Wikipedia Prepares To Add Video Alongside Crowdsourced Text


Wikipedia became the 10th most popular site on the Internet by mining the wisdom of the crowd to develop text-based encyclopedia entries.

Now is it ready to take on video.

The non-profit Wikimedia Foundation is expected to add technology in the next several months to let volunteers add video and multi-media to the general reference posts that in June alone drew 61 million Americans to the property.

There are a lot of components that need to come together, says Ron Yekutiel, CEO of Kaltura. But the plan seems on track for implementation by the end of the year.

Kaltura, the maker of open-source video management software, is supplying its software to the initiative. Yekutiel says there are many complexities, such as storing a history of the editing process for each clip posted.

In essence, the system will work the way the software does that Wikipedia uses to post text today. Editors will be able to follow changes to the material so as to understand how entries are created.

But while text is one thing, multi-media opens a new can of worms. Video clips can be editing in numerous subtle ways, and their source isn’t always obvious.

It will fascinating to see how thoroughly they can be policed – and exactly what value they bring. Will a picture indeed be worth a thousand crowdsourced words?

Cell Phone Shipments Up For First Time In Nine Months


The cell phone market rose in the second quarter for the first time since the third quarter of last year.

The modest rise – 4.7 percent from the first quarter, according to iSuppli – suggests that the mobile business hit a bottom in the past quarter and has begun a slow upswing.

Vendors shipped 265 million phones, up from 253 in the first quarter. Shipments were down 16 percent in the first quarter and 2.6 percent in the fourth quarter.

ISuppli says it expects a larger 6 percent rise in the third quarter and an 8.3 percent rise in the fourth quarter. For all of 2009, sales will be down almost 10 percent from 2008.

Lifting sales in the second quarter was strength in the emerging markets of the Middle East and Latin America. Promotional campaigns helped business in North America.

Zetta Does Not See Commoditization Of Cloud Storage


One of the big unknowns facing cloud computing is whether this business supplying computing services to companies will become commoditized.

This is especially true of cloud storage, where the differentiation among vendors is less dramatic than it is delivering computing power or application management over the Internet.

Data is either available or it isn’t, and access time can be measure quite easily.

So with new vendors entering the market, such as Microsoft (which is charging only 15 cents per gigabyte of storage), should an startup such as Zetta be concerned?

CEO Jeff Treuhaft says no. Cloud storage may get commoditized in the consumer market place, but not when it is offered to the enterprise, he says. “They are looking for something other than a raw disk,” Treuhaft explained this week during an interview at the Always On Summit.

Zetta says its infrastructure is a competitive advantage and that its 25 cents per gigabyte per month charge is attractive to customers. The company buys disks from third-party suppliers, but builds its own hardware and writes its own software for backup, or replication, management and encryption. The system makes extensive use of virtualization to spread data among machines and ensure it is available should one machine crash.

“We took the position you really have to build this as a multi-tenant service from day one,” he said. Multi-tenancy also translates into greater efficiency because it allows several customers to share the same piece of hardware.

Zettta is technically still in beta, but it says demand is healthy. “We have companies now that are not starting with one application but with three,” he said at the Stanford University gathering.

Still, with the market getting more crowded and competitors such as Amazon with its S3 service well established, commoditization over time is a danger.

Zetta doesn’t release its revenue figures and isn’t yet profitable. Monitoring these numbers over the next couple year will be an important market telltale – if the company is brave enough to report them.

Ron Conway Says Real Time Data Is A Real Big Market


Angel investor Ron Conway says real-time data is the next real big thing.

Yet it might not produce Silicon Valley’s next Google. One or two monster companies will not dominate the market. Instead it will nurture a wide range of firms, Conway said Thursday at the Always On Summit and Stanford University.

Conway, one of Silicon Valley’s top angel investors, has been touting this latest investment theme for several months. But on Thursday he attached numbers to the market opportunity.

Today, real-time data is 1 percent to 2 percent of Web content. In three years, it will climb to 25 percent of the content on the Web, he said. That will make the market a $5 billion opportunity.

“I think this is the next multi-billion dollar market,” he said.

Conway didn’t say how real-time he expects investment returns to be. But with Twitter and other companies beginning to focus efforts on making money, perhaps the pay days won’t be as delayed as in the dot-com world of Web 1.0.

Clean Tech Startups Will Make Big Money And See More Failures Too


Clean-tech investors profess a perennial optimism for the potential of their companies. But a dark reality clouds their sanguine outlook: few of their companies have scored big wins in the IPO and M&A markets.

This uncertain exit environment was a factor in this year’s swooning spending. Investments in clean-tech startups fell 70 percent in the recently completed second quarter.

But Vinod Khosla says confidence in clean tech will be rewarded - handsome returns will come with patience. So too will a greater failure rate than VC typically see with their companies.

“More money will be made in clean technology than traditional areas” of venture investing in Silicon Valley, said Khosla on Thursday at the Always On Summit at Stanford University.

Such an outlook might be expected from this head of Khosla Ventures, a firm specializing in clean tech with as many as 60 portfolio investments.

But Khosla is quick to admit the business “will see a higher percentage of failures” even if “the wins will be larger” than normal, too.

With respect to industry sectors, Khosla said he believes lithium battery investments are "over hyped." It is possible lithium batteries could be replaced by something better, he said.

If not, companies innovating in the market will do fine, he adds, noting that Khosla Ventures has invested in some of them.

Dutch Use Open Source For Car Design


The Netherlands is pondering one of the most ambitious ecological goals in the world: putting 1 million electric cars on the road by 2020.

The benefits would be many fold. The first is an almost certain reduction in greenhouse gases – 90 percent if the electricity to recharge car batteries comes from wind power. The second is a steady source of new infrastructure jobs as the country builds recharging stations and other needed facilities.

Some proponents of the grand project, referred to as C,mm,n (pronounced common), also claim electric cars could save drivers money. It isn’t clear yet exactly how. But it probably assumes the price of oil will rise in the next 10 years.

So how does the country get from here to there? It kicked off a community design project by providing the blueprint of an electric car to any one interested in contributing know-how or elbow grease.

"Everyone is free to use and modify the design. The only condition is that any resulting derived designs are returned to the c,mm,nity as open source. We believe that the best results are achieved through cooperation," according to the project.

Apply open source to the car industry is something that hasn’t yet been attempted. So it’s anyone’s guess whether it will succeed.

But considering the industry’s recent record of technological advancement, crowdsourcing a car is welcome approach that probably won’t leave the industry worse off than today.

The Changing Face Of Twitter


Ok. So nearly 70 percent of U.S. adults don’t know enough about the online service Twitter to have an opinion.

Despite its rapid growth, the micro-blogging sensation still appeals to only a small slice of the population – even as Facebook boasts of 250 million worldwide users.

What’s interesting, however, is how this Twitter-digerati has been changing the way it uses the service. According to a TNS and Conference Board survey, nearly a quarter of Twitter users now use it for work, and 26 percent say they log in to find news and stay updated.

Perhaps this is no surprise considering how widely Twitter was used to broadcast information from Iran during the recent presidential protests. And of course we all recall how Twitter was there when a jet went down in the Hudson River.

Still, Twitter’s business migration is an interesting confirmation of the growing role for micro blogging. The site got its start as a place to stay in touch with friends and for members to ell the world what they are doing.

Now it is finding a new, more necessary role in the office and for news distribution, as the Iran protests illustrate.

According to the survey, 22 percent of Twitter members use it for business. This is especially true among the 35 to 54 year old age group, and it is divided evenly among men and women.

Thirty-one percent of male uses say they use it to find news/

Welcome to the workplace, Twitter. Your presence will likely encourage the other 70 percent get an opinion about what you do.

Graphics Chips Are A Sign PC Industry Expects A Big Fourth Quarter


Expectations may be getting ahead of themselves for the personal computer industry.

The business took it on the chin in the first quarter with sales tumbling . But if graphics chips are a sign, manufacturers are expecting a substantial upswing during the year-end holiday and back-to-school seasons.

This optimism may be jumping the gun. Economic signals have been improving modestly in the past month or so. But the spring back in the economy is hardly impressive and remains unsteady to boot.

So could this upbeat assessment end in disaster, with huge inventories of unsold computers clogging to wheels of business come January? It is certainly possible. Let’s hope the H-Ps and Dells have more than faith underlying their business plans.

The glimpse into the PC market optimism is evident in research released Monday from Jon Peddie Research. Computer vendors stopped ordering graphics chips in the third and fourth quarters last year in anticipation of a long worldwide recession, says Jon Peddie.

While the first quarter brought some improvement, the second quarter saw a return to the races. The average second-quarter growth in graphics chip sales over the past eight years was 0.8 percent. This year it was 31 percent, says Jon Peddie, as the industry began preparing to build products for the end of the year.

Obviously the boost could be compensating for the less-than-expected first quarter. But the shipment of 98 million graphics chips can’t be fully explained this way.

The industry won’t return to 2008 levels until next year, says the research firm. But there are good reasons to expect a respectable market this year.

Two new operating systems will come out in the fourth quarter: Microsoft’s Windows 7 and Apple’s Snow Leopard. Graphics chip vendors Nvidia and AMD’s ATI meanwhile will introduce new higher-performing designs made at 40nm.

On top to that, worldwide economic stimulus programs will be in full swing, fueling pent up demand for new machines

It is unclear how the economy will fare during the remaining five months of the year. Let’s hope the computer industry has it right.

Unsold Solar Cells Pile Up in Warehouses


The woes of the solar industry continue and are likely to get worse.

With demand having collapsed at the start of the year and new factories continuing to come on line, unsold solar cells and modules are piling up in warehouses.

The industry’s only salvation may be a price collapse, making solar cells as cheap as optical bandwidth at the depths of the dot-com washout.

At that point, the dynamics of the industry could change dramatically. Until then, companies will have an increasingly difficult time making money.

In a sign of the continuing troubles, inventories of solar gear, including silicon wafers, soared 64 percent in the first quarter, according to iSuppli.

The glut added 1.5 months of supply to an industry already producing more goods than the market is able to absorb. Prices have suffered and will decline further.

ISuppli believes that the “spot” market price for a kilogram for polysilicon, a foundation material for solar cells, will fall to $50 by December from $180 a kilogram at the start of the year. It is a startling decline.

Companies such as REC, Yingli, and SolarWorld have felt the brunt of the inventory excess because they are involved in all stages of solar cell production, from the polysilicon to wafers and cells. Inventories for these integrated manufacturers rose to more than 161 days from 86 days in the first quarter of last year.

ISuppli expects inventories to continue swelling into 2010 –with the woes facing producers mounting.

Ad Effectiveness Is Slowing Online Ad Market


Ning is no laggard: 1.3 million social networks ranging from the professional to the frivolous have been created using its site building tools. (By the way, that is a new number. Ning’s site still boasts 1 million.)

The company also has a post Web 2.0 business model: $24.95 a month will bring you a social network without the ads the company has traditionally relied on to make money.

Business oriented networks – perhaps one for accountants from Cleveland – appreciate Web pages without the ads – and are willing to pay.

But according to co-founder Gina Bianchini (she co-founded the site with Netscape wonder boy Marc Andreessen) it didn’t have to be this way.

Ads might have carried the load at Ning and social sites elsewhere if they had been more successful. In fact, the march of advertising from offline (think television and print) to online has been slowed by the lack of more effective marketing, Bianchini argued Thursday evening at a Churchill Club gathering in Mountain View.

“We need a new advertising unit” for 2009 and beyond, she said. “I think we are still figuring out what (that) advertising will look like.”

There is no lack of trying. Facebook has spent considerable energy in the past several years trying to evolve an ad model for its massive social network.

Just this week, Twitter released a best-practices document with suggestions on how businesses can use its micro-blogging property for their benefit. And earlier this month, Google said it is finally making some progress with You Tube, which has long resisted monetization.

Clearly, though, the final fix is not in. According to Bianchini, one key rule is authenticity. Brands need to be authentic in their appeal to people on social sites, she says.

In its 101 guide for businesses, Twitter also suggested companies need to provide value, perhaps a coupon or smattering of useful information.

Both are good pieces of advice. Advertisers also need to become part of the conversation and lose their identities as corporate marketing machines. It’s a big task. That is why it is taking so long.

Twitter Tries To Sell Itself To Businesses


The Twitter 101 guide for businesses wanting to do business on Twitter gets, well, down to business.

Or, at least that is the intent. The popular micro-blogging site post the guide late Thursday with 10 case studies and suggestions on how companies can get the most out of the online service.

Several of the studies detail the experiences of well-known Twitter users: JetBlue and Dell Outlet, for instance. Others break new ground: such as with the Teusner winery from Australia.

None of the information is startling or magical. Twitter suggests businesses retweet interesting posts, offer coupons and not spam followers with dozens of tweets. Another obvious observation: “If you’ve just launched a product, ask users what they think or search for real-time tweets from people talking about your product.”

Here are some observations from the case studies:

Computer maker Dell now has 80 branded Twitter accounts and more than 100 employees who use Twitter, including StefanieAtDell, who handles customer service exchanges.

The company’s Dell Outlet uses Twitter to distribute product news, offer coupons and communicate with customers. It suggests tweeting only a few times a week so as not to spam followers and to track URL activity to determine what people find most interesting.

Dell Outlet believes it has generated $3 million in revenue attributable to its Twitter activity.

JetBlue has almost a million Twitter followers. It uses its account to distribute information – on flight delays, for instance – and to answer customer questions.

Less than 10 staffers have the authority to post, though other key people in departments across the country have permission to answer questions. Next on the to-do list is to staff the account 24/7.

Teusner searches the service to find people who’ve comment on its wine. Then it sends a note thanking them for trying the wine.

The result is an increase in the number of people coming to the winery for tours and to the company’s Website to explore.

Twitter 101 is a first step in a long learning process. It shows there is tremendous potential for Twitter’s moneymaking initiatives for business expected later this year.

Microsoft Bumping Along The Bottom


Microsoft said Thursday fourth-quarter profits fell 29 percent, ending a year that saw revenue fall for the first time since the company went public in 1986.

But finally there are signs of a steadier economy, said CFO Chris Liddell.

“At least we’re seeing signs of the bottom,” Liddell said on an earnings conference call with analysts. “I see us going along the bottom for some time to come.”

The company’s fortunes have waned as the global downturn suppressed PC sales and slowed business purchases of technology

But now the world’s largest supplier of PC software says the economy is stabilizing, even if sales remain well below those of a year ago. Next year will bring an improvement, but it is difficult to say when, says Liddell.

Until then, conditions for the remainder of 2009 should be similar to what the economy dealt out in the recently concluded three months.

In terms of Microsoft’s own fortunes, Windows 7 should allow it’s crucial Windows business to grow faster than the PC market by the middle of next year, Liddell said.

The Good News For VCs Is Firms Get More For Less


It’s a buyer’s market for houses, cars and venture investments.

With investing levels down and fear of disaster high, venture partners willing to take a risk are getting more for their money. And from the standpoint of capital efficiency, startups appear to be getting further with less cash.

According to Dow Jones VentureSource, the size of venture deals throughout the world is in rapid decline.

The reasons are obvious. Venture investors are saving more money for their existing portfolio companies, afraid they will need to support these children longer. At the same time, there is little indication of a rebound in the IPO market, suggesting a payday for their investments is a long way off. So why invest a lot when a return is many years distant?

The result is they are less willing to write big checks, and entrepreneurs are apparently no longer expect them.

In the U.S., the median startup deal size fell 18% in the second quarter to $5 million from $8 million a year ago. This is the lowest its been since 1999.

The fall is especially deep in clean-tech investing, where the median is now $4 million compared with $10 million last year.

Markets overseas are following suit. In Europe, the median deal size dropped 13 percent to $3 million, and, in Israel, the median transaction tumbled 32% to just under $4.1 million.

In India, the median pact is $4.2 million and it is $7.5 million in China.

If there is any good news in this beleaguered industry it is this: money is going further. The decrease may ultimately lift returns and give entrepreneurs a greater stake in the companies they build.

That could prove an incentive for a patient investor.

Venture Capital Investing Holds Up Better In US Than Abroad


Venture capital flowed more freely in the United States than abroad during the second quarter, suggesting that the entrepreneurial motor of the U.S. economy remains somewhat more intact.

In the U.S., venture capitalists invested $5.27 billion in startups during the three-month period, 37 percent less than a year earlier, according to Dow Jones VentureSource. VCs in Europe, China, Israel, Canada and India watched as their investments plummeted 63 percent to $1.46 billion.

The total overseas was even less than in the troubled first quarter, when a financial meltdown froze business around the world.

Europe held up better than other international regions, but investments in information technology and clean-tech suffered (as they did in the U.S.).

In China, VCs funded only 33 deals and spent $282 million, an 80 percent drop from the second quarter of 2008. Healthcare investing proved a relative bright spot in the country (as it also did in the U.S.).

Israeli startups received 67 percent less than a year ago and Indian companies took in only 66 percent of what they did last year.

“Investors are finding it more challenging to maintain their stakes in current investments,” says Jessica Canning, director of global research at VentureSource.

They also aren’t eager to pour money into new companies. With the industry retrenching globally, now may actually be a good time to offer cash to seedling companies. Oh, and advantage U.S.

PayPal To Follow IPhone And Open To Developers


Ebay hopes PayPal can tap into the developer fervor that has so far generated 65,000 independent applications for Apple’s iPhone.

The online auction outfit will announce on Thursday that third-party developers will be able to include it in applications they write. The goal in opening up PayPal to outside developers is to accelerate innovation and expand its use, said CEO John Donahoe.

Already, PayPal is the feather in eBay’s cap. The payment service’s revenue grew 11 percent in the second quarter the company reported Wednesday while revenue from the company’s flagship auctions fell 14 percent.

PayPal now makes up almost a third of the company and the goal is to double its size in three years.

The open-platform effort at PayPal is analogous to what Apple has done with the iPhone and will be announced on Thursday, Donahoe said on a late Wednesday earnings conference call.

The move is obviously part of an effort to make PayPal a global force in the emerging market for Web payments. EBay already is summoning sales resources to the task.

The company said it attracted new merchants in Europe and Asia to PayPal during the second quarter as platform’s spread in the eBay market place begins to level off.

“It’s got real global momentum,” says Donahoe.

Twitter Promises To Publish Guide For Businesses


Twitter has been studying how businesses use and interact with consumers on its micro blogging site – but isn’t ready to talk about its work.

“From this research, findings, use cases, and best practices have emerged,” co-founder Biz Stone wrote Wednesday on the company’s blog. “We're putting together a document based on our studies and we'll find a spot on our web site to share it with everyone when it's ready.”

This odd announcement makes me wonder about just how useful this apparently well-meaning initiative will be. Twitter hopes to show how companies have adapted marketing and customer-service programs to the real-time Web. But are the benefits so difficult to find and hard to quantify that it is having a hard time explaining the business case?

In his blog entry, Stone highlights two companies that have found ways of turning Twitter into a business tool. But no details are available on the success of the efforts.

One is a cookie shop that notifies its customers when a new batch of chocolate chips come out of the oven. The other is Best Buy, which developed Twelpforce to let employees interact with customers who have questions about products.

It seems that so far businesses are in a phase of experimentation with Twitter. Many indeed are excited about using the site to their advantage, but don’t yet know whether there will be a payback.

So maybe the Twitter research will be interesting. Let’s just hope it is more substance than form.

Consolidation Begins In Online Ad Market As Adknowledge Buys Super Rewards


Adknowledge hopes to open up a new chapter of the online advertising market with its purchase of Super Rewards, a deal it announced Wednesday.

No financial terms were released. However, the transaction appears to be many times larger than any of Adknowledge’s previous takeovers. The company has made five acquisitions in two years recently buying the media division of MIVA for $11.6 million.

The deal pairs a more tradition approach to online advertising – Adknowledge runs a network for placing display, or banner, ads and positions itself as an alternative to Google or Yahoo – with Super Rewards’ focus on virtual currencies.

“It’s a new way to think about advertising,’ says Adknowledge CEO Scott Lynn.

The combination of the two will likely create a formidable competitor and one that will be closely watched. Virtual currency is already a $600 million market in the U.S. and has been growing at a 600 percent pace, according to some estimates. “It is clearly not a fad,” says Lynn.

As the largest virtual currency company, Super Rewards, a division of KITN Media, has said it will generate about $100 million in revenue this year. Adknowledge will have revenue in excess of $250 million.

The company offers its currency to developers of online games and applications on social networks, such as Facebook and MySpace. Consumers earn it by signing up for advertised offers and then redeem it for virtual goods and services in the games they play.

The deal could indeed be a trendsetter. With virtual goods a new bright spot in the social advertising market, other firms will look at ways to respond and capitalize for themselves.

The could make Super Rewards competitors hot properties.

IPod Market Dwindles As IPod Touch And Apple IPhone Take Over


Apple steered a steady course through the difficult economy with quarterly revenue up 12 percent and profits ahead of Wall Street expectations.

But its iPod business hit a wall that analysts had anticipated for some time. Sales were down 11 percent in the company’s third quarter and units (10.2 million were sold) were off 7 percent.

The company offered the explanation that traditional iPods (its Shuffle, Nano and Classic) were losing out to the iPod Touch and iPhone. The sales volume of the traditional models declined while the Touch rose 130 percent, said CFO Peter Oppenheimer on a Tuesday afternoon conference call.

The company expects a further decline over time as it “cannibalizes itself,” with the iPod Touch and iPhone, says Oppenheimer.

Caution aside, the iPod business will last for many more years, he added.

A slowdown in iPod sales has been predicted for several years as the market has become increasingly saturated with the tiny MP3 players. It seems to have finally arrived.

Apple investors were not overly concerned. The company’s shares rose 4 percent, or $6.60, in after-hours trading.

Right Wing Defenders Of US Broadband Policy Out To Lunch


I’m continually bewildered by conservatives who defend U.S. broadband policy with a laissez-faire, hands-off-the-market, ignore-the-facts claim it is working.

Imagine what online services might already be available in the states (including educational ones) if our broadband connections were three to four times faster than they are today.

But if we listen to the likes of the Progress and Freedom Foundation, we may never get there in the next decade or more.

In lengthy comments filed Tuesday with the Federal Communications Commission, W. Kenneth Ferree, president of the foundation, typifies the argument. He claims U.S. broadband markets are adequately competitive and generally successful at encouraging deployment. What is he smoking?

Of course he offers no statistics to back up his claim.

And he ignores perhaps the best source of data available worldwide on broadband deployment. Here is what the Organisation for Economic Co-Operation and Development said in May:

*The U.S. in 2008 slipped to 19th place in terms of the speeds commercial providers offer users. It was 13th in 2007;
*The average download speed in the U.S. is 9.6 Mbps, or a tenth of what is offered in Japan. Other countries ahead of the U.S.: France, Finland, Netherlands and Korea.

Many of the countries providing faster connections benefited from government intervention in their markets.

With this sort of data, how can we even listen to these guys at the Progress & Freedom Foundation? They simply ignore the realities.

Top Ten Venture Deals Highlight Online Services, Healthcare


Second-quarter venture investing showed a modest 15 percent rebound from the depths of the dismal first quarter. But it was no great shakes.

Investments were still down 51 percent from a year ago, and there were no obvious signs of a coming uptick in spending.

In this environment, the top ten deals of the quarter reflected a restrained level of optimism about healthcare investing (now that the Obama Administration has raised hopes of healthcare reform) and online service delivery. These are themes are likely to continue in the months ahead, even if the negative cast of the industry remains.

The top deal of the quarter, according to the National Venture Capital Association, PricewaterhouseCoopers and Thomson Reuters, went to biotech firm Clovis Oncology of Boulder, CO, which raised $140 million. The company is working on anti-cancer drugs.

Three other healthcare transactions made the list: Hyperion Therapeutics of South San Francisco; PhotoThera of Carlsbad; and Cempra Pharmaceuticals of Chapel Hill, NC. Hyperion took in $60 million, PhotoThera, $50 million and Cempra, $46 million.

Companies developing software or online services were led by Workday of Pleasanton, which raised $75 million from Greylock Partners and New Enterprise Associates. The company develops software delivered as a service to human resources departments.

ExactTarget of Indianapolis raised almost $70 million and Revolution Money of St Petersburg, FL, took in $42 million. Security services company LifeLock of Tempe, AZ, raised about $40 million.

Also on the top ten list as well were Phoenix Services of Unionville, PA, and Fusion-io of Salt Lake City.

It is not surprising to see VCs pour buckets of money into later stage and expansion deals since the nation’s public markets refuse. (Most of the IT deals on the list fell into this category.) The question is whether there will be big paydays for some of these more mature companies.

My bet is there could be, but not until more sustained optimism returns to Wall Street.

Samsung Announces Cuts In Greenhouse Gases But Waffles On Goal


Samsung has climbed abroad the global warming bandwagon. But the Korean conglomerate hedged its do-good initiative to protect the bottom line.

The electronics and semiconductor maker set out commendable goals for cutting greenhouse gases from its manufacturing plants. It said it would slash emissions by 50 percent in the five years through 2013. It also said it would reduce the carbon impact of its products by 84 million tons.

But then it backed away from the manufacturing targets – explaining that its reductions would vary depending on sales.

Global warming of course is the environmental crisis threatening the world’s climate (and indirectly its animal and plant life). Corporations with true altruism are stepping to up reduce emissions of gases, such as carbon dioxide, just as the administration of Barack Obama reverses the head-in-the-sand approach of George Bush.

But in Samsung’s case, the reductions will be made on a “financial emissions intensity basis,” whatever that is. In plain language, the company appears to have based its reductions on sales levels, not overall emissions.

To the company’s credit, it said in a Monday press release it would invest 5.4 trillion Korean won in the manufacturing and product efforts. But then why dent the initiative with the “per-sales” restraint? Unfortunately global warming is coming whether sales increase or decrease.

Healthcare Is A Venture Capital Bright Spot And Psilos Group Explains Why


The economy is down, the IPO market stalled, and venture capitalists are sitting on their wallets instead of opening them.

So why is an admittedly apprehensive investor like Albert Waxman spending money at roughly the same pace as last year?

“We’re very cautious,” acknowledges the CEO and senior managing member of Psilos Group. But startup pricing is down and fewer firms are willing to compete for deals, he says.

The net result is Psilos expects two and three deals this year, including an investment in Gamma Medica-Ideas that Waxman hopes to close within 45 days. Gamma Medica develops more effective and lower cost technology for breast screenings.

Waxman is clearly not alone in applying a steady approach to venture capital. Healthcare proved a bright spot in an otherwise dim VC investment horizon in the second quarter.

Spending on startups rose 62 percent from the first quarter and for the first time outpaced investments in information-technology companies. The sector sprung back to spending levels before the financial collapse last fall.

Waxman says his aim is to find companies using information technology in the health-care market. There are enormous opportunities for these firms, especially with the health-care push coming from the Obama Administration.

“I think we will see entrepreneurs respond to the healthcare crisis and the business opportunities it creates,” says Waxman.

For many VCs, healthcare is becoming the new frontier. The industry has a desperate need of technology to improve efficiencies and lower costs. Thirty years into the technology revolution, its use of technology is still crude, says Waxman, and this at a time when the world needs big changes in patient care.

Whether there is money to be made is another question. But for now, change is on the horizon and that spells opportunity for those willing to take a chance.

Clean Tech Investing Is Victim Of Downturn


Venture capital investing sprang back a bit in the second quarter as general partners poured money into healthcare startups.

But clean-tech investing continued to suffer. Investment levels fell back to the early days of the category in 2006.

Clearly concerns such as falling demand and over capacity weighed heavily on general partners. With an energy bill taking a back seat to healthcare, government policy also appeared a bit murky to investors.

According to Dow Jones VentureSource, venture capitalists put just $317 million into clean-tech deals in the second quarter. While that is up 52 percent from the tepid first quarter, it is down a whopping 70 percent from a year ago.

Investments in renewable energy companies fell an even greater 75 percent. Only 16 deals were done compared with 30 last year.

Expect the cold feet to continue. Venture capitalists will likely need to see the demand picture brighten before thawing out their wallets.

Unless, of course, global warming acts first.

Venture Investors Shift To Healthcare, Abandon IT


Venture capitalists reopened their doors for business in the second quarter – at least a crack – but abandoned their traditional focus on information technology for healthcare.

Money placed with startups rebounded 32 percent from the first three months of the year to $5.3 billion, even as it fell 37 percent from the same quarter last year, according to Dow Jones VentureSource.

General partners appear to be convinced the Obama Administration’s push for healthcare reform will bear fruit. Investing in healthcare startups jumped to levels from before the financial crisis hit last fall.

Venture firms put $2.2 billion into healthcare portfolio companies, a remarkable 62 percent improvement from the first quarter and only a 14 percent decline from a year ago.

It was the first time healthcare investing surpassed that of information technology, where checks written to IT startups fell 41 percent. Leading the IT decline was the software sector. Investments fell 52 percent.

The information-technology total was the lowest in 12 years, according to VentureSource, and suggests the confidence in the high-tech economy hasn’t returned.
It also says something that is becoming increasingly obvious to policy makers in Washington and business people across the country: the economic rebound is going to be slow and painful.

Users Of Online Search Becoming More Sophisticated


Most of the buzz in the online search space has been about Bing, Microsoft’s new search engine.

The improvements in Bing, or so the common wisdom goes, will help Microsoft better compete with market leader Google.

But the praise being heaped on Bing may be diverting attention from an even more important industry development: that search users are becoming rapidly more sophisticated, and engines of all types are having a difficult time keeping up.

So far the Bing magic hasn’t played out in the market. According to comScore, Bing did give Microsoft a modest boost in the June rankings. Its market share grew 0.4 points to 8.4 percent. But the gain came entirely from Yahoo, not Google.

Google held its own, with its share unchanged at 65 percent. Yahoo slumped 0.5 points to a 19.6 percent share.

That may have something to do with growing consumer expectations. On a conference call Thursday evening, Google Senior Vice President Jonathan Rosenberg said the company has noticed power users are running more complex searches with longer queries and higher expectations.

He said Google has tried to respond with its new options feature. But much more needs to be done in the realm of adding personalization and intelligence to search responses.

“Search is still an unsolved problem,” says Google CEO Eric Schmidt. So running hard with new products is a little like standing in place. The target keeps moving.

Google Sees YouTube Striding Toward Profits


Google’s says its second-quarter financial results show the online advertising market is slowly stabilizing from the swoons of the global downturn.

But the online search giant fell over itself to highlight the fast growing strength in YouTube, the come-one, come-all video site it bought for $1.65 billion two years ago.

YouTube has been something of a laggard in its ability to carry and sell advertising. But Google says this is changing and that profits may not be far away.

“YouTube is on a trajectory we are very please with,” said CEO Eric Schmidt.

Ad showings more than tripled in the past year to the point where billions of ad views are recorded each month, the company said.

And the success is not only apparent on YouTube’s home page, where “we are seeing significant sell through in major markets,” according to global sales President Nikesh Arora, but on search pages and with “pre-roll” ads that appear at the start of videos.

YouTube is starting to show a lot of pre-roll advertising tied to clips of partners, such as Disney, says Arora. “I think the next phase of YouTube is going to be (with) pre-roll views on short clips and long-form video.” Over time, brand advertising also will expand.

So far, there has been little customer drop off from the pre-rolls.

Google wouldn’t be specific on its expectations for profits. But in the “not too long distant future we actually see a very profitable and good business for us,” says CFO Patrick Pichette.

Watch out Hulu. Google may have figured this business out.

As Mobile Web Startups Proliferate, Making Money Is Still Elusive


A new wave of mobile startup is creatively reshaping the way people will think of and use their mobile phones in coming years.

Before long today’s pocket-sized communicator will become a credit card, a photo store, as well as a user’s primary source of information from the Web.

But this vibrant incubation of new applications is missing one key ingredient: a straightforward way of turning turn technical innovation and site development into revenue.

The proliferation of smart phones, such as Apple’s iPhone, the latest Blackberries and the Palm Pre, is enabling this transformation - opening the door to more complex applications and pushing data in steady streams to mobile users.

The dramatic shift is still several years away. But several early innovators were on display at the MobileBeat 2009 conference Thursday in San Francisco.

One startup, AppStore HQ, wants to create an easier way to locate useful iPhone apps. With tens of thousands of applications available, “it’s easier to get your applications found than get a camel through the eye of a needle,” says exec Chris De Bore.

The company is starting with the iPhone and hope to expand to apps for Google’s Android and the Blackberry.

Boku has already begun turning the phone into a payment device and now boasts operations in 50 countries. Urban Airship plans an alternative way to push data to cell phones and is even working on push alerts for RSS feeds – a potentially huge market. (Apple and other phone developers have begun offering their own push technology for phone data.)

Another promising startup – Touchnote – is rooted in the real world. It wants to make money by turning cell phone photos into postcards it mails to recipients.

But making money is no guarantee. Opentable has been able to use its iPhone application to deliver dinners to local restaurants, for which it gets a fee.

But Flixster’s hope of selling movie ads into its movie location app is a work in progress. The evolution of the phone payment system is also creating confusion.

Payment restrictions make it hard to know whether to charge for a game application and make money with virtual products or to charge for the game itself, says Andrew Lacy of Tapulous.

Entrepreneurs More Likely To Be Middle Age Than Young


The perception that entrepreneurs are most likely ambitious twenty-somethings is just that – perception, not reality.

Instead most startups are founded by middle-aged people who have families and are motivated by a desire to be rich.

A study conducted by the Ewing Marion Kauffman Foundation surveyed 549 founders of businesses in the technology, health-care, aerospace and defense industries.

More than 90 percent came from middle class or lower-class backgrounds and are well educated. More than 95 percent have bachelor’s degrees and nearly 50 percent have earned advanced degrees.

They also tend to be middle age – 40 years old on average – when they started their first company. Nearly 79 percent are married.

They study opens an interesting window into the composition of this somewhat mysterious class of company builders. Common wisdom holds that many entrepreneurs toil in their dorm rooms or struggle in a garage.

The study also found that building wealth is a primary motivation. Other motives for starting a company include: capitalizing on a business idea; the appeal of a startup culture; a desire to own a company; and the desire not to work for someone else.

Good News From The PC Market


The personal computer market topped expectations in the second quarter as resilient consumers shopped for portables, and shipments to China and other Southeast Asian economies reversed course and grew.

The overall market continued to shrink during the three months. But the decline was smaller than anticipated and it gave some analysts hope the market would once again expand by the fourth quarter.

Research firms Gartner and IDC released quarterly numbers on Wednesday afternoon that offered similar market assessments. IDC said the global market fell 3.1 percent, or less than the 6.3 percent decline it expected. Gartner said the market slipped 5 percent, a better performance than the 9.8 percent drop it projected.

“The results can be interpreted as a small sign of a PC market recovery in terms of shipment volumes in some regions,” said Gartner principal analyst Mikako Kitagawa. Asia/Pacific and the U.S. came in better than forecast while weakness continued in Europe, Africa and the Middle East.

Hewlett-Packard widened its lead as the world’s largest PC vendor with almost 20 percent of the market. Dell saw shipments drop sharply, but held the number two spot with an almost 14 percent share.

Acer continued to rival Dell in size with its strategy of selling low-cost portables and netbooks. Toshiba also gained ground.

The two research firms offered differing views on Apple’s place in the U.S. market. Gartner said Apple advanced modestly to 8.7 percent of the market while IDC said Apple lost ground and held 7.6 percent of the U.S. market. Apple generally prices its machines above comparable Windows models.

GlobalFoundries Enters Consolidating Industry


New chip foundry GlobalFoundries will break ground on its massive New York State chip plant in ten days (July 24).

Let’s hope the joint venture isn’t buried by the $6 billion it hopes to spend ($4.2 billion of which will go into the foundry itself).

The company is the latest entrant in a crowded market, one that many think will consolidate in the next few years as the global slowdown trims demand and generates more excess capacity.

GlobalFoundries hopes to transform the foundry business by offering only the most advanced manufacturing techniques to customers. It will start producing at 28 nanometers in 2012 and ramp to volume at 22 nanometers. (Intel’s most advanced lines make chips today with 45 nanometer features).

“We see a huge opportunity to bring leading edge technologies to the foundry space,” said Vice President Thomas Sonderman at the Semicon West trade show on Tuesday in San Francisco.

But the strategy is no guarantee. There are already more fabs than business to fill them. By some estimates 35 outmoded fabs will close this year and another 12 next year.

“The trend I would expect is consolidation,” said IBM Vice President Dan Armbrust.

So far, excess capacity is less of a problem among the most technically sophisticated fabs that produce using 12-inch silicon wafers and produce small electronic ciruits. But it is not clear how long that will last.

“I think we have to hope the economy recovers,” says Sonderman. “We have to fill our fabs to make money.”

Act II For Google-Backed Wireless Startup FON


Remember the wireless company FON?

The Spanish company attracted money from Google, Skype and Sequoia Capital three years back to fund its Wi-Fi sharing scheme, where FON members let other members access the Internet over their home connections.

The story hasn’t had a fairy tale ending. FON has had some success in the United Kingdom and Europe, where it has about 400,000 members. Japan also has been a relative hot spot.

But the network didn’t catch on in the United States. Only 5,000 people signed up.

Now the company is ready for Act II. FON said Monday that it is launching a wireless router for the U.S. market that includes its network sharing technology and which allows people to remotely download data off the Web without using their PCs.

According to FON CEO Martin Varsavsky, the Fonera 2 is like a “Tivo for the Internet” and will do away with waiting for photos, movies and other files to download (or upload). Just set it and walk away.

A FON press release goes a step further, suggesting users can access peer-to-peer download sites such as BitTorrent, RapidShare and Megaupload as well as upload sites such as YouTube, Picasa and Flickr.

Varsavsky said the Fonera 2 will be priced to compete with other wireless routers – at about $90 – and be available in the states come October, after a September launch in Europe. Data storage is not included.

Unfortunately, it is hard to imagine the FON selling point of “no wait” will catch on big. When the Internet was young and people downloaded over dial-up modems, the world wide wait was part of the process. Now, with broadband speeds (as slow as they are) the wait for most people has gone away.

Instead of no-wait, convenience would have made a better ticket. The idea of Tivo-like storage for the Internet is a good one. But FON should have pitched its router as a device for getting content into the home and onto the TV without a struggle. That might have made ACT II worth seeing.

Water Technology Offer A New Frontier For Startups


When it comes to clean-tech investing, water conservation startups haven’t produced a flood of success.

One company, Energy Recovery, went public in a 2008 IPO and several others have found M&A exits. But the list of liquidity events isn’t long.

Still, there may be more promise in the sector than venture capitalists commonly think.

That’s because of the law of large numbers. In California, for instance, 19 percent of the state’s energy is used to transport water from the north to thirsty southern cities and farm fields. Finding ways to move the water more efficiently could bring big benefits and substantial cost savings.

And while water is cheap, a lot of it is used in Central Valley agriculture and for the cooling of commercial buildings and data centers. So even modest steps at conservation can bring large rewards.

A small cadre of VCs play in the space, such as Will Coleman of Mohr Davidow Ventures and Victor Hwang of T2 Venture Capital. There is room for more.

Obviously “there are bigger fish to fry in the clean-tech area,” said Rick DeGolia, CEO of irrigation technology developer Green Wireless Systems, Tuesday at the SDForum sponsored “World Water Crisis: Technology Based Solutions.” “It doesn’t mean there aren’t opportunities.”

According to Coleman, some of those opportunities include filtration and membrane technologies for power generation and consumption. Smart metering is another area worth exploring, especially as water companies begin to implement tiered pricing with higher prices for larger volumes.

Improving the efficiency of data-center cooling is another spot were the demand for new technology could be high.

Water investing isn’t necessarily a perfect fit for venture investing, says Hwang. Companies can take decades to germinate and aren’t always fast growing.

What’s more, the lack of a national water policy means that conditions and markets can vary state to state.

But with VCs looking for new places to make financial bets, water technologies are a thoughtful option. With global warming threatening to disrupt natural water cycles across the globe, the size of the potential payback may be something no one can accurately predict today.

Employment Picture Improves In Technology But Jobs Still Disappear


The loss of almost 34,000 technology jobs in the second quarter isn’t exactly good news. But it represents a big improvement from the first three months of the year and offers a sign of greater stability in the technology business.

Challenger Gray & Christmas reported Monday that the 33,891 U.S. technology jobs lost during the second quarter represented a 60 percent improvement from the first quarter, when 84,217 positions were cut.

They were about equal to the cuts made during the second quarter of 2008.

While the better performance suggests the sharp slide in the technology market has moderated, it continues to show a market place in decline and leaves open the possibility of a second dip in technology sales.

The computer sector saw the greatest decline in the period while telecom and electronics saw the strongest rebound. The telecom industry saw just 1,876 job cuts compared with 18,972 in the first quarter.

Telecom and electronics appear to be benefiting from business strength in wireless markets as Americans continue buying cellular phones and competition to outdo the iPhone heats up.

Venture Funds Appear To Be Writing Off 2009


Many venture firms appear ready to write off 2009 as a lost year.

It is no surprise. Exit markets are tough (though a few IPOs have launched), product markets are soft and investors have little money to pony up for new funds.
The fundraising diet may lead to a smaller industry as firms disappear

General partners may indeed have little choice than to retrench and plan for a time when the economy looks better. And hording money may be the best alternative with the industry likely to shrink in coming years.

This pent-up desire to sit still was evident in venture-capital fundraising statistics released Monday by the National Venture Capital Association and Thomson Reuters.

According to the researchers, only 25 venture firms raised funds in the second quarter – the smallest number since 1996. The money they raised ($1.7 billion) was the lowest amount collected in a quarter since 2003.

Welcome to the 21st Century paradox, where the past is becoming the future.

So far this year, VCs have raised just $6.3 billion for their funds. If that pace continues, the year will come in at less than half the $28.4 billion of 2008 and about a third of the $36 billion of 2007.

Clearly the industry is preparing for a future that might hark back to the pre dot-com bubble days. Already some pundits are projecting that half of all venture firms need to disappear to open up enough opportunities for the rest.

The “shrink to survive” message is now being echoed by industry luminaries. “We believe that many venture firms are waiting until 2010 and beyond to go out to their limited partners, who, in an improved market, will look more favorably upon the assets class, vis-à-vis other alternatives,” says Mark Heesen, president of the NVCA. “That said, there will be firms that will not be able to raise a follow-on fund, and our industry is positioned to contract over the next five years through this type of attrition.”

Yet the belief in contraction is not unanimous. Interesting to note is that while fund raising fell to a 13-year low in the second quarter, new funds drew strong interest. There were eight of them, or roughly a 2-to-1 ratio to existing funds.

That ratio was 15 to 1 in the first quarter. It reminds me of the old Dickensian description: they were the best and the worst of times.

Facebook Homepage Redesign Continues


In March, Facebook rolled out a major redesign of its homepage incorporating real-time data streams and more easily accessible feed filters.

It turns out the redesign continues. The social network company is still seeking the right balance between real-time information and delayed updates that can be days or more old.

The question is how to mix them in the main news feed, says Director of Product Christopher Cox.

Cox, in an appearance at the CrunchUp conference on Friday in Redwood City, said that the company is using e-mail feedback from users and usage data it gets from the site to guide its work.

Facebook is testing several versions of the homepage, he added. The idea is to balance a “real-time and aggregated view” of the feed, Cox says.

Solving The Real Time Problem For Twitter And Facebook


Real-time performance has been aptly defined as the ability to automatically deliver a digital message in a consistently predictable fraction of a second.

It is a definition Joe Ward, CEO of Groovy, eagerly embraces.

That’s because Ward believes he has solved a key bottleneck to the predictable delivery of online data, whether the rapid-fire messages are updates to Facebook news feeds or tweets on the Twitter network.

Groovy on Friday began shipping its SQL switch, the GSX 100, and with it its hope of bypassing the relational databases in the real time infrastructure.

The database is the slow link in the chain, says Ward, whose company recently moved from Australia to Silicon Valley. Instead of forwarding data immediately, or in real time, database feeds must be refreshed at intervals, meaning the flow of information is periodic instead of continual.

Database companies hope to compensate by using caches of memory chips to capture and feed information. But Groovy argues the technology it has spent three years developing is better suited for the task.

The GSX 100 has 24 computer chip cores that it uses in parallel to process information, and Ward claims it can save 20 percent of what a company spends to operate its databases and web and applications servers.

Interest in Groovy appears to be high. Companies such as Twitter and Facebook are finally realizing the constraints the database is having on real-time streaming, says Ward. “This is the one thing people haven’t been willing to say.”

With the launch of the GSX 100, this once hidden discussion may come out into the open. Most certainly it will in venture circles. Groovy, which has raised a couple million dollars in private funding up to now, plans to raise a $5 million to $10 million in financing from strategic investors.

If the GSX 100 proves a success, it may do that in real time.

Top Ten Monetization Ideas For Twitter


Angel investor Ron Conway recent decided to target his new investments at so-called “real-time” Internet social startups.

So it is no surprise he believes these emerging companies can make big money – including Twitter, which has already taken some of his money.

“Twitter absolutely can be a business,” he said during an appearance Friday at the CrunchUp conference in Redwood City. “They are building a very powerful brand.”

So, what opportunities do real-time startups have to turn Twitter-like data streams into cash? Here are Conway’s top ten ways:

*Lead generation
*Coupons (a $500 million opportunity)
*Analytics
*CRM (enterprise customer relationship management on the Web)
*Payments (massive opportunity)
*Commerce
*User authentication
*Syndication of ads
*Selling contextual and display advertising
*Selling followers to corporate clients

Conway didn’t say when he expected revenue to start to flow. “Whatever this is, it’s early days,” he says. “It’s Google in 1998.”

Performance Still Key To Computer Dissatisfaction


Ask PC owners what gives them the greatest dissatisfaction with their computers and the answer will likely be performance.

Recent studies show that more than 50 percent of users single out responsiveness as their key concern.

Machines simply don’t run as fast as they should. This was especially true three or four years ago when memory chip prices rose and vendors responded by scrimping on the RAM memory they installed.

While overall performance is better today, it is still not everything it should be. Fortunately, there are several ways to change this – all worth a little attention.

According to Jens Meggers, vice president of engineering at Symantec’s consumer products division, one key step is to add more memory. No secret here. Memory has long been the key performance variable, especially in machines making due with 500 MB.

A second way is to de-install unused applications. Computer users who frequently download software from the Internet can unknowingly end up with multiple toolbars and programs that soak up unnecessary chip capacity.

A final step is to install a modern suite of security software, obviously Symantec’s bread and butter. Meggers says older security software slowed down machines by using too much memory and adding to PC boot time.

With Norton Internet Security 2009, the suite’s boot time was reduced to 10 seconds and its use required between just 5 and 7 MB of memory. The suite also sped up malware scanning.

Symantec sent Norton Internet Security 2010 into beta testing last week with another key improvement – a performance monitor that shows how different software applications impact computer speed.

Computer performance is better today, says Meggers. But the problem hasn’t been eliminated, he adds.

He is right about that. The next step may come with better scrutiny of the downloads computer owner permit.

Chip Forecast Reverses Course And Sees A Worse 2009


After weeks of more upbeat forecasts for semiconductor market, one research firm has reversed course and predicted a worse 2009 than previously anticipated.

ISuppli said it now sees semiconductor sales falling 23 percent this year with the weak automotive market a primary culprit for the deteriorating outlook. The firm in April had projected sales would tumble 21.5 percent.

“Conditions appear to be worse than previously expected,” says Senior Vice President Dale Ford. “The decline of worldwide automobile sales, particularly in North America, has had a major impact on overall electronic equipment shipments.”

In recent weeks, a number of research firms had raised their outlooks for the year citing greater business stability and a sharp draw down in semiconductor inventories. When inventories get too low, manufacturers replenish them by ordering more products.

So against that backdrop, the iSuppli reversal could be viewed as something of a warning – a canary in the silicon factory.

Yet, the research firm’s revision, release late Wednesday, did not paint a consistently dull canvas. Japanese chipmakers, which experienced a sharp reduction in first quarter production, have now reduced excess inventories and resumed production, it said.

This should contribute to global chip revenue rising 10.4 percent from the second to the third quarters and another 4.9 percent in the fourth quarter. Such an increase would be noticeable improvement from earlier this year.

Next year, chip sales should expand a healthy 13.1 percent, iSuppli added, suggesting a steady rebound will take hold. Let’s hope the firm is right this time.

Private Equity Fundraising Takes It On The Chin


Private equity funds, including venture firms, have been able to raise just one third of what they did last year.

Fund raising through midyear is off 64 percent from the first six months of 2008, says Dow Jones Private Equity Analyst.

Over the period, 173 funds pocketed $54.9 billion so far in 2009, down from $152.7 billion.

Included in the total are 51 venture-capital funds, which raised $5.1 billion, compared with 13.6 billion last year.

The one bright spot in private equity was secondary funds – which purchases investment stakes from limited partners at a discount. The category set a new record raising $13.9 billion.

Cisco Boasts Of Eos Progress, Promises New Customers


More news and entertainment are being consumed than at any time in history. But media companies aren’t benefiting. Instead they are withering on the vine.

This business imbalance is something Cisco Systems would like to change.

The company staked out this ambitious goal in January when it unveiled its Eos software at the CES show. The software is designed to help media and entertainment companies sidestep middlemen, such as Apple and Google, which sit between content publishers and their customers – all the while taking a slice of their revenue.

At a briefing on Wednesday, Cisco said it is making progress with its nascent Eos. Seven refinements of the platform have been rolled out and announcements of key new customers are on the way.

Cisco Senior Vice President Dan Scheinman declined to name them. But he said evidence of Eos’ adoption is only a matter of time.

Cisco is actively in discussions with a broad range of potential customers, from sports publishers to moviemakers and television broadcasters, with substantial interest being shown, he said. “You should expect to see announcements of customers.”

Such announcements would be a welcome milestone in the Eos push. Up to now, the company’s single showcase customer is Warner Music, which has used Eos to create interactive Web sites for the artists Sean Paul and Laura Izibor. Cisco hosts the sites in a software-as-a-service arrangement.

But for Cisco’s all-encompassing Eos to be successful in this busy market place – the product combines site administration, analytics, content management and social networking in one platform – it needs more than an expanding customer roster. It needs a marketing hook.

This is one area where there are reasons to think Cisco hold the field. While Apple has shown it is able to sell a tsunami of music on its iTunes site, it retains the customer data and relationship, not the music company.

Google has a similar strategy with news content, repackaging news stories to draw traffic to its site.

Cisco says it has not intension of carving out a similar role. The goal is to shift the customer relationship and transaction data to the media company, says Scheinman. Even though Cisco hosts Eos, it doesn’t access consumer data, he adds. “We’re not sucking data out of the system.”

If this message fully sinks in, it may be a feather in Cisco’s cap. Still, one big challenge remains: convincing media companies they can build sites to compete with the likes of Google news or Apple’s iTunes, where store-like access to reams of content add considerable value.

As Cisco says, that is a matter of time, one way or the other.

Web 2.0 Use At Home Is Key To Use At Work


Here’s an observation that wouldn’t have occurred to me. Yet it makes intrinsic sense.

The most frequent users of Web 2.0 technologies at work are the same people who use them most readily at home.

It makes sense? But what it suggests is a cross-grain corporate policy at which many businesses would balk. If companies value the qualitative or quantitative business benefits of Web 2.0, they need to encourage personal use by employees.

Web 2.0 has drawn a great deal of attention recently from company managers. Deployment is at an early stage, but the hoped-for benefits have been on the minds of forward-thinking businesses for some time: greater employee collaboration and an ability to mine an organization’s collective intelligence with social networking.

The observation connecting personal and business use of Web 2.0 comes from Forrester Research. The firm recommends businesses offer a “free sampling” to encourage adoption in the office and th market the benefits to decision makers.

But more than a one-time sample is needed. Web 2.0 has to become part of a company’s culture, both at work and at home. Otherwise its potential won’t be tapped.

Venture Industry Needs To Be Cut By 50 Percent


A new study of the venture industry points to some old problems – and some newly discovered ones.

It is common knowledge that venture-capital returns have been poor since the dot-com bubble burst in 2000. For almost a decade, returns have lagged the small-cap Russell 2000 Index by 10 percent, according to a study from the Ewing Marion Kauffman Foundation.

At the root of this decline is the reluctance of public financial markets to buy stock in young, unprofitable companies and the maturing of the core markets that have propelled venture investing: information technology and computer networking.

Ok. So these deficiencies and structural issues are well known and widely debated inside and outside the industry. But what isn’t widely discussed is a topic with which venture partners and the National Venture Capital Association trade group will likely take issue.

According to the study, the venture industry likes to tout its role with companies such as Google, Genentech, Microsoft and Starbucks, but “less than one-in-five of the fastest-growing and most successful companies in the United States had venture investors.”

Only approximately 16 percent of the 900 companies on the Inc. 500 list from 1997-2007 had venture capital backing, and study found. What’s more, less than 1 percent of the estimated 600,000 new businesses created in the United States every year take venture financing.

So what’s the study’s prescription for bringing greater profitability back to the business: “we expect venture investing will be cut in half in coming years. At the same time, lowering valuations and improving overall exit multiples should help resuscitate the industry,” said Robert Litan, vice president of research and policy at the foundation.

“Whether it realizes it or not, whether it wants to or not, the venture industry has to change,” says study author Paul Kedrosky, a senior fellow at the foundation and an investor himself.

Such a prescription is quite a bitter pill for the industry to swallow. Therefore, don’t anticipate that it will. Instead look for better times to bring greater health to firms and funds. And chalk up this study as another dire warning in the series of dire warnings that defines this less than perfectly visible slice of the American economy.

More Speculation Oracle Is Planning A Future With Sun’s Hardware


If you listened to Oracle’s fourth-quarter conference call two weeks ago, you were likely struck by the company's emerging strategy that software and hardware do mix.

Larry Ellison laid out his argument that integration from top to bottom – across server, operating system, database, middleware, and application – is a better way to go.

The mercurial CEO pointed to the Exadata database machine for data warehouses as the company’s “first experiment.” Oracle unveiled the machine last fall and boasts that it is selling extremely well – though chest puffing is a common trait at the company even when it is not warranted.

The strategic implications for Oracle’s planned acquisition of Sun are profound. Integration from Sun’s servers to Oracle’s application stack represents a departure not only for Oracle but for the business software industry, which has generally touted individual products and left hardware decisions to customers given the increasing commoditization of computers.

If indeed Oracle is looking toward life with a hardware division – and not intending to sell it off - it will be interesting to see how competitors SAP and IBM respond.

On Monday, industry pundit Bruce Richardson said he is becoming more convinced that Oracle’s heart is in the deal.

Even though the Justice Department has issued a second request for information, “it still appears the deal will be completed by the end of August,” said Richardson, chief research officer at AMR Research.

With that date in mind, the buzz is that Oracle is eager to hire supply-chain talent to try to make servers and chips into a profitable business, he wrote in a blog post.

If this is true, and if Oracle’s integration strategy begins to capture the interest of some customers, watch out. The business software industry is about to make another 90-degree change of direction.

Hulu Starts Showing ABC Programming


Hulu will finally begin displaying programming from Disney’s ABC on Monday, the culmination of months of negotiations and a big step for the online video site.

Hulu was founded by GE’s NBC and News Corp.’s Fox and has been limited to broadcasts from the two networks. If the site is to become THE online destination for television over the Internet, it obviously needs a broader spectrum of content.

That’s where ABC fits in. Starting Monday, Hulu will begin showing some of the most recent episodes of ABC’s Grey’s Anatomy.

They include “the two-part Season 5 opener, two episodes from the middle of the season, and another pair that lead up to the heart-wrenching finale,” according to a Hulu blog post.

Other ABC programs are on the way.

The development is important for the two-year-old site. According to reports, the negotiations with ABC took more than four months leading up to a deal that was announced in May.

According to the news site All Things Digital, ABC was forced to agree to an exclusive online distribution arrangement with Hulu in exchange for an extension of the exclusive arrangement NBC and Fox have made with the site. It also had to kick in marketing money.

British Startup Claims Record Efficiency In Simple Solar Cell


A spin-off of the Imperial College London claims to have produced the world’s most efficient simple, or single-junction, solar cell.

QuantaSol of Kingston-upon-Thames said the cell it produced in two years achieves 28.3 percent efficiency in converting sun light into electricity.

The “strain-balanced, single-junction, quantum-well” cell was tested by Fraunhofer ISE at greater than 500 suns. A single junction cell enables current to flow in just one direction.

The company was formed in 2007 to commercialize the college’s solar technology. It’s cell makes use of nanostructures of two different alloys that are painted on top of crystalline silicon.

The company, which raised second-round funding last week, plans higher efficiency multi-junction cells in the first quarter of next year.


“This is the first time that anyone has successfully combined high efficiency with ease of manufacture, historically a bug-bear of the solar cell industry,” said CEO Kevin Arthur.

Third Monthly Gain For Chip Market Reported


Unemployment continues to be intractably high. But chips are selling.

The Semiconductor Industry Association reported Friday the third month of improving chip sales driven by a solid rebound in the Asia-Pacific market.

Global sales rose 5.4 percent in May from April to $15.6 billion, the trade group said.

Granted, business is still down 23.2 percent from a year ago. But the rise suggests a steadily improving market and lifts hopes that end-of-year activity could show seasonal strength from the holidays.

The monthly increase in Asia-Pacific sales was 6.7 percent while in the Americas it was 3.9 percent.

The true test may not come for the market until late summer when companies decide how much product to build for the Christmas holidays.

Rebound Of 18% Seen In Chip Market


It is now becoming widely accepted that the chip market hit its bottom in the first quarter. What remains a matter of debate is how quick the rebound will be.

Researchers at IC Insights suggest the bounce will be fairly significant – in fact, an 18 percent surge to be precise.

In a Wednesday report, the firm said the market should benefit from a strong holiday period, a restocking of depleted inventories and an increase in worldwide GDP (after a decline in the first half of the year).

Here are some data points from the study:

*Second half cellphone and PC unit shipments are to be up by 18 percent and 15 percent, respectively, from the first half;

*China's second-half gross domestic products is to rise almost 9 percent with the fourth quarter forecast to be more than 9 percent;

*The chip foundry market almost doubled from the first to the second quarters.

Asian IPO Activity now Rivaling That In The US

Since the collapse of the dot-com bubble and the adoption of the Sarbanes-Oxley reform of 2002, financial market experts have worried the United States would lose its IPO leadership.

Without public market investors willing to speculate on startups with new technologies, the fear has been that entrepreneurs would take their companies abroad, or simply abandon ideas judged too risky or unsaleable.

There is no debate that the appetite for IPOs on Nasdaq (and the New York Stock Exchange) is at a low and has been for the better part of a decade. Venture capitalists have adjusted by selling companies privately. But their M&A deals have brought lower returns, and the incentives for big entrepreneurial bets are less than they were in the roaring 1990s.

For a while, expectations grew that secondary exchanges in Europe (particular in London) would fill the shoes of the diminished Nasdaq. Now the expectations (with good cause) are that the soaring economies of Asia might step in.

In this era of economic dislocation (brought on ironically by uncontrolled excesses on Wall Street) there are early signs this might be taking place. The Asian IPO market is feeling strains of its own. There have been several quarters of declining volumes and a suspension of IPOs by the Chinese government in September. But the malaise is ready to reverse.

In the second quarter, for instance, Asian markets saw six IPOs, matching the total of venture-backed IPOs in the U.S., according to Thomson Reuters. Total offering size was $1.9 billion, or just shy of the $2.3 billion in the states, Thomson Reuters reported.

At the same time, there are 32 Chinese companies lined up to sell initial offerings to the public in coming months. Only 10 venture-back companies sit in registration in the U.S.

Times of stress often produce long-lasting market changes. It is possible IPO leadership could be one of them, with devastating consequences for the world’s largest economy.

Five Venture Backed IPOs Of Second Quarter Best In A Year, But So What

The news from the second quarter might easily be mistaken for good.

Five venture-backed IPOs launched during the three months – the highest total since the first quarter of 2008, when there also were five.

But activity in the market place remains very slow, so slow few companies even bother to file registration papers with the Securities and Exchange Commission.

According to the National Venture Capital Association and Thomson Reuters, there were five venture-backed initial public offerings during the just ended quarter, five information-technology companies and the clean-tech outfit SolarWinds.

While the total was a boost from the first quarter, when there were none, it is no real departure from the sluggish pace of the past year and a half. Since the start of 2008, only 11 venture-backed companies have sold shares on a public market in the U.S., compared with 86 in 2007 and 57 in 2007.

The market in essence has still not recovered from the dot-com implosion - and it is clearly worrisome for the U.S. economy. IPOs allow young companies to raise cash for expansion and in doing so create jobs.

Young companies also are a source of valuable technological innovation.

“We remain concerned about the extremely thin pipeline of companies in registration as it indicates that it will be some time before we can even be in a position to return to healthy IPO activity levels,” said NVCA President Mark Heesen. Only 10 are registered to offer shares.

The danger for the U.S. economy is that exchanges elsewhere begin to fill the shoes of the Nasdaq and other exchanges in the U.S., that have traditionally welcomed startups.

So far they haven’t. But it is probably just a matter of time. In the second quarter, one venture-backed company launched on a foreign exchange: California based Array Networks went public on the Taiwan exchange.