Berners-Lee, Web take bow at Olympics


Web inventor Sir Tim Berners-Lee takes a star turn during the opening ceremony for the Summer Olympics in London.

Sir Tim looks on as his tweet lights up the stadium.

(Credit: Screenshot by Edward Moyer/CNET)

Forget about the ripped-and-rugged sprinters and shot-putters, bring on the gold-medal geeks.

The opening ceremony of this summer’s London Olympics obliged that sentiment, as Web inventor Sir Tim Berners-Lee got the star treatment during the extravaganza.

A hip-hoppy dance routine featuring legions of fist-pumping club-types gave way as a stage-set suburban house rose from the ground to reveal a lone keyboard jockey surfing away in solitude.

None other than Berners-Lee it was, and with a flick of his wrist, he lit up the stadium with a grandly flashing tweet: “This is for everyone.”

And so, more and more, it is. In the two decades or so since its inception, the WWW has grown from a nerdy curiosity into a tool well nigh as widespread as the telephone or TV. Twitter itself reported today that 9.66 million tweets concerning the Olympics opening ceremony were sent out as the spectacle unfolded — that’s more than the number of tweets sent out about the 2008 Beijing Olympics during the entire run of that tournament. Clearly, the Web is nothing these days if not mainstream (though it bears noting that a digital divide does still exist, even in a country as well off as the U.S.).

Berners-Lee’s tweet itself generated almost 10,000 retweets, Twitter said in its blog post. Here, courtesy of Berners-Lee himself, and the Web, is a clip of Sir Tim’s big Olympic moment:

Related stories
Tim Berners-Lee: Tell Facebook, Google you want your data back
Tim Berners-Lee speaks out against U.K. surveillance bill
Tim Berners-Lee: The Web is threatened
Berners-Lee calls for higher purpose of Web
Tech advice from Tim Berners-Lee
Pew: Smartphones narrow digital divide
Web accessibility no longer an afterthought
Berners-Lee in a dress and the Web’s first uploaded photo

 by Edward Moyer

Crave writer Edward Moyer, also CNET News’ Saturday editor, once built a model of the DNA molecule for a PBS science series–out of telephone cord and tapioca balls. He also worked at USA Today and other pubs–waxing philosophical with Elvis’ ex and slurping spaghetti with Roller Girl of “Boogie Nights,” among other things. E-mail Ed with your story ideas and insights.

Related post:

Chinese supremacy at Olympics

Medal Count as July 30 2012
Leaders Total
1
China 9 5 3
17
2
United States 5 7 5
17
3
France 3 1 3
7
4
DPR Korea 3 - 1
4
5
Italy 2 4 2
8
6
Korea 2 2 2
6
7
Russia 2 - 3
5
8
Kazakhstan 2 - -
2
9
Japan 1 4 6
11
10
Australia 1 2 1
4
11
Romania 1 2 -
3
12
Brazil 1 1 1
3
12
Hungary 1 1 1
3
14
Netherlands 1 1 -
2
15
Ukraine 1 - 2
3
16
Georgia 1 - -
1
16
Lithuania 1 - -
1
16
South Africa 1 - -
1
19
Colombia - 2 -
2
20
United Kingdom - 1 2
3
21
Cuba - 1 -
1
21
Germany - 1 -
1
21
Mexico - 1 -
1
21
Poland - 1 -
1
21
Thailand - 1 -
1
21
Chinese Taipei - 1 -
1
27
Azerbaijan - - 1
1
27
Belgium - - 1
1
27
Canada - - 1
1
27
Indonesia - - 1
1
27
India - - 1
1
27
Moldova - - 1
1
27
Mongolia - - 1
1
27
Norway - - 1
1
27
Serbia - - 1
1
27
Slovakia - - 1
1
27
Uzbekistan - - 1
1
Malaysia - - -
-
Malaysia - - -
-

The Facebook Fallacy


For all its valuation, the social network is just another ad-supported site. Without an earth-changing idea, it will collapse and take down the Web.

Facebook is not only on course to go bust, but will take the rest of the ad-supported Web with it.

Given its vast cash reserves and the glacial pace of business reckonings, that will sound hyperbolic. But that doesn’t mean it isn’t true.

At the heart of the Internet business is one of the great business fallacies of our time: that the Web, with all its targeting abilities, can be a more efficient, and hence more profitable, advertising medium than traditional media. Facebook, with its 900 million users, valuation of around $100 billion, and the bulk of its business in traditional display advertising, is now at the heart of the heart of the fallacy.

The daily and stubborn reality for everybody building businesses on the strength of Web advertising is that the value of digital ads decreases every quarter, a consequence of their simultaneous ineffectiveness and efficiency. The nature of people’s behavior on the Web and of how they interact with advertising, as well as the character of those ads themselves and their inability to command real attention, has meant a marked decline in advertising’s impact.

At the same time, network technology allows advertisers to more precisely locate and assemble audiences outside of branded channels. Instead of having to go to CNN for your audience, a generic CNN-like audience can be assembled outside CNN’s walls and without the CNN-brand markup. This has resulted in the now famous and cruelly accurate formulation that $10 of offline advertising becomes $1 online.

I don’t know anyone in the ad-Web business who isn’t engaged in a relentless, demoralizing, no-exit operation to realign costs with falling per-user revenues, or who isn’t manically inflating traffic to compensate for ever-lower per-user value.

Facebook, however, has convinced large numbers of otherwise intelligent people that the magic of the medium will reinvent advertising in a heretofore unimaginably profitable way, or that the company will create something new that isn’t advertising, which will produce even more wonderful profits. But at a forward profit-to-earnings ratio of 56 (as of the close of trading on May 21), these innovations will have to be something like alchemy to make the company worth its sticker price. For comparison, Google trades at a forward P/E ratio of 12. (To gauge how much faith investors have that Google, Facebook, and other Web companies will extract value from their users, see our recent chart.)

Facebook currently derives 82 percent of its revenue from advertising. Most of that is the desultory ticky-tacky kind that litters the right side of people’s Facebook profiles. Some is the kind of sponsorship that promises users further social relationships with companies: a kind of marketing that General Motors just announced it would no longer buy.

Facebook’s answer to its critics is: pay no attention to the carping. Sure, grunt-like advertising produces the overwhelming portion of our $4 billion in revenues; and, yes, on a per-user basis, these revenues are in pretty constant decline, but this stuff is really not what we have in mind. Just wait.

It’s quite a juxtaposition of realities. On the one hand, Facebook is mired in the same relentless downward pressure of falling per-user revenues as the rest of Web-based media. The company makes a pitiful and shrinking $5 per customer per year, which puts it somewhat ahead of the Huffington Post and somewhat behind the New York Times’ digital business. (Here’s the heartbreaking truth about the difference between new media and old: even in the New York Times’ declining traditional business, a subscriber is still worth more than $1,000 a year.) Facebook’s business only grows on the unsustainable basis that it can add new customers at a faster rate than the value of individual customers declines. It is peddling as fast as it can. And the present scenario gets much worse as its users increasingly interact with the social service on mobile devices, because it is vastly harder, on a small screen, to sell ads and profitably monetize users.

On the other hand, Facebook is, everyone has come to agree, profoundly different from the Web. First of all, it exerts a new level of hegemonic control over users’ experiences. And it has its vast scale: 900 million, soon a billion, eventually two billion (one of the problems with the logic of constant growth at this scale and speed, of course, is that eventually it runs out of humans with computers or smart phones). And then it is social. Facebook has, in some yet-to-be-defined way, redefined something. Relationships? Media? Communications? Communities? Something big, anyway.

The subtext—an overt subtext—of the popular account of Facebook is that the network has a proprietary claim and special insight into social behavior. For enterprises and advertising agencies, it is therefore the bridge to new modes of human connection.

Expressed so baldly, this account is hardly different from what was claimed for the most aggressively boosted companies during the dot-com boom. But there is, in fact, one company that created and harnessed a transformation in behavior and business: Google. Facebook could be, or in many people’s eyes should be, something similar. Lost in such analysis is the failure to describe the application that will drive revenues.

Google is an incredibly efficient system for placing ads. In a disintermediated advertising market, the company has turned itself into the last and ultimate middleman. On its own site, it controls the space where a buyer searches for a thing and where a seller hawks that thing (its keywords AdWords network). Google is also the cheapest, most efficient way to place ads anywhere on the Web (the AdSense network). It’s not a media company in any traditional sense; it’s a facilitator. It can forget the whole laborious, numbing process of selling advertising space: if a marketer wants to place an ad (that is, if it is already convinced it must advertise), the company calls Mr. Google.

And that’s Facebook’s hope, too: like Google, it wants to be a facilitator, the inevitable conduit at the center of the world’s commerce.

Facebook has the scale, the platform, and the brand to be the new Google. It only lacks the big idea. Right now, it doesn’t actually know how to embed its usefulness into world commerce (or even, really, what its usefulness is).

But Google didn’t have the big idea at the company’s founding, either. The search engine borrowed the concept of AdWords from Yahoo’s Overture network (with a lawsuit for patent infringement and settlement following). Now Google has all the money in the world to buy or license all the ideas that could makes its scale, platform, and brand pay off.

What might Facebook’s big idea look like? Well, it does have all this data. The company knows so much about so many people that its executives are sure that the knowledge must have value (see “You Are the Ad,” by Robert D. Hof, May/June 2011).

If you’re inside the Facebook galaxy (a constellation that includes an ever-expanding cloud of associated ventures) there is endless chatter about a near-utopian (but often quasi-legal or demi-ethical) new medium of marketing. “If we just … if only … when we will …” goes the conversation. If, for instance, frequent-flyer programs and travel destinations actually knew when you were thinking about planning a trip. Really we know what people are thinking about—sometimes before they know! If a marketer could identify the person who has the most influence on you … If a marketer could introduce you to someone who would relay the marketer’s message … get it? No ads, just friends! My God!

But so far, the sweeping, basic, transformative, and simple way to connect buyer to seller and then get out of the way eludes Facebook.

So the social network is left in the same position as all other media companies. Instead of being inevitable and unavoidable, it has to sell the one-off virtue of its audience like every other humper on Madison Avenue.

Here’s another worrisome point: Facebook is a company of technologists, not marketers. If you wanted to bet on someone succeeding in the marketing business, you’d bet on technologists only if they could invent some new way to sell; you wouldn’t bet on them to sell the way marketers have always sold.

But that’s what Facebook is doing, selling individual ads. From a revenue perspective, it’s an ad-sales business, not a technology company. To meet expectations—the expectations that took it public at $100 billion, the ever-more-vigilant expectations needed to sustain it at that price—it has to sell at near hyperspeed.

The growth of its user base and its ever-expanding  page views means an almost infinite inventory to sell. But the expanding supply, together with an equivocal demand, means ever-lowering costs. The math is sickeningly inevitable. Absent an earth-shaking idea, Facebook will look forward to slowing or declining growth in a tapped-out market, and ever-falling ad rates, both on the Web and (especially) in mobile. Facebook isn’t Google; it’s Yahoo or AOL.

Oh, yes … In its Herculean efforts to maintain its overall growth, Facebook will continue to lower its per-user revenues, which, given its vast inventory, will force the rest of the ad-driven Web to lower its costs. The low-level panic the owners of every mass-traffic website feel about the ever-downward movement of the cost of a thousand ad impressions (or CPM) is turning to dread, as some big sites observed as much as a 25 percent decrease in the last quarter, following Facebook’s own attempt to book more revenue.

You see where this is going. As Facebook gluts an already glutted market, the fallacy of the Web as a profitable ad medium can no longer be overlooked. The crash will come. And Facebook—that putative transformer of worlds, which is, in reality, only an ad-driven site—will fall with everybody else.

By Michael Wolff

Michael Wolff writes a column on media for the Guardian; is a contributing editor to Vanity Fair; founded Newser; and was, until October of last year, the editor of AdWeek

Newscribe : get free news in real time

Related posts:

May 28, 2012
May 20, 2012
May 23, 2012
May 23, 2012
May 24, 2012

Google’s latest wheeze: Work out these blurry house numbers for us


Google, the pride of open everything, uses real blurry house number images as its Captchas, so that the general public can tell them what the number really is.

An openly available image of Sergey Brin in the open air.(Credit: Google+,Sergey Brin)

I have spent much of the day blurry-eyed, moved by Google’s Sergey Brin declaring his company the only great defender of the open Web.

The tears have, it has come to my attention, mainly emerged from laughter at Google’s sweet, thoughtful gall that everything it claims the world desires just happens coincidentally to benefit it commercially.

Still, no sooner had my eyes dried a little when the Telegraph offered me Google’ latest exemplar of sheer, beautiful openness.

For it seems that Google is using real images from Street View as security checks. Yes, if you want to access your own Google account, the company is asking you to decipher a slightly blurry image of a real house number.

It seems that if enough people decide on a particular number, then Google sharpens up the image on Street View.

Yes, you are being asked to work for Google, Openly. For free. And if you don’t, well, you may not be able to access your own Google account.

The Telegraph naturally declares that certain privacy groups are foaming at the lips on hearing of this little scheme — which, according to a Google spokesman, only occurs in 10 percent of security questions.

But surely some people, on hearing of this and Google being fined $25,000 by the FCC for, um, non-compliance with its inquiry into Wi-Fi eavesdropping, might feel that openness has a highly subjective definition in Google’s complex collective cranium.

Google’s version of the open Web seems very simple: let us get at everything. Whether it’s books, streets, houses, Facebook accounts, iPhoto accumulations or perhaps even the remains of your spaghetti bolognese.

Something is open if Google can see it and scrape it. And when Google sees it and scrapes it, it can create a fuller picture of every element of your life — just in case, you know, some lonely advertiser might pass by and show interest.

Some might call this freedom. There again, doesn’t freedom sometimes entail being free not to let rapacious, baby-faced organizations peer into your life?

Chris Matyszczyk is an award-winning creative director who advises major corporations on content creation and marketing. He brings an irreverent, sarcastic, and sometimes ironic voice to the tech world. He is a member of the CNET Blog Network and is not an employee of CNET.

Related posts & articles:

Google’s Business Experiment: Nothing but Web

Google+ face-lift triggers jibes over extra white space

Google plans major revamp for search engine

Google acquires more IBM patents

FCC Proposes: Fine for Google Wi-Fi snooping ‘obstruction’

Google testing Google News tweaks

Sergey Brin, Google: Web freedom faces greatest threat ever. ‘It’s scary.’ (nextlevelofnews.com)

Google’s Sergey Brin: China, SOPA, Facebook Threaten the ‘Open Web’ (wired.com)

Google+ face-lift triggers jibes over extra white space


Yesterday’s revamp of Google+ leaves a hefty amount of white space on certain pages, a design change that’s brought out the comedian in many users.

(Credit: Screenshot by Lance Whitney/CNET)

What would you do with the extra white space now gracing the pages of Google+?

That’s a question many users of the social network have been answering with the usual sarcastic spin we always love to see on the Internet.

Launching yesterday, the latest face-lift for Google+ added a slew of changes, including a new left-side navigation bar and new ways to interact with the people in your circles.

But the one change that’s put people into full mocking mode is the new and extra-sized white space. Click on any virtually any Google+ page, and a good 40 percent is nothing but blank space.

The white-space flap has led to its own trending topic on Google+, where an array of users have chimed in with suggestions on how to use that space most effectively.

One user found the extra white space in front of his monitor a good spot to place his beer. Another put his cat in front of it. And a third angled his monitor into portrait mode to get rid of the white space entirely.

Personally, I’m a fan of white space. I think most Web pages are way too cluttered, so a little breathing room isn’t so bad. But in this case, the search giant may have gone a bit overboard. The extra space kind of makes the pages seem off-balance, like they’re going to tip over.

The obvious questions are why Google designed the pages this way and whether the company plans to use that extra real estate for other content down the road. Google didn’t immediately answer CNET’s request for comment.

A Google rep told CNET that some of the changes were indeed created for future needs.

“So while it may look clutter-free now, the idea is to give us space that will allow us to quickly grow,” the rep said. “With today’s foundational changes we can move even faster–toward a simpler, more beautiful Google.

I have hunch, though, that the company may have planned the whole “extra white space” conspiracy. It quickly turned into a trending topic and has generated lots of buzz. What better publicity could you ask for?

by Lance Whitney wears a few different technology hats–journalist, Web developer, and software trainer. He’s a contributing editor for Microsoft TechNetMagazine and writes for other computer publications and Web sites. Lance is a member of the CNET Blog Network, and he is not an employee of CNET.

Related stories

Tech CEOs 2011: The best and the worst


by Charles Cooper, CNET

Armchair critics of the world rejoice. It’s time to select the year’s best and worst tech CEOs. It’s a judgment that some no doubt will lambaste as arbitrary, even biased. On both counts we plead guilty. So if you have candidates for either category, or take issue with our choices, add your voice in the talkback section below.

THE HEROES

Steve Jobs and Tim Cook
Skip to the next section if you’re thoroughly sick of reading about how Apple keeps hitting the ball out of the park. Truth be told, it was more fun in the mid-1990s when Apple was Silicon Valley’s running soap opera. Nowadays the company operates with the sort of steamroller efficiency epitomized by the 1927 New York Yankees led by Babe Ruth and Lou Gehrig. And for that, you have to credit the CEO tandem of the late Steve Jobs and his successor — and alter ego — Tim Cook.

Tim Cook sitting at Steve Jobs’ right at an event in 2007 (Credit: James Martin/CNET)

Jobs may be gone but his influence at Apple remains in the management team and product design philosophy that he left behind. Even though illness forced Apple’s legendary co-founder to relinquish the reins to Cook in late August, his half-year as CEO was still better than full-year performances turned in by most of his peers. This wasn’t an overnight handover. Whenever Jobs needed to take a step back, Cook was in the unique position of receiving extended on-the-job training, and whatever rough patches he might have encountered were well hidden behind Apple’s carefully constructed PR screen. All the while, Cook got to learn first-hand from the tech industry’s master marketer how it’s done.

What a shame Jobs wasn’t healthy enough to introduce the iPhone 4S. How the fan boys would have swooned when he offered them the first look at Siri. Cook’s not a matinee idol and he doesn’t try to be. Maybe that explains the relatively muted reaction to what was otherwise a very successful product debut. Some quibbled that the lines in front of Apple stores were smaller than for previous releases. But the bloggers and reporters who get hung up by the different style are making a big deal out of the trivial. Like Jobs, Cook has offered the leadership that you’d expect from a strong CEO. He more than justified Jobs’ confidence as Apple’s iPhones, iPads and iMacs continued to sell at a torrid clip in the second half of 2011, sending the company’s shares are up more than 17 percent year-to-date, beating both the Nasdaq index and S&P 500.

The question everyone is asking is whether Cook can muster the magic on his own now that he’s flying solo. Maybe we’ll find out the answer in 2012. But so far, this rates as one of the most seamless managerial handovers in corporate history. And one of the most successful.


President Obama chats with Facebook CEO Mark Zuckerberg.

President Obama chats with Facebook CEO Mark Zuckerberg in February. (Credit: The White House)

Mark Zuckerberg
Here’s one way to think about how entrenched Facebook has become in the cultural lexicon: When someone decides they actually want to leave everyone’s favorite social network grid, this now qualifies as “news.” That is no small accomplishment. Even though Google now offers its own rival service, Facebook remains by a wide margin the preferred social network for revelers, revolutionaries, and just plain folk posting their musings, pictures, and videos uploads.

Wall Street has apparently decided that Facebook is not of this world, according it a pre-IPO valuation now north of $80 billion. But somehow the peanut gallery remains reluctant to give Mark Zuckerberg his full due for building a magnificent platform. Yes, he’s profiled in business magazines and gets sought out for interviews by everyone from Charlie Rose to “60 Minutes.” But when you listen to discussions of the great CEOs of Silicon Valley, you’re more likely to hear mention of John Chambers, who had Cisco buy the company that makes the Flip video camera for $590 million and then shut the division less than two years later. The worst Zuckerberg ever did is get sloppy with privacy controls, a faux pas that some within the blogosphere may never forgive.

But as 2011 closes, it’s time to give it up for the Z-man. Through the years he has remained true to his vision and resisted sundry offers to sell out. Back in 2006, when he was approached with a $750 million offer, more than a few people thought he should take the money and run. Who was Zuckerberg and what was Facebook to think they could outrun then-juggernaut MySpace? But five years later, MySpace is irrelevant, while Facebook has over 750 million active users and earned $500 million on $1.6 billion of revenue during the first half of 2011.

Like Bill Gates, an entrepreneur who managed very well as CEO at a young age, Zuckerberg is growing into the role (helped in no small part by his able No. 2, Sheryl Sandberg.). The best example came this fall when he put a potentially distracting privacy fight with the government in the rear view mirror instead of venting publicly about government persecution. He’s familiar with Microsoft’s less than happy experience battling Uncle Sam and wisely ordered Facebook to strike a deal with the Federal Trade Commission that should put this issue to bed.

Zuckerberg can’t go on auto-pilot. His biggest immediate challenge, of course, comes from Google, which launched its Google+ service in July and passed the 40 million user mark in October. Facebook has to keep pushing. It did a nice job with Timeline, the new profile design that finally went live last week. And with an eye toward avoiding further complaints about user privacy, Facebook also rolled out a useful tool called Activity Log which may go down as one of the site’s most important additions since the inclusion of the News Feed.

The coming IPO, presumably sometime in 2012, will be a barometer of Zuckerberg’s success, as well as the event of the year’s tech calendar. And who knows what the future holds? Is it altogether nutso to imagine Facebook bringing out its own search technology, one that could sort through a gold mind of data about social interactions? Zuckerberg is aiming high, and Facebook is already a good part of the way there. This is how legacies get created. If it all works as Zuckerberg hopes, then maybe that $80 billion valuation will turn out to be on the low side. Scary but true.


Eric Schmidt, Larry Page, and Sergey Brin

From left, Google’s Eric Schmidt, Larry Page, and Sergey Brin.(Credit: Google)

Larry Page
In Google’s 2004 pre-IPO filing with the SEC, co-founder Larry Page sent prospective shareholders a Monty Python-like message that he wasn’t interested in conducting business as usual.

“Google is not a conventional company. We do not intend to become one.”

A bit full of himself, sure, but now that the proverbial buck stops at his desk — he became CEO in April — Page has had an opportunity to back up his words. Though his brief reign, this much is clear: While he may not be an unconventional CEO, Page has ably handled the awesome responsibility that he sought out. He set the company on a new course with the blockbuster announcement of a $12.5 billion deal for Motorola Mobility (a deal that gives Google more than 17,000 patents and will prove useful now that Apple is trying to nuke Android in a court case). Meanwhile, Android continues to grow by leaps — according to Nielsen, it now powers about 40 percent of smartphones — while Google’s search dominance remains unquestioned. The company also made a successful entry into social networking with Google+, which finally offers Facebook its first serious competition for advertising dollars and user attention. Wall Street likes what it’s seen. On the day Page took over, Google’s shares closed at $587.68; with less than a couple of weeks left in the year, they’re hovering around the $630 level.

By all accounts, Page’s accession to the top job — technically this is his second turn as CEO, though his first as the head of Google as a public company — has been annotated by drive and energy. He wants to accelerate Google’s corporate DNA, and in the near term, that may be his biggest challenge. The flip side of being big and successful is the spread of corporate sloth (as both Microsoft and IBM veterans can attest). With around 25,000 employees at Google, this is no longer a scrappy startup and it’s become tougher than ever for good ideas to bubble up from the ranks and get proper consideration. That’s why Page has winnowed the number of projects Google’s engineers are working on, focusing their efforts on the areas where he thinks there’s the best chance for the biggest returns.

OK, how difficult can it be to sit at the top of the mountain, take in your immense kingdom, and bloviate in SEC docs about being unconventional? In fairness, it’s not as easy as it looks, so give Page deserving kudos for not screwing up what continues to be one of the most vibrant tech companies around. We’re often reminded of the spectacular success stories registered by the likes of Bill Gates and Steve Jobs (his second time at the helm more so than his first go around) but any fair recording of CEO-founders includes no shortage of flameouts. Remember George Shaheen at Webvan.com, Philippe Kahn at Borland, and Ted Waitt at Gateway, to name a few? All were smart guys and their companies were once the toast of the town. Then the good times ended and they couldn’t reverse the slide. If Page turns out to be as good as we think, Google’s CEO won’t ever find himself facing that sort of predicament.


THE GOATSReed Hastings
Yesterday’s hero can turn into today’s goat in the amount of time it takes to launch a press release. Just ask Netflix CEO and founder Reed Hastings, who must still be wondering if it was all a nightmare.

Reed Hastings

Netflix founder Reed Hastings at one of the company’s warehouses in Silicon Valley.(Credit: CBS)

Up until this year, Hastings was an Internet rock star, lauded for having changed the way we consume movies and television shows. Netflix was an easy-to-use service priced at the sweet spot. Consumers flocked to it. Wall Street sang its praises. But it all came a cropper in September when Hastings executed the sort of maneuver that one might have expected from F-Troop.

It wasn’t just the 60 percent price hike on one of Netflix’s most popular plans that got peoples’ dander up. Netflix also planned to split into two parts: One unit named “Qwikster” would mail DVDs to subscribers, while the other would continue to focus on streaming movies over the Internet.

This turned out to be a public relations disaster. Even though the price increase would impact only subscribers who used both the streaming and mail-order sides of the business, the announcement left Netflix loyalists steamed. Two separate websites with two billing systems and two names? If there was a higher logic at play, it escaped most people. The reviews were uniformly lousy and Netflix became the butt of late-night TV hosts’ jokes. Wedbush Securities analyst Michael Pachter summed up the general reaction with this icy observation to a reporter from USA Today: “They raised prices. They offered lower-quality content, and they made it more complicated.” Within three weeks Hastings reversed the Qwikster decision and publicly apologized for having “slipped into arrogance” (though Netflix kept the price increase in place.) But the apology was too late to repair the damage. During the third quarter, 800,000 subscribers responded to the Qwikster fiasco by dumping the service. Shares of Netflix, which earlier in the year poked above $300, have since fallen to the $70 range.

People have short memories and this isn’t necessarily the end of the world for Netflix. Fans do return. Think Bob Dylan and his move to electric guitar. After the initial freak-out, most of the faithful got over it. Nothing here rules out that kind of rebound for Hastings — as long as he avoids hitting another sour chord. At that point, Neflix really could be left blowing in the wind.


Leo Apotheker and Meg Whitman

Leo Apotheker and Meg Whitman (Credit: Graphic by James Martin/CNET)

Leo Apotheker
In our quiet moments, it’s reasonable to wonder whether some mischievous warlock left the curse of the cat people on Hewlett-Packard.

Carly Fiorina’s years were marked by corporate drift and tumult. Her replacement, Mark Hurd, was ousted in an expense-fudging scandal involving a former soft-porn actress. In between, there was a bizarre novella in which corporate officers trying to plug a leak ordered investigators to spy on journalists.

But nothing — and I mean nothing — compares with the brief and utterly feckless tenure of one Leo Apotheker, hired in November 2010 to replace Hurd.

Apotheker was a highly regarded software executive who had been chief executive of SAP AG. Although he had little experience as a hardware executive, the company hoped he could take the management skills he had picked up over the course of his long career and apply them to the job at hand. It was only much later on that we learned most members of HP’s board of directors had never even met Apotheker before voting to hire him. That’s what you get when the company is overseen by what a former board member has described as the “worst” board of directors in the history of business. But I digress.

After 11 months as CEO, Apotheker got the boot and HP, once one of Silicon Valley’s storied company, was reduced to a laughingstock. The chronology played out over the summer, when Apotheker announced that HP would kill off the TouchPad tablet computer, which had only recently debuted. He also canceled a crop of phones and products based on Palm’s WebOS operating system. He was also convinced HP would be better off selling the PC business, a $30 billion division which at the time still enjoyed big market presence.

His plan now is easy to mock. But Apotheker had a strategy to remake HP into something resembling his former company and specialize in catering to enterprise-sized companies. On the surface, at least, it was intriguing. After all, the idea of jettisoning low-margin businesses to focus on software and service worked wonders at IBM under Lou Gerstner and Sam Palmisano. But it took time for those two to get all the pieces in place and plan IBM’s exit from the commodity stuff.

In contrast, the clock was ticking for Apotheker right from the start. And with HP missing its financial targets, Apotheker quickly lost credibility with the financial community, making investors even antsier as HP’s stock lost 40 percent of its value. He also lost credibility with another key constituency as the board grumbled at his poor communications skills (starting with the decision to kill the TouchPad) as well as the company’s product direction. Rightly or not, Apotheker was labeled a zig-zagger with little feel for HP’s hardware business. The board executed a mercy killing in September, replacing Apotheker with Meg Whitman. The former eBay CEO has since announced that HP would keep the PC business.

You can’t make this stuff up.


James Martin/CNET

RIM co-CEO Mike Lazaridis shows off the BlackBerry PlayBook.(Credit: BlackBerry PlayBook, Mike Lazaridis)

Jim Balsillie and Mike Lazaridis
After their company’s latest earnings debacle, Research In Motion’s co-CEOs James Balsillie and Mike Lazaridis announced they would take just $1 in salary. Given the collapse of this one-time tech darling, some shareholders may grumble these two are still being overpaid.

It’s hard to believe how quickly RIM has collapsed. The company’s stock has lost more than three-quarters of its market value in the last year while a myriad of app-hip mobile handset rivals have prospered. That’s all the more remarkable given how we’re talking about what once was the premier mobile device maker for businesses. Now RIM is a company that can’t seem to keep up. With every new Android and Apple update, RIM promises a next-generation BlackBerry phone — sometime in the second half of next year. Meanwhile, its PlayBook tablet has been turned into a bargain-bin product with RIM offering massive discounts.

Cue up Clayton Christensen and the perils of the innovator’s dilemma, where one-time market leaders fail to capitalize on new waves of innovation. In the meantime, here’s Lazaridis trying to explain why the on BlackBerry 10, the upcoming product RIM has touted as the basis for its superphone, is going to be delayed:

We need a highly integrated dual-core LTE platform.The processor we selected offers industry-leading power and efficiency, and also allows us to deliver the industrial design, that we believe is critical to the success in this market segment. This chipset will not be available until mid 2012. And as a result of this and certain other factors, we now expect our first BlackBerry 10 smartphones to reach markets in the latter part of calendar 2012. In the meantime, we believe that our strong BlackBerry 7 portfolio will continue to drive adoption of BlackBerry around the world.

One problem: In July, Lazaridis told shareholders that the BlackBerry 7 handsets were just “messaging” handsets compared to the “mobile computing” handsets slated to come out with the BlackBerry 10 software. Now the company’s stuck with these same “messaging” handsets while the market keeps moving along. Sanford Bernstein responded to that performance by calling management “in complete denial of the situation” while another brokerage, Robert W. Baird, said RIM’s U.S. business was “in a freefall.”

There’s a growing feeling that Balsillie and Lazardis, who share responsibilities for leading RIM, are congenitally conventional managers ill-equipped to handle an unconventional challenge. The situation has reached the point that some are even floating suggestions that RIM may need to consider dumping the BlackBerry if it’s to survive. That sounds like a stretch but at this rate the situation is impossibly grim, with investors and customers holding onto faint promises of better times ahead. The fact that RIM has even reached this point constitutes Exhibits A, B, and C for the chorus of critics demanding new leadership.


Tim Armstrong
As an early user of AOL’s dial-up service, I have to confess to a twinge of nostalgia each time I watch “You’ve Got Mail.” That’s about the only warm and fuzzy feeling AOL gives off these days as CEO Tim Armstrong seeks to find on a formula that will save the company from media also-ran status.

AOL CEO Tim Armstrong.

AOL CEO Tim Armstrong.(Credit: Google)

Give the man credit for believing in a strategy. But after two years making the same pitch, the question is whether he’s got the right strategy. Armstrong is an online ad sales guy — he was Google’s president of the Americas operations — and has gone shopping for new content that AOL’s ad sales team can sell against. Like Yahoo, AOL has a legacy business in the form of its dial-up operations which, remarkably, still throws off a lot of cash each quarter. That’s allowed Armstrong to fund his bet that that content will create scale when he acquired the Huffington Post for $315 million as well as TechCrunch for a reported $30 million. It’s still too early to say how those deals are going to work out for AOL though they were grand slams for the two blogs’ creators, Arianna Huffington and Michael Arrington, who sold at the peak. The other big hope is Patch, the company’s network of hyperlocal Web sites. AOL this year has sunk $40 million into Patch on top of the $75 million that it spent on the project last year. Good money after bad? Not according to Armstrong, who has predicted that Patch will start generating a profit by the end of 2011.

But despite adding a collection of works in progress, AOL has failed to distinguish itself from the pack. AOL may argue that its content Web site pickups will help boost traffic and revenues in a meaningful way but it is unclear whether traditional remedies for a traditional media company will provide the needed fix. Wall Street has not bought the story. With Armstrong scheduled to take home a total annual compensation package of $1 million, AOL’s stock plummeted from nearly 25 earlier in the year to the mid-teens.

On top of that, Armstrong’s reputation as a leader suffered when he was unable to effectively resolve the summer soap opera involving Arrington and Huffington. After losing a turf war, Arrington very publicly left AOL; he was soon followed out the door by several key staffers – including, most recently, TechCrunch CEO Heather Harde. But that was just a circus sideshow to the central question about whether Armstrong has what it takes to turn AOL into a money maker. Already calls are coming to split the company into pieces and jettison the units that aren’t adding to growth. How long before some of those same voices begin asking why Armstrong should escape paying the same penalty exacted from Carol Bartz when she failed to revive Yahoo? After all, you can only be in turnaround mode for so long.

Charles Cooper has covered technology and business for more than 25 years. Before joining CNET News, he worked at the Associated Press, Computer & Software News, Computer Shopper, PC Week, and ZDNet. E-mail Charlie

Newscribe : get free news in real time 

Which player can steal more eyeballs in pay-TV market?


Friday Reflections – By B.K. Sidhu

PAY TV there has been some failures in the past.

Mega TV, FineTV and MiTV never made it big. In fact, some just closed shop after a few months of ambitious screening.

Running a pay-TV business requires deep pockets, content that appeals, low pricing and wide reach. However, repetitive programming irks and the station must be very mindful that consumer behaviour is constantly changing, so they need to adapt to change.

The Internet has finally cracked the door to our living rooms and that by itself has brought a change in consumer behaviour.

That has posed a new challenge for traditional broadcasters, pay-TV operators and the likes.

But by the second quarter of 2012, digital cable TV will come knocking on our living room doors with entertainment and education programming. Internet and interactive functions will be a feature and the promoters are looking at “reasonable pricing” and “wide reach” as their strategy.

Nilamas Corp Bhd, a company owned by some high ranking ex-army personnel, has the licence to bring digital cable TV here.

I have no clue what the “reasonable pricing” would be, but it should be a lot less than the current offerings and it should come with a lot more varied content, or else it cannot be termed “reasonable”.

Going by Wikipedia, digital cable is a generic term for any type of cable TV using digital video compression or distribution. Nilamas wants to use fibre optic to link the last mile to homes for picture perfect.

Currently, we have satellite pay-TV operated by Astro, IPTV (Internet protocol TV) offered by Telekom Malaysia Bhd (TM) and RedTone International Bhd‘s DeTV. There are several free-to-air channels now and these analogue networks will migrate to digital terrestrial television broadcasting (DTTB) by 2015.

Astro has also entered the IPTV space to protect its turf. It has over three million subscribers and offers 150 channels.

TM rides on its high-speed broadband to offer Hypp TV. It has 184,000 UniFi users of which 80% are viewers of the IPTV.

Maxis Bhd is also in the entertainment game and had some months ago launched its Maxis Home services. Though a disappointing launch then, its recent teaser ads are generating interest as it seems to have something for everyone in the family. It intends to launch IPTV pretty soon.

Celcom Axiata is silently working on a strategy to be part of the big-screen offering while DiGi.Com Bhd is still focused on small-screen entertainment.

YTL Communications Sdn Bhd is the other player hoping to ride it big in the entertainment scene. It will offer hybrid TV services over a wireless platform by the end of this year with partner, US-based Sezmi Corp.

Incidentally, YTL Communications is also one of the two potential contenders for the DTTB contract. The other is Puncak Semangat Sdn Bhd which teamed up with New Zealand’s Kordia for expertise as well as to train people on the digital migration.

In a nutshell, the entertainment scene via our idiot box should get competitive by mid next year, provided, of course, if Nilamas keeps to its launch date.

At the moment, the players decide on the rates and content and there is virtually no competition. Some consumers are constantly looking for cheaper options, flexible packages and attractive programming and those that can offer them what they want will get their eyeballs.

But let’s not forget that the Net is a huge source of content and a lot of people prefer free downloads. The likes of Google TV is also a potential threat that can steal the eyeballs away.

So while the fight for eyeballs should get intense and the incumbents will not give up without a fight, the threats are aplenty out there.

The biggest threat would be the inability to reach out to the next generation of consumers who want everything in their living rooms as well as while they are on the go, and a lot of them are using personal computers as their home entertainment hub.

Deputy news editor B.K. Sidhu believes switching between web and TV should be seamless.

Google’s Business Experiment: Nothing but Web


In the cloud: A model uses a Chromebook on an airplane. Google

Google’s Business Experiment: Nothing but Web

Computers that do everything in a Web browser are touted as an inexpensive alternative for companies.

Thursday, October 27, 2011 By Tom Simonite

Decades of Moore’s Law have trained us to expect every new computer to do more than the one before. Google’s most ambitious foray into cloud computing, however, has it wooing businesses with computers that do much less.

Those computers are known as Chromebooks. The laptops, officially launched in June, use an operating system called ChromeOS that is little more than a souped-up version of Google’s Chrome Web browser. “Chromebooks came from this realization that cloud computing gives an opportunity to rethink what the desktop is,” says Rajen Sheth, Google’s program manager for Chromebooks. The pitch to businesses is slightly more prosaic: outfitting and supporting workers with Google’s Chromebooks costs a lot less than giving them conventional PCs.

Google offers Chromebooks under a subscription model, where each machine costs between $20 and $33 per month. That price includes support and a promise that a replacement will be priority-shipped for any computer that breaks. Gartner research estimates that the total cost of ownership to a business is between $3,300 and $5,800 annually for a regular desktop computer, and more for laptops. The cost of owning a Chromebook, according to Google, is simply 12 times its monthly subscription cost—at most, $396 per year.

In typical Google fashion, Chromebooks were not released as a fully polished product. They first appeared in December 2010, when Google sent a prototype, the Cr-48, to thousands of volunteer testers and journalists (read Technology Review‘s review of the Cr-48). Feedback from that experiment was used in creating the first Chromebooks available for sale, which appeared this summer and are made by Samsung and Acer.

Despite the low cost, Chromebooks outperform conventional PCs in some respects. They take only eight seconds to boot up and can manage even a long workday on a single battery charge. Yet logging in to find nothing but a browser—no desktop with shortcuts, no conventional applications such as Microsoft Office—is unnerving. Whether you’re composing e-mail, creating a presentation, or editing an image, you have to do it using the Web. Without an Internet connection, very few Chromebook apps will work at all.

Sheth says that poses no problem for many workers. “A significant proportion of people in business today just use a browser for everything they do,” he says. Many call center workers and traveling sales reps already rely on software accessed through a browser. In fact, before leading Chromebook, Sheth was responsible for much of Google’s success in convincing companies to adopt business versions of Web-based apps such as Gmail.

Sheth’s most clearly detailed business case for Chromebooks revolves around what the laptops offer to IT staff. There’s no need to install and configure security software, because the only software on the computer—the ChromeOS operating system—is updated automatically by Google and encrypts all saved data. What customization tasks remain can be handled using a slick Web-accessible dashboard.

“There’s a huge pain point for IT managers around manageability, upgrades, and security,” says Frank Gillett, who covers emerging technologies in IT for Forrester Research. “Google has built a back-end service for Chromebooks that takes care of all that very well.”

Sheth declined to say how many Chromebooks have shipped, but there are some signs the market for Web-only computers may prove larger than many anticipated. Gillett recently surveyed IT buyers and found that around 16 percent of them said their users could survive with just a Web browser. “I expected to prove they’re really skeptical, but they weren’t,” he says. Even so, Gillett still considers Chromebooks an “experiment” rather than a polished product line.

As Google upgrades the ChromeOS operating system, its stripped-down computers are likely to become more capable. Full support was recently added for the business package Citrix, which allows a Chromebook user to log in to a remote desktop and use Windows. Sheth says the important thing for Google is that the Chromebook gain a toehold in the market. “We’re really aiming for the future vision of the enterprise. Today is the market entry strategy, not the end point,” he says. He predicts that it will be another three to five years before most business tasks are done through a Web browser.

Newscribe : get free news in real time

Follow

Get every new post delivered to your Inbox.

Join 1,245 other followers

%d bloggers like this: