Entrepreneur Watch

Yahoo to adopt AdSense?

The Wall Street Journal reports today that Yahoo may be on the verge of signing an ad deal with Google. There's a mention of it at ZDNet. That article apparently mentions that "this Yahoo-Google tie-up could create a real-time auction system that could allow Microsoft to connect." Not sure what "to connect" means, but I assume it means Microsoft could participate in the ad deal to ease anti-trust concerns.

The best comment on the deal comes from fr0thy2, who says of the connection aspect: "That'd be great. Especially if they keep changing the protocols further down the road so that MS machines don't work properly."

After all, since Microsoft is accusing Google of being the new, monopolistic Evil Empire, whom better to take lessons from than Microsoft?

I've said for years that it was dumb for Yahoo not to use AdSense, because AdSense works and Yahoo's ad system does not -- although they could fix that if they would just follow Google's lead and make sure the ads are RELEVANT with no flash or pop-ups. But Yahoo just can't resist giving into the demands of advertisers, even though it's painfully obvious that those demands simply don't work.

Here's another one. Yahoo is a portal. Google is a search engine. Yahoo should also drop its own search engine and use Google's again. Once Yahoo decided Google was a competitor, it dropped Google Search, the best general search engine on the market, in order to offer its own, inferior engine. That's a really smart way to serve your customers: Remove a product that works for an inferior one out of fear and spite.

The way for Jerry Yang to turn Yahoo around is to adopt the best-of-breed applications wherever possible and then to work on distinguishing the portal in other ways. That includes offering the best content it can find, rather than the stuff that content providers can be convinced to pay Yahoo for the privilege of posting on Yahoo.

A case in point. I write for an investment site called smallcapinvestor.com. Very early on, Google Finance started posting links to the articles we write, because they rose to the top. Yahoo did not, until smallcapinvestor worked out a deal to pay Yahoo to carry them. Very occasionally, my articles do not rise high enough for Google to capture it, and Google does not provide the link. But now everything we write appears on Yahoo Finance.

Yahoo needs to get it through their skulls that picking content based on financial deals instead of quality actually hurts the site, and its revenues, in the long run. Google is unbiased and tries for the best. And it has all but killed Yahoo because of it.

This is the internet. Get with the program, Yang.

Web 2.0 Expo: Words of hope from tim O'Reilly, Jesus, and me.

At Web 2.0 expo, Tim O’Reilly made the inspirational speech. He was preaching to the faithful, but it was good to hear some optimism about the future of technology, and not just in entrepreneurs’ ability to get rich.

Quite simply, We’re making a change in the world, he said. And it’s true.

He had some heady comparisons: Web 2.0 is not just about participation. We are building a platform to make people smarter, he asserts. It’s akin to literacy or the formation of cities --a huge change in the way the world works. And, he adds: We have a long way to go and a lot to discover.

For those who think his rhetoric is a bit strong, I would add a comparison I’ve made before: The ancient Great Library of Alexandria. More than a repository of knowledge, it was a place for the great thinkers of the age, about 300 BCE to the year zero, to come and study, experiment, write and change the world.

Just as the need for organizing all the world’s information provided the impetus for new inventions – including the process of alphabetizing scrolls, the invention of the dictionary, the bibliography and the Greek grammer, which became the basis for the later invention of the Latin Grammar – the Internet necessitated the invention of the Google search engine.

And we all became smarter. The Library of Alexandria was created by the Ptolemy clan. Ptolemy I was a general of Alexander the Great, who conquered Egypt and much of the rest of the civilized world and then died, leaving the spoils to his general to divide up. So great works were translated into Greek, the works of the great Greek writers and philosophers were collected, the Greek language spread throughout Europe and the Middle East, and the Hellenic Age began. Its influence is with us today. A translation of the Torah into Greek is even believed to be the document that Jesus used to spread his religion to a mostly Greek speaking world.

The Ptolemys, like Alexander, were idealists. The intent was to spread knowledge and Greek culture, and it worked. Parts of Alexandria were open to the public, making it the first public library, as well as the greatest library the world saw until the spread of the internet.

O’Reilly made an interesting comparison that points to the benefits of idealism. He compared Google to a large bank. Both are massive data centers. But only Google gives you services against the data, including the data collected about you. The bank mines our data in the back office but keeps it to itself. O’Reilly expresses the hope that Enterprise 2.0 will be about companies letting users into their back office and turning companies inside out. Give us the chance to learn from our data.

And here I hope his enthusiasm is more than just the optimism of the faithful. The alternative, he says is to lead us back to the concentration of power we saw in the Microsoft Age. There is still the danger that will happen.

And, just my opinion, if it does, it will not be Google that does it. As much as the Technorati sometimes complains about Google, the company seems to have its head in the right place. There is no evidence that it has yet abused any of its power or access to massive information. Google is all about sharing. As long as it maintains its ideals, we’re in pretty good shape.

Web 2.0 Expo: I hate bloggers

I'm an old press guy. I used to work at Business Week, Upside magazine, have written for Science magazine, Technology Review, a bunch of others. In general I hate bloggers.

I don't really hate them as a group. I hate the fact that blogging pays nothing to very little. There's no reason to rely on the mainstream press for first news any more, because billions of low-paid bloggers are reporting on everything, sometimes accurately. Publications are cutting back, laying off, cutting fees and going out of business. It's hard for an old hack like me to make a living.

But the most fascinating indication of the change in hierarchy is here at Web 2.0 Expo. The mainstream press used to get special treatment at conference. Free internet access in the press room, free lunches, preferred seating at keynotes, exclusive interviews with execs, invitations to the best parties.

Well. The bloggers now get all the perks of the mainstream press, plus. I seem to qualify as both, so i get my choice.

I'm hanging with the bloggers.

The press room has terrible wi-fi. Nobody can get any work done. We get the same box lunch as everyone else. Some of my old Business Week and other print press colleagues are sitting in the press room complaining or silently typing away.

Two doors down is the Blogtropolus room, hosted by a social media consultancy called TheConversationGroup and sponsored by a bunch of Web companies, and things there are hopping.

Lunch is served. Wi-fi is better, and password accessed. They have people giving free massages, a Wii bowling tournament going on, a video center filming conversations with bloggers, neat new products being shown off -- like a $350 pet robotic dinosaur with touch sensors so that it knows whether to snuggle up to you when you hold it or walk on the floor when you put it down.

There's buzz. People are talking, blogging, meeting, the room is alive.

The press room, alas, seems like a retirement home. Sedate. And much more sparsely populated.

So I'm hanging with the bloggers. Now if they would only pay us better...

UPDATE:

OK, now I'm really pissed off. They're bringing beer and food into the blogger's room. It's 3:30 pm.

Those poor suckers in the mainstream press. I'm gonna have a beer.

Web 2.0 expo: Oosah

I'm attending the Web 2.0 conference this week, spending a lot of time meeting with companies.

I've been sitting at home working on a book proposal and writing investment stories too long, and have a lot of catching up to do on Web 2.0 stuff. I've been stuck back in about Web 1.4.

So I've taken a different approach to meetings at this conference. I accepted meeting requests from all takers until I was too booked to take anymore. I just didn't know enough about the companies to pick and choose.

About two out of 10 meetings have been interesting. which is actually about the track record I get when i screen them first. Fortunately, that included the first meeting I took, with a brand new company called Oosah, founded early '07.

Oosah allows you to swap pretty much any kind of file from site to site, or into Oosah, creating mashups and sharing them with friends. Started by a brilliant Sergey Brin-like kid who doesn't want his overseas programmers to know how young he is, the distinguishing thing about Oosah is that you don't really download anything.

You can log in to several sites at once through the OOsah interface -- Flikr, YouTube, Picasa, Facebook -- and they all appear on your dashboard. Drag and drop items from one site to the other. If you're a PC user, it's like putting in shortcuts that link from one site to a file on another site.

But the content is never moved from one site to another. It's pulled up in real time from the site on which it resides. You can remotely manage the stuff through the Oosah interface -- make slide shows, galleries, whatever you want. All your stuff is in front of you at once. Share them publicly, privately or password protected.

It just came out of beta. Check it out at www.oosah.com.

How Rolla P. Huff destroyed Earthlink

Earthlink has been having trouble making money lately. It's abandoning municipal wi-fi efforts to focus on "more profitable" businesses.

Earthlink can't figure out how to run the businesses it has. After years of great DSL service from Covad, I decided to switch to earthlink for phone and DSL because it's cheaper. I was hoping this was still a decent entrepreneurial company, not a jaded loser like the monopolistic telcos.

I was wrong. My service has been spotty. A week ago, the phone line suddenly went screwy, full of static. The static comes and goes, and is so bad that I can rarely get a DSL signal through it.

I went to tech support, and they spent hours getting me to unplug and plug in lines, cycle the modem, etc. Finally they agreed to send out a technician. But I had to wait two days.

The technician checked all my interior phone lines and found no problems. He hooked up his equipment to the main phone box, and concluded that there was a bad signal in the local loop, which Earthlink leases from AT&T.

He told me he would put in a work order to AT&T to fix it, and said the telco contractually had 24 hours to fix it.

No such luck. The line is still bad. I called tech support again. the technician told me that the issue had never been "escalated" to AT&T. She read me the report. It said that tests found no stress on the interior lines, but did find a problem with the local loop. But, since he did manage to get a DSL signal momentarily on one line, he recommended also having my interior lines checked. Earthlink decided my interior lines were the problem.

I demanded to talk to a supervisor. The supervisor insisted that the technician decided not to escalate to AT&T, but said I should have my interior lines checked. I insisted he had said he would put in the order for AT&T. The supervisor said he would call the technician to see what the difference was. He hasn't been able to reach him for the last four days.

I was on the phone for two or three hours with the supervisor while he tried to reconfigure my system for a bridge connection. That worked for about half an hour, and now I can't get a signal again.

The supervisor had to get me to call a different technician to reconfigure my laptop, which runs Vista. I was on the phone for about two hours with that technician, but the Earthlink bridge could not recognize my earthlink password. He kept trying, changing the password, running off to talk to others. He wouldn't quit, despite zero progress. I finally hung up on him. I had wasted five hours.

Yesterday I got an automated call from Earthlink saying their records indicated my issue had been "resolved." If true, press one. If not, press 2. They connected me to another technician.

The technician said he had to transfer it to a supervisor and put me on hold. For one hour, I listened to a recording telling me that my call was very important to them, but all technicians were helping other customers. At the end of the hour, the recording said I had been waiting too long and they had to help other customers, but please call again. Then it hung up on me.

I'm so mad I can't see straight. I have to go back to AT&T for phone, which seems able to run a decent loop when it isn't for earthlink. And I'll go back to Covad.

Mr. Huff, if you want to know why Earthlink can't make money, talk to me.

UPDATE:

I submitted a complaint to the FCC, then called Earthlink tech support again. The automated service asked for my case number, which I entered, and was again told by the machine that records said the issue was resolved. I pressed 2 to get a technician, and the computer told me that it could not reach any at the moment.

Do you think they set up my case number to start ignoring me?

So I called the tech support line again and just waited for a technician without giving the case number. I got a technician, who insisted HIS records show that the case is still open.

Which should I believe, him or the computer? I'll go with the Borg. It knows.

He transferred me to a supervisor, who first said that the report from the technician who visited my home indicated a problem with internal lines, not the local loop. I made the supervisor read me the report, and sure enough, it said there was a problem with AT&T. The supervisor said she would call the technician.

She called back after an hour and said she could not reach the technician. She would send out a new technician, who would stay in contact with the central borg while checking, so there would be no question of what the problem was.

The technician is supposed to be here on Thursday.

In the meantime, I'm using a wi-fi signal from a neighbor to get online. It works sometimes.

Microsoft/Yahoo = AOL/Time Warner

Is Microsoft's bid for Yahoo a surprise? No. Any idiot could have seen this one coming 11 months ago.

Will the deal be consummated? Probably, but nobody knows for sure.

Will Microsoft/Yahoo be a better competitor against Google? No. It would only benefit Google.

Let me tell you a story. I bought a new laptop in December. I didn't want to upgrade to Vista, but there was not one single laptop on the market that came with XP.

Microsoft Office would have cost me more than the laptop itself, so I'm trying desperately not to buy it. That is very hard.

Microsoft Write is incompatible with Microsoft Word. I tried sending an article I wrote in MS Write to an editor at one of the publications I work for. He couldn't open it. So I copied the article into a Google Doc and invited him to share it. He managed to export it as a Word document.

What does it say about Microsoft that, in this day of mass communications and online collaboration, I have to go through Google to translate a document from one Microsoft product to another? Microsoft is still stuck in the 1990s.

Microsoft is used to telling its customers what to do, and punishing them if they don't play along. The only reason I can possibly conceive of for the Write/Word incompatibility is that Microsoft has designed Write to be purposely flawed in order to force me to upgrade. It's punishing me for trying to use Write.

That's old school thinking. In a world of complicated technology, every company should be doing everything it can to make things easier for customers. There is a near infinite universe of fascinating programs on the internet, and a walled garden is simply going to be broken down by the sheer force of the new world outside that wall.

Yahoo doesn't really get it, either. It does everything it can to keep you inside the Yahoo garden, and desperately throws annoying ads at you in the hope that you'll click on one, ignoring the fact that it decreases the quality of the experience for its users.

Combine those two companies, and you have a disaster.

Google isn't perfect, either. It has not made Google Docs compatible enough. When I export as Word, for example, it comes out with manual line breaks rather than as paragraph returns, so does not recognize individual paragraphs. I have to do a search and replace to get the paragraph returns.

Google should have had this fixed by now. If the company can figure out how to make every application it has compatible with everything from Yahoo and Microsoft , it will become the de facto stadard, the universal translator that gives us compatibility where it is woefully lacking.

This is Google's opportunity to really take over.

Unfortunately, there's a decent chance that will also destroy Google. But by then, there will another competitor to come along and take the reins.

TechCrunch Resolutions: Apple, Google, Microsoft, Yahoo

Don't you just hate New Year's resolutions? I mean, who ever keeps them anyway? I made one that I've already broken, but I promise to try again next week. My other resolution is to blog more. I know I don't blog enough to get any real traffic. Hit me if I don't keep this one, OK?

The folks over at TechCrunch were kind enough to offer resolutions for some of our favorite companies. I thought that was amusingly generous of them. The mostly boil down to one thing: Open up dammit. I found some of them interesting and some amusing. So I thought I'd offer my comments about their offered resolutions. All's fair in love and blogging and self-indulgent self-publishing.

Apple: Open up more.

I think Michael Arrington wasn't born yet when Steve Jobs returned to Apple, so I'll add a little ancient history perspective.

Jobs wasn't really planning on staying at Apple long after his return, which was orchestrated by getting rid of then-CEO Gil Amelio and then taking over as "interim CEO, or "iCEO." Jobs, I'm convinced, was plannning on short-term moves to return the company to profitability, become a hero, then take off for Hollywood with Pixar and let the company founder after he left. But he surprised himself, and was more successful than even he expected, reviving the company with iMacs. So he decided to stay and make Apple a Hollywoodish consumer products company.

Now, Jobs is brilliant. He designs outrageously great products, as he is fond of humbly pointing out, and is the greatest marketing genius since P.T. Barnum. But he's a control freak.

Apple's market share has soared, from about 4% of the PC business (as I recall) when Jobs returned, to about 7% now. The company's stock price has skyrocketed.

Big deal. One of the things he did for short-term gains that really hurt Apple's long-term success was to kill the Mac clone business that Amelio had started to implement. Apple would be much bigger, wealthier and more successful if there were Mac clones -- if Jobs were to really open up. I said this in my Upside column at the time it all happened, but now no one will know if I was correct.

Look, people hate Microsoft's operating system. People are uninstalling Vista. If Apple simply licensed its OS to cloners, it could have destroyed Windows XP and Vista would have been stillborn. Jobs argued at the time that profits would have declined because it would make less money off each clone license than off each Mac it sold.

But that assumes the market didn't expand. I would bet that Apple clones would have at least half the PC market by now, there would be many more applications for Apple's OS, and Apple would be selling at least as many self-made Macs as it is today.

I think it's cowardice not to. Jobs is conceding that his own elegant hardware designs could not compete with Mac clones. Nonsense. People who want cheap comptuers would buy Mac clones instead of Windows PCs, and those wanting a truly elegant, integrated device would pay extra for the real thing, although Apple PCs would have to sell at a lower price than they do today.

But with a mix of hardware sales and software licenses, Apple would be more profitable today. Microsoft has 78% gross profit margins and 27% net margins. Apple has 35% gross margins and 15% net margins. Apple's market cap is $158 billion. Microsoft's is $322 billion. Software is simply more profitable than hardware.

Jobs blew it. Open up, guy. Apple is the only closed hardware system on the market. There's a good reason people abandoned the model. 7% market share? Sheesh.

Facebook: Let people take their data from Facbook and use it in other apps and sites.

Also correct. Come on guys, closed systems are a thing of the past and anti-Web culture. If Facebook doesn't do this, others will, and will take its business away. Yahoo has already proved that the walled garden approach does not work.

Google: Go beyond PageRank.

Sorry, TC. Just because you don't know what Google is doing beyond PageRank doesn't mean nothing is being done. Google is way ahead of you on this. The company just chooses not to tell you what algorithms it's using these days. Secretive company, remember?

Amazon: Open up Kindle and let others make the hardware.

No brainer. See Apple comments above. And Amazon hardware isn't even elegant. I don't know if Bezos is smart enough to take the advice, but I think he is.

Microsoft: Get serious about Webtop apps.

Well, the company is trying. But it's hard for a company with a huge, profitable legacy business to change, and Microsoft is probably the best in the world at adapting. To Google, the internet is the primary platform, the PC an adjunct. In Microsoft's view, it's the other way around. The company has to try to distinguish its strategy some way, and hoping its desktop leverage will still help. It won't, but it will take Microsoft a while to find out. Then it will change.

Yahoo: Use the traffic and stop trying to keep everyone inside the walled garden.

Right on, but it won't happen. Yahoo still thinks it can be a content company and monetize it by sending people to that content. Wrong. No single publisher can offer all the best content. People want to get the best. And Yahoo hasn't learned that content is a notoriously unprofitable business unless you have monopoly status. But content monopolies are being destroyed by the internet, and the only successful ad strategy is to sell ads around content that you don't own.

To that I'll add that Yahoo still refuses to admit that only relevant ads make big profits online. But then, most online publications refuse to admit it as well. Too much junk, too many irrelevant pop-ups. Yahoo still gives preference to the highest ad bidders, even though nobody clicks on them. Read my clicks: It doesn't work!

eBay: Sell Skype.

It will. This year.

Thanks to TC for making promises for others. Think I can try that on my relatives?

Google, the industry catalyst

I was at the Google Media Holiday Party tonight, an annual bash the company gives to show the press that the folks there aren't as hostile to our profession as it seems.

I still think that Google is one of the most misunderstood companies out there. Being contrarians, nobody in the press likes to write yet another positive article about the company that's become a behemoth, an advertising monopoly, the primary invader of everyone's privacy, the abuser of copyrights, the scattershot company that goes so far afield of its core business it wants to build a ladder to the moon and take on the cell phone industry. Google bashing articles are in. So the company throws a party.

Sergey and Larry were absent this year, but senior folks such as Eric Schmidt, Marissa Meyer (who seems to be in charge of everything that falls into the category of "search" and must have no social life,) economist Hal Varian, open source maven Chris DiBona, Google.org director Dr. Larry Brilliant (isn't that a great name?) and others that I didn't get a chance to talk to were there.

I joined a small group talking with Eric Schmidt about things like Android, Google's attempt to open up the cellular industry. He wasn't saying much, of course. So I asked him if Google wanted to become a communications company, given Android, rumors of a Google-branded cell phone and its decision to bid on the 700 MhHz wireless spectrum.

Eric's non-answer was to say, "We already are a communications company." It's true. Google already has its own private internet, and allows Google users to speed up their internet transmissions by tapping into it.

So look at the potential. A cell phone, a piece of the wireless spectrum, its own huge network of fiber and server farms, and you have a telecommunications company.

Since Google is bidding on the wireless spectrum it is strictly forbidden by the FCC from talking about what it wants to do with it. So Schmidt had to dodge direct questions.

But I've been thinking about the idea of Google as a catalyst for industries lately. Why does Google get into so many strange businesses? I think the answer is simple. Others aren't doing it, at least not properly. Somebody has to.

Google hates monopolies (except online advertising monopolies.) Monopolists charge too much and stifle innovation. The internet presents so many ways of breaking monopolies and lowering prices, but governments are pretty good at listening to monopoly lobbyists. So Google tries to act as a catalyst for breaking monopolies and unleashing the potential of the internet.

Of course, when the internet is unleashed, Google benefits. There's no other company with such a 1:1 relationship between the number of people online and its own revenues. Just get people there and Google will make money from them, with one ad or another. As DiBona said in a Guardian interview, "as the internet gets bigger, so goes Google."

I asked Schmidt if Google was just trying to be a catalyst to steer industries in the right direction. Schmidt just schmiled.

Everywhere there's an old monopoly failing to take advantage of the internet to increase services and cut costs, there's an opportunity. The cellular industry has been a closed, monopolistic system, locking people into two year contracts just in order to upgrade their hand set. It keeps prices high and service quality low.

So Google comes along and creates an open handset that allows apps developers to innovate, and is unlocked so it can run on any cell network. The cellular carriers will resist, but just suppose the Google phone starts catching on.  Google has a phone into which it can  shove its apps without having to deal directly with the cellular carriers.

If the Google phone itself doesn't become a big hit, it just might start breaking apart the closed industry. Other carriers start accepting unlocked phones, stop subsidizing the price of hand sets with higher access fees, and people start getting a choice of which carrier to use. It gets easier to use the cell phone to go online, and cheaper to boot. The Google phone fades away, but Google still wins.

Google bids on the spectrum and changes the rules: Its cell network will take any phone that manufacturers want to put on it, and Google subsidizes the whole system with advertising (which is Google's real business.)

Or the other telcos realize they have to drop their prices and find a new business model in order to compete with Google, making it easier and cheaper to use cell phones as portable online devices. Google's cell business doesn't take off, but it still wins. And it sells its spectrum to someone else.

How about municipal wi-fi? One muni wi-fi consultant, Craig Settles at Successful.com, told me recently that he thought Google was just dabbling in muni wi-fi, but would neither put up nor shut up. Google offered to install and run a free wi-fi system San Francisco, but it never came to be.

But suddenly muni wi-fi systems started springing up across the country.

Settles thinks Google actually did a lot of harm by getting municipalities to think that they should all get it for free, but I don't know. It at least got them to thinking about how to offer the service.

So Google doesn't become a wi-fi supplier. It was a catalyst, and the more free or low-cost wi-fi we have across the country, the more people get online. Google comes out ahead.

Why does Google do apps and email? It does have advertising on email, but apps are a tougher cookie when it comes to mixing advertising in the batter. Well, first of all, Google wants to kill off Microsoft -- again, a monopolistic company that charges too much, in Google's opinion.

If I outfit my new laptop (which I was forced to accept loaded with Vista) with all the usual Microsoft apps, the software will cost more than the hardware. Does that make sense?

So Google starts offering free apps online. Would Microsoft have ever started moving in that direction without Google as the catalyst? Duh. So suppose Microsoft ends up winning the online apps war after all. The software is now cheaper, and runs online rather than in the home machine. Without an operating system monopoly that all apps must conform to, there's more competition in applications. More people go online and spend time there. Google wins.

Look at Dibona's group. Among other things, he runs the summer of code event, bringing together students and mentors to work on open source projects. But it's really about getting people to use Google APIs to create apps for Google software platforms. Google socks it to Microsoft and boosts its own platforms. And the idea of opening up online platforms to outside apps developers catches on. Look at Facebook.

How about alternative energy? That one's really far afield. Dr. Brilliant told me it's good for business because Google wants to lower energy cost and consumption. So it pays solar thermal energy companies to set up systems for Google, and puts money into the industry through Google.org.

This doesn't really benefit Google's business (hence the .org involvement,) but its something Larry (Page, not Brilliant) wants to see more of. A pet project. With funding and purchases, Page hopes to give an extra boost to the alternative energy business.

Over and over again, these peripheral businesses show their benefit not by being direct moneymakers for Google, but by busting monopolies and getting more people online (or serving other pet projects from executives.)

Who says Google's scattershot strategy is dumb? It doesn't have to take over these industries, it just has to make the investments to move existing, old-fashioned corporations in a direction that will benefit Google.

Who better to do it? As Dr. Brilliant told me this evening when talking about investing in alternative energy, "We've got the money."

Google tries to make the world green

Don't you just hate it when people don't take your brilliant advice? I've been telling people for years that we need a new publication dedicated to covering technology entrepreneurs, but does anybody listen? Geez...

Larry Page hates it too. At the American Association for the Advancement of Science meeting last February, Page called for the scientists present to focus some of their creative energy on creating clean energy. Apparently, not enough of them have taken his advice.

So now he's dedicating some of Google's resources to the task. In his blog post he starts out by noting that "Clean and affordable energy is a growing need for our company."

Perhaps he's trying to justify why Google is getting into such an unrelated field with that opening. In a Fortune article a couple days ago, Brent Schlender already asked, "Is Google Spinning Out Of Control?"

And that opinion was based just on "two extraordinarily ambitious strategic gambits" -- OpenSocial, an attempt to create an open platform for social networks and Google's new cell phone initiative to create an open platform for phones. Imagine what Schlender thinks of this latest initiative.

Google, says Schlender, has no experience in creating platforms. Well, unless you consider things like  Google Maps a platform with all the mashups being created.

But he's right, these efforts do take Google well beyond its traditional expertise. These are attempts to do something good and useful for the world.

The key phrase in Page's blog is, "we're seeking to  accelerate the pace at which clean energy technologies are developing." Google is trying to be a catalyst for others to take up the challenge. It's the same with Google's attempts to push municipal wi-fi into the world. Many others have taken up that gauntlet, even as Google's experiment in San Francisco failed.

StreetInsider.com quotes Dr. Larry Brilliant, Executive Director of Google.org: "by funding research on promising technologies, investing in promising new companies, and doing a lot of R&D ourselves, we may help spark a green electricity revolution that will deliver breakthrough technologies priced lower than coal."

If Google can't pull these deals off, maybe it can inspire others to, perhaps even helping to fund them. Google put some money behind Meraki Networks, which is getting volunteers or entrepreneurs to share their own broadband networks with cheap wi-fi devices, even inspiring the founders to start the company in the first place.

Coincidentally, after the Google/Earthlink attempt to offer San Francisco a free wi-fi system went into apparently permanent limbo, Meraki offered to give away routers to SF residents to spread a little free wi-fi love there.

As an inspirational force, I say, more power to Google.

 

CNN coverage of Google vs. the iPhone

Blogs can influence the mainstream press.

CNN London saw my blog about the Google phone and set up an interview with me to discuss it.

You can see the video on CNN International here.

It's currently listed as the Video of the Week in the right hand column. The title is "Google takes on the iPhone."

Google's Android phone: Less than met the ear

Google made its anticipated announcement about a new Open System phone. People listened. What they heard was less than what they heard last week. The stock seems to be sliding a little in after-hours trading -- although not by much.

I had thought it would decline further. This was only an announcement of a new operating system for cell phones, not the unveiling of some fancy new gizmo like the iPhone. Handset makers include HTC, Samsung and Motorola.

But it's easier to get the handset makers on board -- they can cut costs with an Open and probably free OS -- than it is to get the mobile carriers to buy into this. As the Wall Street Journal predicted, Deutshe Telelkom's T-Mobile is a partner in Open Systems crime. So are Sprint Nextel and NTT DoCoMo.

Sprint and T-Mobile are desperate for something to distinguish themselves, and a wealth of new applications may help. Japanese carriers like NTT are more open to Open.

Absent are AT&T and Verizon, the biggest U.S. carriers. The Wall Street Journal brings up the legitimate issue of concern over rogue applications that may be security risks and steal info from us.  "Those issues partly explain why large U.S. operators like AT&T and Verizon ... have yet to sign on to Google's initiative."

Sure. I'll accept that. But I'll bet iPhones to land line handsets that the bigger reason is that they don't want to give up the ability to overcharge us for features.

Still, this will be a start -- in the second half of next year -- to wresting some control from the carriers. It will not only allow third party apps, it will operate on more than one carrier's cell network. That's got to put pressure on the Old Age carriers.

And perhaps when the handset makers reveal their phones there will be some nice surprises. We don't know yet if Google will release APIs for apps makers before the phones are released.

Also, analyst Jeff Van Rhee at Craig-Hallum, who follows Nuance Communications (maker of the Dragon voice recognition system) recently told me that there have been strong rumors that a Google-backed phone will include Nuance's software.

That could make QWERTY keyboards on phones obsolete. Just speak your email message or web search. That's a good app and one that Steve Jobs mysteriously passed on with the iPhone.

Now let's see if Google can pull it off. For everyone's sake, and the sake of real competition, I hope so.

Fun with Google phone rumors

My name is Richard and I'm a Google rumor junkie. I admit it. I can't get enough of them. I've tried taking up drinking as a diversion, but it just doesn't overcome that craving for the heady elixir of Google rumor mongering. (Just how does one monger, anyway?)

The Google phone rumors are as tasty as they come. The only thing we know for sure is that it's helping drive Google's stock into the stratosphere. Is this a revolution? Is it just over-enthusiastic hype for what will turn out to be a series of search and email applications?

Here's a sampling. You decide. Then tell me. Addicted minds want to know.

The latest photographic rumors include this photo of the alleged Google phone, courtesy of HT Lounge. The site says the device is made by HTC, and that "HTC is already planning to ship 50,000 Google Phone test units out to developers by the end of the year."

The Wall Street Journal, of course, started the rumors of a new, open cell phone platform. What's a platform? The Journal says it's cell phone software that's "'open' right down to the operating system."

Then it tantalized us with a free sample rumor that Google is "in advanced talks with two top U.S. cellphone operators, Verizon Wireless and Sprint Nextel Corp., about selling handsets tailored to its new mobile-phone operating system, people familiar with the matter said."

Like most dealers, the Journal refuses to give us any more unless we pay up. Subscription? Didn't Dr. Murdoch say it was going to be free?

So we turn to other sources. Bloomberg steps up with its own sources who say "Google is in talks with Verizon and Sprint Nextel about developing mobile-phone software and services."

Software and services? What does that mean? Google Maps and Search? Bloomberg says that "Verizon Wireless spokesman Jim Gerace confirmed the companies have talked." But he won't say what they talked about. Give me more!

OK, it still looks like an OS. "An operating system would give Google another way to profit from sales of mobile phones, which outsold personal computers by more than 4-to-1 last year, according to Gartner," says Bloomberg.

But wait, there's less! PC World says that "Pundits are predicting possibilities ... from a specific phone running a new Google operating system to a suite of applications that work on a wide range of phones."

Damn. No OS. In fact, PCW quotes Ken Dulaney at Gartner saying "Building an OS is the dumbest thing [Google] could do." It doesn't have the experience.

Without an open OS, no universal apps from third parties running on all phones.

Reuters also disappoints with sources that say these talks are Google apps, not an OS. "Verizon Wireless is in active talks about putting Google applications on phones it offers, people familiar with the matter told Reuters."

So are we talking about a Google phone running on just a few cellular networks, with Verizon just taking some Google apps and trying to keep control over its handsets? Could be. 

And CNN/Money speculates that the speculation of a Verizon deal is nothing more than speculation. ”A person close to Verizon says no deal with Google is imminent. Verizon isn't commenting.”

If so, Verizon might find that missing out on the iPhone and the Google phone starts to hurt business, and eventually caves in. God willing.

Red Herring takes that Trojan Horse view, quoting an anonymous analyst. “The search king, the analyst said, has a short-term goal to make concessions to the carriers and gets its products into the market, and it has a long-term goal to pursue spectrum and invest in an open network.” That’s the 700 MHz spectrum that Google is supposed to bid on. 

On ZDNet, Eric Everson, founder of MyMobiSafe.com puts a real buzz kill on the whole idea of an open cell phone platform by noting: “While many of the emerging third-party developments will be pure and safe in nature, the poor state of security throughout the mobile industry will literally put millions at risk.” 

I’ve got to admit, he’s right. What happens when we start buying things through our cell phones? Maybe Google has some new built-in security system. I haven’t found any rumors to that effect. 

Well, let’s keep our hopes up. 

Here’s my speculation: 

However it happens, maybe a new (Linux-based?) OS will emerge and allow apps developers to go cross-platform. 

Google-branded hardware built by third parties is not likely to match the slick design of the iPhone, but it may give us cheaper services and more apps. We’ll all be happy until hackers start breaking in. I don’t know what Google will do about security.

People will be disappointed over what Verizon announces. It’s going to resist this trend as much as possible. It will start off by adopting some of the Google apps, and maybe jump further in later. 

Google will get some smaller carriers to buy in to its platform, which means an OS. Independent apps will catch on. Google will start wrenching cell carriers’ control from them, but it may take years. They’ll fight it by whining to the FCC first. 

Remember, you heard it here first. Unless I’m wrong. Then you didn’t hear a thing.

Today's top story: the Google Phone vs. the iPhone

Don't you hate it when long-anticipated products fail to live up to their advance hype?

When I was a kid, I desperately wanted a chemistry set. I had visions of making incredible new discoveries that would set the field of chemistry buzzing like a bee banging its head against a window -- although I had no idea what they would be. When it arrived, the chemicals included were so mundane I was forced to fantasize about using the ones marked "poison" against any burglar who might enter our home and threaten my family while asking me to get him a cup of tea.

The iPhone turned out to be a great design, but was crippled when Jobs decided to line his own pockets while punishing his customers with an exclusive relationship with AT&T.

Google will have the opposite problem. The Wall Street Journal reports today that the Google phone could be announced within two weeks. The difficulties it will face, says the Journal:  Google "will have to overcome resistance from wireless carriers and deal with potentially thorny security and privacy issues."

Forget the security and privacy issues. Most people just don't worry about those. The Journal is just trying to make sure it mentions all possible difficulties. After all, we don't want to overestimate Google, do we?

The Journal says that Google wants "to loosen the grip wireless carriers have over the software and services consumers can access on cellphones."

Now, that's where it will run into problems. This arrogant company wants to force cell carriers to let us decide what features we want. Mother Bell knows best.

Aside from including the obvious features -- its search engine, Google Maps, YouTube and Gmail email -- the Journal says Google wants to take the "radical" step of making "the phones' software 'open' right down to the operating system ... That means independent software developers would get access to the tools they need to build additional phone features."

Gasp! allowing entrepreneurs to innovate on a cell phone? Not on my overweight monopolistic behemoth phone company! Phone companies bring a whole old meaning to the word "mashup." It's what they'd like to do to Sergey Brin's head.

Steve Jobs had to be kicked in the teeth and dragged to the altar by rebelling customers before allowing outside developers to marry new features to the iPhone.

I say: Bust those monopolies! End the forced two-year contracts just to replace a phone whose planned obsolescence has arrived and whose keyboard no longer works! Let us choose the features we want instead of paying for a host of unwanted features just to get the two we really need! Hang the cellular executives by their thumbs!

But I digress.

Google actually wants its phone to be available to all carriers. But it will have trouble dragging them along. What does it say about the state of  American free markets when, as the Journal reports,  "In the U.S., [Google] has the most traction with Deutsche Telekom AG's T-Mobile USA."

Good old mom-and-apple-pie Deutsche Telekom.

ComputerWorld shows optimism with the headline: Has a wireless upheaval begun? According to industry analysts, says CW, "Google's entry could signal a more open system where a customer buys the Google phone and then chooses a carrier."

What a concept! In my socialist view, carriers should be forced to head in that direction.

CW quotes an IDC analyst who says "It's possible some carriers will work with Google.  AT&T seems to be more open already with its iPhone support and other things, while T-Mobile and Sprint Nextel may be more open than Verizon Wireless."

I refused to get an iPhone because it doesn't work with my carrier, Verizon, which gives me the best signal. That was Steve Jobs's choice.

Now the Google phone probably won't work with Verizon either. That's Verizon's choice. I may have to switch carriers just to make the point that they can't manipulate me that way, just as I avoid the iPhone to let Jobs know he can't manipulate me that way, either.

This is one revolution I support. If only the reality can live up to the hype.

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Golden Boot Award: Stan O'Neal

Don't you just hate it when people who are dumber than you earn a thousand times more?

Still, it's not as bad as when someone is handsomely rewarded for their stupidity. Therefore, we have another Golden Boot Award to offer: Stan O'Neal, recently promoted to Former Chairman and Chief Executive of Merrill Lynch.

It seems he was shocked to discover that gambling on sub-prime mortgage was an unsustainable business model.

From the Wall Street Journal:

Merrill last week reported a third-quarter net loss of $2.2 billion after writing off $8.4 billion of mortgages, collateralized debt obligations and loans. Two and a half weeks earlier, Mr. O'Neal had said the writeoffs would be $5 billion, and earlier in the summer, he and other Merrill executives said the subprime mortgage crisis appeared to be overblown.

The only thing that's overblown here is the practice of promising to reward CEOs with pirated treasure no matter how much they screw up. Less than three weeks ago he still didn't know the extent of the losses, and three months ago he thought things were just hunk-dory.

For keeping such a keen eye on the business, he walks away with $160 million, including a pension that could give him $2 million a year for life. That ought to keep him in gold-plated bifocals for a while.

The Journal notes that he "will receive no severance package or annual bonus." Damn, that's cold. His money comes from "various pension plans and stock grants."

It's the wonder of American capitalism. Never build performance considerations into CEO compensation. The CEO in sheep's clothing is allowed to walk away richer than a wolf in a flock of tethered sheep, while the employees are led to the slaughter with pink slips to make up for his mistakes.

Now I may be more naive than a socialist in a libertarian world, but where's the self-correcting nature of this scenario?

It's a good day to be fired.

Crazy Google earnings estimates 3Q 2007

Google's announces earnings today. It will net $1.29 billion ($4.13 per share) on a GAAP basis,  on $4.30 billion gross revenues for 3Q 2007. Assume TAC (traffic acquisition costs) of 30% as usual, and that's net revenues of $3.01 billion.

Those are my guesses. Wild, I admit. Google provides the most fun for playing the earnings guessing game because, unlike virtually every other company, it follows the letter and intent of disclosure laws, which say that you cannot give inside information to any limited group of people. So it gives no guidance to investment bank analysts.

Every other public company has private meetings with analysts to keep them from being surprised. The stock market hates surprises. The companies get away with this because they also put the data given to analysts on their web sites. But the analysts are about the only ones that study the data.

The average estimate from those analysts is EPS of $3.78, with a range of $3.55 to $4.04. Average estimate of net revenues is $2.94 billion, with a range of $2.80 billion to $3.70 billion.

Silicon Alley Insider likes to get anyone to make their guesses for a chance at the honor of being right and beating the analysts. Four estimates on the site range from $3.93 EPS to $4.20, with revenue estimates ranging from $2.984 billion to $3.3 billion. So the public is a little more optimistic than the analysts.

24/7WallStreet.com says "We have recently seen many analysts up their targets on the stock, so this 'earnings estimate' is now going to be a mere lower-end benchmark where many are looking for a blowout number."

That site also warns that hiring might depress profits a little, as it did last quarter. "The company has already tried to warn traders about expense growth exceeding revenue growth, so if any analysts come out with "we are disappointed with expenses growing fater than revenues" then they aren't reading the filings and aren't listening to what the company says. "

SeekingAlpha.com notes that in the last week, a lot of traders are hedging bets by selling calls above the current share price. It says investors are probably hedging "against a downside surprise ... due to general skittishness over the share's current all-time-highs."

Bloomberg gives a nice summary of warnings that the stock could drop today.

David Katz, who helps manage $1.7 billion as chief investment officer of Matrix Asset Advisors in New York tells Bloomberg, "There's very little room for disappointment." The stock is "very richly valued,'' Katz said. "We would not own it."

Investors, the ultimate in crowd wisdom, had bid the stock up $3.63 to $636.80 by 2:49 PM ET today.

Bloomberg says it may be overvalued  because "at 49 times this year's estimated earnings, Google shares are more than twice as expensive as those of Microsoft Corp., Intel Corp. and Hewlett-Packard Co."

Big deal. Google is growing faster than those companies and gives more consistent results.

Here's how I figure it: Last quarter Google  reported revenues of $3.87 billion for the quarter ended June   30, 2007,  an increase of 58% over year ago and 6% higher than the first quarter of 2007.

In the 3rd quarter of 2006, Google's revenues were up 70% from a year ago. So I'm going to randomly guess that Google revenues will be up 60% over last year this quarter. That means gross revenues of $4.30 billion this quarter.

In 2Q 2007, Google's GAAP net margin was 24%, lower than usual. In Q3 2006, GAAP net margin was 35%. So I'm going to guess a 30% net margin this quarter, or GAAP earnings of $1.29 billion or $4.13 per share.

Google's press release on the 2Q earnings was released July 19. Over the next several days after that announcement, the stock dropped from about $550 to $508. That's a GAAP P/E of 173 on the quarter's earnings after the decline. That means the stock should be worth over $700.

Guess it'll go up.

News of the day: Agito Networks' cell/wi-fi hybrid

Computer World reports on Agito Networks' enterprise router "designed to pull cellular phone traffic onto the corporate Wi-Fi network when employees are on-premise."

Notes that start-up DiVitas Networks and carriers Sprint Nextel Corp. and AT&T are also working on such technology.

The router decides whether to switch you from cell to Wi-Fi "based on a number of factors, such as cost, reliability of the network, the network load, delay characteristics and the quality of the session (bit error rates or packet loss)."

Hey, cost is enough for me.

Another bash on the stubborn heads of those overpriced cell carriers? When do we get routers like that for home use? Wi-Fi calls are to cell calls as OJ Simpson's Rolex is to a real Rolex. It probably still tells time.

CW says the router will be out by the end of the year. Cost: $10,000 for 25 users, $25,000 for 100 users.

Network Computing is a little more skeptical of Agito's edge. "Agito's executive team has as a strong background Wi-Fi but little on the voice side, and even less on the wireless carrier." Says DiVitas Networks is also emphasizing the role of the enterprise WLAN.

Telecommunications Online says "There are already dual-mode Wi-Fi-mobile phones on the market and Agito is working with Nokia Siemens Networks and Microsoft in how its product, the RoamAnywhere Mobile Router, will work with those devices."

InfoWorld reported on Divitas in May, which seamlessly hands off the call from the cell to the  "Mobile Convergence Appliance" with less trouble than my cell phone has maintaining a signal when I walk from my bedroom to my living room. But it requires downloading special software to the cell phone.

Network Computing says Agito doesn't require the user "to endure a long software download or tether the phone to perform a desktop install, the end-user only needs to enter a URL to download a small piece of client code." Also notes that "WLAN vendor Aruba Networks has made hints about this in their own FMC solution, still in trials, but Agito's claims are much more extensive."

Joanine Wexler at Network World gives a bit of an overview will all the jargon I don't understand, and also points us to a ,Network World white paper on the topic, but it requires so much registration info I didn't even get to the price.

My summary: Viva la Wi-Fi cell phone!

Total Music = Free Music = Zune? Brilliant!

Reports of the death of the iPod may be greatly exaggerated, but an interesting game's afoot.

Sources seem to be telling select publications that Universal Music approached Microsoft about offering free music downloads on the Zune player.

Free for Zune owners, that is. Supposedly, Universal wants Microsoft to subsidize the cost of the new subscription service, called Total Music.

An article in the Telegraph of London says Universal "is in talks with Sony BMG and Warner Music" about offering their tunes through Total Music as well. The goal is to wrest control of the music download biz from Apple.

Business Week reports that Universal CEO Doug Morris is behind the deal and "has already enlisted Sony BMG Music Entertainment as a potential partner." If all three join forces, 75% of the music sold in the U.S. would be part of the service. This is not only about beating the iPod, but about trying to stem piracy, says BW.

BW also says the cost to Microsoft would be about $5 per month per subscriber. Ex-MCA Records Chairman Irving Azoff, now head of Azoff Music Management Group, claims "The artists are behind him."

It's a fascinating idea, if true. Microsoft has billions in cash laying around, and would really like to smash the iPod. BW says the assumption is that people would upgrade every 18 months, adding $90 to the cost of the Zune player.

I don't know if the math works out. Duncan Riley at TechCrunch questions whether Microsoft can afford to subsidize the price. If it passes it on to the consumer, will they buy a $239 4GB Zune instead of a $149 4GB iPod?

I also wonder: Will Microsoft (or the labels)  accurately keep track of who is actually using the service each month? What if you drop your Zune in the toilet and don't replace it? Does Microsoft go on paying forever? 

Macwolrd notes that it's "unclear how the new service would approach the issue of DRM (digital rights management)." Seems to me if you get the music free, there is no need for DRM.

Another question: How do the labels figure out how much to pay the individual artists? Some people may download 10 songs a month, others 500. How much of that $5 goes to each artist whose song was downloaded?

Still, there is real potential here. 99 cents per song is too much to pay. It's a matter of finding the price that's low enough to make privacy not worth it. I'll bet that, whatever that price is, the artists and labels will make more money because of the volume.

Google phone perspective

Saul Hansell at the NYTimes has an interesting article on the Google phone: "There is a lot we don’t know about Google’s cellphone effort, but this much seems clear from the many reports: Google isn’t making a phone, it is developing an open-source cellphone operating system," he writes.

Google is challenging the cellular industry. The great opportunities in technology now are to use the disruptive force of the internet and open source software to provide low-cost or free alternatives to monopolistic industries that, simply put, charge too much -- simply because they always have.

The mobile phone industry and telcos in general are prime offenders. So there is ample opportunity for Google, a trusted brand name, to make enormous inroads.

The difficulty will be getting the cellular carriers to agree. Steve Jobs made a huge mistake in limiting the iPhone to AT&T's service, when Verizon has the best service. To succeed, the phone should be able to work on ALL carriers' networks. But that means the telcos will make less money charging for new phones, locking us in with two-year contracts, charging to activate features (such as GPS and Web browsing) that is already built into the phones.

Hansell believes that the Google phone may have more success in Europe, where unlocked phones are more accepted.

Low-cost, Open Source phones with free features and smaller monthly fees will happen here. It cannot be stopped. But the telcos own the cell towers and they will fight until they are dead. And once again, other nations will be far ahead of the U.S. in implementing new technologies and better technology infrastructures.

Doesn't this bother anybody but me?

Google phone: It's baaack....

Rumors of the birth of a Google phone have been greatly exaggerated ... to date. But the rumor mill is grinding away again.

Business Week goes into details about the advertising possibilities, noting that it could be a free service, a nightmare for current cell carriers. That's the killer app to me. If so, bye bye iPod, and many cell carriers.

HT Lounge says it will run Linux and will be manufactured by HTC, may be 3G enabled with chips by Qualcomm.

A ZDNet blog has a picture, which appears to be made by Samsung. The pic first showed up on Mobileburn, but no one knows yet if it's real. The image on mobileburn was removed due to high-bandwidth usage.

I hope it shows up soon. I want to check it out, ads and all.

Update: Forbes has a nice article about HTC, the Taiwanese company rumored to be making the handset for the Google phone. I has built smart phones and handheld devices for such companies as AT&T, Microsoft, Dell and Hewlett-Packard, running Windows and Palm software. But the article concludes that HTC could just be one of several manufacturers.

Better search, or more bells & whistles?

So Yahoo adds more features to its search engine. But do they really help give better results?

Better results are needed. The Mercury News notes that Harris Interactive claims only 15 percent of users find what they are looking for on their first search. It also gives a brief overview of what different search engines have added recently: integrating audio, videos and photos into search results.

Fine, but does this stuff really give better search results? What we need is a better understanding of what we're searching for, and I may be looking for lyrics to a song, not an audio snippet.

Yahoo has added a search assist feature that suggests what we're searching for if we type too slowly. Some people just type faster than others, and if I make a mistake in my search term, it's usually because I'm typing too fast and make a type-o.

Plus, Yahoo thinks its a good thing to point people to more of its own content. That's exactly the wrong approach. We want the best results, not those from one particular provider.

When I type in a stock symbol with Google, say GOOG, I automatically get a choice of finance sites that  give info about that stock, including Google, Yahoo, MSN Money, CNN money, Market Watch and Reuters. If I want pure stock data I go to Google Finance because I like its charts. If I want to find financial analysts, I go to Yahoo Finance. Different sites have different advantages.

When I type GOOG into Yahoo, I get Yahoo sites at the top.

Yahoo still doesn't get it.