Microsoft-Yahoo Deal Draws Antitrust Scrutiny
By Information Week
Antitrust bodies in the U.S. and Europe are eyeing Microsoft (NSDQ: MSFT)'s search partnership with Internet portal Yahoo (NSDQ: YHOO) to ensure the deal doesn't run afoul of competition rules.
"As we said when the agreement was announced, we anticipated that this deal will be closely reviewed in the United States and EU, and discussions in both geographies continue," a Microsoft spokesman told the Reuters news agency Wednesday.
The spokesman said Microsoft remains confident that the deal will close sometime in 2010.
Microsoft and Yahoo struck a wide-ranging search partnership on July 29. Under the ten-year pact, Microsoft will place its Bing search engine on all Yahoo sites and, initially, keep 12% of the revenue from Yahoo-driven searches. Yahoo will handle sales and marketing for premium search ads for both its own properties and Microsoft's.
Microsoft is also committed to hire a minimum of 400 Yahoo employees on a full-time basis as it extends Bing to Yahoo's Web sites. It will also hire an additional 150 Yahoo workers to help with the transition.
Yahoo can terminate the arrangement if organic seo search traffic generated by the alliance falls below a specified percentage of Google's traffic. Yahoo also retains the right to expand the partnership by adding Microsoft's mapping and mobile search services to its Web properties.
Microsoft must submit to Yahoo copies of all data it collects from its sites while providing search services, according to an SEC filing.
Yahoo CEO Carol Bartz has said that, by in effect outsourcing search to Microsoft, her company can save $200 million in annual capital expenditures through reduced spending on search-related operations. The companies said it could take up to two years for them to fully implement their agreement.
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Friday, September 18, 2009
How Will ReCAPTCHA Help Google?
By Channel Web
Those aggravating strings of nonsensical words you have to key into your computer when trying to send someone an e-mail or buy tickets online -- they're called CAPTCHAs -- are actually doing a job that Google (NSDQ:GOOG) finds pretty valuable. But in its zeal to teach computers to, in essence, "read," Google may be chipping away at the ability of CAPTCHAs to provide security.
Google will buy ReCAPTCHA, a company that provides CAPTCHAs to help protect more than 100,000 Web sites from spam and fraud. Financial terms were not disclosed.
CAPTCHAs (Completely Automated Public Turing Test To Tell Computers and Humans Apart) are often created from old pieces of text, including books and newspapers.
Computers, through programs called "spiders" or "robots," find it hard to recognize those words because the ink and paper have degraded over time. So far, CAPTCHA programs have been successful in deflecting robotic attacks because the spiders can't recognize the text.
But in addition, the technology can help Google in its large-scale -- and controversial -- text scanning projects such as Google Books and Google News Archive Search.
Google wants the technology because as users decipher the jumbled characters with CAPTCHAs, the software "learns" to interpret those words during organic seo searches.
The technology that Google now uses to scan documents, Optical Character Reader Recognition, stumbles over the translation of print that's faded and worn. ReCAPTCHA's Web site illustrates that accuracy problem.
Because ReCAPTCHA uses old text from old print publications and users then type them in as a CAPTCHA, users teach computers to read the scanned text. Having the text version of documents is beneficial because it facilitates searching and renders it easily on mobile devices. ReCAPTCHA's slogan, "Stop Spam. Read Books," seems to be a good fit with Google's plan.
Therein may lie the rub, however. As we teach computers to read, CAPTCHAs may lose their appeal as a security mechanism. Of course, as hackers' malicious software also becomes more sophisticated, the distorted character strategy would become threatened anyway. Google's next step may need to address that security concern.
By Channel Web
Those aggravating strings of nonsensical words you have to key into your computer when trying to send someone an e-mail or buy tickets online -- they're called CAPTCHAs -- are actually doing a job that Google (NSDQ:GOOG) finds pretty valuable. But in its zeal to teach computers to, in essence, "read," Google may be chipping away at the ability of CAPTCHAs to provide security.
Google will buy ReCAPTCHA, a company that provides CAPTCHAs to help protect more than 100,000 Web sites from spam and fraud. Financial terms were not disclosed.
CAPTCHAs (Completely Automated Public Turing Test To Tell Computers and Humans Apart) are often created from old pieces of text, including books and newspapers.
Computers, through programs called "spiders" or "robots," find it hard to recognize those words because the ink and paper have degraded over time. So far, CAPTCHA programs have been successful in deflecting robotic attacks because the spiders can't recognize the text.
But in addition, the technology can help Google in its large-scale -- and controversial -- text scanning projects such as Google Books and Google News Archive Search.
Google wants the technology because as users decipher the jumbled characters with CAPTCHAs, the software "learns" to interpret those words during organic seo searches.
The technology that Google now uses to scan documents, Optical Character Reader Recognition, stumbles over the translation of print that's faded and worn. ReCAPTCHA's Web site illustrates that accuracy problem.
Because ReCAPTCHA uses old text from old print publications and users then type them in as a CAPTCHA, users teach computers to read the scanned text. Having the text version of documents is beneficial because it facilitates searching and renders it easily on mobile devices. ReCAPTCHA's slogan, "Stop Spam. Read Books," seems to be a good fit with Google's plan.
Therein may lie the rub, however. As we teach computers to read, CAPTCHAs may lose their appeal as a security mechanism. Of course, as hackers' malicious software also becomes more sophisticated, the distorted character strategy would become threatened anyway. Google's next step may need to address that security concern.
Wednesday, September 16, 2009
Google Curtails Europe Book Plan
By The Wall Street Journal
Making concessions to European publishers, online-search giant Google Inc. Monday said it will remove all European books that are still commercially available from its $125 million program to scan orphaned and out-of-print books in the U.S. and sell them online.
The concessions come after concerns were voiced by European authors and publishers who don't want the company to scan books by European authors that are still protected by copyrights, without asking their permission.
The new position means books that are no longer available to U.S. consumers but are still on sale in Europe won't be included in Google's scanned catalogs, unless the author expressly wants to be included, Google said.
In the U.S., Google has reached a settlement with publishers that will allow it to scan and post online all out-of-copyright and out-of-print books, for which owners are hard to identify. Due to complex copyright rules, the U.S settlement will only apply to users in that country.
Previously, European rights holders whose books were out of print, or had never been published in the U.S., were considered to have opted for the scanning process.
It's a step in the right direction, [but] it's not enough for our members to sleep peacefully.
To alleviate European concerns, Google has also promised to have two non-U.S. representatives on the governing board of the Books Rights Registry, which is to govern the settlement. One of its jobs is to find authors for out-of-print books that are being scanned by Google, and redistribute any earnings coming through the book search. Books are orphaned if they are protected under copyright, but the rights holder is nearly impossible to identify.
Google decided to clarify its European position following complaints, especially from German publishers, that were concerned that their authors were being illegally scanned in the U.S. Several European publishing associations say they plan to send their objections to the U.S. District Court judge who is holding a hearing on the Google deal in New York in early October.
A lot of the European concerns had been already addressed in the U.S. settlement and the emphasis on rights-holder control should put minds at ease.
By The Wall Street Journal
Making concessions to European publishers, online-search giant Google Inc. Monday said it will remove all European books that are still commercially available from its $125 million program to scan orphaned and out-of-print books in the U.S. and sell them online.
The concessions come after concerns were voiced by European authors and publishers who don't want the company to scan books by European authors that are still protected by copyrights, without asking their permission.The new position means books that are no longer available to U.S. consumers but are still on sale in Europe won't be included in Google's scanned catalogs, unless the author expressly wants to be included, Google said.
In the U.S., Google has reached a settlement with publishers that will allow it to scan and post online all out-of-copyright and out-of-print books, for which owners are hard to identify. Due to complex copyright rules, the U.S settlement will only apply to users in that country.
Previously, European rights holders whose books were out of print, or had never been published in the U.S., were considered to have opted for the scanning process.
It's a step in the right direction, [but] it's not enough for our members to sleep peacefully.
To alleviate European concerns, Google has also promised to have two non-U.S. representatives on the governing board of the Books Rights Registry, which is to govern the settlement. One of its jobs is to find authors for out-of-print books that are being scanned by Google, and redistribute any earnings coming through the book search. Books are orphaned if they are protected under copyright, but the rights holder is nearly impossible to identify.
Google decided to clarify its European position following complaints, especially from German publishers, that were concerned that their authors were being illegally scanned in the U.S. Several European publishing associations say they plan to send their objections to the U.S. District Court judge who is holding a hearing on the Google deal in New York in early October.
A lot of the European concerns had been already addressed in the U.S. settlement and the emphasis on rights-holder control should put minds at ease.
Monday, September 14, 2009
Microsoft Updates Bing with 'Visual Search' Feature
By PC World
Microsoft's Bing search engine is stepping up its assault on Google with the introduction of a unique beta search and shopping tool called Visual Search. The Visual Search feature offers an alternative to lists of blue links that are often delivered by search engines when researching cars, cameras, or other topics. Visual Search was announced Monday by Yusuf Mehdi, a senior vice president at Microsoft, at Tech Crunch 50, a tech conference being held in San Francisco.
Instead of displaying traditional lists of Web site search results Bing's Visual Search displays rows images of items that can be scrolled through via a slick interface. For example a search on Bing for handbags, Yoga poses, or movie showtimes will deliver traditional results. Now look to the left-hand side of your search resulst and you'll see a "Visualize" the search option. Clicking on this link takes you to the Visual Search page that allows you to scour images - not text links - to help you explore or winnow your search down fast. The tool also offers refinement options to narrow the number of images by criteria such as price, movie theater, or team (when searching for sports).
To preview Visual Search topics visit this Bing page which should be live by the time you read this.
Microsoft says Visual Search will be rolled into Bing over the next few weeks with some customers seeing it before others. By the end of September, it says, the feature will be live to all. The move comes as Microsoft has seen moderate success with Bing. Since its launch in May Microsoft`s Bing search market share in the U.S. grew slightly in July to 9 percent, according ComScore, a market research firm. Google owns 65 percent of the search market compared to Yahoo with 19 percent (Bing and Yahoo's combined market share is 27 percent).
Visual Search: Hands On
With the example of visually searching for cars I started out with 25 images appearing on my Web browser. Using a scroll bar on the right I was able to quickly scroll through hundreds of images of cars. When I hovered my mouse over a picture of a specific car a balloon popped up containing additional vehicle information. Click on the image and you are taken to Bing search results for the make and model of the car you were looking at.
Thanks to a slick user interface kicking virtual tires of cars is loads of fun, but what makes this technology really handy is its ability to winnow down you search. On the left-hand side are tools for narrowing the number of cars by 25 most popular, SUVs, or make and base price. Each time you select a preference the number images is reduced.
Unfortunately Visual Search significantly limited to 50 topics Microsoft has created Visual Search libraries for. That's right, there is no Bing engine that can create a Visual Search result on-the-fly for just any topic. Microsoft creates them specifically for what it says is popular search results. Search dinosaurs, Olympic sports, or laptops and no such Visual Search is offered.
I found this an addictive way to explore topics not limited to cars, but also politicians in office, MLB players, and dog breeds.
The number of topics Microsoft says it will expand to depends on how popular the feature is with Bing users.
By PC World
Microsoft's Bing search engine is stepping up its assault on Google with the introduction of a unique beta search and shopping tool called Visual Search. The Visual Search feature offers an alternative to lists of blue links that are often delivered by search engines when researching cars, cameras, or other topics. Visual Search was announced Monday by Yusuf Mehdi, a senior vice president at Microsoft, at Tech Crunch 50, a tech conference being held in San Francisco.
Instead of displaying traditional lists of Web site search results Bing's Visual Search displays rows images of items that can be scrolled through via a slick interface. For example a search on Bing for handbags, Yoga poses, or movie showtimes will deliver traditional results. Now look to the left-hand side of your search resulst and you'll see a "Visualize" the search option. Clicking on this link takes you to the Visual Search page that allows you to scour images - not text links - to help you explore or winnow your search down fast. The tool also offers refinement options to narrow the number of images by criteria such as price, movie theater, or team (when searching for sports).
To preview Visual Search topics visit this Bing page which should be live by the time you read this.
Microsoft says Visual Search will be rolled into Bing over the next few weeks with some customers seeing it before others. By the end of September, it says, the feature will be live to all. The move comes as Microsoft has seen moderate success with Bing. Since its launch in May Microsoft`s Bing search market share in the U.S. grew slightly in July to 9 percent, according ComScore, a market research firm. Google owns 65 percent of the search market compared to Yahoo with 19 percent (Bing and Yahoo's combined market share is 27 percent).
Visual Search: Hands On
With the example of visually searching for cars I started out with 25 images appearing on my Web browser. Using a scroll bar on the right I was able to quickly scroll through hundreds of images of cars. When I hovered my mouse over a picture of a specific car a balloon popped up containing additional vehicle information. Click on the image and you are taken to Bing search results for the make and model of the car you were looking at.
Thanks to a slick user interface kicking virtual tires of cars is loads of fun, but what makes this technology really handy is its ability to winnow down you search. On the left-hand side are tools for narrowing the number of cars by 25 most popular, SUVs, or make and base price. Each time you select a preference the number images is reduced.
Unfortunately Visual Search significantly limited to 50 topics Microsoft has created Visual Search libraries for. That's right, there is no Bing engine that can create a Visual Search result on-the-fly for just any topic. Microsoft creates them specifically for what it says is popular search results. Search dinosaurs, Olympic sports, or laptops and no such Visual Search is offered.
I found this an addictive way to explore topics not limited to cars, but also politicians in office, MLB players, and dog breeds.
The number of topics Microsoft says it will expand to depends on how popular the feature is with Bing users.
Official: Book settlement makes 'mockery' of copyright law
By The San Fransisco Chronicle
Google's proposed book settlement with book authors and publishers, allowing the company to digitize and sell millions of books, makes a "mockery" of copyright protections in the U.S. Constitution, the head of the U.S. Copyright Office said Thursday.
The Google book settlement, the subject of a court hearing next month, allows Google to scan out-of-print books without permission from copyright owners, creating a sort of compulsory license, said Marybeth Peters, register of copyrights at the U.S. Copyright Office. The settlement "allows Google to continue to scan millions of books into the future and permits Google to engage in a number of activities ... that are indisputably acts of copyright infringement," Peters told the U.S. House of Representatives Judiciary Committee.
The settlement seeks to circumvent "full public debate" and Congress' authority to change copyright law by allowing Google new rights for digital books, she added.
"The settlement would alter the landscape of copyright law, for millions and millions of rights holders of out-of-print books," Peters said. "It would flip copyright on its head by allowing Google to engage in extensive new uses without the consent of the copyright owner -- in my view, making a mockery of Article One of the Constitution, that anticipates that authors shall be granted exclusive rights."
A hearing on the settlement is scheduled for Oct. 7 in the U.S. District Court for the Southern District of New York. In October, after three years of negotiations, Google, the Authors Guild and the Association of American Publishers announced a settlement of lawsuits filed against Google after it began scanning books without copyright owners' permission.
Google has scanned about 10 million books and has begun offering access to books with its Google Books product.
Representatives of Google, the Authors Guild and the National Federation of the Blind defended the book deal, saying it will give the public access to millions of out-of-print and so-called orphaned books. Orphaned books are those for which no one claims copyright, and the settlement sets up an independent book registry that will seek to find the owners of orphaned works.
Blind people will gain access to digitized versions of books, which can be run through text-to-speech software, advocates said. Disadvantaged students across the U.S. will have access to books now only available in the world's greatest libraries, added David Balto, a senior fellow at the Center for American Progress and a former antitrust attorney with the U.S. Department of Justice and the U.S. Federal Trade Commission.
Lawmakers generally praised the settlement. The settlement represents "one of the most innovative developments" since the printing press, said Representative John Conyers, a Michigan Democrat and chairman of the committee.
But critics said the settlement gives Google an unfair advantage by allowing it blanket access to most books. The settlement rewards Google for scanning first without asking authors and publishers for permission, said Paul Misener, vice president of global policy at Amazon.com.
Amazon has scanned about 3 million books, Misener said. "The difference is, and probably the only significant difference between their book-scanning project and ours, is we first sought permission from the rights holders," he said. "We went to the rights holders, and one by one, negotiated deals ... to be allowed, legally, to scan these books."
The settlement releases Google from liability for any past and future copyright infringement, giving the company a huge advantage over competitors, Misener said.
The settlement would give Google an "unlawful and inappropriate" monopoly and strips away the rights of copyright holders worldwide, added John Simpson, a consumer advocate with Consumer Watchdog. "The deal simply furthers the relatively narrow agenda of Google, the Authors Guild and the Association of American Publishers," he said.
But David Drummond, Google's chief legal officer, told lawmakers that none of the benefits negotiated in the settlement are exclusive to Google. Any other company can negotiate the same deal, he said.
Drummond also told the committee that Google will expand retailer access to books scanned and sold by the company. Google has already committed to allow retailers access to sell in-print books scanned by Google, but on Wednesday, he announced that Google would expand that program to out-of-print books covered by the settlement. Amazon.com and other retailers will be able to sell those books and get part of Google's revenue share, he said.
"We're willing to put our money where our mouth is," Drummond said. "We believe strongly in an open and competitive market for digital books. Google will host the digital books online, and retailers such as Amazon, Barnes & Noble or your local bookstore will be able to sell access to users on any Internet-connected device they choose."
By The San Fransisco ChronicleGoogle's proposed book settlement with book authors and publishers, allowing the company to digitize and sell millions of books, makes a "mockery" of copyright protections in the U.S. Constitution, the head of the U.S. Copyright Office said Thursday.
The Google book settlement, the subject of a court hearing next month, allows Google to scan out-of-print books without permission from copyright owners, creating a sort of compulsory license, said Marybeth Peters, register of copyrights at the U.S. Copyright Office. The settlement "allows Google to continue to scan millions of books into the future and permits Google to engage in a number of activities ... that are indisputably acts of copyright infringement," Peters told the U.S. House of Representatives Judiciary Committee.
The settlement seeks to circumvent "full public debate" and Congress' authority to change copyright law by allowing Google new rights for digital books, she added.
"The settlement would alter the landscape of copyright law, for millions and millions of rights holders of out-of-print books," Peters said. "It would flip copyright on its head by allowing Google to engage in extensive new uses without the consent of the copyright owner -- in my view, making a mockery of Article One of the Constitution, that anticipates that authors shall be granted exclusive rights."
A hearing on the settlement is scheduled for Oct. 7 in the U.S. District Court for the Southern District of New York. In October, after three years of negotiations, Google, the Authors Guild and the Association of American Publishers announced a settlement of lawsuits filed against Google after it began scanning books without copyright owners' permission.
Google has scanned about 10 million books and has begun offering access to books with its Google Books product.
Representatives of Google, the Authors Guild and the National Federation of the Blind defended the book deal, saying it will give the public access to millions of out-of-print and so-called orphaned books. Orphaned books are those for which no one claims copyright, and the settlement sets up an independent book registry that will seek to find the owners of orphaned works.
Blind people will gain access to digitized versions of books, which can be run through text-to-speech software, advocates said. Disadvantaged students across the U.S. will have access to books now only available in the world's greatest libraries, added David Balto, a senior fellow at the Center for American Progress and a former antitrust attorney with the U.S. Department of Justice and the U.S. Federal Trade Commission.
Lawmakers generally praised the settlement. The settlement represents "one of the most innovative developments" since the printing press, said Representative John Conyers, a Michigan Democrat and chairman of the committee.
But critics said the settlement gives Google an unfair advantage by allowing it blanket access to most books. The settlement rewards Google for scanning first without asking authors and publishers for permission, said Paul Misener, vice president of global policy at Amazon.com.
Amazon has scanned about 3 million books, Misener said. "The difference is, and probably the only significant difference between their book-scanning project and ours, is we first sought permission from the rights holders," he said. "We went to the rights holders, and one by one, negotiated deals ... to be allowed, legally, to scan these books."
The settlement releases Google from liability for any past and future copyright infringement, giving the company a huge advantage over competitors, Misener said.
The settlement would give Google an "unlawful and inappropriate" monopoly and strips away the rights of copyright holders worldwide, added John Simpson, a consumer advocate with Consumer Watchdog. "The deal simply furthers the relatively narrow agenda of Google, the Authors Guild and the Association of American Publishers," he said.
But David Drummond, Google's chief legal officer, told lawmakers that none of the benefits negotiated in the settlement are exclusive to Google. Any other company can negotiate the same deal, he said.
Drummond also told the committee that Google will expand retailer access to books scanned and sold by the company. Google has already committed to allow retailers access to sell in-print books scanned by Google, but on Wednesday, he announced that Google would expand that program to out-of-print books covered by the settlement. Amazon.com and other retailers will be able to sell those books and get part of Google's revenue share, he said.
"We're willing to put our money where our mouth is," Drummond said. "We believe strongly in an open and competitive market for digital books. Google will host the digital books online, and retailers such as Amazon, Barnes & Noble or your local bookstore will be able to sell access to users on any Internet-connected device they choose."
Thursday, September 10, 2009
Google Look A Bit Different Today? It's Not Your Eyes
By Channel Web
Did Google and Google SEO look a bit different when you first opened it this morning? Did everything look just a bit bigger, but you blamed it on that double latte you had?
Starting late Wednesday, Google (NSDQ:GOOG)'s home page and search results pages feature larger text for Web surfers whose eyesight just isn't what it used to be. Most prominent is the larger search box and the larger "Google Search" and "I'm Feeling Lucky" buttons below it.
The "supersizing" of the Google page elements was announced in a blog post Wednesday by Marissa Mayer, Google vice president of search products and user experience. "Although this is a very simple idea and an even simpler change, we're excited about it -- because it symbolizes our focus on search and because it makes our clean, minimalist home page even easier and more fun to use," Mayer said in the blog.
The blog also offers a link to 17 slides showing the evolution of the Google home page from November 1998 to a sample of an October 2007 home page in Arabic.
By Channel Web
Did Google and Google SEO look a bit different when you first opened it this morning? Did everything look just a bit bigger, but you blamed it on that double latte you had?Starting late Wednesday, Google (NSDQ:GOOG)'s home page and search results pages feature larger text for Web surfers whose eyesight just isn't what it used to be. Most prominent is the larger search box and the larger "Google Search" and "I'm Feeling Lucky" buttons below it.
The "supersizing" of the Google page elements was announced in a blog post Wednesday by Marissa Mayer, Google vice president of search products and user experience. "Although this is a very simple idea and an even simpler change, we're excited about it -- because it symbolizes our focus on search and because it makes our clean, minimalist home page even easier and more fun to use," Mayer said in the blog.
The blog also offers a link to 17 slides showing the evolution of the Google home page from November 1998 to a sample of an October 2007 home page in Arabic.
Wednesday, September 09, 2009
Wal-Mart Sets Outside Offerings in Online Mall
By The Wall Street Journal
Wal-Mart Stores Inc., borrowing a page from Amazon.com Inc., Monday began offering merchandise from lesser-known retailers on its Web site in exchange for a share of the revenue.
The world's largest retailer by revenue said it added nearly one million new items to Walmart.com from other sellers as part of a new online mall, known as Walmart Marketplace.
Wal-Mart customers can purchase the products through Walmart.com, but Wal-Mart never touches the merchandise: its partners ship from their sites and handle exchanges and returns.
"Our vision is to make Walmart.com the most visited and valued online site," said Kerry Cooper, Walmart.com's chief marketing officer. Terms of the agreements weren't disclosed.
The move is part of an emerging effort by retailers to embrace the techniques that have made e-commerce companies such as Amazon and eBay Inc. successful. Adding outside merchants allows Walmart.com to considerably widen the range of products it sells, without taking on additional inventory.
Scot Wingo, one of the many keynote speakers of the night said, "Even the mega players can only manage so much selection". Scot Wingo, is the chief executive of Channel Advisor, a company that advises retailers on selling across a variety of Web sites.
Other traditional retailers have similar alliances, including Sears Holdings Corp., which began selling 130,000 Whitney Automotive Group auto parts last year through Sears.com.
Early participants in Wal-Mart's online mall include CSN Stores LLC, an online retailer that sells through websites such as Cookware.com, and Dreams Inc., which sells sports apparel through StarStruck.com.
Wal-Mart.com's expansion isn't likely to shake up the industry. But it could signal the arrival of new marketplaces from traditional online retailers and perhaps even social-networking and search sites.
By The Wall Street Journal
Wal-Mart Stores Inc., borrowing a page from Amazon.com Inc., Monday began offering merchandise from lesser-known retailers on its Web site in exchange for a share of the revenue.
The world's largest retailer by revenue said it added nearly one million new items to Walmart.com from other sellers as part of a new online mall, known as Walmart Marketplace.
Wal-Mart customers can purchase the products through Walmart.com, but Wal-Mart never touches the merchandise: its partners ship from their sites and handle exchanges and returns.
"Our vision is to make Walmart.com the most visited and valued online site," said Kerry Cooper, Walmart.com's chief marketing officer. Terms of the agreements weren't disclosed.
The move is part of an emerging effort by retailers to embrace the techniques that have made e-commerce companies such as Amazon and eBay Inc. successful. Adding outside merchants allows Walmart.com to considerably widen the range of products it sells, without taking on additional inventory.
Scot Wingo, one of the many keynote speakers of the night said, "Even the mega players can only manage so much selection". Scot Wingo, is the chief executive of Channel Advisor, a company that advises retailers on selling across a variety of Web sites.
Other traditional retailers have similar alliances, including Sears Holdings Corp., which began selling 130,000 Whitney Automotive Group auto parts last year through Sears.com.
Early participants in Wal-Mart's online mall include CSN Stores LLC, an online retailer that sells through websites such as Cookware.com, and Dreams Inc., which sells sports apparel through StarStruck.com.
Wal-Mart.com's expansion isn't likely to shake up the industry. But it could signal the arrival of new marketplaces from traditional online retailers and perhaps even social-networking and search sites.
Tuesday, September 08, 2009
Google Executive to Quit
By The Wall Street Journal
Google Inc. announced that Kai-Fu Lee, president of Google Inc.'s China operations, is resigning from the company after working to establish the Internet giant as a formidable player in the country.
Mr. Lee will be succeeded by two Google executives, the company said. Boon-Lock Yeo, currently director of Google's Shanghai engineering office, will run engineering for Google China. John Liu, who currently leads Google's sales team in greater China, will assume Mr. Lee's business and operational responsibilities.
Mr. Lee left Microsoft Corp. to join Google in 2005 to develop the company's operations in China, where Google was later than some of its rivals to establish a beachhead.
Mr. Lee's hiring kicked off a legal battle between Microsoft and Google. Microsoft, alleging Mr. Lee violated his employment contract, filed suit against Google. Google countersued, accusing Microsoft of "a shocking display of hubris," according to court documents. The companies settled privately in 2005.
Google said Mr. Lee is leaving to work on his own venture. "With a very strong leadership team in place, it seemed a very good moment for me to move to the next chapter in my career," Mr. Lee said in a statement.
During Mr. Lee's tenure, usage of Google products, including its search service, has grown among Chinese users. The company has also launched some products unique to the market, including an online music service. In announcing Mr. Lee's departure, Google said it was nearly doubling the size of its sales force in China in response to strong growth.
But Google continues to confront a range of headaches in China, which, as the country with the largest number of Internet users, is critical to its growth. Google still trails Chinese search leader Baidu by a wide margin. In the second quarter of 2009, Google drew around 20% of Chinese Internet searches, compared with Baidu's 76%, according to iResearch, an Internet research concern.
Google has also continued to clash with Chinese authorities, who have selectively blocked services such as its video-sharing site, YouTube.
By The Wall Street Journal
Google Inc. announced that Kai-Fu Lee, president of Google Inc.'s China operations, is resigning from the company after working to establish the Internet giant as a formidable player in the country.
Mr. Lee will be succeeded by two Google executives, the company said. Boon-Lock Yeo, currently director of Google's Shanghai engineering office, will run engineering for Google China. John Liu, who currently leads Google's sales team in greater China, will assume Mr. Lee's business and operational responsibilities.
Mr. Lee left Microsoft Corp. to join Google in 2005 to develop the company's operations in China, where Google was later than some of its rivals to establish a beachhead.
Mr. Lee's hiring kicked off a legal battle between Microsoft and Google. Microsoft, alleging Mr. Lee violated his employment contract, filed suit against Google. Google countersued, accusing Microsoft of "a shocking display of hubris," according to court documents. The companies settled privately in 2005.
Google said Mr. Lee is leaving to work on his own venture. "With a very strong leadership team in place, it seemed a very good moment for me to move to the next chapter in my career," Mr. Lee said in a statement.
During Mr. Lee's tenure, usage of Google products, including its search service, has grown among Chinese users. The company has also launched some products unique to the market, including an online music service. In announcing Mr. Lee's departure, Google said it was nearly doubling the size of its sales force in China in response to strong growth.
But Google continues to confront a range of headaches in China, which, as the country with the largest number of Internet users, is critical to its growth. Google still trails Chinese search leader Baidu by a wide margin. In the second quarter of 2009, Google drew around 20% of Chinese Internet searches, compared with Baidu's 76%, according to iResearch, an Internet research concern.
Google has also continued to clash with Chinese authorities, who have selectively blocked services such as its video-sharing site, YouTube.
Friday, September 04, 2009
Google's Gmail Goof-Up
By Business Week
It's too bad the National Transportation Safety Board can't investigate Google to find out just why Gmail crashed Tuesday as Google's explanations for its outages (via its dashboard) are short and kindergarten-like.
The NTSB would seek out the root cause of the outage, hold hearings and issue a report with recommendations for fixing the problem. But Google follows the standard operating practice of cloud and SaaS (Software-as-a-Service) providers, and that is to tell customers as little as possible about an outage. They treat their customers like dumb bunnies.
A Gmail outage isn't on the scale of a contaminated food supply incident, the discovery of lead paint on children's toys, or a plane crash—all events that trigger a federal investigation and detailed reports that flesh out causes and remedies.
But what happens if Google wins contracts to provide applications and mail services for Los Angeles and other government entities?
Cloud and SaaS providers increasingly want to manage critical services for government. And in time, outages that are now annoyances may have critical implications to them. Los Angeles' IT department is recommending the city move to Google Apps and says the company's services "often exceed the current city level."
That's a plus for Google but if something goes wrong with LA's IT systems, at least there is still a clear line of accountability to the managers responsible and an opportunity to probe.
But along with telling customers as little as possible, hosting, cloud and SaaS providers indemnify themselves as much as possible from any business losses resulting from an outage.
In theory, the accountability is provided by the market: a customer can move to new service provider. But a migration to the cloud may be a path of no return. LA, in its assessment of cloud services, said that if it ditches its current infrastructure, "it may be cost-prohibitive to return to the city-owned and operated structure."
Today, the harm is mostly economic. When eBay Inc.'s PayPal service crashed last month, it was just something customers had to deal with it.
PayPal blamed the failure on a "back-end router" and some redundancy issues, and left it at that. That meant the companies like Sailrite Enterprises Inc., a sailing supply company, which relied exclusively on PayPal, were unlikely to learn what happened and had to suffer the loss.
But if cloud and SaaS providers manage government services then it's unlikely that an informed public will settle for incomplete explanations about outages.
If the service is critical, they will want to know what went wrong. Was the equipment upgraded, patched? Was staffing at proper levels? When was the last time someone tested the emergency generators? And so on.
Answers to fair and legitimate questions will be sought and little "dashboards" aren't going to cut it.
The Gmail outage also affected the Google SEO search results. Searchers were getting queries that were not relevant to their searches, but, Google has resolved the problem and everything is now functioning properly.
By Business Week
It's too bad the National Transportation Safety Board can't investigate Google to find out just why Gmail crashed Tuesday as Google's explanations for its outages (via its dashboard) are short and kindergarten-like.
The NTSB would seek out the root cause of the outage, hold hearings and issue a report with recommendations for fixing the problem. But Google follows the standard operating practice of cloud and SaaS (Software-as-a-Service) providers, and that is to tell customers as little as possible about an outage. They treat their customers like dumb bunnies.
A Gmail outage isn't on the scale of a contaminated food supply incident, the discovery of lead paint on children's toys, or a plane crash—all events that trigger a federal investigation and detailed reports that flesh out causes and remedies.
But what happens if Google wins contracts to provide applications and mail services for Los Angeles and other government entities?
Cloud and SaaS providers increasingly want to manage critical services for government. And in time, outages that are now annoyances may have critical implications to them. Los Angeles' IT department is recommending the city move to Google Apps and says the company's services "often exceed the current city level."
That's a plus for Google but if something goes wrong with LA's IT systems, at least there is still a clear line of accountability to the managers responsible and an opportunity to probe.
But along with telling customers as little as possible, hosting, cloud and SaaS providers indemnify themselves as much as possible from any business losses resulting from an outage.
In theory, the accountability is provided by the market: a customer can move to new service provider. But a migration to the cloud may be a path of no return. LA, in its assessment of cloud services, said that if it ditches its current infrastructure, "it may be cost-prohibitive to return to the city-owned and operated structure."
Today, the harm is mostly economic. When eBay Inc.'s PayPal service crashed last month, it was just something customers had to deal with it.
PayPal blamed the failure on a "back-end router" and some redundancy issues, and left it at that. That meant the companies like Sailrite Enterprises Inc., a sailing supply company, which relied exclusively on PayPal, were unlikely to learn what happened and had to suffer the loss.
But if cloud and SaaS providers manage government services then it's unlikely that an informed public will settle for incomplete explanations about outages.
If the service is critical, they will want to know what went wrong. Was the equipment upgraded, patched? Was staffing at proper levels? When was the last time someone tested the emergency generators? And so on.
Answers to fair and legitimate questions will be sought and little "dashboards" aren't going to cut it.
The Gmail outage also affected the Google SEO search results. Searchers were getting queries that were not relevant to their searches, but, Google has resolved the problem and everything is now functioning properly.
Thursday, September 03, 2009
Apple, AT&T Respond in Google Phone Spat
By The Wall Street Journal
WASHINGTON -- AT&T Inc. told federal regulators Friday that it played "no role" in Apple Inc.'s decision to keep Google Inc.'s Google Voice Internet phone application off the iPhone while Apple said that it hasn't rejected the software.
Instead, Apple told the Federal Communications Commission that it is still studying the Google Voice application, but said it has concerns about how Google's application puts the Google brand on Apple's device.
"The application has not been approved because, as submitted for review, it appears to alter the iPhone's distinctive user experience by replacing the iPhone's core mobile telephone functionality and Apple user interface with its own user interface for telephone calls, text messaging and voicemail," Apple said.
The FCC is looking into why Google's phone app wasn't approved for Apple's App Store and whether AT&T, which has exclusive rights to offer the iPhone to customers in the U.S., had anything to do with it. In late July, the FCC asked all three companies for information on what led to the software's apparent rejection from Apple's online store.
In its letter to the FCC Friday, AT&T said it wasn't responsible for keeping Google Voice off of the iPhone and that it doesn't block consumers from using lawful applications on the Internet.
"AT&T was not asked about the matter by Apple at any time, nor did it offer any view one way or the other," said Jim Cicconi, AT&T's senior executive vice president for external and legislative affairs. "More broadly, AT&T does not own, operate or control the Apple App Store and is not typically consulted regarding the approval or rejection of applications for the App Store or informed when an application is approved or rejected."
AT&T said that it wasn't asked by Apple about the Google Voice app "nor did [AT&T] offer any view one way or the other," according to the letter.
Additionally, AT&T said that it plans to take "a fresh look at possibly authorizing [Internet phone] capabilities on the iPhone for use on AT&T's 3G network." AT&T currently restricts use of some Internet phone applications, notable Skype's phone service, on the iPhone to Wi-Fi networks.
Google also filed a response to the FCC about the matter, but redacted any information about its talks with Apple on its Google Voice app.
Thus far, the FCC's interest hasn't reached the stage of a formal investigation. FCC Chairman Julius Genachowski has previously told reporters that the agency is interested in finding out more about what happened in the matter.
An FCC spokeswoman said the agency was reviewing the letters.
Apple declined to approve the Google Voice application and related software developed by third parties in mid-July and some have speculated that AT&T had something to do with the decision.
AT&T has maintained for several weeks that it doesn't have control over Apple's App Store and that any decision to reject an application lies with the computer giant.
Google Voice doesn't replace traditional or wireless phone services since it requires users to have at least one other phone. Google Voice is more of a call directing service. Google Voice users choose a phone number that, if called, will ring all of the user's other phones. It also offers other services, like call recording and voice mail transcription.
However, Google Voice's cheap international calling rates and free SMS message service could be more problematic for wireless carriers, which make healthy profits on text-message fees.
It's not entirely clear what action the FCC could take against Apple to require the company to offer the Google Voice application to its customers.
The agency's inquiry, however, comes as its focusing more attention on competition issues in the wireless industry, including the issue of whether to ban exclusive handset deals like the one between AT&T and Apple for the iPhone. Next week, the agency plans to open broad inquiries into the state of competition in the wireless industry and whether to change truth-in-billing rules designed to prevent phone companies from tacking on extraneous charges onto subscribers' bills.
By The Wall Street Journal
WASHINGTON -- AT&T Inc. told federal regulators Friday that it played "no role" in Apple Inc.'s decision to keep Google Inc.'s Google Voice Internet phone application off the iPhone while Apple said that it hasn't rejected the software.
Instead, Apple told the Federal Communications Commission that it is still studying the Google Voice application, but said it has concerns about how Google's application puts the Google brand on Apple's device.
"The application has not been approved because, as submitted for review, it appears to alter the iPhone's distinctive user experience by replacing the iPhone's core mobile telephone functionality and Apple user interface with its own user interface for telephone calls, text messaging and voicemail," Apple said.
The FCC is looking into why Google's phone app wasn't approved for Apple's App Store and whether AT&T, which has exclusive rights to offer the iPhone to customers in the U.S., had anything to do with it. In late July, the FCC asked all three companies for information on what led to the software's apparent rejection from Apple's online store.
In its letter to the FCC Friday, AT&T said it wasn't responsible for keeping Google Voice off of the iPhone and that it doesn't block consumers from using lawful applications on the Internet.
"AT&T was not asked about the matter by Apple at any time, nor did it offer any view one way or the other," said Jim Cicconi, AT&T's senior executive vice president for external and legislative affairs. "More broadly, AT&T does not own, operate or control the Apple App Store and is not typically consulted regarding the approval or rejection of applications for the App Store or informed when an application is approved or rejected."
AT&T said that it wasn't asked by Apple about the Google Voice app "nor did [AT&T] offer any view one way or the other," according to the letter.
Additionally, AT&T said that it plans to take "a fresh look at possibly authorizing [Internet phone] capabilities on the iPhone for use on AT&T's 3G network." AT&T currently restricts use of some Internet phone applications, notable Skype's phone service, on the iPhone to Wi-Fi networks.
Google also filed a response to the FCC about the matter, but redacted any information about its talks with Apple on its Google Voice app.
Thus far, the FCC's interest hasn't reached the stage of a formal investigation. FCC Chairman Julius Genachowski has previously told reporters that the agency is interested in finding out more about what happened in the matter.
An FCC spokeswoman said the agency was reviewing the letters.
Apple declined to approve the Google Voice application and related software developed by third parties in mid-July and some have speculated that AT&T had something to do with the decision.
AT&T has maintained for several weeks that it doesn't have control over Apple's App Store and that any decision to reject an application lies with the computer giant.
Google Voice doesn't replace traditional or wireless phone services since it requires users to have at least one other phone. Google Voice is more of a call directing service. Google Voice users choose a phone number that, if called, will ring all of the user's other phones. It also offers other services, like call recording and voice mail transcription.
However, Google Voice's cheap international calling rates and free SMS message service could be more problematic for wireless carriers, which make healthy profits on text-message fees.
It's not entirely clear what action the FCC could take against Apple to require the company to offer the Google Voice application to its customers.
The agency's inquiry, however, comes as its focusing more attention on competition issues in the wireless industry, including the issue of whether to ban exclusive handset deals like the one between AT&T and Apple for the iPhone. Next week, the agency plans to open broad inquiries into the state of competition in the wireless industry and whether to change truth-in-billing rules designed to prevent phone companies from tacking on extraneous charges onto subscribers' bills.
Monday, August 31, 2009
Is Google Sitting on the Clock of eBay?
By The Wall Street Journal
Is Google the next eBay?
Maybe. There are some worrisome parallels between Google today and eBay in 2005-06, as the online-auction company's growth was faltering.
Consider this history: In August 2004, then-Chief Executive Meg Whitman said she didn't believe eBay was approaching anything like saturation. Just six months later the company issued a weaker-than-expected forecast that in hindsight was the end of its red-hot growth phase. EBay's stock is now trading at less than half its December 2004 level.
Through 2005-06 some hoped that eBay's PayPal unit, acquired in 2002, and Skype, in 2005, would prove to be new growth engines, along with international markets. As it turned out, of course, after writing off much of the Skype purchase price, eBay now is looking to jettison it. And growth at PayPal and internationally hasn't been enough to stop eBay's top-line growth rate from decelerating.
When it comes to Google, there also are hopes for international growth. YouTube has some similarities with Skype, high user traffic but relatively low revenue. Whether YouTube can live up to its promise as a big ad platform is uncertain.
Another of Google's potential growth engines is Android. But its ability to help Google expand in the mobile-ad market remains unproved.
Certainly, Google can claim lots of phones soon may be using the Android operating system. Unfortunately, they don't include the two phone brands that account for much of the growth in the smart-phone market, Apple and Research In Motion's BlackBerry. Google also is banking on expanding into display advertising.
While investors wait for these new initiatives to prove themselves, growth is slowing in the core paid-search ad business. Google's revenue growth rate has fallen from 93% in 2005 to 31% in 2008.
The recession has demonstrated the Internet company isn't immune from pressures other ad-dependent businesses face. Revenue growth dropped to 3% year on year in the second quarter.
Moreover, as U.S. revenue growth was only 1.6%, it is possible that Google's core search business actually shrank in the U.S. when contributions from newer businesses like mobile advertising are excluded.
Google's revenue growth will certainly accelerate coming out of the recession. The issue is by how much and for how long.
In the short term, growth will be sparked by "price reinflation of key words," said Majestic Research Managing Director John Aiken. Prices fell during the worst of the slump. Assuming demand returns, price per clicks should rise again.
But that won't sustain growth long term. That rests on several other variables, including where consumers go to search the Internet and how many searches they do.
Competition from Microsoft's revamped search engine, Bing, is showing signs of life. Search marketing reported this month that Bing had lifted its paid-click market share 44% since the beginning of June. It still is only 4.9%, but Microsoft's share will rise assuming the deal with Yahoo is completed.
It would be foolish to predict that Google won't have another business success, of course. Microsoft managed to leverage its strength in PC operating systems into a stranglehold over the word-processing and spreadsheet applications.
But investors should be careful buying on such hopes. With Google's medium-term revenue growth likely to fall toward 10%, it is hard to justify paying 25 times 2009 consensus earnings, including the cost of employee stock options. Google may itself discover the next Google-like business.
But until it proves that case, investors may want to wait for the stock to retreat.
By The Wall Street Journal
Is Google the next eBay?
Maybe. There are some worrisome parallels between Google today and eBay in 2005-06, as the online-auction company's growth was faltering.
Consider this history: In August 2004, then-Chief Executive Meg Whitman said she didn't believe eBay was approaching anything like saturation. Just six months later the company issued a weaker-than-expected forecast that in hindsight was the end of its red-hot growth phase. EBay's stock is now trading at less than half its December 2004 level.
Through 2005-06 some hoped that eBay's PayPal unit, acquired in 2002, and Skype, in 2005, would prove to be new growth engines, along with international markets. As it turned out, of course, after writing off much of the Skype purchase price, eBay now is looking to jettison it. And growth at PayPal and internationally hasn't been enough to stop eBay's top-line growth rate from decelerating.When it comes to Google, there also are hopes for international growth. YouTube has some similarities with Skype, high user traffic but relatively low revenue. Whether YouTube can live up to its promise as a big ad platform is uncertain.
Another of Google's potential growth engines is Android. But its ability to help Google expand in the mobile-ad market remains unproved.
Certainly, Google can claim lots of phones soon may be using the Android operating system. Unfortunately, they don't include the two phone brands that account for much of the growth in the smart-phone market, Apple and Research In Motion's BlackBerry. Google also is banking on expanding into display advertising.
While investors wait for these new initiatives to prove themselves, growth is slowing in the core paid-search ad business. Google's revenue growth rate has fallen from 93% in 2005 to 31% in 2008.
The recession has demonstrated the Internet company isn't immune from pressures other ad-dependent businesses face. Revenue growth dropped to 3% year on year in the second quarter.
Moreover, as U.S. revenue growth was only 1.6%, it is possible that Google's core search business actually shrank in the U.S. when contributions from newer businesses like mobile advertising are excluded.
Google's revenue growth will certainly accelerate coming out of the recession. The issue is by how much and for how long.
In the short term, growth will be sparked by "price reinflation of key words," said Majestic Research Managing Director John Aiken. Prices fell during the worst of the slump. Assuming demand returns, price per clicks should rise again.
But that won't sustain growth long term. That rests on several other variables, including where consumers go to search the Internet and how many searches they do.Competition from Microsoft's revamped search engine, Bing, is showing signs of life. Search marketing reported this month that Bing had lifted its paid-click market share 44% since the beginning of June. It still is only 4.9%, but Microsoft's share will rise assuming the deal with Yahoo is completed.
It would be foolish to predict that Google won't have another business success, of course. Microsoft managed to leverage its strength in PC operating systems into a stranglehold over the word-processing and spreadsheet applications.
But investors should be careful buying on such hopes. With Google's medium-term revenue growth likely to fall toward 10%, it is hard to justify paying 25 times 2009 consensus earnings, including the cost of employee stock options. Google may itself discover the next Google-like business.
But until it proves that case, investors may want to wait for the stock to retreat.
By The Wall Street Journal
Google Faces Suit Over On2 Purchase
Google Inc.'s acquisition of video compression software maker On2 Technologies Inc. has been challenged in court by On2 shareholders who claim the deal's $106.5 million price tag is "unfair."
The complaint, filed in Delaware Court of Chancery on Monday, seeks class action status and a permanent injunction blocking the deal. The plaintiffs also demand that the defendants, which include On2's board as well as Google, account for all damages caused.
Google declined to comment on the complaint. On2, which produces software that makes high-definition video playback possible on mobile devices, wasn't available for comment.
Under the terms of the deal, each On2 share will be converted into 60 cents in Google stock -- a 57% premium over the closing price for On2's shares the day before the deal was announced.
The complaint argues that prior to the transaction, On2's stock had been trading "well in excess" of 60 cents, hitting 65 cents as recently as May 13, and reaching $1.16 in 2008.
The complaint alleges that On2 management and Google rushed to announce the deal just one day before the small software company reported its best quarterly financial results in six quarters.
On2 last week announced a loss of $224,000 for the quarter on $5 million in revenue.
Google Faces Suit Over On2 Purchase
Google Inc.'s acquisition of video compression software maker On2 Technologies Inc. has been challenged in court by On2 shareholders who claim the deal's $106.5 million price tag is "unfair."
The complaint, filed in Delaware Court of Chancery on Monday, seeks class action status and a permanent injunction blocking the deal. The plaintiffs also demand that the defendants, which include On2's board as well as Google, account for all damages caused.
Google declined to comment on the complaint. On2, which produces software that makes high-definition video playback possible on mobile devices, wasn't available for comment.
Under the terms of the deal, each On2 share will be converted into 60 cents in Google stock -- a 57% premium over the closing price for On2's shares the day before the deal was announced.
The complaint argues that prior to the transaction, On2's stock had been trading "well in excess" of 60 cents, hitting 65 cents as recently as May 13, and reaching $1.16 in 2008.
The complaint alleges that On2 management and Google rushed to announce the deal just one day before the small software company reported its best quarterly financial results in six quarters.
On2 last week announced a loss of $224,000 for the quarter on $5 million in revenue.
Thursday, August 27, 2009
Why AT&T Killed Google Voice
By The Wall Street Journal
Earlier this month, Apple rejected an application for the iPhone called Google Voice. The uproar set off a chain of events—Google's CEO Eric Schmidt resigning from Apple's board, and the Federal Communications Commission (FCC) investigating wireless open access and handset exclusivity—that may finally end the 135-year-old Alexander Graham Bell era. It's about time.
With Google Voice, you have one Google phone number that callers use to reach you, and you pick up whichever phone—office, home or cellular—rings. You can screen calls, listen in before answering, record calls, read transcripts of your voicemails, and do free conference calls. Domestic calls and texting are free, and international calls to Europe are two cents a minute. In other words, a unified voice system, something a real phone company should have offered years ago.
Apple has an exclusive deal with AT&T in the U.S., stirring up rumors that AT&T was the one behind Apple rejecting Google Voice. How could AT&T not object? AT&T clings to the old business of charging for voice calls in minutes. It takes not much more than 10 kilobits per second of data to handle voice. In a world of megabit per-second connections, that's nothing—hence Google's proposal to offer voice calls for no cost and heap on features galore.
What this episode really uncovers is that AT&T is dying. AT&T is dragging down the rest of us by overcharging us for voice calls and stifling innovation in a mobile data market critical to the U.S. economy.
For the latest quarter, AT&T reported local voice revenue down 12%, long distance down 15%. With customers unplugging home phones and using flat-rate Internet services for long-distance calls (again, voice is just data), AT&T's wireline operating income is down 36%. Even in the wireless segment, which grew 10% overall, per-customer voice revenue is down 7%.
Wireless data service is AT&T's only bright spot, up a whopping 26% per customer. How so? As any parent of teenagers knows, text messages are 20 cents each, or $5,000 per megabyte. After the first month and a $320 bill, we all pony up $10 a month for unlimited texting plans. Same for Internet access. With my iPhone, I pay $30 a month for unlimited data service (actually, one gigabyte per month). Is it worth that? The à la carte price for other not-so-smart phones is $5 per megabyte (one-thousandth of a gigabyte) per month. So we buy monthly plans. Margins in AT&T's Wireless segment are an embarrassingly high 25%.
The trick in any communications and media business is to own a pipe between you and your customers so you can charge what you like. Cellphone companies don't have wired pipes, but by owning spectrum they do have a pipe and pricing power.
Aren't there phone competitors to knock down the price? Hardly. Verizon Wireless, T-Mobile and others all joined AT&T in bidding huge amounts for wireless spectrum in FCC auctions, some $70-plus billion since the mid-1990s. That all gets passed along to you and me in the form of higher fees and friendly oligopolies that don't much compete on price. Google Voice is the new competition.
By the way, Apple also has a pipe—call it a virtual pipe—to customers. Its iTunes music service (now up to one-quarter of all music sales, according to NPD Market Research) works exclusively with iPods and iPhones. The new Palm Pre, another exclusive deal, this time by Verizon Wireless, tricked iTunes into thinking it was an iPod. Apple quickly changed its software to lock the Pre out, and one would expect Apple locking out any Google phone from using iTunes.
It wouldn't be so bad if we were just overpaying for our mobile plans. Americans are used to that—see mail, milk and medicine. But it's inexcusable that new, feature-rich and productive applications like Google Voice are being held back, just to prop up AT&T while we wait for it to transition away from its legacy of voice communications. How many productive apps beyond Google Voice are waiting in the wings?
So now the FCC and its new Chairman Julius Genachowski are getting involved. Usually this means a set of convoluted rules to make up for past errors in allocating scarce resources that—in the name of "fairness"—end up creating a new mess.
Some might say it is time to rethink our national communications policy. But even that's obsolete. I'd start with a simple idea. There is no such thing as voice or text or music or TV shows or video. They are all just data. We need a national data policy, and here are four suggestions:
• End phone exclusivity. Any device should work on any network. Data flows freely.
• Transition away from "owning" airwaves. As we've seen with license-free bandwidth via Wi-Fi networking, we can share the airwaves without interfering with each other. Let new carriers emerge based on quality of service rather than spectrum owned. Cellphone coverage from huge cell towers will naturally migrate seamlessly into offices and even homes via Wi-Fi networking. No more dropped calls in the bathroom.
• End municipal exclusivity deals for cable companies. TV channels are like voice pipes, part of an era that is about to pass. A little competition for cable will help the transition to paying for shows instead of overpaying for little-watched networks. Competition brings de facto network neutrality and open access (if you don't like one service blocking apps, use another), thus one less set of artificial rules to be gamed.
• Encourage faster and faster data connections to our homes and phones. It should more than double every two years. To homes, five megabits today should be 10 megabits in 2011, 25 megabits in 2013 and 100 megabits in 2017. These data-connection speeds are technically doable today, with obsolete voice and video policy holding it back.
Technology doesn't wait around, so it's all going to happen anyway, but it will take longer under today's rules. A weak economy is not the time to stifle change.
Data is toxic to old communications and media pipes. Instead, data gains value as it hops around in the packets that make up the Internet structure. New services like Twitter and other social media sites promoting top search engine placement don't need to file with the FCC.
And new features for apps like Google Voice are only limited by the imagination. Mother-in-law location alerts? Video messaging? Whatever. The FCC better not treat AT&T and Verizon like Citigroup, GM and the Post Office. Cellphone operators aren't too big to fail. Rather, the telecom sector is too important to be allowed to hold back the rest of us.
By The Wall Street Journal
Earlier this month, Apple rejected an application for the iPhone called Google Voice. The uproar set off a chain of events—Google's CEO Eric Schmidt resigning from Apple's board, and the Federal Communications Commission (FCC) investigating wireless open access and handset exclusivity—that may finally end the 135-year-old Alexander Graham Bell era. It's about time.
With Google Voice, you have one Google phone number that callers use to reach you, and you pick up whichever phone—office, home or cellular—rings. You can screen calls, listen in before answering, record calls, read transcripts of your voicemails, and do free conference calls. Domestic calls and texting are free, and international calls to Europe are two cents a minute. In other words, a unified voice system, something a real phone company should have offered years ago.
Apple has an exclusive deal with AT&T in the U.S., stirring up rumors that AT&T was the one behind Apple rejecting Google Voice. How could AT&T not object? AT&T clings to the old business of charging for voice calls in minutes. It takes not much more than 10 kilobits per second of data to handle voice. In a world of megabit per-second connections, that's nothing—hence Google's proposal to offer voice calls for no cost and heap on features galore.
What this episode really uncovers is that AT&T is dying. AT&T is dragging down the rest of us by overcharging us for voice calls and stifling innovation in a mobile data market critical to the U.S. economy.
For the latest quarter, AT&T reported local voice revenue down 12%, long distance down 15%. With customers unplugging home phones and using flat-rate Internet services for long-distance calls (again, voice is just data), AT&T's wireline operating income is down 36%. Even in the wireless segment, which grew 10% overall, per-customer voice revenue is down 7%.
Wireless data service is AT&T's only bright spot, up a whopping 26% per customer. How so? As any parent of teenagers knows, text messages are 20 cents each, or $5,000 per megabyte. After the first month and a $320 bill, we all pony up $10 a month for unlimited texting plans. Same for Internet access. With my iPhone, I pay $30 a month for unlimited data service (actually, one gigabyte per month). Is it worth that? The à la carte price for other not-so-smart phones is $5 per megabyte (one-thousandth of a gigabyte) per month. So we buy monthly plans. Margins in AT&T's Wireless segment are an embarrassingly high 25%.
The trick in any communications and media business is to own a pipe between you and your customers so you can charge what you like. Cellphone companies don't have wired pipes, but by owning spectrum they do have a pipe and pricing power.
Aren't there phone competitors to knock down the price? Hardly. Verizon Wireless, T-Mobile and others all joined AT&T in bidding huge amounts for wireless spectrum in FCC auctions, some $70-plus billion since the mid-1990s. That all gets passed along to you and me in the form of higher fees and friendly oligopolies that don't much compete on price. Google Voice is the new competition.
By the way, Apple also has a pipe—call it a virtual pipe—to customers. Its iTunes music service (now up to one-quarter of all music sales, according to NPD Market Research) works exclusively with iPods and iPhones. The new Palm Pre, another exclusive deal, this time by Verizon Wireless, tricked iTunes into thinking it was an iPod. Apple quickly changed its software to lock the Pre out, and one would expect Apple locking out any Google phone from using iTunes.
It wouldn't be so bad if we were just overpaying for our mobile plans. Americans are used to that—see mail, milk and medicine. But it's inexcusable that new, feature-rich and productive applications like Google Voice are being held back, just to prop up AT&T while we wait for it to transition away from its legacy of voice communications. How many productive apps beyond Google Voice are waiting in the wings?
So now the FCC and its new Chairman Julius Genachowski are getting involved. Usually this means a set of convoluted rules to make up for past errors in allocating scarce resources that—in the name of "fairness"—end up creating a new mess.
Some might say it is time to rethink our national communications policy. But even that's obsolete. I'd start with a simple idea. There is no such thing as voice or text or music or TV shows or video. They are all just data. We need a national data policy, and here are four suggestions:
• End phone exclusivity. Any device should work on any network. Data flows freely.
• Transition away from "owning" airwaves. As we've seen with license-free bandwidth via Wi-Fi networking, we can share the airwaves without interfering with each other. Let new carriers emerge based on quality of service rather than spectrum owned. Cellphone coverage from huge cell towers will naturally migrate seamlessly into offices and even homes via Wi-Fi networking. No more dropped calls in the bathroom.
• End municipal exclusivity deals for cable companies. TV channels are like voice pipes, part of an era that is about to pass. A little competition for cable will help the transition to paying for shows instead of overpaying for little-watched networks. Competition brings de facto network neutrality and open access (if you don't like one service blocking apps, use another), thus one less set of artificial rules to be gamed.
• Encourage faster and faster data connections to our homes and phones. It should more than double every two years. To homes, five megabits today should be 10 megabits in 2011, 25 megabits in 2013 and 100 megabits in 2017. These data-connection speeds are technically doable today, with obsolete voice and video policy holding it back.
Technology doesn't wait around, so it's all going to happen anyway, but it will take longer under today's rules. A weak economy is not the time to stifle change.
Data is toxic to old communications and media pipes. Instead, data gains value as it hops around in the packets that make up the Internet structure. New services like Twitter and other social media sites promoting top search engine placement don't need to file with the FCC.
And new features for apps like Google Voice are only limited by the imagination. Mother-in-law location alerts? Video messaging? Whatever. The FCC better not treat AT&T and Verizon like Citigroup, GM and the Post Office. Cellphone operators aren't too big to fail. Rather, the telecom sector is too important to be allowed to hold back the rest of us.
By The Wall Street Journal
Media Firms, Advertisers Study Nielsen Alternative
A dozen major media companies, advertisers and ad agencies are banding together to find new ways of measuring television-viewing habits, a move that could create fresh competition for Nielsen Co.
Dubbed the Coalition for Innovative Media Measurement, the consortium plans to explore ways of using TV set-top boxes from cable and satellite companies and other tools to measure TV watching, according to people familiar with the matter. The effort aims to measure audiences across TV, the Web and mobile devices, the people said.
Media companies involved in the consortium include General Electric Co.'s NBC Universal, News Corp., Time Warner Inc., Viacom Inc., CBS Corp., Discovery Communications Inc. and Walt Disney Co., according to people familiar with the matter. News Corp. owns The Wall Street Journal.
The consortium's plan could be a shot across the bow of Nielsen, which has seen an increase in the number of challengers to its dominant position in the business of gauging the audiences commanded by TV shows. The coalition will explore options that include working with those competitors, creating a new competitor or even working with Nielsen as a data provider, some people familiar with the matter said.
The effort is still preliminary and wouldn't immediately create a replacement for Nielsen, people familiar with the matter said.
"We are not responding to something that's not yet announced," said Karen Gyimesi, a Nielsen spokeswoman.
Nielsen uses a panel of U.S. households to estimate how many people watch TV shows. Networks and advertisers then use the Nielsen data to set advertising rates. Nielsen charges both networks and advertisers for access to the data.
TV-network owners and ad agencies have long chafed at Nielsen's tight control over quantifying TV viewing. In the late 1990s, TV networks teamed up with advertising agencies and planned to spend tens of millions of dollars to launch a rival to Nielsen, dubbed Smart. That effort fizzled in part because of the high cost.
But network executives have continued to complain that Nielsen doesn't measure their audiences accurately. In May, Nielsen fanned those worries when it told networks that some people in Nielsen households hadn't been following instructions to push buttons that register who in a household is actually watching TV, possibly depressing its viewer estimates.
The new coalition is also an effort to address the growing use of the Web and mobile devices to watch TV, say people familiar with the matter. Nielsen and other firms track some of that activity, but network executives have argued that a lack of standardization has hindered their ability to make money on new ways their shows are being seen.
The plans were reported earlier by the Financial Times.
Advertisers in the group include Procter & Gamble Co., Unilever, Dell and AT&T Inc., people familiar with the matter said. Advertising firms including WPP PLC's GroupM and Publicis Groupe SA's Starcom Mediavest are also participating in the group, those people said.
NBC Universal has been one of central proponents of the coalition, say some people familiar with the matter. Jeff Zucker, the company's chief executive, reached out to major advertisers such Unilever and ad buying giants such as Starcom Mediavest earlier this year about a forming some sort of alliance to find a new ways to measure viewership across different media, some of these people say.
Last year, in a bid to promote its broadcasts of the Beijing Olympics, the company also cobbled together a group of measurement companies to tally the event's audience across various media, including video-on-demand, TV, cell phones and the Web.
"Management said to me we have to figure out a way to go beyond Nielsen to measure this stuff," Alan Wurtzel, NBC Universal's president of research and media development, said at the time.
The agreement to create the coalition itself has yet to be finalized, according to some people familiar with the matter. The companies had been set to announce it in early August, and a press release announcing the effort has been readied, these people said. But that plan has been delayed, in part as lawyers review the project for possible anti-trust or collusion concerns because so many competitors are involved, according to two people familiar with the matter.
Other people cited the difficulty in coordinating such a large number of participants as a reason for the delay.
Over the past few years, Nielsen's grip on the media-measurement business has loosened somewhat. Companies such as WPP's TNS Media Intelligence and TiVo Inc. have started offering advertisers and network more granular data on TV viewing by using data from cable set-top boxes. Some of the services can estimate how many people are watching in different parts of a commercial break.
Nielsen has responded by with its own new services. Last year, the company began offering a new service that uses information from cable set-top boxes in approximately 330,000 households in Los Angeles. It gets the data from cable operator Charter Communications Inc.
Nielsen is also using a test-bed of households to refine techniques for extending its TV ratings to cover at least some TV shows that are watched on the Web, executives said in an interview last month. The technology is separate from its existing services to measure traffic to Web sites and for online video.
Media Firms, Advertisers Study Nielsen Alternative
A dozen major media companies, advertisers and ad agencies are banding together to find new ways of measuring television-viewing habits, a move that could create fresh competition for Nielsen Co.
Dubbed the Coalition for Innovative Media Measurement, the consortium plans to explore ways of using TV set-top boxes from cable and satellite companies and other tools to measure TV watching, according to people familiar with the matter. The effort aims to measure audiences across TV, the Web and mobile devices, the people said.
Media companies involved in the consortium include General Electric Co.'s NBC Universal, News Corp., Time Warner Inc., Viacom Inc., CBS Corp., Discovery Communications Inc. and Walt Disney Co., according to people familiar with the matter. News Corp. owns The Wall Street Journal.
The consortium's plan could be a shot across the bow of Nielsen, which has seen an increase in the number of challengers to its dominant position in the business of gauging the audiences commanded by TV shows. The coalition will explore options that include working with those competitors, creating a new competitor or even working with Nielsen as a data provider, some people familiar with the matter said.
The effort is still preliminary and wouldn't immediately create a replacement for Nielsen, people familiar with the matter said.
"We are not responding to something that's not yet announced," said Karen Gyimesi, a Nielsen spokeswoman.
Nielsen uses a panel of U.S. households to estimate how many people watch TV shows. Networks and advertisers then use the Nielsen data to set advertising rates. Nielsen charges both networks and advertisers for access to the data.
TV-network owners and ad agencies have long chafed at Nielsen's tight control over quantifying TV viewing. In the late 1990s, TV networks teamed up with advertising agencies and planned to spend tens of millions of dollars to launch a rival to Nielsen, dubbed Smart. That effort fizzled in part because of the high cost.
But network executives have continued to complain that Nielsen doesn't measure their audiences accurately. In May, Nielsen fanned those worries when it told networks that some people in Nielsen households hadn't been following instructions to push buttons that register who in a household is actually watching TV, possibly depressing its viewer estimates.
The new coalition is also an effort to address the growing use of the Web and mobile devices to watch TV, say people familiar with the matter. Nielsen and other firms track some of that activity, but network executives have argued that a lack of standardization has hindered their ability to make money on new ways their shows are being seen.
The plans were reported earlier by the Financial Times.
Advertisers in the group include Procter & Gamble Co., Unilever, Dell and AT&T Inc., people familiar with the matter said. Advertising firms including WPP PLC's GroupM and Publicis Groupe SA's Starcom Mediavest are also participating in the group, those people said.
NBC Universal has been one of central proponents of the coalition, say some people familiar with the matter. Jeff Zucker, the company's chief executive, reached out to major advertisers such Unilever and ad buying giants such as Starcom Mediavest earlier this year about a forming some sort of alliance to find a new ways to measure viewership across different media, some of these people say.
Last year, in a bid to promote its broadcasts of the Beijing Olympics, the company also cobbled together a group of measurement companies to tally the event's audience across various media, including video-on-demand, TV, cell phones and the Web.
"Management said to me we have to figure out a way to go beyond Nielsen to measure this stuff," Alan Wurtzel, NBC Universal's president of research and media development, said at the time.
The agreement to create the coalition itself has yet to be finalized, according to some people familiar with the matter. The companies had been set to announce it in early August, and a press release announcing the effort has been readied, these people said. But that plan has been delayed, in part as lawyers review the project for possible anti-trust or collusion concerns because so many competitors are involved, according to two people familiar with the matter.
Other people cited the difficulty in coordinating such a large number of participants as a reason for the delay.
Over the past few years, Nielsen's grip on the media-measurement business has loosened somewhat. Companies such as WPP's TNS Media Intelligence and TiVo Inc. have started offering advertisers and network more granular data on TV viewing by using data from cable set-top boxes. Some of the services can estimate how many people are watching in different parts of a commercial break.
Nielsen has responded by with its own new services. Last year, the company began offering a new service that uses information from cable set-top boxes in approximately 330,000 households in Los Angeles. It gets the data from cable operator Charter Communications Inc.
Nielsen is also using a test-bed of households to refine techniques for extending its TV ratings to cover at least some TV shows that are watched on the Web, executives said in an interview last month. The technology is separate from its existing services to measure traffic to Web sites and for online video.
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