaging and sales strategy development, affinity and cobranding partnerships and open services.

- Truveo: Monetize the over 50 million UVs Truveo receives monthly through our O&O site and APIs through a phased approach including banner advertising on the site and monetization of the APIs.

The plans we are putting into place strengthen our position in the industry and improve the finacial health of our business. The evaluation of our product is based on ongoing monthly reviews of each product???s progress compared to our 2008 goals and the market outlook. It is fact based, not arbitrary. It goes without saying that we are all working in a dynamic and challenging industry, but I firmly believe that we can succeed by focusing on reveue opportunities and managing our costs. I hope that you will continue to stay focused and deliver your best work as we strive to continue the transformation of our company.

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While researching the AOL blogs budget cuts story this afternoon we stumbled on a much bigger story unfolding at AOL. The company is planning to shut down a number of non-performing products, say people with knowledge of the situation. The products, which include Xdrive, AOL Pictures, Bluestring and MyMobile, all fall under EVP Products and Marketing Kevin Conroy.

In an email to his staff on July 14, Conroy talked about the upcoming product reorganization. Some products will be shut down. Others will simply be ignored for the most part and fade into obscurity over time. The future of another slow growing product under Conroy, MyAOL, is also in question.

Conroy, who joined AOL in 2001, reports to President and COO Ron Grant. His peers include:

• Joanna Shields, EVP and President of People Networks. Shields is the former President of the recently acquired Bebo, and controls that property as well as AIM, ICQ, Goowy and Yedda.
• Bill Wilson, EVP Programming. Wilson controls AOL’s content sites, including the blogs, News, Movies, Lifestyle, and Celebrity Gossip. He’s seen as a rising star at AOL, with many of his properties growing rapidly.
• Ted Cahall, EVP Platforms and Technologies. Cahall owns search and provides engineering support to the other groups.
• Lynda Clarizio, EVP and President of Platform A. Calrizio runs the advertising arm of AOL.

Conroy has plenty of high profile properties left under his control, but insiders are wondering if each of them really belongs under one of the other execs’ groups. AOL Mail, for example, fits in naturally with social networking and instant messaging under Shields. MyAOL and the AOL client may be better under Wilson’s content group. The toolbar, Userplane and Truveo could all fall under Wilson or Cahall.

The real problem is that Conroy, unlike his peers, lacks any real product direction or mission. He has a hodge podge of properties and services that are either being shut down or really belong somewhere else.

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Microsoft SVP Satya Nadella has announced that the company has expanded its deal with Facebook to integrate Microsoft’s Live Search into the social network. There are few details at this point, but Microsoft will be serving up advertising (both traditional and sponsored search results) through Facebook by the end of the year. Microsoft previously bought a $240 million stake in Facebook at a massive $15 billion valuation, in exchange for global advertising rights.

The news parallels the search deal that Google signed with MySpace in 2006, when it won the rights to provide search and advertising to the News Corp-owned social network, with a minimum rev share agreement of $900 million. Microsoft was also clamoring for search rights on MySpace at the time, but Google managed to beat it out by forging a hasty deal.

Google has had a hard time monetizing the search deal with MySpace, but it blames the under performance on the difficulty with monetizing social networks in general. It’s probable that Microsoft will run into similar issues on Facebook, but it may be just as concerned with exposing users to Live search as it is with generating revenue, at least in the short term. Back in 2006 Michael speculated that Microsoft may have been taking a loss on its initial advertising deal with Facebook, simply to beat out Google and get some traction in the advertising space. It may be taking a similar approach here.

Microsoft is eager to expand its Live search, which has languished far behind Google and Yahoo for years. In May the company launched an apparently desperate move to actually pay users for using the site through its Live Search Cashback program. That initiative has proven to be a success, increasing search usage by 15%. But Live search still trails Google and Yahoo by huge margins, accounting for only 9% of all search queries (Yahoo and Google account for 21% and 62% respectively).

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Our own Michael Arrington joins Wired’s Steven Levy and the Wall Street Journal’s Walt Mossberg on last night’s Charlie Rose show. Most of the discussion was on the iPhone 3G and how Apple continues to turn the mobile world on its head. At the end of the discussion the trio also talk about Yahoo’s future.

This is Mike’s third appearance on the show this year. See his March and May conversations with Rose as well.

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One area that seems to be immune from the cuts: The Tech Network (including Engadget), which continues to grow like a weed and drives substantial revenue.

Employees across AOL are being asked to cut down on expenses as much as possible, even minor ones. One person complains that they’re cutting things like free bagels, and are being asked to limit travel as much as possible. Are more big layoffs coming across AOL as it gears up for a sale to Yahoo or another suitor? We’re looking into it.

Another explanation for the cuts, says one source: this is standard Q3 belt tightening. The blog properties were simply running way over budget and needed to be pruned to keep things under control. In addition to looking for a buyer, AOL is also concerned about the economy in general and trying to stay ahead of the curve to avoid more painful cuts down the road.

Update: We received an email from someone who says they are an AOL blog writer:

Obviously, I can’t give my name (and it’s not the name on this account, either), but as a writer for one of the blogs in AOL’s Weblogs, Inc. Network, I can tell you that the cuts are going pretty far beyond free fucking bagels. Pardon my language, but what we’re going through for these sites is beyond anything that could possibly be considered reasonable.

I don’t know what’s going on with Engadget and co., or the lifestyle blogs, but the gaming bloggers were told yesterday to STOP ALL POSTING. Now, after the network bosses went into the fray, our two biggest sites are cleared, but the rest of the sites are working on a 5 posts/day deal, so long as those aren’t written by international bloggers, but only US writers. Anything above and beyond that is unpaid and will be written under a staff account. Nearly everyone has agreed to post for free, including columnists, in the hopes that we will all still have jobs come August 1, when they’re telling us we’ll be back — just on a smaller budget.

Of course, we’re all speculating that this means there’s definitely a deal in the works, because there doesn’t seem to be any reason for AOL to kill the properties when the Joystiq Network was enjoying the biggest traffic month in its history. Either they’re selling us, or selling out completely, because they don’t care. If we didn’t have so many people who considered the job a labor of love, all the gaming network blogs would die.

Don’t know if any of this is usable, but I’d like to see the information out there if possible, because what AOL is putting us through is simply ludicrous.

I will answer questions if there are any that I can answer.

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On a VC panel at MobileBeat a right now, Accel partner Richard Wong points out:

Apple is the new gatekeeper. It is a walled garden. Hopefully it is a more benevolent one [than the mobile carriers].

So far Apple is more benevolent than the carriers. It takes only 30 percent of paid apps, versus the 40 to 50 percent that carriers take for apps and services distributed through their phones. And Apple is taking almost nothing from ad-supported apps.

There are rumors of Apple blocking apps that compete with its core businesses and applications. Apple cannot play favorites if it wants to become the dominant mobile Web platform.

(Photo by Paul Englefield).

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The Amsterdam meetup, co-organised with eBuddy, was a blast. As part of the meetup I organised an impromptu pitch session for startups. One of the issues with the European scene is that there are two few opportunities for startups to pitch so anything to “work” that pitch muscle is useful practise for startups over here.

So we heard from etrip.nl - a sort of Kayak, / Skyscanner competitor; kipjes.com - human search engine (browser extension) which is in stealth mode; gemzies - “Digg for About.com style experts”; Treasuremytext - A way to save and archive SMS messages to the Web (more); Tunin.fm - mobile internet radio with a new compression technology; Mads.com - mobile ad serving, DART for mobile; Wiseline - A competitor to sites like dandelife and miomi; and Viuer - a scripted Ed TV show where users vote on the scenario. I also met with irlconnect, Wakoopa and TheNextWeb guys.

Like many European cities, Amsterdam is packed with a highly educated population that makes for a fertile ground for talent. But just as in the rest of Europe, getting funding for that first startup is still no easy feat, especially in the current environment. It makes me think that there may be a role for a Y-Combinator style micro-finance project out here. Seedcamp is one such competition which is making great waves, but we need more, much more.

See after the jump for pictures and more info on our generous event sponsors, eBuddy, Q-go, WatchMouse, E.Factor and Blurb.

GOLD SPONSORS

ebuddy

eBuddy ???eBuddy created the world???s first independent, web browser-based IM service in 2003 and extended the service to mobile in June 2007. eBuddy enables 16+ million unique monthly users with AIM, GoogleTalk, MSN, MySpaceIM and Yahoo! IM accounts to chat free of charge in one, aggregated interface without having to download any application or software. Supporting 550+ different mobile devices, eBuddy???s mobile IM solution offers both a J2ME client and a browser-based IM service, and currently allows more than 2 million unique monthly users access on their mobile phone, independent of carrier or device via WAP or mobile internet browser.

Q-go ??? Natural Language Search company

Q-go ??? The world???s first Natural Language Search company: Founded in 1999, Q-go has grown to become a leading supplier of Natural Language Search solutions, providing a powerful, natural language search engine for Internet and intranet sites based on natural language processing. Q-go???s NLS Product Suite supports all major Western languages, and offers a variety of online service solutions to help financial institutions, airlines, telecoms, government agencies, insurance, and other companies dramatically improve their customer service levels while lowering costs. The answers provided by Q-go are comparable to those of call centers in terms of consistency, completeness and quality resulting in a more efficient and cost-effective solution for organizations.

WatchMouse - Site Performance Monitoring

WatchMouse offers web-based solutions to monitor the performance and security of your site. By simulating regular visits to your website from its worldwide monitoring network, WatchMouse provides you with accurate reports on how well visitors from all over the world can interact with your site. Based on these checks, WatchMouse can tell you if your visitors can still reach your site, if the basic interactions and click paths still work, and whether they do so within the performance limits you set out. Today, WatchMouse watches tens of thousands of sites in over 70 countries.

BRONZE SPONSOR

E.Factor

E.Factor is a global platform that connects entrepreneurial people with like-minded souls, both online and in person.

blurb

Blurb is a creative publishing platform which enables every blogger, artist, marketer, photographer, traveler, entrepreneur and poet to create and sell their own book.

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This morning at that OSCON conference David Recordon of Six Apart will announce on stage the formation of the Open Web Foundation. The new foundation is about providing a home for the development and ratification of web-related standards efforts. The foundation will be focused on developing the technical specifications of protocols used for communication and inter-operability between applications on the web. The foundation will also set out the legal terms and best practices for the use and transport of both private and public data, and the usage of web services.

We first reported on the announcement on Tuesday of this week after Chris Saad, the co-founder of the Data Portability project wrote a post about the announcement. The Data Portability project is focused on the evangelism of data openness and transparency, while the new Open Web Foundation will be focused on implementation issues.

Yesterday at the F8 conference Facebook announced their support for the new foundation, and we have learnt that Google, MySpace, Six Apart, Plaxo and many others will also be supporting the new initiative. Google and Facebook now have an appropriate venue where they can resolve their differences and work on a standard way to have their users interact with each other between the Facebook Connect and OpenSocial platforms. The web foundation also provides the technical details, as well as policy details, on how such a relationship between companies and products could work.

Currently there is not much more at the Open Web Foundation outside of a lot of strong backing, a lot of strongly willed organizers and a lot of initiative. The foundation hopes that within the next few months after the announcement today they will be able to release their first set of work on data standards and formats.

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I will be there moderating a panel with Rich Miner (Google’s group manager of wireless), Matt Murphy (the Kleiner Perkins Partner who runs the iFund), Sam Altman (CEO of Loopt), and J.H. Kah (SK Telecom’s SVP of Business Development). We’ll be exploring all the big platform shifts going on in mobile right now with the iPhone and the coming Android phones.

I will be continuing that discussion at our own Mobile Web Wars Roundtable tomorrow, which will be a live-streamed discussion. But that’s sold out (the venue only holds 150 people). MobileBeat is much larger and you can still get tickets.

Here is the complete list of who is speaking:

Rich Miner, Android/Google, Group Manager, Wireless Programs
Matt Murphy, Kleiner Perkins Caulfield Byers, Partner
Ross Levinsohn, Velocity Interactive Group, Partner
Mike Baker, Nokia Interactive, Vice President
Jeff Sellinger, CBS Mobile, EVP & General Manager
John Smelzer, FOX Interactive Media, SVP & General Manager
Michael Bayle, Yahoo!, General Manager of Global Monetization
Sumit Agarwal, Google, Product Manager, Mobile
J.H. Kah, SK Telecom, SVP, Business Development
Rick Segal, JLA Ventures, Co-Manager of Blackberry Partners Fund
Steve Hegenderfer, Microsoft, Group Manager, Windows Mobile
Brandon Lucas, MySpace, Sr. Director, Mobile
Jed Stremel, Facebook, Director of Mobile
Sandi Isaacs, Paramount Pictures, Sr. Vice President Interactive & Mobile
Erick Schonfeld, TechCrunch, Co-Editor
Dan Farber, CNET, Editor-in-Chief
Om Malik, GigaOmni Media, Founder
Sam Altman, Loopt, CEO & co-Founder
Omar Hamoui, Admob, Founder & CEO
Jason Devitt, Skydeck, Founder and CEO
Richard Wong, Accel Partners, Partner
Jeff Brody, Redpoint Ventures, Founding Partner
Tim Chang, Norwest Venture Partners, Principal
Shawn Carolan, Menlo Ventures, Managing Director
Lars Kamp, Accenture, Head of Wireless Practice
Gregory Gorman, Tertius, Founder
Matthew Fix, Vodafone Ventures, Principal
Satya Mallya, Orange Telecom, Director at Orange Labs
Dr. Richard Koo, Augmentum, SVP of Augmentation Services
Mike Rowehl, Skyfire

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Payoneer’s advantage over Paypal in the micro-payments arena is that it makes international payments easier by not requiring a bank account for verification. Websites like iStockPhoto or Metacafe can issue pre-paid Mastercard debit cards to their customers and transfer funds electronically to the credit card account. The account can be used as a regular electronic payment transfer system as well similar to Paypal.

The Israeli startup (whose headquarters are in New York City), will use the new cash to fund expansion into more markets and invest in technologies to detect and prevent fraud and abuse by criminals and terrorists.

If you are going to go after a niche in the payments industry, international payments is about as big a niche as you can get. But it can also be a dangerous game in the post-9/11 world.

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The idea is to share moments of your life: sunsets, deep thoughts, funny faces. Or just broadcast your current status. You can upload the videos via a Webcam or your mobile phone, follow video updates from your friends, and even import contacts from Twitter. You can even link your 12seconds account to your Twitter account and it will automatically send a Tweet with a link your videos every time you put up anew one.

Is all of this pointless? Maybe, but no more than Twitter. Although, as a communications platform, text will always be more immediate and accessible than video.

The startup was founded by David Beach and Sol Lipman six months ago. They are bootsratpping it with 10 employees working for burritos. Besides Seesmic, 12seconds.tv also competes with the UK’s Phreadz. Here are a couple sample videos.

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On the iPhone, even the ads are cool. Mobile advertising network AdMob is launching a whole new set of customized ads for iPhone apps. As CEO Omar Hamoui explains in the video above, the ads are specifically designed for iPhone apps. Rather than the static text or image ads that make up most of its mobile ad inventory today, these take advantage of specific features of the iPhone.

For instance, an ad for a song can stream the audio or launch the page on iTunes where you can buy it. A movie ad can open up YouTube so you can watch the trailer. An ad for a retailer can find nearby stores on Google maps. Others call a number through the phone, or can take you to a specific Web page. And just like on Facebook,where many of the ads on apps are simply promotions for other apps, an ad for an iPhone app will launch the App Store. (See video below).

To get iPhone app developers to sign up for his new ads, Hamoui is giving away $1 million worth of advertising to the developers with the most compelling apps who apply here. Each developer who is selected will recieve $5,000 worth of free ads for their apps.

Admob already serves up 34 million mobile ads a month on the iPhone’s Safari browser. But that is a mere one percent of the total that AdMob serves across all phones. Hamoui, however, believes that the new type of ads he is launching today will quickly make up the majority of his inventory. Some of the advertisers he’s already lined up include Ford, Electronic Arts, Land Rover, Jaguar, “The Mummy,” Loopt, AccuWeather.com, and MovieTickets.com.

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AddictingGames, a popular Flash game portal, has announced plans to hold a large-scale awards show pertaining to casual games. The show will take place in 2009, with a series of voting rounds conducted on the site that will allow AddictingGames’ users to decide the final outcome (though judges will have some say).

The show will be open to any casual game on the web, but the results will likely be heavily skewed towards games on AddictingGames, since that’s where voting will actually take place. Few details have been released, but the Nickelodeon-owned site promises content spread on websites and television programs across “the entire Nickelodeon/MTVN Kids and Family Group”.

While the execution is flawed (the voting will be totally biased), developers could use an incentive to create casual games that are more involved than the mind numbing junk games that litter countless sites and development platforms across the web. Alongside a compensation program that AddictingGames will be rolling out for its most popular developers, this could at least help gamers pick out the best of the crop.

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I agree with Sam Gustin when he says that yesterday’s Facebook Developer Conference in San Francisco was in the end a snoozer, but not because CEO Mark Zuckerberg failed on stage.

First of all, saying the event itself was sleep-inducing is just factually incorrect. Before and after the keynote they played music so loud that a deaf person would complain. I was alarmed and somewhat panicked by the noise, but certainly not sleepy. And on a more serious note, Zuckerberg himself was much more at ease and charismatic on stage than I’ve ever seen him previously. He’s no Steve Jobs yet, but he’s no slouch, either.

I left the event feeling fairly upbeat about Facebook. They sent a clear message to developers that they need to build compelling apps and learn to play nice. And they created a clear reward and punishment system to deal with both ends of the spectrum.

But I’ve learned that I need period of reflection after these super-shows before I can really digest what happened. And after reflecting, I’m feeling more than a little let down by Facebook’s product focus and ability to execute.

Snatching Mediocrity From The Jaws Of Victory

A year ago Facebook set the Internet on fire with the launch of Facebook Platform. Competitors rushed to respond, and since then Facebook has been on a tear.

Facebook has all the momentum as the worlds largest social network (if not the most valuable), and they’ve always been willing to launch bold and controversial new products that change the way people perceive the company (News Feeds, Platform, Beacon).

Everyone looks to them to see what comes next. When rumors surfaced in May that they were going to announce Facebook Connect, a way for third party sites to integrate their services with Facebook profile data, Google and MySpace rushed to announce their own versions of the product, with nearly identical features and, in the case of Google (Friend Connect), a suspiciously similar name.

But today they were not bold, and they did not act like thought leaders. There was no controversial but exciting new product experiment unleashed on a gushing audience. Instead, there were minor tweaks to a platform that needs a major overhaul.

Facebook Connect, the most exciting new product on the agenda, is still vaporware. A parade of partners came out on stage to talk about all the great things they’ll do when it eventually launches this Fall. Meanwhile, Google’s product is in working alpha, and MySpace has fully launched Data Availability.

The new three tier ranking system for apps, which we first wrote about in March, addresses the problem of black hat developers, but it may create more pain than it’s worth. Developers have long complained that Facebook plays favorites.

More disappointing is what Facebook didn’t announce today. No payments platform, even though developers are begging for a way to make money beyond pitifully-low (and falling) CPM ads.

Nor did Facebook address their now quaint and basically unusable messaging system, even though MySpace paved the way for them by implementing Gears nearly two months ago.

Facebook also didn’t take the opportunity today to make amends with Google and cross-integrate their products. Competition is fine, but users are best served with interoperable products. In effect, Facebook is continuing to tell their users exactly what they can and cannot do with their own data.

Finally, Facebook chastised developers who build slow applications, telling them that they need to speed things up and think about scaling. But user complaints about the slowness of Facebook in general are on the upswing. Perhaps its time for the company to listen to its own advice.

Suddenly Facebook is acting more like a company with lots to lose (and therefore defend) rather than a scrappy young underdog startup looking to shake things up, capture our imagination and change the world. It’s time for them to be audacious again, and take some risk. Otherwise, they risk becoming simply boring. And that’s the fast lane to mediocrity.

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Johnson, Microsoft’s soon-to-be ex-President of Platforms & Services, has been with Microsoft since 1992. He was in the unfortunate position of leading the recent Vista effort through its very troubled launch, and running Microsoft’s online efforts while watching their lunch be eaten by Google. He takes a consolation prize: He will become the CEO of Juniper Networks, a $12 billion network hardware manufacturer.

So what’s next for Microsoft? The Windows and Windows Live products now report directly to Ballmer. All the online stuff, including search, advertising and most MSN/Live.com services will be headed by a new executive. Ballmer says they’ll look for the person to lead their Google-killing efforts both internally and externally.

Putting Johnson aside for a moment, It’s damn well time Microsoft put someone in charge of its online efforts. Johnson had to split his time with the Windows cash machine and the results have been somewhat predictable. A half time executive running a product that doesn’t even have a brand (Live? MSN? Microsoft?) can’t win against Google.

The truth is that the next guy (or gal) isn’t going to make any fast gains on Google, either, no matter how awesome Mesh and Silverlight are. Ballmer seems willing to spend as long as it takes, though, noting that the war with Google is over the long term, not the short: “In the coming years, we???ll make progress against Google in search first by upping the ante in R&D through organic innovation and strategic acquisitions. Second, we will out-innovate Google in key areas…”

That sounds like Microsoft will channel yet more Windows and Office profits into their Internet startup. There’s no question that they intend to compete in search and advertising any more. The only question is whether they have any chance of winning.

Even if Microsoft concedes that they have a years (decades?) long war on their hands, they have to face the fact that Google’s commanding lead in search, and the network-effect driven advertising wealth that comes with it, will be hard to beat. And all those client software profits won’t last forever, particularly since Google is eating away at that via their suite of free Office products.

The first thing Microsoft needs to do is buy Yahoo - all of it. That brings them to half of Google’s market share in search, and at least they’re in the game.

Another thing Microsoft needs to do is simply pick a brand name for the Internet side of things, and stick with it. Microsoft. MSN. Live. Whatever, just name it something a little catchier than “Online Services.”

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Opposing Views is an information portal disguised as a debate site. Experts debate hot-button issues, and readers can comment and vote on who they think is right. For instance, the site has a Barack Obama adviser and a John McCain adviser debating about “Who Has the Right Plan For America’s Economy?” A NASA scientist and a Hudson Institute fellow debate, “Have We Reached Peak Oil?” The National Autism Association and a doctor go head-to-head on: “Are Autism and Vaccines Linked?”

Opposing views finds experts and associations willing to argue one side or the other, and sometimes multiple experts weigh in on a single topic. Each argument is broken down into a list of simple points with a headline that readers can click on to go deeper. The experts can argue each point, and embed supporting videos and links. Readers can add their own arguments in comments and vote on who they think is winning the debate. (The best comments can be elevated to the starting page of each debate by the experts).

In the end, fine hopes to create an information-rich site that ranks highly on Google for each topic. In that sense he is competing with About.com, Helium, and even Wikipedia and Google’s newly-launched Knol. The debate format ensures that the content will change constantly, and the participating experts and associations will lend their (link) authority to the site.

The company was founded in September, 2007 and has raised $1.5 million in angel funding from Applied Semantics co-founder Gil Ebaz, Frontera Capital, and Fine (who is also the chairman of sports forecasting company Accuscore and was previously the founder of Youbet.com).

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Zimbra Desktop, which is built on Mozilla Prism, is available for Windows, Mac and linux machines. It weighs in at 40 MB, about double the size of Thunderbird. The product promises the robust features of Outlook, which are lacking in Outlook Express and Thunderbird. Users can access Yahoo mail accounts, Zimbra accounts, or any Pop/IMAP supported email boxes. Zimbra Desktop also includes a calendar, contact list and other features.

Based on limited testing (I set it up with Yahoo Mail only for now), the product is a winner. It’s responsive and quick, which is the most important feature for a desktop email client. I like the ability to tag items, collapse conversations, and perform web and local searches via the search bar in the top right corner of the app. If I wasn’t all Mac across the board to keep things synced properly, I’d use Zimbra permanently. Screen shots below.

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Co-founders of the gaming publisher Playfish, Kristian Segerstr??le and Sebastien de Halleux, chalk up the growth to a profound platform shift social networks have introduced into the gaming marketplace. Traditionally, large publishers have lorded over the $50 billion gaming industry by controlling two things: access and distribution. Be it a console game or the latest PC title, only big companies could shoulder the large costs of distribution deals and advertising involved in bringing a game to market.

Social networks, however, have are an open platform that give away both access and distribution for free (the CBS backlash is an exception that proves the rule).

You may already recognize Playfish from their flashy Facebook games: Who Has The Biggest Brain?, Word Challenge, and Bowling Buddies. The games have a very similar look and feel to the popular Wii, especially their latest game, Bowling Buddies. Playfish developed the 3 games over the past 6 months and has grown to about 6 million monthly users playing an average of 30 minutes a session. The team attributes this to the social infrastructure that both makes the games more enjoyable and easier to spread. For some perspective, EA’s Pogo.com claims about 14 million visitors per month and has been around since 1999.

For the large part, big gaming publishers have only stuck a toe into social networking. Gaming giant EA’s most notable release to date has been the official version of Scrabble, which currently has around 7,000 DAU (it’s also limited to USA and CAN). However, there’s certainly more to come as these networks watch startups work out the kinks. EA has already done some major releases on the iPhone and has larger plans for their latest acquisition, Rupture. Comparatively, Playfish commands 3 of the top ten gaming apps on Facebook, totaling around 1 million daily active users. The others are belong to notables include SGN, Zynga, and Serious Business.

But traditional gaming companies have been beating the startups on one key metric, monetization. PC and console games saw sales up 43% last year to $18.8 billion. Onine gaming is currently a $1 billion a year business. Pogo.com has around 1.5 million members for it’s monthly subscription service, Club Pogo, for which they pay $4.99 a month or $29.99 a year. Free players of the main site are upsold to premium features and game downloads.

But Playfish is taking a similar approach, looking to monetize gamers on all points of the demand curve. Gamers who are happy to play the basic game will be subject to advertising, while players looking for more can pay for upgrades and premium games. Just this past week they released $10 paid upgrades for “Who has the Biggest Brain?” and expect these payments outpace their ad sales. Albeit, their only form of advertisement is video ads displayed after a game set is completed.

While Playfish has yet to cross outside of the Facebook platform on to other platforms, they’ve made great strides to cross continents by translating their top game “Who has the Biggest Brain?” into six languages. The London-based startup also has studios in Norway and Beijing. They’re funded by $3 million in angel financing with a $1 million bridge from Accel.

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Xobni, the Y Combinator email startup that turned down an acquisition offer from Microsoft earlier this year, has just lost its VP Engineering and first employee, Gabor Cselle. Cselle joined the company in March 2007, sporting a seemingly perfect resume that included work on the Gmail team and a Master’s thesis on “Organizing Email”.

The departure may not be abrupt (Cselle won’t be leaving until the end of August), but it is unexpected, and frankly, doesn’t make much sense. Since launching at TechCrunch40, Xobni has shown impressive growth and received widespread acclaim - Bill Gates demoed the service at the Office Development Conference earlier this year.

CEO Jeff Bonforte (who joined the company only five months ago) says that Cselle simply decided that he was no longer happy at Xobni, and wanted to try building his own startup. Bonforte says that Cselle likely wants his own shot at glory, and because of Xobni’s quick rise to success, members of the team may believe that launching a startup is far easier than it really is.

Cselle’s blog post on his depature seems to confirm this, at least in part:

“Ever since reading a biography of Bill Gates when I was 14 years old, I’ve wanted to be a founder of a company that makes a difference. I’ve wanted to build a workplace where people can be creative, productive, and happy, and a product that delights users and improves their lives. I feel like the time is now.”

Cselle may be itching to try his own luck, but Bonforte’s explanation still doesn’t sit well with us. Microsoft just threw $20 million at the company, which it turned down, likely in hopes of a better offer somewhere down the road. Why wouldn’t Cselle wait for his payday and then jump ship to start his own company?

We’ve heard that Cselle has been unhappy at the company for months, but we haven’t been able to reach him for any further details (we’ll update the post as soon as we do). In his blog post, he says that after leaving Xobni in August, he’s going to travel the world, raising money along the way for a new email startup.

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Digg founder Kevin Rose promised OpenID integration at a conference in early 2007, but the company has been silent on it since then. Like many other companies, they seemed to enjoy the positive press that the announcement made but were unwilling to schedule the development time to actually implement it.

Facebook Connect isn’t slated to go live until the Fall, and we assume they’ll push OpenID at the same time. We asked OpenID’s David Recordan what he knew - he said he noticed the same thing we did but doesn’t have any additional information on when or if Digg would finally implement the single sign-on solution. We also have an email in to Digg for comment.

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