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Thursday, September 29, 2011


Story first appeared in USA TODAY.
It isn't a pretty picture at Yahoo right now, but that's not stopping the beleaguered Internet company from touching up its popular photo-sharing service, Flickr.
Wednesday with the introduction of a new way for friends in different locations to simultaneously browse through pictures. The company also unveiled its first official application for the millions of devices running on Google's Android software.
It's part of a broader effort by Yahoo to recapture some of the ground that it has lost in recent years to Facebook, which has emerged as an advertising and photo-sharing hub. Yahoo touted its free Android app as a sign of its determination to become a bigger force on mobile phones and tablets.
Yahoo's product managers are making the push at a time of internal turmoil.
The company, which is based in Sunnyvale, Calif., is trying to figure out whether it makes sense to sell part or all of its business after firing tough-talking Carol Bartz as CEO earlier this month. Employees were told the process could take several months in an e-mail last week from Yahoo Chairman Roy Bostock and co-founders Jerry Yang and David Filo. In the meantime, Chief Financial Officer Tim Morse is also filling in as interim CEO.
Flickr's newest sharing tool, called "Photo Session," is designed to replicate the experience of leafing through an old-fashioned photo album, even if the people who are browsing are located thousands of miles apart. Any of Flickr's nearly 170 million users can activate a session by obtaining a special link that can be sent to other invitees. A photo session can be done on iPhones, iPads and personal computers using the Safari, Firefox and Chrome browsers. The feature doesn't currently work on Internet Explorer or Opera browsers.
Photo Session also doesn't work on the new Android app, but Yahoo plans to address that shortcoming in future updates.
Until now, the millions of people with Android devices had to rely on apps designed by non-Yahoo programmers. Douty cited the Android app as just one of several that Yahoo will be releasing in the next few months to expand its reach beyond the 137 million mobile devices that currently use some of its services.
In doing so, Yahoo hopes to revive its revenue growth after several years of erosion that have contrasted with steady growth at Google and Facebook. Yahoo's financial funk has depressed its stock price and ushered out three CEOs in less than five years — Bartz, Yang and Terry Semel.

Wednesday, September 28, 2011

Authenticity of Web pages under attack by hackers

USA Today
by Byron Acohido
Sept 28, 2011

The keepers of the Internet have become acutely concerned about their ability to protect the most sensitive personal information such as account logons and credit card numbers.

Hackers cracked three companies that work with the most popular Web browsers to ensure the authenticity of Web pages where consumers type in sensitive information.

Authenticity of Web pages under attack by hackers.

The hacked firms are among more than 650 digital certificate authorities (CAs) worldwide that ensure that Web pages are the real deal when displayed by Microsoft's Internet Explorer, Firefox, Opera, Apple's Safari and Google's Chrome.

A hacker gained access to digital certificate supplier DigiNotar this summer and began issuing forged certificates for dozens of marquee companies.

Unable to cope with the fallout, the Dutch company filed for bankruptcy last week. Two other digital certificate companies, New Jersey-based Comodo and Japanese-owned GlobalSign, were similarly hacked this summer, exposing a glaring weakness in the Internet's underpinnings.

"The infrastructure baked into the Internet, which is based on trust, is starting to fall apart," says Michael Sutton, research vice president at security company Zscaler.

CAs digitally certify account sign-ins, shopping and other pages where consumers type sensitive data. This sets up an encrypted connection to the Web browser, which displays the form for the consumer to fill out. The browser trusts only digitally signed pages.

A counterfeiter issued valid DigiNotar certificates for 531 faked pages. Some of the pages were crafted to expertly impersonate online properties of Google, Microsoft, Skype, Equifax, Twitter, Facebook and the CIA, among others, according to consulting firm Fox-IT.

This touched off a scramble to cut off the faked pages, which were difficult for consumers to spot as faked.

The successful hacks demonstrated that it is possible to "impersonate any site on the Internet," says Josh Shaul, chief technical officer at security company AppSec.

No banks or payment-service websites were targeted, says Mikko Hypponen, chief researcher at anti-virus company F-Secure. The hackers seem much more interested in harvesting personal data from e-mail services, social networks, credit bureaus, blogging sites and anonymity services.

The pressure is on CAs and browser makers to do more to identify and quickly eradicate counterfeit certificates and faked Web pages, security experts say. "No one knows where the next breach will occur," says Jeff Hudson, CEO of digital certificate management company Venafi.

Microsoft, maker of Internet Explorer, declined to comment, as did Apple, maker of the Safari browser. "The security of the Web is our collective responsibility," says Johnathan Nightingale, Mozilla's director of Firefox engineering.

Amazon to Challenge iPad

The Wall Street Journal
Sept 28, 2011 Inc. is expected to unveil Wednesday the latest—and possibly biggest—challenger to Apple Inc.'s dominant iPad tablet.

Few specifics are known about the tablet, and Amazon hasn't publicly acknowledged its existence, even in the invitation for an event to be held Wednesday. However, a tablet from the Seattle-based company is seen posing a threat to the iPad's dominance due to Amazon's strong media offerings, history of aggressive pricing and its ability to market the device on its popular website.

Amazon to Challenge iPad.

Among the features expected: touch-screen technology; a customized version of Google Inc.'s Android operating system; and access to Amazon's app store, streaming movies and TV shows. Some observers have speculated that the device could be priced below $300—a new iPad is $499 —and could include Amazon Prime, the company's $79-per-year shipping and media service.

An Amazon spokeswoman didn't respond to a request for comment.

In a page lifted from Apple's playbook, Amazon distributed cryptic invitations—containing nothing more than the company's name, an address, a date and time—to a media event in New York. The Wall Street Journal reported in July that Amazon was working on tablet that would run on Google's Android platform, according to people familiar with the device. Unlike the iPad, it won't have a camera, one of those people said.

Amazon already has established it can successfully market a piece of hardware. As Apple's iPad sets the bar for tablets, Amazon's Kindle is the de facto standard for dedicated e-readers. Citigroup has estimated the Kindle will contribute about 10% of Amazon's total revenue by next year, or more than $6 billion, even as the company lowers prices on the machine.

As for whether a new tablet could eat into Kindle sales, Amazon Chief Executive Jeff Bezos has touted the compatibility of the Kindle and fuller-featured tablet devices in the past, saying many shoppers buy both. Amazon will also likely benefit from the millions of people who visit its website, which could serve as built-in promotion. "Amazon has an advantage that other tablet manufacturers don't in that millions of people already visit its site on a regular basis," said Ken Sena, an analyst who covers Amazon for Evercore Partners. He added that those consumers will be regularly exposed to advertisements for the device.

"It certainly creates a competitor to the iPad," Mr. Sena said.

The iPad, credited with kicking off the consumer tablet-computer market, has won plaudits for its ease of use, elegant design and selection of over 90,000 apps that transform it into everything from a video player to a DJ turntable.

The iPad already has left several high-tech bodies in its wake. Research In Motion Ltd.'s PlayBook, Hewlett-Packard Co.'s TouchPad, Samsung Electronics Co. Ltd.'s Galaxy Tab and Motorola Mobility Holdings Inc.'s Xoom have all failed to attract mass audiences. Last month, just weeks after the tablet device had first gone on sale, H-P wound down its TouchPad project. Samsung, meanwhile, faces lawsuits around the world from Apple, which claims the Korean electronics giant copied the iPad's look and feel.

Apple has sold about 29 million iPads since the product went on sale early last year and had 68.3% of the tablet market in the second quarter, according to data tracker IDC.

Apple declined to comment for this story. The Cupertino, Calif.-based consumer-electronics giant has scheduled its own media event for next Tuesday, at which it is expected to unveil the latest version of the iPhone.

Amazon's new tablet will also have to compete with Barnes & Noble Inc.'s Nook, a low-cost e-reader that offers a color screen and Web surfing.

Still, Amazon appears intent on replicating Apple's most appealing qualities. On Monday, the company augmented its media offerings by striking a partnership with News Corp.'s Fox unit that places the network's shows, such as "24," on the Prime streaming service.

The All Things D website, a sister publication to The Wall Street Journal, has reported that Amazon also has media partnerships to support the tablet with publishers Hearst Corp. and Condé Nast.

News Corp. owns All Things D as well as the Journal.

Amazon's longstanding relationships with consumers also means it has reams of sensitive information, including email addresses and credit-card data. That could make it easy for Amazon to market additional products for its tablet, as well as charge for them. "They have an awful lot of consumer credit cards already on file," says Michael Gartenberg, an analyst at research firm Gartner Inc. "I don't think we've seen anyone quite in this position to present a different alternative."

Tablets: Ultimate Buying Machines

The Wall Street Journal
Sept 28, 2011

Retailers have found an interesting characteristic of consumers who browse their websites using tablets: They're much more likely to pull the trigger on purchases than other online shoppers.

That discovery is making retailers focus on tablets ahead of the all-important holiday season, as the tough economic backdrop puts a premium on what the industry calls "conversion"—making sure the shoppers who show up actually buy something.

Tablets: Ultimate Buying Machines

Tablets still account for only a small percentage of overall e-commerce, but they are punching above their weight. While the conversion rate—orders divided by total visits—is 3% for shoppers using a traditional PC, it is 4% or 5% for shoppers using tablets, says Sucharita Mulpuru, an analyst at Forrester Research.

Many retailers also report that tablet users place bigger orders—in some cases adding 10% to 20% more to the tab—on average than shoppers using PCs or smartphones. Retailers are trying to take advantage of that trend by tweaking their websites to better accommodate tablets and rolling out catalogs that have been developed for the device. "Everything helps," says Peter Sachse, chief marketing officer at Macy's Inc. and chairman of

The tablet market is still dominated by Apple Inc.'s iPad. Offerings from new entrants including Inc., which is expected to unveil a tablet Wednesday, could further broaden the market. Forrester Research thinks one-third of U.S. adults could own tablets by 2015.

For most retailers, e-commerce is the fastest growing part of their businesses, posting double-digit revenue gains each year even as in-store growth remains muted. Around 3% of the nearly $150 billion U.S. consumers spent online last year came via mobile devices, of which tablets are a rapidly growing component, according to market research firm comScore Inc.

While only 9% of online shoppers own tablets, their behavior is encouraging for retailers. Consumers tend to spend more time on the Web after buying a tablet, and nearly half shop from the device, according to a survey of more than 2,300 consumers by Forrester. Tablet owners tend to be wealthier, which gives retailers a self-selected audience of their best customers. They may also be encouraged to spend by less tangible attributes: large touchscreens that draw users into the content, and a portability that helps users get more comfortable than when surfing on PCs.

Macy's, teen retailer Abercrombie & Fitch Co. and Gap Inc. all say they are seeing the highest percentage of conversions from shoppers using tablets. The companies wouldn't disclose figures.

Blake McCrossin, a public-relations associate in New York, says he thought shopping would be the last thing he would do on his iPad. The 30-year-old has since used the Apple device to order everything from clothes to a flat-screen television and has already finished most of his Christmas shopping using it. "The visuals and graphics are amazing, and I get caught up in impulse buying," Mr. McCrossin says.

Shopping network QVC promotes tablet use on-air and through its social media channels. It is also using alternative technologies to Flash on its website to accommodate the iPad, which doesn't support that software. "We see it as a key growth vehicle for QVC," says Claire Watts, CEO of QVC U.S.

Mobile commerce accounts for about 3% of QVC's revenue, which last year came to $7.8 billion. Tablets are the fastest growing part of mobile and deliver a higher conversion rate than mobile or PC users, according to Ms. Watts.

Macy's, which owns its namesake department store as well as Bloomingdale's, began making its sites compatible with devices that don't support Flash this year. The department store owner is rethinking the "point and click" experience of its website, which like most others was designed on the premise that links would be clicked with an arrow controlled by a mouse rather than by a user's finger, which is more blunt.

"Every website in the world was built for a mouse," says Mr. Sachse. "We underline things to click. We are thinking about what that should look like in a touch environment."

Many retailers are finding tablet users prefer to visit their main websites directly through a browser, just as they would from a PC, even though some companies have pumped lots of money into creating specialized sites that would work better with mobile phones' small screens and long load times.

Cosmetics chain Sephora uses the same website for tablets as it does for PCs, says Bridget Dolan, Sephora's vice president of interactive media. Sephora also has a free tablet app. QVC also says more tablet users visit directly through its website than via its apps.

Some retailers are revamping their catalogs in light of tablets, which allow them to add videos, slideshows, how-to demonstrations and 'order' buttons. Sephora dropped its summer catalog for the first time this year and shifted entirely over to tablets in an experiment to see what effect it would have on sales. The company will continue to produce print versions of its other seasonal catalogs.

Sephora has partnered with Google Inc. and online shopping site TheFind, both of which have tablet apps that aggregate catalogs from brands such as Nordstrom Inc., Crate & Barrel, Neiman Marcus and Urban Outfitters Inc. Users can swipe through their favorite catalogs and place orders through the free apps.

Siva Kumar, CEO of TheFind, says the conversion rate on its Catalogue app is about 10% higher than on its website, and average order size is between 10% and 20% higher.

Tablet users on average are spending three times as much time on the catalog app than on the website, he says.Sephora receives as much revenue from tablets as it does through mobile, even though people visit Sephora by smartphone much more often. Sephora's tablet conversion rate and average order size is also higher than PC and mobile, says Ms. Dolan. "She who can afford a tablet tends to be a higher spender in general," she says.

Monday, September 26, 2011

Target's blunder with designer continues.

The Wall Street Journal
Sept 22, 2011
Target's blunder with designer continues.
NEW YORK - Target is a victim of its own success.

The discounter drummed up so much hype around its exclusive, limited-time line by upscale Italian designer Missoni that its website crashed and was down most of the day on Sept. 13 when the collection was launched, angering customers. More than a week later, some shoppers who bought the Missoni for Target line are posting on social media websites Facebook and Twitter that they won't shop at Target again because their online orders are being delayed - or worse, canceled - by the retailer.

Brielle deMartino, 23, from Del Ray Beach, Fla., was so excited that she woke up at 6 a.m. on the launch day and spent $700 on Missoni clothes, a bike and plates. The next day, she got an email from Target that her online order was cancelled. Then, she spent hours on the phone with Target customer service representatives she describes as unapologetic.

"I have never been treated like this," says deMartino, who got the charges removed from her card after calling her bank and posted on Facebook and Twitter about the ordeal. "Instead of taking responsibility, they didn't care. I have always been pro-Target, but I don't want to give my money to a company like that again.'

Talk about having a bulls-eye on your back. Target became the discount industry's darling by making it cool to buy stylish clothes and trendy decorations at the same place you pick up toothpaste and paper towels. But recently, it has suffered from similar public relations nightmares as its rival Wal-Mart Stores Inc. Earlier this year, Target had its first union election in what is seen as a precursor to more labor disputes nationwide. Now, customers are blasting Target on websites like Twitter at a time when Americans worried about the economy are easily being influenced by what their friends say on social media websites.

"This was badly handled," said Robert Passikoff, president of Brand Keys Inc., a New York customer research firm that has an index that shows Target's image has taken a hit. "What was supposed to be engaging and delightful is now the opposite - disappointment."

Morgan O'Murray, a Target spokeswoman, said the company experienced unprecedented demand for the collection and is working on correcting problems.

"This demand impacted our site and affected the shipment and delivery of select guest orders," O'Murray said in a statement. "Providing an exceptional experience is incredibly important to Target, and we have a team dedicated to addressing those guests who have been affected."

The crash heard around retail

The Missoni collection was an attempt by Target to regain the cachet it lost among the fashion-forward crowd after it began focusing on expanding its food business. Target is among a few retailers who have partnered with high-end designers that create exclusive lines they can offer for a limited time at deep discounts.

The collections can spur demand by creating a sense of urgency to buy. Last year, Target scored big with a line created by Liberty of London, offering 300 items with the designer, which is known for its floral prints, and selling out of most of it in a couple of days.

The retailer tried to recreate that success with Missoni line, which featured stationery for $2.99 up to $599.99 patio furniture at a fraction of the cost of the designer's original works that can go for $595 to $1,500 and more. Target declined to comment say how much it spent on marketing, but it used social media websites and ads on TV and in Vogue magazine.

Target also opened a temporary store in Manhattan at the start of New York Fashion Week on Sept. 8. On the night of the store's opening, Target hosted a party attended by Missoni-clad celebrities like actress Elizabeth Olsen, the younger sister of the twin actresses Mary-Kate Olsen and Ashley Olsen. The temporary store, which spanned six blocks, was supposed to stay open three days, but closed after items sold out in six hours.

By Sept. 13, the day of the launch, Target said demand for Missoni items rivaled the frenzy on the day after Thanksgiving, which is typically the busiest shopping day of the year. More than 100 customers lined up at stores nationwide. Some locations sold out in a few hours.

Celebrities were even writing about the launch, or tweeting, on Twitter. Actress Busy Phillips, who plays Laura in ABC's "Cougar Town," tweeted: "Got the bike. Not the colorful one but still SO EXCITED." Actresses Jessica Alba and Jessica Simpson also were gushing about the line: "I dreamt about the Missoni 4 Target bike last night," Alba tweeted. Simpson replied, "I want that bike too!! So cute!"

The buzz turned to frustration for some shoppers. About two hours after the 6 a.m. launch, many on Target's website came face-to-face with Target's mascot bulldog and the disappointing news: "Woof! We are suddenly extremely popular. You may not be able to access our site momentarily due to unusually high traffic. Please stay here and we'll try to get you in as soon as we can!"

This happened throughout the day. Some who were patient got through. Those who weren't left the website disappointed.

Ben Rushlo, director of performance management at Keynote Systems Inc., which tracks websites' performance, said that he couldn't remember the last time a site stayed down most of the day. He said usually, a website slowly deteriorates throughout the day - with minor glitches becoming more prevalent - before crashing.

"It wasn't your normal meltdown," he said.

The Missoni mess gets messier

Even some customers who got through complained that items disappeared from their online shopping carts. Some were unable to checkout. Those who were able to buy breathed a sigh of relief, with some hocking their buys on for more than double Target's prices.

But the celebration was short-lived for some. Twitter and Facebook are abuzz with customers complaining that they got emails from Target notifying them that their orders will be delayed or canceled altogether. The posts range from mild ("I'm waiting for orders and now get an email that some may not ship," to prickly ("Every time I see someone with Missoni for Target I get a little more mad.").

Megan Bonner, 26, from Memphis, Tenn., bragged on Twitter after ordering $300 worth of Missoni dresses and cardigans until the next day when she got emails telling her that her shipments would be delayed. Nervous that she wouldn't get the items at all, she bought some of them at a nearby Target. But now she worries she won't be refunded for the other merchandise.

"I feel violated. I feel taken advantage of," she said. "If I don't hear back from them in another week, I will call back. Maybe, I just won't go back anymore."

Target had planned to sell the line into October online and at all 1,700 U.S. stores. But many locations are sold out and the online pickings website are slim. Target had said it was replenishing merchandise, but that it would trickle in.

The debacle comes at a precarious time for Target. The chain, which has struggled to return to its pre-recession growth, is just beginning to benefit from its expanded grocery business and a 5 percent discount it gives shoppers who pay with a Target credit or debit card.

Target Corp., based in Minneapolis, had been posting disappointing revenue gains, but it had a 3.9 percent second-quarter increase in revenue at stores opened at least a year - a measure of a retailer's health. That compares with a 2 percent first-quarter gain.

Analysts disagree on whether Target's image can rebound from the snafu, which comes just months after a failed measure to unionize by employees at a Valley Stream, N.Y. spurred organizers to target stores nationwide.

C. Britt Beemer, chairman of America's Research Group said in order for Target to recover, it needs to placate angry customers by, say, offering $10 to $20 gift cards. "A lot of companies don't want to fix the problem," he said. "They feel it's better to let it go away. But the problem is that's a dangerous strategy."

Passikoff, with Brand Keys, says the damage is already done - and he can prove it. He said the negative publicity has pushed down Target's reading on the company's Loyalty Index, which measures brand reputation, among other things, to 109 from 119 in August. Brands should have at least a 116, Passikoff says, and anything under 100 signals "trouble."

But Brian Sozzi, a Wall Street Strategies analyst, says shoppers' discontent - much like the Missoni for Target line - is fleeting. "I think it is short-term anger," he said.

Thursday, September 22, 2011

Facebook changes irk some of its friends.

USA Today
by Gary Strauss and Jon Swartz
Sept 22, 2011

Facebook's latest move is testing the patience of its friends.

The world's most popular social-media site, which is making a habit of making changes and tweaks with little or no advance warning to its 750 million users, set off tons of dislikes Wednesday, angering many with a redesign that alters the look and feel of its popular profile pages.

News stories under Facebook's News Feed now top the pages instead of fresh posts from friends. Event reminders such as birthdays and friend requests are squished under a ticker-like function, part of a broader effort to give more of a real-time feel à la Twitter and upstart rival Google+, which opened its invitation-only social network to the public Tuesday. There also are newly designated categories for "close" friends, family, co-workers and others.

Facebook changes irk some of its friends.

The pitch to consumers is convenience: an app that promises to help save time and, through loyalty rewards and digital coupons, money. You can store and sync up redeemable Google discount offers inside the Wallet.

I've used the Nexus S to pay at 7-Eleven and Subway, as well from the back seat of a taxicab. The tap-and-pay process is simple. The phone incorporates Near Field Communications or NFC, a short-range wireless technology that makes secure transactions possible.

The Google Wallet app on my test phone was funded by a prepaid Google debit card. Google is encouraging usage, for the time being, by issuing a $10 credit on the card. You can add to the total via any plastic credit card, starting at a $20 minimum. Citi MasterCard holders can use a digital replica of that card. (Don't worry, the full account number isn't displayed.) Eventually you'll be able to use other credit cards. You'll also be able to add favorite loyalty and gift cards to the app. Initially, that feature is limited to American Eagle Outfitters.

For now you can make "tap-and-go" payments at merchants who accept the MasterCard PayPass Network. There are some 140,000 PayPass locations in the U.S., and Google includes a PayPass finder inside the app. Google also has announced licensing arrangements with Visa, Discover and American Express and will add those payment networks to Google Wallet. (Google won't disclose timing.)

Acceptance will take time

Of course, Google Wallet and other initiatives to turn your cellphone into a digital billfold are in their earliest stages. People have paid with cold cash or plastic for generations. Educating the public and merchants about mobile payments will take time.

Google must also make the Wallet app available to other handsets. For the moment, Sprint's Nexus S is the only phone capable of exploiting the Wallet service, though more NFC-capable devices are coming.

And while Google Wallet arguably represents the most ambitious mobile payment initiative to date, it isn't the only one. The ISIS network, formed by the wireless carriers AT&T, T-Mobile and Verizon Wireless, is cooking up its own digital wallet. I already buy coffee from time to time with a prepaid Starbucks card app on my iPhone. I've also tried the free Card Case app from start-up Square. Intuit and PayPal are also in the game. (Not all these efforts involve NFC technology.)

Setting up the Google Wallet account involves creating a four-digit PIN that can help protect the phone should it be lost or stolen. Entering the wrong PIN five times wipes the Wallet clean. You don't have to be connected to a cellphone network, however, nor do you have to open the Google Wallet app to pay.

If prompted at checkout, you are asked to choose to "pay by credit." And then you just tap the back of the phone against the terminal to complete the payment. In some cases you may have to re-enter your PIN, and in some cases the retailer may ask you to sign your name.

At CVS I had to present my physical CVS loyalty card to earn further discounts. It will be a lot more convenient when such loyalty cards are stored inside the Wallet.

I was handed paper receipts each time I made a purchase. Google Wallet records a history of "events" inside the app that signify when you used the prepaid Google card and (in some cases) the approximate location where you completed the transaction. Alas, the name of the merchant and the amount paid does not appear.

Google says refunds are handled as with any prepaid card. But though the CVS clerk told me my refund request went through when I tapped the phone against the PayPass terminal, the refund credit never showed up on the prepaid card inside the app. Google says that can take up to a week.

Some day lots of people may pay for stuff through the Google Wallet or similar ventures. But rest assured you'll carry plastic cards and physical wallets for quite some time to come.

Google Wallet's tap-and-pay system is simple.

USA Today
by Edward C. Baig
Sept 22, 2011

The other day while buying Tic Tacs at my neighborhood CVS Pharmacy, I didn't pull cash or a credit card out of my wallet. Instead, I paid with a Nexus S smartphone from Sprint. Moments after the clerk rang up the purchase, I placed the back of an Android handset against the point of sale terminal and heard a friendly beep signifying that I had successfully used the phone to pay. The transaction took just seconds.

I've been checking out Google Wallet, the mobile payment app that can transform your cellphone into a digital wallet. On Monday, the search giant began rolling out the app to customers who own the Nexus S through an over-the-air software update. Google had been running Wallet field trials in New York and San Francisco, after first unveiling the pay-by-cellphone venture last spring. I conducted my own tests in Silicon Valley, Manhattan and northern New Jersey.

The pitch to consumers is convenience: an app that promises to help save time and, through loyalty rewards and digital coupons, money. You can store and sync up redeemable Google discount offers inside the Wallet.

I've used the Nexus S to pay at 7-Eleven and Subway, as well from the back seat of a taxicab. The tap-and-pay process is simple. The phone incorporates Near Field Communications or NFC, a short-range wireless technology that makes secure transactions possible.

The Google Wallet app on my test phone was funded by a prepaid Google debit card. Google is encouraging usage, for the time being, by issuing a $10 credit on the card. You can add to the total via any plastic credit card, starting at a $20 minimum. Citi MasterCard holders can use a digital replica of that card. (Don't worry, the full account number isn't displayed.) Eventually you'll be able to use other credit cards. You'll also be able to add favorite loyalty and gift cards to the app. Initially, that feature is limited to American Eagle Outfitters.

For now you can make "tap-and-go" payments at merchants who accept the MasterCard PayPass Network. There are some 140,000 PayPass locations in the U.S., and Google includes a PayPass finder inside the app. Google also has announced licensing arrangements with Visa, Discover and American Express and will add those payment networks to Google Wallet. (Google won't disclose timing.)

Acceptance will take time

Of course, Google Wallet and other initiatives to turn your cellphone into a digital billfold are in their earliest stages. People have paid with cold cash or plastic for generations. Educating the public and merchants about mobile payments will take time.

Google must also make the Wallet app available to other handsets. For the moment, Sprint's Nexus S is the only phone capable of exploiting the Wallet service, though more NFC-capable devices are coming.

And while Google Wallet arguably represents the most ambitious mobile payment initiative to date, it isn't the only one. The ISIS network, formed by the wireless carriers AT&T, T-Mobile and Verizon Wireless, is cooking up its own digital wallet. I already buy coffee from time to time with a prepaid Starbucks card app on my iPhone. I've also tried the free Card Case app from start-up Square. Intuit and PayPal are also in the game. (Not all these efforts involve NFC technology.)

Setting up the Google Wallet account involves creating a four-digit PIN that can help protect the phone should it be lost or stolen. Entering the wrong PIN five times wipes the Wallet clean. You don't have to be connected to a cellphone network, however, nor do you have to open the Google Wallet app to pay.

If prompted at checkout, you are asked to choose to "pay by credit." And then you just tap the back of the phone against the terminal to complete the payment. In some cases you may have to re-enter your PIN, and in some cases the retailer may ask you to sign your name.

At CVS I had to present my physical CVS loyalty card to earn further discounts. It will be a lot more convenient when such loyalty cards are stored inside the Wallet.

I was handed paper receipts each time I made a purchase. Google Wallet records a history of "events" inside the app that signify when you used the prepaid Google card and (in some cases) the approximate location where you completed the transaction. Alas, the name of the merchant and the amount paid does not appear.

Google says refunds are handled as with any prepaid card. But though the CVS clerk told me my refund request went through when I tapped the phone against the PayPass terminal, the refund credit never showed up on the prepaid card inside the app. Google says that can take up to a week.

Some day lots of people may pay for stuff through the Google Wallet or similar ventures. But rest assured you'll carry plastic cards and physical wallets for quite some time to come.

Google defends business practices before Senate.

USA Today
by Scott Martin
Sept 22, 2011

Google Executive Chairman Eric Schmidt was on the hot seat Wednesday at a Senate antitrust hearing as CEOs and senators accused Google of abusing its dominance in Internet search to the detriment of smaller rivals.

Schmidt defended Google's business practices, asserting that his company "does nothing to block access to any of the competitors and other sources of information in Web searches." He opened his remarks with a reference to the Microsoft antitrust case, which nearly broke up that software company. "Many of us in Silicon Valley have absorbed the lessons of that era," he said.

Google defends business practices before Senate.

His remarks landed on a cross section of senators who either praised or probed Google's business. Cozen O'Connor antitrust attorney Melissa Maxman said that was a good tone for Schmidt to hit. "It's the smart way to present it because the Microsoft inquiry didn't go all that well."

Sen. Mike Lee, R-Utah, launched some of the sharpest attacks on Google, charging that it has a "clear and inherent conflict of interest" in its search results.

Yelp, TripAdvisor, Nextag, Expedia and dozens of other companies say Google — which operates rival services such as travel and shopping search — gives preferential treatment in Internet search queries to its own businesses. "Google rigs those results," Nextag CEO Jeffrey Katz said at the hearing.

Yelp CEO Jeremy Stoppelman said, "Let's be clear: Google is no longer in the business of sending people to the best destinations on the Web. It has everything to do with generating more revenue."

The inquiry put the spotlight on Google's behavior and whether it harms competition. That issue will be closely scrutinized in the months ahead by the Federal Trade Commission, which in June launched a separate antitrust investigation of Google. The Justice Department and European Union are also examining Google, which has two-thirds of the Internet search market, trailed by Yahoo and Microsoft's Bing.

John Mayo, a professor at Georgetown University's McDonough School of Business, says, "This will come down to the same issues as the Microsoft case: Is the firm's behavior pro-competitive or exclusionary?"

Google came prepared for its date with Washington. It has ramped up its lobbying presence in the nation's capital, hiring 13 lobbyist firms since June 1, according to CQ MoneyLine.

Bill Gates tops 'Forbes' list of richest Americans.

USA Today
by Alex Veiga, The Associated Press
Sept 22, 2011

LOS ANGELES – America's economic woes don't appear to be hurting philanthropist Bill Gates, who tops Forbes' list of the 400 richest Americans for the 18th year in a row.

The magazine said Wednesday that the Microsoft co-founder's wealth amounts to $59 billion, ranking him ahead of all the other billionaires who make up this year's list.

Bill Gates tops 'Forbes' list of richest Americans.

Gates' fortune swelled by $5 billion from a year ago, outpacing No. 2 on the list, Warren Buffett, whose net worth is $39 billion, Forbes said.

Buffett, who wrote in a recent piece for The New York Times that the tax rate he paid last year was lower than that paid by any of the other 20 people working for him in his office, was the only person among the top 20 on Forbes' list to see his fortune shrink from a year ago.

The Berkshire Hathaway CEO's fortune decreased by $6 billion — the largest dollar-amount loss by anyone on the Forbes 400 this year, the magazine said.

Oracle CEO Larry Ellison rounds out the top three richest Americans with a net worth of $33 billion, $6 billion more than last year.

Financier George Soros took seventh place, his first time among the top 10. Forbes estimates his wealth at $22 billion.

Three members of the Walton family, descendants of Wal-Mart Stores founder Sam Walton, also are among the top 10 wealthiest Americans this year. Rounding out the top 10 are Sheldon Adelson, CEO of casino developer and operator Las Vegas Sands, and oil billionaire brothers Charles and David Koch.

Forbes said the combined wealth of the 400 people on this year's list is $1.5 trillion, with an average net worth of $3.8 billion. That amounts to a 12% increase from last year.

Some 262 people on the list saw their fortunes grow, while 72 saw a decline, the magazine said.

This year, entrepreneurs dominate the list at an all-time high of 70%, Forbes said.

All told, 18 people made it to the Forbes 400 for the first time this year, including Napster co-founder Sean Parker, who ranked 200th, and John Henry, majority owner of the Boston Red Sox and the Liverpool soccer team, at No. 375.

Facebook founder Mark Zuckerberg was the biggest dollar gainer on the list, with a net worth of $17.5 billion, which earned him the No. 14 spot.

There were 42 women on the list, including media mogul Oprah Winfrey at No. 139, with a net worth of $2.7 billion.

Buildings house secret servers that keep Net humming.

USA Today
by Judy Keen
Sept 9, 2011

CHICAGO – From the outside, the Gothic brick and limestone building a few blocks south of downtown almost looks abandoned.

Plaques identify it as a landmark completed in 1929, a former printing plant that once produced magazines, catalogs and phone books. The sign over the main door says "Chicago Manufacturing Division Plant 1."

There are hints, though, that something is going on inside. Cameras are aimed at the building's perimeter. A small sign at the back entrance says "Digital Realty Trust."

Sturdy gates across the driveway keep the uninvited out.

There's good reason for the intentional anonymity and security, says Rich Miller: "The Internet lives there."

Miller, editor of Data Center Knowledge, which tracks the industry, and Dave Caron, senior vice president of portfolio management for Digital Realty, which owns the 1.1 million-square-foot former R.R. Donnelley printing plant, say it is the world's largest repository for computer servers.

Caron won't identify its tenants, but he says the building stores data from financial firms and Internet and telecommunications companies. "The 'cloud' that you keep hearing about … all ends up on servers in a data center somewhere," he says.

There are about 13,000 large data centers around the world, 7,000 of them in the USA, says Michelle Bailey, a vice president at IDC, a market research company that monitors the industry. Growth stalled during the recession, but her company estimates about $22 billion will be spent on new centers worldwide this year.

The need for data centers is increasing as demand for online space and connectivity explodes. Some are inside generic urban buildings or sprawling rural facilities. For all of them, security is paramount. Inside, after all, are the engines that keep smartphones smart, businesses connected and social networks humming.

Some data centers have "traps" that isolate intrusions by unauthorized individuals, technology that weighs people as they enter and sounds an alarm if their weight is different when they depart, bulletproof walls and blast-proof doors, Bailey says.

When Wal-Mart opened a data center in McDonald County, Mo., a few years ago, County Assessor Laura Pope says she signed a non-disclosure agreement promising "I wouldn't discuss anything I saw in there." She hasn't.

Borrowing a line from a 1999 movie, Miller says, "I used to kid about the Fight Club rule: Rule No. 1 is you don't talk about the data centers, and Rule No. 2 is you do not talk about the data centers."

Although the rapid growth of data centers has diminished their ability to "hide in plain sight," he says, many owners and occupants are "very secretive and … sensitive about the locations."

That makes sense, Miller says. "These facilities are critical to the financial system and the overall function of the Internet."

Making new use of the old

Some data centers — sometimes called carrier hotels because space is leased to multiple companies — are in large urban buildings where they can tap into intersecting networks, Miller says.

Old manufacturing facilities such as Chicago's Donnelley printing plant often are repurposed because they have high ceilings and load-bearing floors to support heavy racks of servers.

"They are interesting examples of the new economy rising up in the footprints of the old," he says.

Giant companies such as Google, Facebook, Apple, Yahoo and Amazon often build their data centers in rural areas. "They're looking for cheap power and cheap real estate," Miller says. While the number of private centers grows, the federal government is consolidating. It has more than 2,000 data centers and this summer announced plans to close 373 by the end of 2012.

Communities such as Quincy, Wash., population 6,750, and Catawba County in western North Carolina want to become data center hubs. Catawba and neighboring counties dubbed themselves "North Carolina's data center corridor," says Scott Millar, president of the Catawba County Economic Development Corp.

Apple last fall opened a 500,000-square-foot, $1 billion facility in Catawba County. Google and Facebook have data centers in nearby counties and more are under construction.

Catawba County is building a second data center park in hopes of attracting more, Millar says. Because data centers don't require many employees, most of the permanent jobs are created by contractors who provide electrical, cooling or security support, he says. About 400 people work at the giant Chicago data center; many employ far fewer.

The Apple data center, Millar says, is "pretty secretive." No signs indicate what the building holds, he says, "but everybody knows what it is."

James Lewis, a senior fellow in technology and security at the Center for Strategic and International Studies, a public policy research group in Washington, D.C., compares the evolution of data centers to changes in the way electricity is generated.

A century or more ago, he says, factories and other companies operated their own electric plants to power their lights, elevators and other functions. Those with spare capacity began to sell it to their neighbors. "That's what happened to computing," Lewis says.

Instead of maintaining computer servers in their own facilities for rapidly growing data storage needs, some businesses locate their servers or backup servers in data centers, he says. They can save money because the centers minimize energy consumption, ensure security and allow computers to share tasks. Data centers also give companies places to store backed-up data that is crucial to their businesses.

"The amount of data in the world doubles every couple of years and people … are willing to pay for it to be stored," Lewis says.

He doesn't think it's essential to conceal the centers' locations, though, because hackers won't try to come in through the front door. "The main source of risk isn't physical, it's cyber," he says. "If hiding the location … is all that they're doing, they're not doing enough."

Tall building, low profile

Keeping a low profile is just the beginning of the security measures at Digital Realty Trust's massive Chicago data center.

The exterior is embellished with terra cotta shields depicting printers' marks. The building occupies almost a full block, is nine stories tall and has a 14-story tower. Inside, there are visible and unseen protections, some of which the company won't talk about publicly. There are guards at both entrances, cameras inside and out, motion sensors and much more. To access the rooms where rows of servers live, a card must be scanned and a fingerprint recognized.

The interior of the building is a mix of old and new. Because it is a landmark, its wood-lined two-story library, which has been used for photo shoots, must be kept intact. Some corridors feature stone arches overhead, and some offices are paneled in English oak.

Other hallways are sterile and silent. Inside the locked doors of the individual data centers are locked metal-grid cages and, inside them, rows of black shelving with the blinking lights of servers visible through the doors. The only sound is an electronic buzz. Cameras scan every square foot of the room.

Between the rows of servers are "cooling aisles" with thousands of round holes in floor tiles feeding cool air into the space. Over the server shelving are ladder racks that suspend "raceways" — yellow plastic casing enclosing fiber optic cables. The shelving doesn't extend to the ceiling; air must circulate above the servers to keep temperatures down.

Caron says it costs $600-$800 per square foot to build a data center and often less than $70 a square foot for a normal industrial building, including the land. The giant printing presses that once filled space in the former Donnelley building made it ideal for conversion to data center use, he says. A data center floor must be able to handle at least 150 pounds and as much as 400 pounds per square foot. By comparison, most office buildings are built for 70 pounds per square foot.

Huge amounts of electricity power all those servers, he says: 100-150 watts or more per square foot, compared with 3-5 watts for each square foot of an office building. To keep the servers running, there's more than one electrical feed into the building and backup systems and generators ensure there's never an interruption in power. The Chicago facility has 63 generators.

Digital Realty Trust, which bought the building in 2005, owns 96 properties, most of them data centers, in the USA, Europe and Asia, Caron says. There is, he says, "a lot of demand" and the company expects to spend up to $500 million this year on acquisitions. Last year it spent more than $1 billion , he says.

'You have no idea what's here'

Not every data center is a fortress. The one owned by the city of Altamonte Springs, Fla., is a former 770,000-gallon water tank next to City Hall.

Lawrence DiGioia, information services director in the city of 40,000, says he relocated the city's servers after being forced by three hurricanes to pack everything up to keep them out of harm's way. The tank has 8-inch-thick walls. "It did a great job holding water in," he says, "so we knew it could keep water out."

Even a small-scale data center needs security, though. DiGioia says his is protected by video surveillance, requires dual authentication to enter and a biometric lock limits access to the server room.

It's even harder to get into the five data centers 200 feet deep in a former limestone mine in Butler County, Pa.

"The facility affords a very high level of security, not only physical — armed guards, steel gates, layers of security, biometrics — but also we're protected from the elements, civil unrest, terrorist-type things," says Chuck Doughty, vice president of the Underground, as it's called, for Iron Mountain, an information management company.

Except for the cars parked outside, he says, "you'd have no idea what's here." Besides 7 million gigabytes of digital data, including e-mail, computer backup files and digital medical images such as MRIs, the Underground is home to documents, film reels and computer backup tapes owned by the U.S. Patent and Trademark Office, Sony Music and Universal, among others.

Doughty worked for years on Room 48, an experiment in making data centers more energy-efficient and reliable, and is working now on ways to utilize some of the cold water in the mine to cool the computer space without using chillers or cooling towers. He hopes to begin construction next year.

The security of data centers, Doughty says, is becoming increasingly important for companies and governments "not only because of the situation in the United States with terrorism, but because of the world situation."

Lewis says one of the lessons of the Sept. 11 terrorist attacks was the importance of having data stored in more than one place. As more data centers are built, he says there will be more debate about legal issues: What happens if law enforcement has a warrant for a server that also contains data owned by other companies? Should there be standards for protecting consumers, including requirements that they be notified of breaches? Should data centers be regulated by the government?

John McKay, a visitor to Chicago from Vancouver, Canada, snapped photos of the former printing plant recently. A brochure highlighting historic buildings in the neighborhood had led him to it.

"What a shame," he said, "that it's vacant."

AOL talking merger with Yahoo?

Sept 9, 2011

AOL Chief Executive Tim Armstrong has reportedly approached private equity firms to gauge interest in a deal with Yahoo that would place Armstrong as the head of the combined company, according to a Bloomberg report.

CNBC later reported that a source close to Yahoo said the company had no interest in a deal with AOL.

AOL talking merger with Yahoo?

AOL shares closed down 5.3 percent at $14.72 while Yahoo inched up 0.3 pct to $14.48.

Both former tech powerhouses have fallen on tough times and columnist John C. Abell says: “It’s impossible to know if anything short of IBM-like reinvention could have altered the course of these two companies so that the music playing now would still be more jazz than dirge.”

In other AOL-related news, Xconomy blogger Wade Roush argues that the “explosion of criticism” over TechCrunch founder Michael Arrington’s plans to create a startup seed fund has finally convinced Armstrong that “yoking a formal venture fund to a journalistic operation would make the (real or perceived) conflicts wholly unmanageable.”

Apple Inc scored a symbolic legal victory in efforts to keep its lead spot in the tablet computer market when a German court upheld a ban barring Samsung’s local unit from selling its Galaxy 10.1 tablets in Europe’s biggest economy.

A new iPhone application aims to make social networking truly social, with the help of geo-location technology.

Evernote, which makes a popular app for taking notes and storing data on tablets, phones and personal computers, is considering filing for an initial public offering by the end of next year, its chief executive told Reuters on Friday.

Google+ opens up, takes fight to Facebook.

by Edwin Chan and Alexei Oreskovic
Sept 21, 2011

(Reuters) - Google Inc (GOOG.O) and Facebook trotted out a variety of new social networking features in back-to-back announcements on Tuesday, underscoring their intensifying competition for Web surfers.

Google integrated its flagship search engine into its 3-month old social network -- with membership now open to the Internet public -- and expanded its "Hangouts" video-chat feature to allow mobile use and broadcasting.

Google+ opens up, takes fight to Facebook.

The company said on its official blog its well-received Hangouts feature -- where up to nine people can link up and chat with a user on video -- will be available on camera equipped smartphones powered by its own Android software. Support for Apple Inc (AAPL.O) iOS devices "is coming soon", it added.

And a user can now host an online broadcast with this feature -- recording a session and broadcasting it live for public access online. Black Eyed Peas front man will host the first "Hangout on Air" on Wednesday, Google said.

"Hangouts should keep pace with how you socialize in the real-world, so today we're launching it on the one device that's always by your side: your mobile phone," senior vice president of engineering Vic Gundotra said on the blog post.

For its part, Facebook said it was introducing a new "ticker" on its users' home pages, providing real-time notifications of what friends are doing on the service. Facebook also revamped the service's main news feed to flag important items -- such as a new baby announcement -- for Facebook users who have not logged on for a few days. Facebook also changed the way photos are displayed on the site, increasing the size of pictures that appear in a users' news feed.

Facebook is the world's No.1 social networking service, with more than 750 million users. The company has rolled out a series of improvements to its service recently, many of which seem designed to match features Google has used to set apart its rival social networking service, Google+.

Google did not say how many people had signed up for Google+ so far, but confirmed the social network was now open to all, whereas previously it had been invitation-only. Analysts estimate upward of 25 million users have joined Google+ since its inception.

The company also made its search engine available from within the social network. Users can search from Google+ and get results not just on the network, but from the worldwide Internet.

Google's infant social network, which counts Facebook CEO Mark Zuckerberg as a member, has met scepticism so far. Some are waiting to see if it can maintain the rapid momentum of its first months.

If CEO Larry Page's brainchild -- which some say mimics better than Facebook the instinctive categorizing of friends that occurs in real life -- takes off, it will come at a pivotal moment for its bigger rival. Facebook is widely expected to go public in 2012.

"We're nowhere near done, but with the improvements we've made so far we're ready to move from field trial to beta," Gundotra said.

EA wants Facebook's users, $3 billion in digital sales.

by Liana B. Baker
Sept 21, 2011

(Reuters) - Electronic Arts Inc may never recover its Silicon Valley swagger. But maybe it doesn't have to, its top executive says.

Three years after EA went from being one of the hottest kids on the video games block to industry also-ran, the leaner, more focused company now hopes to take on Zynga and make $3 billion in revenue from digital game sales in the next few years.

EA wants Facebook's users, $3 billion in digital sales.

Chief Executive John Riccitiello told Reuters in an interview his company survived a "near-death experience," three years ago when its profit shrank, game quality was poor and it lacked an Internet presence.

"We were once a swaggering success in the Valley and then we were suddenly an afterthought," he said of the Redwood Shores, California-based company's position in 2007, when game sales started to slip worldwide.

The CEO said that swagger may never fully return, but through cost cutting, slashing the amount of games it makes and publishing top games on Apple devices, EA has re-emerged as company that is setting its sights on social gaming phenomenon Zynga.

It is within shooting distance. Zynga, which filed with regulators for an initial public offering of up to $1 billion in July, receives the bulk of its revenue from making games for social networks, notably Facebook.

In just five weeks, EA's "Sims Social" game on Facebook attracted more than 53 million monthly active users, more than the company had expected and second only to Zynga's CityVille, which has more than 73 million monthly users, according to AppData, a firm that tracks social games data.

The goal is to one day surpass Zynga's users on Facebook. For now, AppData shows Zynga still dwarfs EA's user base on Facebook with 267 million users to EA's 94 million.

EA's comeback story, as well as job creation and tax policy, will be the topic of Riccitiello's speech on Thursday in front of the U.S. Chamber of Commerce in Washington.

Riccitiello said EA is now one of the few game companies, including China's Tencent, that will generate more than $1 billion this year in digital game sales.

He said the next step will be for EA to be the first video game company to make $3 billion in digital revenue -- sales made other than from the sale of traditional discs.


Digital revenue comes from everything from extra content gamers can download onto their console games -- such as on Microsoft's Xbox -- to the sale of virtual goods (like costumes) for a user's avatar in a Facebook game.

"We'd like to be the first to get to $3 billion in digital revenue," Riccitiello said, adding it could be in the "next two or three years."

To be sure, EA still has a way to go before it can reach that figure. The CEO said the company is only a third of the way done in its digital plans.

As for its console games, the part of its business which generates the bulk of its revenue, he said this holiday season will be crucial to see whether changes to that division have worked.

EA is chasing after Activision Blizzard's crown in first-person shooter games. EA's "Battlefield 3" video game is coming out in October, a month before Activision releases "Call of Duty: Modern Warfare 3," which is expected to shatter sales records.

"We don't think we can outsell them this time but we think we can knock them by 20-30 market share points, a gigantic chunk. On a market share basis, we are going to hurt them good," Riccitiello said.

The burning question on Wall Street is when EA's massively multiplayer -- so called because it hosts multiple players simultaneously in a single, common game world -- role-playing game "Star Wars: The Old Republic" will come out.

EA has poured millions of dollars and put years of labor into the game. The company has said the game would launch during the holiday season.

Riccitiello declined to comment on a release date. But he said pre-orders for the game were in the "hundreds of thousands" and above the 200,000 level the company's finance chief had mentioned to Reuters in July.

Schmidt says Google has not cooked search results.

by Diane Bartz and Malathi Nayak
Sept 21, 2011

(Reuters) - Google Inc has not cooked its search results to favour its own products and listings, Executive Chairman Eric Schmidt told a U.S. Senate hearing looking into whether the search giant abuses its power.

Members of the Senate Judiciary Committee's antitrust panel said on Wednesday that Google had grown into a dominant and potentially anti-competitive force on the Internet.

Schmidt says Google has not cooked search results.

"Google is in a position to determine who will succeed and who will fail on the Internet," said Republican Senator Mike Lee. "In the words of the head of the Google's search ranking team, Google is the biggest kingmaker on Earth."

Google has been broadly accused of using its clout in the search market to stomp rivals as it moves into related businesses, like travel search.

The Federal Trade Commission is looking into that charge and others, including whether Google manipulates its search result rankings to favour its own products.

Google is trying to convince regulators and lawmakers that it does not need restrictions placed on its growing portfolio of businesses, and that its business practices are legal and good for consumers.

Lee aggressively quizzed Schmidt over whether Google deviates from its search algorithm to boost its own listings.

He brought a chart that showed a study comparing the success rate for shopping-related key word searches. Lee said that search rankings for price comparison sites -- Nextag, PriceGrabber and Shopper -- varied while Google's shopping site consistently ranked third.

"I see you magically coming up third every time," Lee said. "I don't know whether you call this a separate algorithm or whether you've reverse engineered one algorithm, but either way you've cooked it, so that you're always third."

Schmidt replied: "Senator, may I simply say that I can assure you we've not cooked anything."

Google controls more than two-thirds of the global search market. But Schmidt argued that specialty web sites -- like those with restaurant reviews and travel search -- give Google stiff competition.

In an oblique reference to Microsoft, which faced nearly two decades of legal scrutiny for antitrust violations, Schmidt told lawmakers: "We get it. By that I mean, we get the lessons of our corporate predecessors."

Colin Gillis, an analyst at BGC Partners, said some of the senators were "gunning hard" for Google but Schmidt handled himself professionally. "He appeared well-coached to me," Gillis said.

The senators were at times frustrated by what Democratic Senator Al Franken characterized as "fuzzy" answers from Schmidt about how Google prioritizes its search results and whether it unfairly uses rivals' content.

Franken questioned Schmidt about complaints from Yelp -- which provides user-generated reviews of restaurants, shops and other local businesses -- that Google unfairly rips reviews from Yelp to build Google's competing site, Google Places.

Franken asked if Google still used Yelp's content to drive business to Google Places.

"As far as I know, not," Schmidt answered.

Franken skeptically asked, "As far as you know?"

"Again I'll have to look, but I'm not aware of any," Schmidt said.

Schmidt was Google's chief executive officer from 2001, but vacated the post to company co-founder Larry Page in April.

Schmidt now serves as executive chairman and oversees government affairs -- a position of critical importance during the FTC probe and lawmakers' reviews.

Some of Google's rivals made their case at the hearing for why Google needs to be reined in.

Jeffrey Katz, the CEO of Nextag, an Internet comparison shopping company, said Google was initially a huge help in building innovation.

"But what Google engineering giveth, Google marketing taketh away," he said in written testimony.

He argued that Google is now the Internet neighborhood bully. "Google doesn't play fair. Google rigs its results, biasing in favour of Google Shopping and against competitors like us," Katz said in written testimony. "As a result, Nextag's access is more and more discriminated against ... because we compete with Google where it matters most, for very lucrative shopping users."

Katz and Yelp CEO Jeremy Stoppelman both said they would not start new businesses in the current environment.

"I personally wouldn't. I'd find something else to do," said Stoppelman at the hearing.

Google spurns Oracle $2.2 billion Android damage claim.

by Jonathan Stempel
Sept 21, 2011

(Reuters) - Google Inc urged a federal judge to reject an Oracle Corp expert's recommendation that it pay more than $2.2 billion for infringing patents for Java technology used in the Android operating system.

U.S. District Judge William Alsup in San Francisco had on July 22 rejected Oracle's request for as much as $6.1 billion of damages, but gave the company a chance to revise its claim. A trial is scheduled to begin next month.

Google spurns Oracle $2.2 billion Android damage claim.

Oracle had sued Google in August 2010, claiming that the Internet search company's Android system infringed Java patents that Oracle acquired when it bought Sun Microsystems Inc seven months earlier. It also alleged copyright infringement.

The lawsuit is one of several among phone and software companies seeking a greater share of profits in the growing market for smartphones and tablets.

In a Tuesday letter to the judge, Google lawyer Robert Van Nest said a new report by Oracle damages expert Iain Cockburn recommended damages of more than $2 billion for copyright infringement, including $1.2 billion for unjust enrichment in 2012 alone, and $201.8 million for patent infringement.

Van Nest said the September 12 report is deficient because Cockburn either speculated about or did not explain how he calculated damages, and failed to show how much revenue Sun or Oracle might have earned by partnering with Google on Android.

The report "ignores governing law and the guidelines in this court's July 22, 2011 order," Van Nest concluded.

Google plans to ask Alsup to exclude portions of Cockburn's findings from the case. A Google spokesman called the revised damages estimate "flawed."

Oracle spokeswoman Deborah Hellinger declined to comment. Cockburn, a Boston University management professor, did not respond to requests for comment.

In the July 22 order, Alsup faulted Google for trying to downplay the value of Android, and use its 2006 talks with Sun regarding a lower-cost Java license as a basis to limit Oracle's damages to a fraction of what it seeks.

But he scolded Cockburn for having "overreached" in an earlier report by assuming the entire value of Android was tied to Oracle's patents, rather than only parts alleged to infringe those patents. He urged that any revised report be more specific, and threatened to exclude it altogether if it "fails to measure up in any substantial and unseverable way."

Alsup suggested that $100 million should be a "starting point" to help determine damages, before adjusting for several changes in the marketplace since the Sun license talks.

Google is based in Mountain View, California, and Oracle in nearby Redwood City.

Tuesday, September 20, 2011

Google's Larry Page and Oracle's Larry Ellison Square Off in San Francisco Court.

Bloomberg News
by Brian Womack, Aaron Ricadela and Karen Gullo
Sept 19, 2011

Google Inc. and Oracle Corp. (ORCL) chief executive officers will square off in court today to resolve a dispute that may pose the biggest threat to Google's Android mobile software, now running on more than 150 million devices.

Google's Larry Page and Oracle's Larry Ellison were ordered to appear before a federal court magistrate in San Jose, California, after tussling over patents for more than a year. Oracle accused Google of infringing patents related to its Java software, and a settlement means the companies avoid the risk of having a jury decide whether Google owes royalties.

Google's Larry Page and Oracle's Larry Ellison Square Off in San Francisco Court.

"It's like Gorbachev and Reagan," said Scott Daniels, a lawyer with Westerman Hattori Daniels & Adrian LLP in Washington. "The greatest chance of settling the case, of ending the Cold War, to use the analogy, is to have the two highest figures there."

Oracle's suit, filed in August 2010, may represent a bigger menace to Google's software than challenges from Apple Inc. (AAPL), which has already won patent decisions against Android device makers. In settlement talks, Page aims to avoid having to pay Oracle licensing fees that analysts at Citigroup Inc. said could be as high as $15 per device. That sum might slow the adoption of the software, which Google gives away.

Ellison is under pressure to wring profit from the acquisition of Sun Microsystems Inc. and its Java software after a report in June showed falling hardware sales, raising concern that Redwood City, California-based Oracle may not be making most of the $7.3 billion deal, which closed last year.

Aaron Zamost, a spokesman for Mountain View, California- based Google, and Deborah Hellinger, a spokeswoman for Oracle, declined to comment.


Ellison, 67, has demonstrated his mettle as an opponent, said Neil Herman, an analyst at Ticonderoga Securities. He prevailed in 2009 after an almost two-year fight against Swiss billionaire Ernesto Bertarelli over who can determine the challenger in the America's Cup yachting competition.

And after a trial where Ellison testified, a federal jury awarded Oracle $1.3 billion in damages against rival SAP AG (SAP), which it accused of stealing software. While a judge ruled this month that the verdict was "grossly excessive," Oracle vowed to pursue "the full measure of damages" it believes are owed.

"Larry Ellison has been masterful historically in his ability to hire good attorneys who give good advice and has been quite successful in the legal battleground," said Herman, who is based in New York.


Page, 38, who succeeded Eric Schmidt in April, may prove a worthy opponent, said Paul Saffo, managing director at San Francisco-based Discern Investment Analytics Inc., which provides financial tools for institutional investors.

Ellison, who founded Oracle in 1977 and has been its CEO since that year, is known for his blunt manner, Saffo said. Within days of becoming CEO in April, Page shook up the company's leadership, promoting seven of his managers to senior executive positions to streamline decision making.

On Page's watch, Google has also bulked up on patents and the attorneys it needs to defend against allegations of infringement. The company agreed in August to buy Motorola Mobility Holdings Ltd. for $12.5 billion, gaining more than 17,000 patents.

"The only difference between these two men is their age, not their skills," said Saffo, who said he holds some shares of Google. "They are two well-matched CEOs."


Both executives were "strongly" urged to attend today's session by U.S. District Judge William Alsup, who has been overseeing the case, after opposing sides initially said they would send lower-ranking executives.

Magistrate Judge Paul Grewal in San Jose will oversee settlement talks. Grewal's role is to play devil's advocate to each side, said Paul Janicke, a lawyer and professor who teaches intellectual property law at University of Houston Law Center.

"You try to portray the worst case for each side –'Here's what could happen to you' — so that they will see their down side," said Janicke, who has mediated patent disputes.

Oracle initially estimated that damages from allegedly unauthorized use of Java technology would amount to as much as $6.1 billion. Alsup threw out the tally, calling it "wishful thinking," according to a July 22 order.

In the same order Alsup also took Google to task for what he called "Soviet-style negotiation" in suggesting that a reasonable royalty would be at most $100 million.


Undeterred by the judge's reproach, Ellison will likely ask for an ongoing licensing fee for each device that sports Android software, said Walter Pritchard, an analyst at Citibank Global Markets. Oracle may seek anywhere from $5 to $15 per device, he said. Richard Windsor, an analyst at Nomura Securities, said Oracle may seek less than $1 a device.

Any amount would add up quickly. More than 550,000 Android devices are activated each day, Page said last month. Introduced in 2008, Android has become the leading software for smartphones, with 43 percent of the market in the second quarter, up from just 17 percent a year earlier, according to Gartner Inc.

Java, the point of contention, has emerged as an industry standard for writing business software and is widely used to create Web-based applications. After buying Sun in January 2010, Oracle said it would make more money from Java than its inventor had. Sun collected just $220 million in Java-related revenue in fiscal 2008.


Companies including Research In Motion Ltd. (RIMM), Inc. and Sony Corp. already license Java. Oracle claims that Google's Android relies on technology that infringes Java patents, and that Google should take a license.

Android has proven itself vulnerable in legal battles before. Apple won a U.S. International Trade Commission ruling in July in a patent-infringement case targeting HTC Corp. (2498)'s Android-based mobile phones.

Oracle's efforts could be more damaging to Android, said Jack Gold, an analyst at J. Gold Associates LLC in Northborough, Massachusetts.

"It strikes the foundation of Android," Gold said. "What Oracle is saying is, 'No, Android is fundamentally flawed in that it's based on our invention and you've copied our invention.' It much more goes at the core of Android."

A royalty fee would increase the cost of using Android and may cause some handset makers to consider alternative operating systems. Still, Google, with its $39.1 billion in cash and short-term securities, could absorb some of the fee charged to partners that make the devices, said Will Stofega, program director at IDC. While giving away the software, Google aims to make money through advertising that it puts on the smartphones.

If Oracle does score a victory against Google, it won't want to extract too high a fee, said Ray Valdes, an analyst with Gartner. Android needs to be successful for Oracle to get any royalties from the devices, he said.

EBay vs. Craigslist Lawsuit Heats Up.

Bloomberg News
by Karen Gullo
Sept 16, 2011

EBay Inc. (EBAY)'s lawyer said Craigslist Inc. may have "lobbied" for a criminal subpoena issued in a federal probe into allegations the online auctioneer stole confidential information from Craigslist.

The criminal subpoena issued last week and served on EBay means the exchange of documents and information in Craigslist's lawsuit against EBay should be put on hold, EBay lawyer Mark Lambert said at a hearing yesterday in state court in San Francisco.

EBay vs. Craigslist Lawsuit Heats Up.

The online classified company claims in the lawsuit that San Jose, California-based EBay used proprietary information from Craigslist to start a competing online ad site when the two companies were negotiating over EBay buying a stake in Craigslist. After winning two rulings that the case can proceed, Craigslist is seeking to move ahead with discovery, where the two sides exchange documents and interview witnesses.

"We believe they lobbied for" the subpoena and put it in newspapers yesterday, Lambert said at the hearing. "It names lots of individuals and creates tremendous uncertainty."

"This is something that they took to the authorities, it's of their making," Lambert told Superior Court Judge Richard Kramer, who is presiding over the civil case. "It's a game changer."


The Sept. 7 grand jury subpoena to Craigslist seeks information pertaining to "incidents where EBay employees engaged in alleged criminal activities and misconduct focused around the misappropriation of proprietary/confidential information from Craigslist."

It lists a February 2005 incident in which EBay founder Pierre Omidyar allegedly requested information from EBay and instructed employees to use Craigslist metrics to compare its growth rates with those of EBay's competing website called Kijiji.

Anyone named in the subpoena may want to hire a lawyer and may be unwilling to respond to civil subpoenas in the case, Lambert said.

Michael Clyde, an attorney for Craigslist, told Kramer that the criminal subpoena should have no impact on the civil case.

"There's no reason why we can't finally get started with discovery in this case," he said.

The subpoena "will not cause complete cessation of anything," Kramer said. It will be taken into account in fashioning a discovery plan, he said. The judge scheduled the next hearing in the case for Oct. 18.

EBay said Sept. 13 that the company is cooperating with the U.S. Justice Department investigation.

"We will cooperate with any inquiry related to the disputes between EBay and Craigslist," Amanda Miller, an EBay spokeswoman, said in an e-mail. "EBay believes that Craigslist's allegations against EBay are without merit."

Monday, September 19, 2011

Anti-virus firms push security software for mobile devices.

USA Today
by Byron Acohido
Sept 18, 2011

The prospect of consumers and employees physically losing information-packed mobile devices, or getting them hacked, is driving a red-hot sector of the tech industry: supplying mobile security.

Research firm IDC says global spending on mobile security is on track to balloon to $1.9 billion by 2015, up from $407 million in 2010.

Anti-virus firms push security software for mobile devices.

PC anti-virus companies Symantec, McAfee, Trend Micro and Webroot, among others, are stepping up efforts to market their mobile security services to consumers.

A subscription, which typically costs about $30 per year, includes anti-virus protection, backup data storage and technology to locate a lost or stolen mobile device. Some offerings also include safe browsing, parental monitoring and the ability to remotely lock a missing device and even wipe clean all the sensitive data it contains.

"Security is not just about anti-virus anymore," says Kevin Mahaffey, chief technical officer of Lookout Mobile Security, which specializes in security services for Android and BlackBerry handsets. "Security involves everything that could go wrong with your mobile device."

The threat was highlighted last week after someone hacked into Scarlett Johansson's text messages to steal and circulate nude photos of the actress.

Other players are moving to cash in. AT&T recently announced a partnership with Juniper Networks to develop a mobile security platform for businesses and consumers. New software services, delivered over the Internet, are expected to be available later this year. The idea is to integrate mobile security services into the wireless Internet connection supplied by AT&T, then sell annual subscriptions for different packages of security services.

"Everyone recognizes that mobile devices have gone from being a convenience to being a necessity," says Ed Amoroso, chief security officer at AT&T. "As the value of the asset increases, attention to security increases, as well."

Mobile devices are "uniquely more sensitive than PCs" since "the device is with you all the times," says Trend Micro's Tarek Alawdeen.

And because of their size, "smartphones and tablets are easier to lose or have stolen than laptops and notebooks," adds Webroot's Chad Bacher.

Corporations have special concerns. Many must comply with federal laws for safekeeping of financial and health records. Sensitive company records circulating via an array of mobile devices puts some companies at risk of violating record-keeping rules, says Chenxi Wang, principal security and risk analyst at Forrester Research.

"If you look at AT&T and Juniper's announcement it's not just about anti-malware and anti-theft, it's more about helping enterprises maintain compliance and enforce security policies," says Wang.

Many of the new mobile security services are built around defending users of Google Android smartphones and touch tablets from malicious software designed to steal data and take control of the device. "Very often we see malicious apps disguised as legitimate games, music, and ringtones which, if downloaded, can gain root access to your device in order to take control of your apps, transmit personal information from your device, control search results, or send texts and SMS messages to premium numbers." says Bacher.

Several security firms have issued reports this year showing that Android devices are increasingly susceptible to attack. McAfee, for instance, found that Android devices faced 76% more threats from April through June than in the first quarter of this year.

The "Android Market is an open app store, where anyone can freely publish Android Apps, and it is up to the community of Android users to flag malicious or fraudulent apps," says Trend Micro's Alawdeen. "The end user has no way of knowing which apps are safe or malicious."

Google spokesman Jay Nancarrow declined to comment.

Apple devices need added security too, security experts say. McAfee recently began selling an app via Apple's iTunes store that backs up iPhone- and iPad-stored photos and videos, locates lost devices and can remotely wipe information from a missing device. Apple provides a free app, called Find My iPhone, that provides basic functions for finding or locking down lost iPhones and iPads.

Several other independent app developers supply similar apps, and anti-virus giant Symantec is developing security offerings for Apple iOS, the operating system that runs iPhones and iPads.

"You stand to risk losing much more than contact information. You would lose personal, sensitive photos, like so many celebrities have," says Symantec's David Cole. "The person who finds your phone might have access to any of the websites you log into."

Results of a recent Symantec survey of 12,704 respondents in 24 nations found that only 16% installed the most up-to-date security on their devices, while 10% reported being the victim of a mobile-related cybercrime.

The security companies are banking on a rising percentage of consumers and businesses finding value in spending about $30 a year on a subscription service to protect each of their mobile devices, says Stacy Crook, senior research analyst at IDC.

"Consumers are going to have to start seeing this as a must-have and be willing to pay for it," says Crook. "We'll have to see how the market shakes out. It could be a very good business to be in, especially if users have to pay for it every year."

Heidi Klum 'most dangerous' celeb to search on Web.

USA Today
by Brett Molina
Sept 16, 2011

Internet surfers might want to use caution before conducting a Google search for Heidi Klum.

The Project Runway host and former model has been ranked the "most dangerous celebrity" to seek out on the Web, according to a report from McAfee.

Heidi Klum 'most dangerous' celeb to search on Web.

What makes Klum so dangerous? The computer security firm says one in 10 searches for the celebrity lead to a malicious site capable of adding malware or other viruses to a computer.

"While slightly safer than last year, searching for top celebrities continues to generate risky results," said Paula Greve, director of Web security research at McAfee, in a statement. "Consumers should be particularly aware of malicious content hiding in 'tiny' places like shortened URLs that can spread virally in social-networking sites, or through e-mails and text messages from friends."

Last year's "most dangerous celebrity," Cameron Diaz, dropped to No. 2 on this list. CNN host and Larry King replacement Piers Morgan was third.

Here's a look at the top 10:
1. Heidi Klum
2. Cameron Diaz
3. Piers Morgan
4. Jessica Biel
5. Katherine Heigl
6. Mila Kunis
7. Anna Paquin
8. Adriana Lima
9. Scarlett Johansson
10. Emma Stone, Brad Pitt, Rachel McAdams (tie)

Customers Angry Over Revamped Pricing Are Deserting Netflix.

The New York Times
Sept 15, 2011

Some of Netflix's popularity lies in its simplicity — in its ability to serve up films and TV shows and renew subscriptions automatically, without any thinking on the part of the customer.

Until now, that is.

A new pricing scheme is forcing Netflix's 25 million customers to think about which service they want — access to online streams, access to DVDs by mail or both — and some have decided to rethink the monthly splurge entirely.

Customers Angry Over Revamped Pricing Are Deserting Netflix.

On Thursday, the company said that customers were canceling their subscriptions in greater numbers than it expected, about a million in total, causing a projected quarterly loss in customers for only the second time in its history. The company did not signal a shift in direction or a change its financial guidance for the quarter; still, its stock dropped almost 19 percent in heavy trading on Thursday, closing at $169.25 and worsening a season-long selling streak. In July, the stock peaked at $304.79.

The downward revision reflects the negative reaction to Netflix's decision, announced in July and adopted this month, to separate its DVD-by-mail service from its faster-growing Internet streaming service. Before, DVD-by-mail was a $2 add-on for some streaming subscribers; now, each service now costs $8.

Like many customers, Steve LoGiudice, a health care analyst from Wooster, Ohio, re-evaluated his Netflix spending this summer when the change was announced. His 6- and 9-year-old children watch TV episodes through Netflix, so he kept the streaming service, but he stopped paying for DVDs by mail.

"If they didn't radically change their cost structure," Mr. LoGiudice said of Netflix, "we probably would have just kept paying the old rate without much thought or review."

Netflix's subscriber base had been on a reliably upward trajectory since its founding more than a decade ago, with one slight exception in 2007. The company — widely praised for making it easy to stream films and some TV shows via the Internet — had 24.6 million customers at the end of the second quarter of the year, when it last reported figures to investors. Back then, it expected that it would end the third quarter with 25 million, three million of whom would opt only for the DVD service.

But early Thursday morning it lowered its subscriber estimates for the third quarter, which ends in two weeks, to an expected total of 24 million, a quarterly decline of 600,000.

The decline is due in large part to customers who were unhappy about the price changes. Netflix now expects that 2.2 million customers will opt for DVDs by mail only.

Investors and the Internet video-consuming public have been paying close attention to Netflix as a leader in the growing over-the-top video industry, a reference to the fact that Netflix piggybacks on other companies' Internet connections.

Netflix has proved that many people will pay for a premium selection of films and shows online, helping to create a new revenue stream for media companies and sparking competition from Hulu, Amazon and other competitors. But Netflix also has shown that customers can reject what they perceive as an unfair deal.

Netflix knew that some customers would drop out when the changes were instituted. It had previously cautioned investors that the change would benefit the company, but not until the fourth quarter. "Despite the guidance revision, we remain convinced that the splitting of our services was the right long-term strategic choice," the company wrote in a letter to shareholders on Thursday.

The splitting of the services, the company said in July and again Thursday, will give it more money to spend on content for its streaming service, which is widely recognized as the future of the company.

Some analysts backed Netflix. While noting the short-term uncertainty, Anthony DiClemente of Barclays Capital said in an analysts' note Thursday that Netflix "remains among the best user experiences for watching video online" and credited it for remaining "disciplined on costs" and pursuing international opportunities.

Earlier this month, Netflix started new streaming services in Brazil, Mexico and many other Latin America countries. Previously the service was available only in the United States and Canada.

Netflix faces the same hurdle in every country it opens up shop: a need for compelling content. That fact was reaffirmed in the United States earlier this month when the premium cable channel Starz, which supplies Sony and Disney films to Netflix, said it would stop doing so in February when its contract expires.

The films from Starz helped to jump-start Netflix's streaming service several years ago, but according to Starz, the two companies could not come to terms on a new contract. Netflix said it would acquire content from other sources, essentially spending its subscribers' money elsewhere.