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Fly Or Die: Hands On With The Google Music Beta And A Wild New Wi-Fi Hard Drive

Posted: 19 May 2011 08:59 AM PDT

This week Erick and I received two invites to the Google Music Beta and I also discovered that Erick is a secret 90s classic rap fan who used to drink the brass monkey while whiling away the hours in his college dorm room. Who knew?

We also tried out the new Seagate GoFlex Satellite wireless hard drive and discussed why I loved the New Yorker iPad app so darn much. Plus, at some point in the show, a rep from one of the three companies comes on to respond to our verdicts (we don’t know who it is until he shows up, which is part of the fun).

You can watch two clips from the show (including a detailed hands-on of Google Music) or you can watch the entire episode below, featuring all three products.

What did we discover? Well, as of right now Google Music is just a file locker that uses a standalone desktop app to transfer your entire music library to the cloud. That doesn’t mean it’s not cool, it just means it doesn’t have the music discovery and purchasing features that we’ve come to know with non-cloud based iTunes. However, this is Google – they’ll get this fixed eventually and until that day comes you can still use the service to listen to your entire, remotely-stored collection on almost any device that supports Flash in the browser or has a standalone app. This limits things to Android-only at this point, but I wouldn’t be surprised if an HTML5 version or iOS app isn’t forthcoming.

The GoFlex Satellite is another device that stores your information in the cloud, albeit in a cloud that exists five feet from your iPad or PC. This 500 GB drive costs $199 and has a built-in WiFi access point. When you connect to it, you are brought to a page that displays all of the music, movies, and photos on the drive and you and up to three other people can all access the files at the same time. It’s drag-and-drop simple and Seagate even made a standalone iPad app for viewing unsupported video and photo formats.

Finally, Erick and I fight over the New Yorker iPad app. I love it for its simplicity, while he finds it too simplistic. Is this the happy medium or just another magazine app? You decide.

That Was Fast: Amazon’s Kindle Ebook Sales Surpass Print (It Only Took Four Years)

Posted: 19 May 2011 08:14 AM PDT

Five years ago, if you’d told a fellow book lover that eBooks were poised to surge in popularity and overtake traditional books, you probably would have been met with a scoff and a dismissal about reading too much sci-fi. And yet here we are: Amazon has just announced that it is now selling more eBooks than it is selling print editions, a mere four years after launching the Kindle. Obviously Amazon doesn’t account for all print or eBook sales, but it’s a very impressive milestone.

Then again, the news doesn’t come as a huge surprise if you’ve been following the Kindle’s growth. Kindle eBook sales surpassed Amazon’s hardcover sales back in July 2010, and they surpassed paperback sales in January of this year. But now it’s bested both of them combined. Note that this does not include the free books that many Kindle users take advantage of — these are all paid books.

The quick rise of the Kindle can be attributed, at least in part, to the steep price cuts Amazon has been making. A year ago the device cost $259. Amazon slashed it to $189 in June 2010, then began offering a Wi-fi only version last summer for $139. And now it’s gone even lower with an ad-supported version for only $114. Amazon says that this new model, which is called ‘Kindle with Special Offers’, is already selling more than the other Kindle devices.

Amazon also says that 2011 has had the fastest year over year growth rate for its U.S. books sales in over a decade, including both eBooks and print — and that Kindle eBook sales are up 3x in 2011 from what they were this time last year.

Hey, remember when the iPad was going to kill the Kindle?

Voice Sentiment Analysis Startup Saygent Raises $1 Million

Posted: 19 May 2011 08:02 AM PDT

Saygent, a SaaS startup that helps companies figure out the sentiment behind customer voice responses, has raised $1 million in seed funding from 500 StartupsInnovation Endeavors, Juvo Capital, Kapor Capital, Kima Ventures, Orefa Investment, PG Ventures, Ty Danco and Matthew Grodin.

With clients from Fortune 500 companies including Comcast and other biggies, Saygent uses crowd-sourcing to automate the processing and analysis of natural language at high-volume, helping brands figure out audience sentiment, intent and other characteristics valuable to marketers.

Founder Guy Hirsch hopes to challenge the call center industry, "The mission Saygent took upon itself will define a new category in enterprise feedback management or, in other words, how companies think about using phone-intensive workflows in general."

Hirsch wants to use the additional financing to hire engineers and amp up business development efforts.

You can learn more about Saygent and its mission by watching this video of the founders at 500 Startups Demo Day, below.

DFJ Leads $6 Million Round For Social Job Board Jibe

Posted: 19 May 2011 08:01 AM PDT

TechCrunch 50 company Jibe (formerly LocalBacon), has raised $6 million in Series A funding led by Draper Fisher Jurvetson and DFJ Gotham with existing investors, Polaris Venture Partners, Zelkova Ventures, Lerer Ventures, Thrive Capital and Stanford University Endowment participating in the round. This brings the company’s total funding to $7 million.

Jibe is a next-generation job board that leverages Facebook, LinkedIn and Twitter to help job seekers find the best positions in the job market.

On Jibe, job seekers sign in with Facebook Connect. The platform will then pull in their work and education history from their Facebook profile and from LinkedIn to pre-populate their Jibe profile. Then for every job posting, they can see if they are connected to anyone at that company. Jibe allows members to message those people directly to ask for a recommendation or job advice.

Jibe uses a credit system that allows applicants to apply for jobs. Applicants can earn credits by linking their Jibe account to their various social networks, broadcasting their job search, sending private messages through the system, or updating their work history profile. On the enterprise side, Jibe allows companies to add a social layer to the evaluation and vetting process.

The company says that more than 700,000 visitors engaged with Jibe’s social recruiting platform in April, resulting in thousands of interviews. Companies hiring on Jibe include Microsoft, MTV, Amazon, Intel, American Express, and Bank of America among others, and Jibe has signed up 25 percent of the Fortune 50 as clients.

Jibe, which faces competition from both LinkedIn and BranchOut, plans to use the funding to build
out its engineering team, expand its product, and further develop its mobile offerings. Upgrades Social News Curation Platform, Adds Eric Hippeau As An Advisor

Posted: 19 May 2011 07:58 AM PDT this morning announced new curation and management capabilities for its publishing platform, which basically allows individuals and publishers like HBO create personalized online newspapers by incorporating Twitter and Facebook streams into a familiar newspaper layout. earlier this year raised $2.1 million for its social news curation platform, and is today also announcing a welcome addition to its advisory board: former Huffington Post CEO and venture capitalist Eric Hippeau is joining Guy Kawasaki as an advisor to the company.

I spoke with Hippeau this morning, and he’s genuinely excited about, which he says is one of the pioneers in the new age of self-expression, allowing anyone to combine the publication of personalized online newspapers (mini Huffington Posts, in a way) with today’s blogging platforms and social networking services, with solid technology at the core.

Of course, it also helps that Softbank Capital, a venture capital firm started by Hippeau, is one of the investment firms backing's latest product advancements – which are live now – make it easier for people to find and share relevant information from the Web by improving the search capabilities, significantly enhancing curation options and providing one-click editorial controls that allow publishers to delete or reposition articles on their paper(s). claims over 12 million articles are curated daily by users.

Related reading: The Age Of Relevance

You Can Now Get Every Playboy Issue Ever Published On Your iPad For $8 Per Month

Posted: 19 May 2011 07:45 AM PDT

Ever wanted to be able to access every issue of Playboy magazine published since December 1953 on your iPad? Even if just for the articles?

You’re in luck: Playboy Enterprises, the media company behind the magazine, this morning announced a web-based subscription service that gives users the opportunity to read, search and explore every single Playboy issue.

Beware: link to ‘iPlayboy’ above is potentially NSFW, depending on where you W.

Also, the subscription service was actually supposed to launch in March, but hey.

Pricing ranges from $4.95 for 3 days of access to $8.99 per month for a full year.

Update: that is the pricing I could see, but a Playboy rep tells me subscription pricing is actually $8 per month, $60 per year and $100 for two years.

From the press release:

From the inaugural issue with Marilyn Monroe to the current issue with rock heiress Lizzy Jagger on the cover, iPlayboy features every pictorial, interview, Centerfold, investigative reporting piece, story, advertisement and image that ever appeared in the magazine, more than 130,000 pages in total.

Readers can search for a groundbreaking interview they read years ago, find classic fiction, or read about the most-recent celebrity cover model, all in one place.

The site will be updated with each monthly issue so that it includes current content as well as archival features and pictorials.

Well Woop-dee-doo Basil!

LinkedIn IPO Shares Pop 84 Percent On First Trade, Opens With $7.8B Market Cap

Posted: 19 May 2011 07:07 AM PDT

This is a big day for professional social network LinkedIn, which was founded in 2003. After filing its S-1 with the SEC in January, the company has begin trading its shares, under the symbol LNKD, on the New York Stock Exchange this morning. As we learned yesterday, LinkedIn priced its IPO at $45 per share, giving the company a valuation of $4.5 billion. Today, the company began trading at $83.00 per share, a 84 percent increase from $45 per share. That’s a $7.8 billion market cap. It’s now up to $90 per share, but is fluctuating.

LinkedIn is offering a total of 7,840,000 shares and is looking to raise as much as $406 million in the offering. Currently there are 94.5 million shares outstanding plus 1,176,000 shares to cover over-allotments. If the company sold the over allotment, LinkedIn’s valuation could be as high as $8 billion.

The company just reported that Q1 revenue in 2011 was up 110 percent to $93.9 million. Net income increased to $2.08 million, from $1.81 million in Q1 2010. LinkedIn says it will use the funds from the offering for general corporate purposes, including working capital, sales and marketing activities, general and administrative matters and capital expenditures. The funds could also be used for acquisitions or investments in complimentary technologies.

Here’s LinkedIn’s announcement announcing its debut on the NYSE.

Related Posts: Attn Entrepreneurs: Mark Zuckerberg Isn't the Role Model. Reid Hoffman Is.

Website Building Tool Jimdo Is Taking Off, Adding Cool Features, Making Money

Posted: 19 May 2011 07:04 AM PDT

Jimdo, a service that lets anyone create a good-looking website without too much effort, is on a roll. The tool has now been used to build over 4 million websites, and 200,000 more Jimdo-powered sites get published every month.

Last year, the German startup behind the service rolled out a feature that let anyone create an online store, quickly and easily. Fast forward 15 months and 40,000 online stores have been built using the service, generating more than 7.5 million euros in sales.

Today, the company is debuting a mobile-friendly view for optimized display on iPhone, Android handsets and other smartphones, which works for all Jimdo websites. In addition, all 40,000 online stores will have a mobile store with mobile checkout. Click a Google Map in the mobile view, and the native Google Maps app will open on your phone.

Jimdo has more in store: next week, the company will announce Dropbox integration, enhancing the website building application with a digital file center in the cloud.

The startup currently boasts offices in Hamburg, San Francisco, Shanghai, and through cooperation with KDDI Webcommunications, also in Tokyo. There are about 70 people working for Jimdo today, and co-founder Christian Springub just relocated to the United States to more efficiently attack the North American market.

Furthermore, Jimdo is a profitable business today, although they declined to share absolute revenue numbers. Either way, their momentum is noteworthy, especially when you consider how much capital was raised by rivals Wix ($58.5 million) and Yola ($25 million).

Jimdo, in contrast, was built on only 500,000 euros (roughly $715,000). When United Internet invested in the company, more capital was available, but the management team actually moved to buy back the shares back in 2009.

iOS Game Publisher Fuse Powered Raises $2m Seed Round From BlackBerry Partners Fund And NFQ

Posted: 19 May 2011 07:02 AM PDT

When you hear a name like BlackBerry Partners Fund, your first thought probably isn’t “Hey! They should invest in an iOS games publisher!”

As it turns out, while the investment firm shares a name and myriad ties to the finest gadget line to come out of Waterloo, the fund isn’t bound to products built for any one platform in particular. They’re celebrating that fact today by investing in — you guessed it — an iOS game publisher.

This morning, iOS publisher/analytics provider Fuse Powered is announcing a two million dollar seed round lead by BlackBerry Partners Fund and NFQ Ventures.

Read the rest at MobileCrunch >>

Need Help With Class? Motuto For iOS Puts A Live Tutor In Your Pocket

Posted: 19 May 2011 07:00 AM PDT

As easy as it is to forget that the iPad isn’t just a little Angry-Birds-and-Netflix machine, it’s always nice to see someone building something meant to teach kids a thing or two.

Exhibit A: Motuto. Launched this morning, Motuto takes live tutors from around the world and shoves ‘em into the iPhone, iPad, and, before too long, Android devices.

>”>Read the rest at MobileCrunch >>

Students: Buy A Win7 PC, Get An XBox 360 Free

Posted: 19 May 2011 06:32 AM PDT

If this doesn’t point to a coming refresh of Xbox 360 hardware I don’t know what does. Starting May 22, Microsoft is offering a free XBox 360 (with 4GB of storage) to folks who pay $699 or more for a Windows 7 PC – note they do not say “laptop,” which suggests that makers like HP and Dell are trying to boost their waning, post-PC sales.

Obviously this is a great deal for students but it definitely points to a bit of a fire sale when it comes to the smaller, less memory-studded Xboxen along with the PCs that are currently mouldering on shelves thanks to the relative success of tablets. While I believe that the belief that tablets are eating into PC sales is correlation without causation, I do think that the race to the bottom in PC prices and netbook sales has negatively effected PC makers who are now facing a customer – of their own making – who expects more for considerably less. As a result, sales and profits are down catastrophically.

Read more…

DreamIt And Comcast Partner For New Program For Minority Entrepreneurs

Posted: 19 May 2011 06:01 AM PDT

Comcast Interactive Capital, the venture capital arm of the media giant, has partnered with Philadelphia based venture fund and startup accelerator Dreamit Ventures to provide seed funding, training, mentoring and other benefits to minority-led startups through DreamIt's accelerator program.

The new $350,000 fund will give five minority-led startups for its Fall Philadelphia 2011 program a extra infusion of capital on top of the funding DreamIt provides for its class of startups. For Comcast Interactive Capital, this is the first investment initiative from the $20 million fund that was created as part of the acquisition of NBC Universal. The $20 million fund will be used to invest in other minority led startups and initiatives (outside of DreamIt), mainly in the technology sector.

Similar to DreamIt’s other startups that are incubated in its accelerator, the chosen minority-led startups will be mentored by experts in marketing, brand building, business development, financial modeling, business plans, distribution and customer acquisitions. The companies will also be provided with office space and the end of the three-month period, the startups will have the opportunity to pitch to venture capital and angel investors at a demo day in Philadelphia.

For DreamIt, this is the first specialized program within the accelerator that will provide extra funding and resources for a subset of startups. DreamIt recently expanded expanded its incubator to New York City.

Entrepreneurs interested in applying to the program can access more details here.

Sophia Does The Math, Buys Guaranteach To Boost Its Social Education Platform

Posted: 19 May 2011 05:35 AM PDT

Sophia, which operates a free online social teaching and learning platform, this morning announced that it has acquired Guaranteach, a Web-based service that provides tens of thousands of short-form tutorials along with assessment tools to students, teachers, colleges and schools.

Guaranteach offers nearly 23,000 short-form videos on math topics ranging from counting to calculus, developed by nearly 200 teachers and math experts. Guaranteach also offers more than 60,000 quiz questions, as well as assessment tools that match tutorials to the learning style of the learner and provide student progress reports.

Sophia will soon start offering the Guaranteach portfolio of math tutorials – previously available on a pay-per-use basis to schools – to individual learners around the world at no cost.

Notably, Sophia also plans to use the Guaranteach model to develop and offer a range of English and science tutorials in addition to math.

The deal will also help Sophia enhance its social learning solution, which is currently available for licensed use by K-12 districts and higher education institutions.

In public beta since March 2011, Sophia offers a crowd-sourced platform where academic information is organized in learning packets and can be created by anyone, anywhere using text, images, presentations, video, audio and more. The site is free and packets are rated for quality and evaluated for academic soundness by users and experts within the community.

Guaranteach was founded by Innosight Ventures, the venture arm of Innosight. Last year, Guaranteach received a grant from the Bill and Melinda Gates Foundation, with the purpose of enriching teaching and determining whether and how the use of short-form instructional videos will increase engagement and student achievement.

NewSchools Venture Fund was also an investor.

Smart Lending: On Deck Gives Your Startup A Credit Score So You Can Secure A Loan

Posted: 19 May 2011 05:00 AM PDT

We talk a lot about the startups and companies that receive venture capital and angel funding, but what about the other subset of small businesses that are fundamental to the success of the economy, but may not be on the radar of VCs and angels? These companies, from restaurants and small retailers to salons and florists, may not be high-potential startups like a Google or a Facebook, but they provide services we use on a daily basis and are, therefore, equally as deserving of the necessary capital that would help them get off the ground. Of course, traditionally it’s been very difficult for them to secure bank loans.

Generally speaking, these small businesses likely don’t have traditional finance departments, spend little on finance, keep small cash reserves, and often don’t have the collective experience to complete a 14-item loan package that makes them attractive to lenders. On the flip side, financial institutions can’t afford to spend a lot of time evaluating and working with businesses seeking sub-$100K loans. As a result, banks tend to fall back on personal and consumer credit scores, treating these startups as individual borrowers, rather than evaluating the credit potential of the business itself.

As a result, On Deck Capital was founded in May of 2006 to bring a technological spin to streamline the process of bringing loans to Main Street businesses and startups. Instead of simply looking, say, at an applicant’s tax returns when evaluating businesses, On Deck uses software to examine a business’ day-to-day operations. The software investigates how many customers the business has, cash flow, sales, and registered complaints, for example, in order to judge whether or not the company is solid enough to repay a loan.

Considering the fact that banks have lacked an efficient way to analyze businesses for sub-$100K loans and have underwritten commercial loans based on a consumer credit score, multitudes of creditworthy small businesses have been deprived of the capital they need to grow. As such, On Deck is today announcing its On Deck Score, a business credit score developed to provide lenders with an effective measure of a small business’ creditworthiness. The startup partnered with Equifax, which collects, organizes, and manages various financial, demographic, and employment data to develop and implement the On Deck Score. Equifax will be hosting the On Deck Score.

The cloud-based On Deck platform enables small businesses to go to create a business profile, which links to electronic data sources, including online banking, accounting and merchant processing. On Deck then combines that information with social, tax, and industry data to create a comprehensive financial profile of the business. And now banks and lenders will be able to not only have access to this complete financial profile, but an accurate business credit score, through On Deck Score, in the name of streamlining the lending process.

For a somewhat unusual approach to small business lending, On Deck has been able to spend 5 years developing the technology of its business, thanks to the attention of big-name investors. RRE Ventures, SAP Ventures, and Khosla Ventures, among others, have contributed over $30 million to the On Deck platform.

On Deck Founder and CEO Mitch Jacobs tells me that there are currently 5 million businesses that have 25 employees or less — a segment the U.S. economy relies on for 40 percent of its jobs. So, facilitating the financial underwriting of these businesses is an important goal, especially as the U.S. pulls itself out of a recession. These small businesses provide the key to a full economic recovery — and future success.

“There’s been a transformation over the last 10 years, as businesses have been going from paper-based islands of inefficiencies to adopting lots of software that’s connected to the cloud”, Jacobs said. “Banks have traditionally used less realtime information than the average 10-year-old, but now the time is right, the adoption of software by businesses is high, and there’s an opportunity for businesses to quickly create a full data profile that minimizes risk for lenders and opens up a vast sum of capital for the small business owner”.

Jacobs went on to say that the the typical loan application and approval process can take up to 3 months, but the On Deck system streamlines the lending process so that businesses can be receiving capital in as little as 2 days. As this is the case, and considering that the service is free to use, On Deck has already facilitated over $125 million at an average of loan size of $30K. The ceiling price for an On Deck loan is $150K.

For more info on the free service, check out the overview here.

Khosla Ventures Is Raising, Like, A Billion Dollars

Posted: 19 May 2011 03:55 AM PDT

Venture capital firm Khosla Ventures is raising $1 billion for its new fund, Khosla Ventures IV, an SEC filing reveals. From the looks of it, the new fund will be roughly the same size as the previous one (raised in September 2009).

The news comes a few weeks after former YouTube and Facebook CFO Gideon Yu left the firm after joining them less than two years earlier, to go work for the San Francisco 49ers.

The Menlo Park, California-based investment firm was founded in 2004 by Vinod Khosla, the iconic co-founder of Sun Microsystems and former general partner of Kleiner Perkins Caufield & Byers, and focuses on investments in early stage companies in the Internet, computing, mobile, silicon technology and cleantech industries.

Portfolio companies include Square, Jawbone, BOKU, Hunch, GroupMe, Meebo and Xobni.

I’ve contacted Khosla Ventures for more information, but haven’t heard back yet.

In the meantime, here’s an awesome piece of text from their website, which you may find inspirational:

Change depends on unreasonable people. Don’t assume–analyze. Brutal honesty trumps hypocritical politeness. Have courage. Build companies instead of cutting deals.

Thrive on technological risk. Ignore the nonsense of conventional wisdom. People matter. Care about genuine issues: a healthy environment. Sustainable power. Free information. Go for GREAT, not just good. Be willing to fail but aim for revolutionary success.

Related reading material from past years:

Vinod Khosla, Risk Junkie
Interview: Vinod Khosla Is On The Hunt For Great Technologies
Vinod Khosla: New CEOs Should Spend More Than 50% Of Their Time Recruiting (TCTV)

Plizy iPad App Could Be A Flipboard-meets-Pandora For Video

Posted: 19 May 2011 02:55 AM PDT

Plizy is an interesting new startup which wants to bring personalized video content to the iPad [iTunes link] the company has also announced a $1.2m angel funding round from undisclosed investors.

Plizy wants users to discover, share and watching online video based on your social graph, history, and interests. It sounds like a few other startups we could mention, and competitors might best be described as ShowYou or Pandora. In fact, there is an element here of “Flipboard meets Pandora” for video.

Octopart, The Little Startup That Hung In There

Posted: 18 May 2011 09:58 PM PDT

Looking for a transistor or a relay? Or possibly an oscilloscope? More than likely you’ll end up at Octopart, a vintage Y Combinator startup that launched in 2007.

The company is a search engine for electronic parts, allowing users to navigate through a taxonomy of structured stuff, or just do a plain old parts name/number search. Once you find what you’re looking for, Octopart will show you a variety of distributors who sell the part and their prices, along with a link to go buy it. Here’s the most searched item on the site.

The company is small, but growing and profitable. While the company won’t disclose revenues, about $10 million a year in commerce flows through their site, they estimate (meaning end purchases at distributors via referrals from them). Octopart generates revenue from those referrals, and through display ads on their site.

And it has a great story of how it got here.

The company was founded by two physics Ph.D dropouts, Andres Morey and Harish Agarwal. They added a third physics Ph.D dropout, Samuel Wurzel, as CEO. They raised a modest $300,000 angel round in 2008 from notable investors, but kept the team to just the three of them. Monthly expenses, other than their salaries, were just $700.

In late 2008 they had another round of financing lined up and about to close. But that $800,000 angel round dissolved during the late 2008 venture capitalist “oh crap it’s 2001 all over again everybody run for it!” meltdown.

The round never closed. The company was out of money. Anyone with any sense at all would have gone back to the warm, safe, inviting Ph.D program cocoon that they so hastily left the year before.

Instead, they cut their salaries to $0 and focused on finding that $700 every month to keep the servers up. Lean times.

But then things started to change, Morey tells me. Traffic increased organically. They closed more paying deals with distributors. Something like critical mass was achieved, and real revenue started flowing in. At least, enough revenue to allow them to pay themselves salaries.

And then more visitors showed up, clicking more results, and more revenue came in. Today Octopart has half a million monthly unique visitors, says Morey. And those are solid gold looking-to-buy-something-right-now unique visitors, the kind that bring in revenue.

“We hired our first employee, Bryan Newbold (a new MIT physics grad),” Morey told me today, adding “And we just signed up Mouser Electronics which means we have deals with all major distributors of electronic parts.”

Octopart isn’t sexy like a lot of startups. It’s boring, and practical (words Sarah Lacy used today to describe LinkedIn). But boring and practical, when combined with pretty awesome search technology, can make a fine business. Especially when the founders aren’t quitters when things get tough.

Well, actually, they are quitters, since they all dropped out of grad school. But they’re not quitters now, and that’s all that counts.

Flickr Designer Publicly Criticizes Flickr’s Design

Posted: 18 May 2011 09:33 PM PDT

The photo-sharing space continues to heat up, and continues to leave dominant player Flickr in the dust innovation-wise. If one thing's becoming clear, it's that it must be really painful to work at Yahoo and have any sort of passion for good product design.

The latest example of this pain point comes from Flickr designer Timoni West, who has publicly criticized the service on her personal blog, in a post called "The Most Important Page On Flickr." In the post Timoni links to the Flickr Contacts > Recent Uploads page and breaks down what's wrong with it, namely that on a micro-level that there is no chronological way to sort photos, the thumbnail size is too small and there's no way to see all of a user's recent photos without visiting their profile.

But what West finds most problematic is that …

"The page fails on a fundamental level—it's supposed to be where you find out what's happened on Flickr while you were away. The current design, unfortunately, encourages random clicking, not informed exploration.

The page isn't just outdated, it's actively hurting Flickr, as members' social graphs on the site become increasingly out of sync with real life. Old users forget to visit the site, new sign ups are never roped in, and Flickr, who increased member sign-ups substantially in 2010, will forego months of solid work when new members don't come back."

Power Flickr users, desperate for a platform that provides the sense of community early Flickr did, are moving on to Instagram, 500px and the recently launched Mlkshk. As Flickr user and developer Buzz Andersen put it, "This highly perceptive post by @Timoni almost completely covers the reasons my use of Flickr has declined over time."

Many feel like Flickr has swerved from its original course of being a community of photographers and photosharers to being a storage center. Jason Kottke (Kottke!) referred to the problem as such, "Flickr has become a shoebox under the bed instead of the door of the refrigerator or workplace bulletin board. "

Thomas Hawk is one of the early Flickr evangelists who moved on because of lack of community, leaving the service for 500px, "500px is like Flickr was in the early day. They care about the users. Flickr doesn’t anymore … [500px CEO] Ian Sobolev is interacting with users like Stewart/Caterina did. Flickr censors, bans, deletes and talks down to their users."

But West thinks (or rather, writes) that there's still a glimmer of hope, that Flickr still has the ability to "kick ass in this arena." But she modifies her assertion with "They just have to build it" and her statement is decidedly less powerful when taken in the context of the "This post is largely taken from a proposed redesign I sent out last year” sentence in the introduction.

Last year!!!

With no such redesign in sight one can't help but feel that West's insightfulness is lost on Yahoo. And that Instagram should probably hire her to build its web platform.

Google And Amazon May Have Just Handed Apple The Keys To The Cloud Music Kingdom

Posted: 18 May 2011 08:27 PM PDT

With regard to their cloud music offering, it looks like Apple is now just about ready to rock and roll. It would seem that this is now coming together even faster than they anticipated. And that may be thanks to two unlikely sources: Google and Amazon.

CNet’s Greg Sandoval is reporting tonight that Apple has signed an agreement with music label EMI to offer its music through Apple’s upcoming new cloud music service. This means that Apple now has agreements in place with two of the four major labels (Warner signed last month). And Sandoval believes that deals with the remaining two, Sony and Universal, could be wrapped up as early as next week. Again, rock and roll.

With those deals in place, it means that Apple will be free to launch their cloud service anytime they please. And while we had heard the initial plan was to do so at their annual music event in the early fall, Apple could indeed move the launch up to WWDC in early June (just a few weeks from now). We haven’t heard anything definitive about this either way, but you can bet that Apple is thinking about it.

It would be a pretty savvy move. One that would make their rivals look bad. Really bad.

You see, while Apple is believed to have had the infrastructure work done for a while for their cloud music offering, the hold up was these label deals. Negotiations have been ongoing for months, and given the stakes, it seems likely that they could have gone on for many more months. Then Amazon decided to get ballsy.

They launched their own cloud music service in March without any of the labels signed on, surprising everyone. Legally, they said they had the right to do this since customers are placing this music in digital vaults in the cloud in the same way they might put music on an MP3 player. The labels, not surprisingly, disagree.

When Amazon did that, Google, which had also been negotiating with the music labels for at least a year, also decided they needed to get their offering out there. Last week at Google I/O, they launched Google Music in beta. Again, the labels were pissed off.

And guess who they ran to?

As Sandoval reported last week, following Google’s Music announcement:

Nonetheless, the hope in the music industry is that Apple’s music service will make the competing offerings look shabby by comparison and force Amazon and Google to pay the licensing rates the labels are asking.

So the labels, which for the better part of a decade now have been looking for someone, anyone to help counter Apple’s power in their business, is turning right back to Apple when they need help. And Apple will obviously gladly welcome them with open arms. After all, with these licenses, Apple will have secured the cloud music high ground despite being the last to launch.

Think about it. With these agreements, Apple is likely going to be able to do the one thing that is absolutely crucial for cloud music to take off: offer library syncing without uploading. In other words, Apple now likely be able to do what Lala (the company Apple bought in late 2009 and subsequently shut down) was able to do: scan your hard drive for songs and let you play those songs from their servers without having to upload them yourself.

It’s hard to overstate how critical this is. Right now, Amazon makes you upload your own library for any song you haven’t purchased from them since their service launched (those you purchase from them can automatically be added to your locker). Google doesn’t even have a music purchase option at all yet, so you have to upload music.

As Jason and I talked about on OMG/JK this week, that means hours or days of uploading — that’s what he had to go through. How many people are realistically going to do that? Not a lot.

But because neither Amazon nor Google have the label agreements — the key thing we warned about months ago when people were buzzing about Google Music rumors — they have no choice. Apple has a choice. And will fully take advantage of it.

Both Amazon and Google have complained that the terms the labels want are unacceptable and untenable for a business. Yet, it looks like Apple has been able to work them out. And that may well be thanks to, yep, Amazon and Google.

[image: flickr/dagoaty]

Security Breach: Here’s How Expired Domains Expose You To Embarrassment (And Theft)

Posted: 18 May 2011 07:37 PM PDT

As if you’re not scared enough of the Internet (and its potential to ravage your personal information), something comes along to make you even more paranoid. Just ask PlayStation users, or those that were on the receiving end of Firesheep’s eavesdropping. Today’s vulnerability du jour? Expired domains. The technical veterans among us are likely already familiar with this, but it seems that letting a domain name expire, especially those tied to other online accounts, exposes your personal information and makes you vulnerable to potential identity theft.

Today, British developer and hacker Ben Reyes wrote a post describing how he was able to use an expired domain to access to another person’s Gmail, Google calendar, contacts, and more, which then, in turn, allowed him to access further web accounts, like Amazon.

It started when Reyes recently attempted to link a newly registered domain to Google Apps. The Google Apps page immediately responded to the request, saying that the domain had already been registered. Thank you, try again. This was because the previous owner of the domain name had left it tied to Google Apps. So Reyes went through the domain reclamation process, proved he was the new owner, and shabang, he was granted access.

Once he signed in, the fun started. Google apps gave him a choice of two administrator accounts, so he chose one at random, picked a new password, and signed in. He then found himself gazing at the entire email history, calendars, and contacts owned by someone he didn’t know. If Reyes had been harboring malicious intentions, he presumably could have used this information to launch an attack on the person as well as the organizations the person had patronized.

He was able to quickly discover that the person in question was the owner of an Amazon Web Services account, so he sent Amazon a password reset request, changed the password, and was quickly granted access. Considering Amazon and most other online services simply require an email address to reclaim an account, you can see the potential for some serious identity theft here. Not only that, but with access to AWS, Reyes could easily recover the person’s name, address, and the last 4 digits of their credit card. Yikes.

Again, someone with a greater facility with the dark side could easily use the information above to squirm their way into the person’s PayPal account to steal further financial information, not to mention files and personal information stored on Dropbox and Facebook.

Reyes of course alerted the owner of the AWS account he had accessed, making them aware of their vulnerability — and to his blog post, which he had subsequently published on Hacker News. In fact, it turns out that the person in question is the senior lead at a well-funded and fairly well-known startup. So, if this can happen to someone with technical know-how, it can happen to anybody.

Reyes has also contacted Google to make them aware of the security loophole. Google has not yet given concrete word as to whether or not they’ve fixed the problem, but this just illuminates the larger issue at hand here, which is that he could have easily accessed the person’s Amazon account using a wildcard email address. Meaning that it’s pretty easy to steal your personal information through an expired domain linked to Google Apps.

According to Stuckdomains, there are more than 33 million expired domains on the Web. I think many of us have let a domain name or two expire, but clearly doing so with other accounts still attached to it poses a huge security risk. Even if an expired domain isn’t attached to Google Apps, one could still use, say, an Amazon account to gather personal info.

But Google Apps obviously provides an easier way for someone to discover what accounts are already tied to the domain. And this goes for the non-technical as well. You don’t have to be a hacker. Many of us legitimately tie domains to Google Apps and could experience the same.

Reyes and I agreed that this may cause VCs and investors (not to mention people across the board) to rush back to those forgotten domains to re-register — for the sake of preventing their email addresses from being leaked to eager young startups. (God forbid.) And more.

After all, a few users in the post’s comment section on Hacker News said that they’d already written scripts to scan all newly expired domain names to check to see if they’re connected with Google Apps. Megamark16 chimed in, saying, “It took me about 10 minutes to write a python script that grabs a list of recently expired domains and checks each domain to see if it’s a valid Google Apps domain. This is a pretty serious issue, if indeed it’s still possible to take ownership of accounts as the article suggests”.

From what we can tell, and from what Reyes has learned from Google, the problem still remains. “It’s scary to think with this information at hand, black hat hackers could potentially dig up a user’s personal information through their old domains. Programmers online are already discussing automated ways to find domains with information goldmines attached to them. This information can prevent people from getting caught with their pants down”.

So, pull your pants up, and monitor those expired domains. If you don’t, you may find yourself sponsoring an anonymous hacker’s paid vacation to Tahiti. Just ask Reyes, who is likely now spending time on his new Kindle, thanks to those friends he’s made through Google Apps.

While my headline may be a bit overzealous, as this is likely due to some lazy webmaster, or is an intentional design flaw, it’s obviously a big problem.

We’ll update as we learn more. Here’s the link to Reyes’ post, too, for reference.

Cool! Google Places Now Allows You To Import Foursquare Data …Via RSS, So No One Will

Posted: 18 May 2011 06:59 PM PDT

When I first saw the ReadWriteWeb headline: Google Places Now Imports Your Foursquare Check-Ins, I was surprised. Wow, that’s interesting, and could be huge, I thought. Then I wondered why neither Foursquare nor Google was touting this?Again, could be big for both! Then I read the not-so-fine print.

Oh. RSS. Meh.

Turns out, Google is touting this, quietly. On their Google Places blog (one of Google’s 100 or so blogs), they have a post today entitled: Better access to your content is, well, better. Buried in this post, towards the bottom, you’ll see the note that you can now import other feeds of location information into Places. Writes Google:

To do that, just find the URL of a public GeoRSS/Atom feed that contains place information you care about. This could be anything from a feed of your Foursquare check-ins to a My Map you may have created years ago.

In other words, no one is actually going to do this.

You have to go to a special Foursquare page, copy the RSS feed link, go back to Google Places, paste it there, and wait as they import your items. “It’s really easy!,” Marshall Kirkpatrick writes. I’m actually not sure they could have made this less intuitive. If you’re going to make this option, at least make a simple tool for it.

Still, it is a nice option to have for the 13 of you that will use it. As a longtime Foursquare user, I have a long history of check-ins dating back more than two years (and longer if you count the Dodgeball check-ins they allowed you to import way back when as well). And Google notes that they sync those locations up with the corresponding venues in Google Places (or they do their “best” to).

Trying it out, the results seem to sync up well. But I can’t get it to go beyond my ten most recent Foursquare check-ins. So much for my entire Foursquare history.

Again, this is actually a good idea, I just wish it wasn’t such a shoddy implementation on the front-end. My guess is that’s because Foursquare has no idea about this. (And, to be fair, Google says you can do this with any location feed.) After all, there’s a war going on for location data. And Google and Foursquare are sort of like ex-roommates who had a falling out way back when.

Exclusive: Gilt Taste Is Cooking Up An iPad App That Will Let You Swipe Without Touching

Posted: 18 May 2011 05:19 PM PDT

Earlier today, Gilt launched the latest addition to its group-buying sites with Gilt Taste—a very pricey online purveyor of produce, meats, fish, cheese, and other “artisinal” foods. While it’s easy to get distracted by the jaw-dropping prices ($50 steaks anyone?), the part I find interesting is that Gilt Taste is also an online magazine.

Mouth-watering food photography helps to move the merchandise. The entire design of the site started with what it should look like first on a tablet and then worked backwards to the tiled view on the Web. In fact, a companion iPad app is in the works. When you are cooking in the kitchen, a propped-up iPad would be perfect for reading recipes, except that you wouldn’t want to touch it with wet or greasy hands. So instead of swiping, Gilt is prototyping a way to use the camera to create “motion-activated recipes.” You would swipe your hands through the air in front of the screen instead of touching it to go through step-by-step recipes, which could include video and more photography.

The editorial side of the site is overseen by advisor Ruth Reichl, who was the editor-in-chief of Gourmet magazine for ten years and before that was the food critic for the New York Times. Mixed in with the articles on how to cook broccoli and chicken with ramps, is also an in-depth story by Barry Estabrook on the impact natural gas fracking could have on the food supply.

“It is very important to me that we create a new kind of magazine here that is not advertising-based,” Reichl tells me. Foodies love to read about food, learn about food, and related issues. Content brings buyers. There is a chinese wall between the online market and the editorial, just like there is between advertising and editorial at a traditional publication. But this is the direction that lifestyle publishing—from fashion to food—is going (see also, Thrillist or Refinery29)

Reichl comes from the print establishment, but she is already liberated by working online. “This wasn't even conceived of six months ago,” she says. “In print, there is no way you could do this in six months. We have 8 people. You'd have 50 at a magazine.” And some of those are engineers who like to build things like that iPad app. It also costs a lot less than launching a splashy new magazine, which can easily run $50 million to $100 million. In contrast, Gilt chairman Susan Lyne says the launch of Gilt Taste “is a few million dollars. It is nowhere close to what it would cost to launch a magazine.”

And what of those expensive food items and departure from Gilt’s discount model? Well, there will be weekly specials, but Gilt Taste is not supposed to replace your grocery shopping It is for special occasions, and for foodies who want access to the same farms and culinary sources that the best chefs in the world go to. Also, Lyne knows there is demand for fancy foods because she tested it out on the main Gilt site where flash sales of food items “really flew.” It makes sense. Food is a perishable item, even more so than fashion. But the team at Gilt felt that shoppers needed more context, and in fact, editorial to attract them, educate them and keep them coming back.

Personally, I can’t wait to try out some of those “motion-activated recipes.”

#TwitterAllowsYouTo. discuss.

Posted: 18 May 2011 04:10 PM PDT

“All media work us over completely. They are so pervasive in their personal, political, economic, aesthetic, psychological, moral, ethical, and social consequences that they leave no part of us untouched, unaffected, unaltered. ” — Marshall McLuhan

“#TwitterMakesYouStupid. discuss” — Bill Keller

For someone so disdainful of the Internet, New York Times Executive Editor Bill Keller sure fits the textbook definition of a troll. His anti-aggregation screed “All the Aggregation That’s Fit to Aggregate” and today’s Twitter-bait “The Twitter Trap” have taken up a good chunk of my New York Times paywall quota. If that was his objective, then well done Bill Keller.

The part of me that wants people to be more clever than they actually are hopes Keller’s “First” column is an attempt to stir the blog fight waters. After all, attacking the entire Internet is definitely punching up. But sadly, instinct (and the fact that his reference to Twitter users as Twits is supposed to be funny but isn’t) tells me that this is not the case.

Says Keller:

“We are outsourcing our brains to the cloud. The upside is that this frees a lot of gray matter for important pursuits like FarmVille and "Real Housewives."

But my inner worrywart wonders whether the new technologies overtaking us may be eroding characteristics that are essentially human: our ability to reflect, our pursuit of meaning, genuine empathy, a sense of community connected by something deeper than snark or political affinity.”

“The Internet Is Making Us Dumb” is the song that never ends, and was sung more beautifully than Keller by Nicholas Carr (Caveat: I’ve only read excerpts from Carr’s book, because yes I’m too busy tweeting and also because it is wrong). Essentially Keller is arguing that technologies like Twitter and Facebook make us less human, but seems to have conflated “human” with “old” ”familiar to me.”

But I’ll go deeper than default snark for the moment.

Twitter is a tool. Like any tool you use it as you see fit, within constraints. Apologies to Marshall McLuhan, but arguing that a tool or a medium makes you a certain way (in this case less human) is a bit like arguing that the existence of supermarkets make people fat or that haikus make people brief. Yes, the supermarket makes it easier to buy the food that makes you fat, but how much of it you eat it is ultimately your choice.

Mediagazer Editor and media critic Megan McCarthy explains the conundrum thus, “Keller is being a bit hypocritical in complaining about how Twitter, and other technology, make us less able to connect because he keeps himself at arms length from it due to his own preconceived notions.”

Keller has decided to abstain from going to the supermarket, and is proclaiming thinness as a result.

Because of its opt-in follow system, Twitter allows us to make choices as to what information we consume, how we consume it and how we respond to it, within constraints. There are a plethora of anecdotes to support how Twitter and Facebook foster a greater sense of community and discussion, but let’s take today as an example: Because of Twitter I have read not just Keller’s piece, but read four incredibly insightful meta-media counterpoints to his argument.

Perhaps out of secondhand embarrassment, even Keller’s own employee Nick Bilton responded to his boss’ “#TwitterMakesUsStupid. discuss” tweet and subsequent treatise with an entire post arguing essentially that “stupid is as stupid does.”

“Could Twitter make me stupid? Absolutely. If I only followed funny cats that speak with poor grammar, I'd be on my way to a vapid state of mind in no time. But I don't. I follow dozens of news outlets and writers; I follow chefs, neuroscientists and the president of the United States; and of course, I follow Mr. Keller."

To his credit Mr.Keller replied, in the comments section, that his actual argument was not that Twitter makes you stupid, but that Twitter is “ill suited to real discussion.” I don't think anyone would hold up this stream of tweets as a proud example of an enlightening colloquy,” Keller said, referring to the reaction to his post.

If Keller spent more time on social media, he’d understand that when it comes to the colloquy sparked by the Internet, what you see publicly posted on Twitter and Facebook is just the tip of the conversation iceburg.  Thanks to Twitter and Facebook, I’ve now discussed The Twitter Trap privately (through DM) and publicly with multiple friends, colleagues and industry leaders whom I’ve both met and have yet to meet in person. And his experiment has certainly provided many bloggers with an easy opportunity to prove how well they write. ;)

In addition to all of the Keller analysis I’ve consumed and discussed, I’ve read Sheryl Sandberg’s epic Barnard commencement speech, found material for a news post (about Twitter) and planned a real life meeting with a startup founder (who I met on Twitter). I’ve faced a torrent of human connection and knowledge and I’m still in my pajamas.

Keller seems to forget that there are links at the end of some tweets, and those links lead to blog posts and newspaper articles and in the comments sections of those blog posts and newspaper articles you can find yes, real discussion. And definitely a lot more REAL DISCUSSION than in the comments section of Keller’s original post, which is currently closed.

Image: Bill Keller Meme Generator

Attn Entrepreneurs: Mark Zuckerberg Isn’t the Role Model. Reid Hoffman Is.

Posted: 18 May 2011 03:44 PM PDT

Forty-plus weeks traveling the emerging world has taught me many things. Chief among them is that most entrepreneurs outside Silicon Valley learn the wrong lessons looking in.

A lot of that is the fault of publications like TechCrunch: We get excited about new things. If it’s exploding like Groupon, all the better. But we even go nuts over things like Foursquare or Quora that have pretty muted user-bases. That’s what being evangelists and early adopters is all about. We tend not to write about all the apps that launch and go nowhere, with good reason: If we’re doing our job well, we probably thought they sucked to begin with.

But the bigger disservice we do is not writing enough about the boring companies who work every day to build something that becomes huge, giving the impression that starting a business is easy in the Valley. That somehow people wake up with an idea, and roll out of bed onto a pile of venture capital, press and adoration. A lot of times the companies we should be writing about more than we do are admittedly boring infrastructure or enterprise software names. But there’s a category of consumer names that should be sexy, but for whatever reason don’t get the hype.

I’ve always thought of Yelp in this category. Local plays like Foursquare and Groupon have always gotten more attention. Another one is Pandora. Spotify has gotten far more attention, despite Pandora pulling off what almost no other music startup has– surviving the full-barrel onslaught of the record labels. But the king of them all for the Web 2.0 crowd is LinkedIn.

You could understand if LinkedIn was just paling next to Facebook. I mean, who doesn’t? Facebook is one of those once-a-decade phenomenons. But LinkedIn started out as the less-sexy social network next to Friendster. And then it graduated to the also-ran next to MySpace. It has officially trounced both now that its IPO has priced at $45 a share, or $4 billion-plus valuation– the highest valuation for an Internet company debut since Google.

More than ten years ago, Reid Hoffman– LinkedIn’s founder– was one of the first people to believe in the comeback of the consumer Internet, investing in a host of startups, but putting the bulk of his money, personal brand, time and firepower behind LinkedIn.

LinkedIn is one of the only social networks that survived from the first social media frenzy. That’s quite an accomplishment when you think about it. Hoffman wasn’t exactly up against entrepreneurial slouches. All the big Valley venture capital guns were behind Friendster. Mark centerfold-of-Vanity-Fair-this-month Pincus was behind Tribe. And Sean You-Know-What’s-Cool? Parker was behind Plaxo.

One of the reasons LinkedIn outlasted that early generation of social networks was that it was boring and practical. In the early days of social networking, the only reason anyone could think to use these sites was for dating. But Hoffman knew that would always be a customer acquisition headache: Either a dating site solves your problem and you stop using it, or it doesn’t and you stop using it. LinkedIn on the other hand would be this thing in the background you would need your entire career.

You could argue the flaw with LinkedIn was the rational strategy that saved it worked too well. For many people, it became an indispensable tool for certain moments of professional panic, but not something you used daily or even monthly. I’ve always compared it to a AAA card, a comparison that visibly annoys Hoffman and usually results in suggestions of other ways I should be using it. But back in 2007, even he admitted the site’s biggest flaw was they weren’t giving people enough to do.

When the Web 2.0 craze took off in 2006 or so, Hoffman’s star soared, but shockingly it wasn’t really because of LinkedIn. It was his angel portfolio that got the bulk of media attention. That includes out-performers like Facebook, but also stars that shined bright and burned out like Digg and Six Apart. Ever the gracious interviewee, Hoffman would answer questions about the sexier companies, but always be sure to work in a LinkedIn plug. A favorite was regularly betting me an expensive dinner at the restaurant of my choice if LinkedIn couldn’t help me do a certain aspect of my job as a reporter better.

Hoffman wasn’t in his early twenties or a college dropout, and he’d be the first to admit he wasn’t a natural CEO. He’s said in previous interviews that he has a hard time firing people quickly enough– a skill that Mark Zuckerberg has excelled at. He’s left the CEO chair several times, only to come back when other candidates haven’t worked out. But even though he could easily throw out that old cop-out of “I’m just the guy who starts stuff; I’m not the CEO type” and wash his hands of the company, Hoffman cared about LinkedIn too much to ever be very far even when insanely sexier jobs were his for the taking. Even now in his role at Greylock, he spends the bulk of his time working on LinkedIn.

And yet, given all this, it’s LinkedIn that is the first social network to go public, the first multi-billion Web 2.0 IPO. It’s more than double the exit of sexy YouTube. And, in a rare case of startup justice, his day-in, day-out work building the social network no one ever wanted to get excited about has paid him handsomely: Netting him a boost of nearly $1 billion to his net worth. Few entrepreneurs who’ve spent a decade building a company get that kind of personal return, because few personally invest so much of their own cash along the journey.

Hoffman can’t comment on any of this of course. I haven’t talked to him in weeks. These are all my observations after ten years of interviewing him about LinkedIn, watching him shake his head at the unfairness of the hype cycle and keep slogging away at building LinkedIn regardless. Hoffman should be the role model for entrepreneurs star-struck by the seeming glamour and ease of Silicon Valley’s consumer Internet world. He’s the living incarnation of the reality of the Valley: It may be easier than ever to start a product, but building a company is just as hard as its ever been.

As for the brain-dead commentators wondering if LinkedIn’s IPO represents a bubble, somewhere Hoffman has to be laughing and shaking his head again. What part of spending a decade of building a business with more than 100 million users that no one hyped, that represents one of the few large-scale working examples of a freemium business model screams “BUBBLE” to you people? These are the same people that said Google was wildly overvalued when it priced at under $100 a share.

As most people with common sense have argued, we’re not in an Internet bubble now, because the soaring valuations are mostly contained within the frothy insider ecosystem. Secondary markets are starting to change that, but so far, there are exactly two $1 billion + Web 2.0 exits that I can count: YouTube and LinkedIn. Maybe you count a few more. It depends on your definition of “Web 2.0.” I count it as the wave of consumer Web social media companies started with the Friendster explosion. Some could count Skype (twice,) but I’d argue Skype is more of a sandwich generation company. But even if your definition is more generous, I bet you can count them on one hand. Five or fewer isn’t a bubble.

There’s exactly one aspect of Silicon Valley right now that I will concede does feel like 1999: It’s easy to start a company. Stupidly easy. And entrepreneurs like Hoffman are the antithesis of that archetype not a symptom of it.

Carrier: Legacy — Can Apple, Google, Or Microsoft Really Change Anything?

Posted: 18 May 2011 02:34 PM PDT

The backstory of last year’s film Tron: Legacy picks up where the first film left off. Kevin Flynn teams up with Tron to create a new Grid, one meant for programs and users. But Flynn realizes that he can’t be in the system working on this constructed world all the time, so he creates another program, CLU, to help with the effort. Together, the three of them work on creating this new perfect system.

Then something happens.

I’m reminded of this story when reading Kevin Fox’s post last night entitled: Is Microsoft trying to end the reign of mobile carriers? (MSFT+Skype+Nokia). In it, he lays out a scenario in which Microsoft uses their acquisition of Skype alongside Windows Phone 7 and their new deep partnership with Nokia to disrupt the system that we’ve all been familiar with for far too long: carrier dominance. Their aim is to create a new Grid, if you will. And they’re not alone. Google and Apple are also working on this goal. Flynn. Tron. CLU.

When you read it, it sounds great. But just like in the movie, something is going to happen. Because we’ve actually already seen it happen before.

Back in January 2010, following Google’s much-hyped Nexus One unveiling, I wrote a post entitled: Apple And Google Just Tag Teamed The U.S. Carriers. In it, I argue that the biggest part of Google’s announcement wasn’t any one device, it was the new model they were putting out there. Google’s ambition to sell devices directly to consumers would build upon the consumer-friendly mobile foundation laid by Apple with the iPhone. Under the new system, consumers would go to a website and click on the phone they want, click on the carrier they want, and boom, they’re done. This was going to change everything. It was going to be beautiful.

Then something happened.

While Apple (some would say stubbornly) clung to their exclusive agreement in order to continue to bend AT&T to their will, Google backed down. When it became clear that the Nexus One was simply not selling, Google seemingly panicked and went running with open arms to the carriers.

“Open” is the keyword there. Google spun this close relationship with carriers like Verizon as giving consumers more options, more choice. This was “open”. It was also “open” in that the relationship allowed Verizon and the other carriers to begin taking advantage of Android and use it for their own, insidious purposes. And the OEMs too. We’re seeing this now with Android devices that aren’t upgraded to the newest builds for months (and sometimes not at all), pre-installed bloatware apps (that can’t be uninstalled), new carrier-run app stores, etc.

The carriers and OEMs are slowly but surely using Android to ensure that we stay a world in which they’re in control. And I’m sorry Android fans, but Google is letting them. The company showed so much promise in their initial Nexus plan. And as we hear it, Google initially had even more ambitious plans for the Nexus phones — how does a $99 unlocked Android phone sound? But the carriers quickly brought the hammer down on these plans. And Google, making a business decision, abandoned them.

(And all of this is without diving into just how murky the Google/carrier relationship has now gotten.)

So you’ll forgive me if I’m skeptical when I read Fox’s grand plan for how Microsoft is now going to come along and reshape the industry. As he notes:

Making calls, placing calls, searching for signal and scrimping minutes hasn't changed much since the mobile phone came out, because carriers have little incentive to innovate. Mobile carriers make their money either way, and 'innovation' comes down to increasing the bottom line, whether it's charging $1,300/megabyte for text messages or adding 20 seconds of instructions on how to leave a voicemail so that the carrier might get an extra minute's revenue.

Not only do the carriers have little incentive to innovate, there are plenty of disincentives if they innovate — or let others innovate. Everything that changes has the potential to ruin their model. And worse, changes that are adopted take away their control. Now that Verizon has given into (most of) Apple’s demands and gotten the iPhone, they’re saying all the right things about their love of the device. But the truth is that they hate it. They hate its very existence because it’s a very slippery slope for them. It points to a future where they’re no longer in control.

So why bother offering the iPhone at all? Because consumers demand it. Again, this is what really scares the shit out of the carriers. Consumers in control.

And that’s where Fox’s Microsoft plan may run into problems. Using Windows Phone 7 with Nokia hardware and Skype built-in all sounds great, but how is Microsoft going to sell them in any meaningful capacity? By pretty much all accounts, Windows Phones are not selling very well at the moment. Nokia phones have never sold well in the U.S., and their market share is quickly declining worldwide. That’s not to say both of those things can’t be turned around, but it will be very hard. Google and Apple are now the entrenched players with RIM also strong (though also seemingly in decline).

The easiest way for Nokia Windows Phones to get traction will be with the help of — surprise — the carriers. And do you think they’re going to help if Microsoft/Nokia plans to screw them? Perhaps Google can best answer that question.

As I see it, Apple is now the only short-term hope for true carrier disruption. Why? It’s simple, really.

Apple Stores.

Apple’s insanely successful retail stores give them one huge piece of leverage that the others don’t have. If a consumer wants an iPhone, they don’t have to go to an AT&T store or a Verizon store, they can just go to an Apple store. If a consumer wants an Android phone, it’s carrier or bust. (Again, this is why it’s so disappointing that they killed the website idea — it would have taken a long time to take off, but it deserved more time.)

Microsoft has their own retail stores as well, but there are only a handful currently. And it’s far from clear if they’ll ultimately work out or not. If they do, great. Then maybe Microsoft will have a shot at mobile industry disruption. But without them, they need the carriers.

It’s because of the retail stores that Apple is able to possibly do things like create a carrier-crippling SIM card, as has been rumored. Imagine having an iPhone that you buy at an Apple store that can seamlessly hop between Verizon, AT&T, Sprint, etc, as a consumer sees fit? That’s the dream.

Of course, even Apple is far from that dream at the moment. They too rely on the carriers for the all-important subsidy that brings the iPhone down to a reasonable price point. (Remember when the iPhone first was released and sold for $600? Apple had to learn a lesson the hard way as well.) But the talk of Apple working on a significantly cheaper iPhone may be related to this. Or there are other options…

…such as the “soft carrier” idea Fox talks about. If these phone makers can start getting customers to transfer more and more of their airtime minutes over WiFi, using things like Skype and FaceTime, things will get more interesting. But that’s going to be a very slow road.

Talk of change and disruption is great. But I’m skeptical since we’ve been here before. I have no doubt that things will eventually change — everything does. But it just seems like it’s going to take a long time and be more of a natural progression because the carriers aren’t stupid — they know that they still hold most of the cards. The only real hope in the near term may be for Apple, Google, and Microsoft to team up to turn the tables on the carriers. It would take a coordinated effort. But Google already walked away from one such effort.

It’s starting to sound like Google may be interested in trying again. And perhaps the shake up under new CEO Larry Page alongside Android’s now powerful market position will lead to that. But Apple and Microsoft have their own issues that they must overcome as well before we can start talking about the creation of a new, perfect system.

We’ll see. All I know is that it ultimately didn’t end well for Flynn, Tron, or CLU.


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