SiliconBeat

Apple’s earnings report today was incredibly impressive. But as interesting to me as the record revenues and sales was just how much the company has changed in just a few short years.

As recently as seven years ago, Apple was at heart a computer that also had a sideline of digital music players. As recently as four years ago, you could make the case that Apple was a digital music company that also happened to sell computers.

Now, Apple is clearly a mobile phone maker who also happens to sell computing devices and, oh by the way, a few digital music players.

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Cisco launched a new media advertising campaign this week, and this one doesn’t feature the quirky, indie actress Ellen Page.

Instead, the networking giant is using stories about some of its customers, in business and industry, and how they’re using Cisco technology to boost their operations.

That’s in keeping with Cisco’s s new focus, after CEO John Chambers took the company through a much-publicized reorganization last year. He pulled the plug on some ill-fated forays into consumer tech, including Cisco’s attempts to sell handheld Flip cameras and a home video-conferencing system that Page had demonstrated in some jokey television spots last year.

After acknowledging that Cisco had spread itself too thin with those efforts, among other things, Chambers is now vowing to stay focused on a shorter list of commercial tech priorities - where his company is competing with the likes of IBM, HP and Oracle.

The new ads don’t specifically mention Cisco’s internal overhaul, but the campaign “is a reflection of what we’re doing from a corporate strategy perspective,” Cisco Chief Marketing Officer Blair Christie told me last week. She added, “We’re a B to B company.”

The ads still use the “human network” catch-phrase that Cisco first began promoting in 2006. The company won’t say how much the campaign will cost, but Christie said the effort will extend to US and overseas markets and will include a sizeable online component - including “homepage takeovers” on several news sites and a LinkedIn blast to 140,000 C-level executives at companies with which Cisco hopes to do business.

The ads will appear in places where business leaders are likely to be tuning in, which means a heavy roster of televised sports events and finance-oriented sites like CNBC or the Wall Street Journal.

The decision by co-founder Jerry Yang to resign from the Yahoo board is as sad as it is overdue.

No matter how rudderless Yahoo had become in recent years, Yang deservedly remains a Silicon Valley icon. He was there at the start of the Internet era, along with co-founder David Filo, building one of the first great Web businesses. It is a company that generated millions of dollars in wealth for founders and employees, created thousands of jobs, and helped pioneer the idea that the Web could be a place where businesses could be built.

In short, it’s nothing to sneer at. And if things had gone differently, it would be a career that people would be exulting today instead of softly mocking.

Had Yang taken this step several years ago, as many suggested, he might have moved into the role of Valley elder statesman. There could have been a graceful pivot to serving as a mentor or start-up advisor, angel investor or venture capitalist. Or perhaps even starting his own business. One could imagine him following the path that another Internet wunderkind Marc Andreessen has take to a new kind of prominence.

Instead, Yang made the ill-advised decision to try to fix an ailing Yahoo back in 2007 and became CEO. It was a short stint, but coincided with a hostile takeover bid from Microsoft that Yang helped thwart. In the mind of many investors, Yang will forever be villified as the person who lost them billions of dollars.

Yahoo continued to drift under his successor, Carol Bartz, and during the many months it took to find a new CEO after she was fired last summer. Meanwhile, the board agonized over how to chart a new course for the company.

Yang and Yahoo’s era had clearly passed, and the longer he remained involved, the harder it would be for the company to make a dramatic break from its past and move forward. If recently hired CEO Scott Thompson is to have any hope of moving the company forward, he needs a clean slate. More importantly, employees and shareholders need to have faith that he is in charge of strategy and decision making.

That means that while Yang was the first to leave the board, he hopefully won’t be the last. There were already rumors swirling Tuesday that there would be more departures from the board. Let’s hope that’s true. This has been one of the worst boards in Silicon Valley. And chair Roy Bostock, one of the board’s longest serving vets, who has overseen the hiring of three CEOs, needs to be the next to head for the exits.

Other long-time members should also probably step down, including Gary Wilson, a general partner at, Manhattan Pacific Partners (2001); and Arthur Kern, an investor and former radio executive (1996). This would give Yahoo an opportunity to bring in four fresh, dynamic voices who could help Thompson envision a way forward for a company that still has so many tantalizing assets and remains one of the most visited sites on the Web.

Yahoo has attempted to reboot several times over the past decade and stumbled each time. Just because the company keeps getting another chance, doesn’t mean it will continue to do so. This could well be the last chance the company has to seize the future and restore itself to glory.

It’s an opportunity that it can’t afford to waste by holding on to anything — or anyone — from its past.

Facebook has topped Google’s Orkut to become the top social network in Brazil, the world’s fifth largest country and Internet market, comScore will announce later today. That’s a huge win for Facebook, because Brazil for years has been a stronghold of Google’s Orkut social network.

The switch reflects Facebook’s rapid growth in much of the developing world, particularly in South America and Asia, countries that are now providing the lion’s share of Facebook’s growth, with membership approaching the saturation point in countries like the U.S. and Britain.

Here’s my story on that topic:  http://www.mercurynews.com/business/ci_19723521

comScores said that in December 2011, Facebook.com attracted 36.1 million visitors, a 192 percent jump in traffic over the previous  twelve months, meaning it passed Orkut, even though  – to surpass Orkut as the leading social networking destination in the market.

In an early view of the release later today, comScore said:

“Facebook’s rapid ascent in the Brazilian market has certainly been one of the most interesting stories to develop during the course of 2011,” said Alex Banks, comScore managing director for Brazil. “Brazil has always been a particularly social market and currently owns the fifth largest social networking population in the world. But despite the cultural affinity for social media, Facebook adoption had traditionally lagged in the market. That has all changed in the past year, during which the site has tripled in audience size as engagement has grown sevenfold to assume the leadership position in the market.”

- Mike Swift

Twitter clearly views Google’s new social search features, which highlights postings by the searcher’s Google+ friend connections, as a direct threat to its bread and butter - - serving as the default place on the Web where people go to learn about breaking news, whether it comes from an individual or a news organization.

Tuesday, within hours after Google announced its new “Search - Plus your World” service, Twitter complained in a written statement released to the media that:

Search example from Twitter general counsel, Alex Macgillivray

Macgillivary’s Tweet linked to an example of a Google search. He is saying, essentially, is that a person searching  Google for “@wwe”, the Twitter account of the professional wrestling organization, will instead now be steered to Google+ content.  The Twitter account result was there, but it was well down the page.

It will be interesting to see watch whether Twitter takes things to the next level and files a formal complaint with the FTC. Twitter spokesman Matt Graves declined to comment Wednesday afternoon.

Zynga released its latest quarterly earnings number in an updated prospectus. Dean Takahashi at VentureBeat has a good overview of the numbers:

“Zynga reported net income of $12.5 million in the third quarter ended Sept. 30, down 54 percent from $27 million a year ago, according to anupdated S1 filing with the Securities and Exchange Commission. The performance isn’t stellar, but it’s not so bad as to suggest Zynga’s planned initial public offering is in trouble.

Revenue was $307 million in the quarter, up 80 percent from $170.6 million a year ago. In other words, Zynga is working harder for the profits it gets by generating a lot more revenue compared to the past.

In the second quarter, Zynga reported only $1.4 million in profits on $280 million in revenue, so the third quarter report is an improvement on a quarter-to-quarter basis.”

What’s interesting are the user metrics. From the filing:

“According to AppData, as of September 30, 2011, we had the largest player audience on Facebook, with more MAUs on Facebook than the next eight social game developers combined.”

In the previous filing, Zynga had as many users as the next 15 developers combined as of June 30.

Also:

“Our players are also more engaged, with our games being played by more than 58 million average daily active users, or DAUs, worldwide as of September 30, 2011.”

That’s down from 60 million at the end of June. And the quarter included the release of two new games: Empires & Allies and Adventure World. Also, monthly average users fell from 232 million to 230 million in the quarter.

Finally:

“According to AppData, as of September 30, 2011, our games were played by more DAUs than the next 14 social game developers combined.”

That number is down from 30 at the end of June.

So, as Takahashi notes:

“Zynga is working harder for the profits it gets by generating a lot more revenue compared to the past.”

The good news, as Zynga prepare for an IPO in the next few weeks, is that it’s coaxing more revenue out of fewer players. And Zynga has a big pipeline of games coming. That includes CastleVille, which will launch in the next couple of weeks.

The CastleVille release is the latest in Zynga’s “Ville” franchise that includes FarmVille and CityVille.

“This is really built on the shoulders of the games that came before it,” said Bill Jackson, the Zynga creative director who led a team based in Dallas that built the game.  ”It’s built on the shoulders of giants.”

Jackson was giving me a preview of the games a few days ago. And the quality is indeed impressive.

CastleVille is set in Medieval times and has many elements that will be familiar to Zynga players. In this case, the goal is to build the castle of your dreams by engaging in a series of quests. A preview of the game demonstrated how Zynga continues to push the edge in terms of graphics as well as music, which includes the use of a full symphony to create the soundtrack.

Where the game pushes into new territory is in its expanded use of narrative. There is a story at the heart of it that players can choose how they follow, rather than having quests or goals dictated to them as in previous games.

At its heart, CastleVille remains a social game, but it also shows how Zynga is moving toward creating massively multiplayer experiences. The question now is whether the rising production values and the evolving game experience will draw new players as well as longtime Zynga fans.

While Zynga’s update to its IPO filing today doesn’t have huge news, it does include two important clarifications that will provide fodder for both critics fans of the company.

First, the bottom line: The clarifications confirm that users are playing Zynga games for shorter periods of time. That’s going to fuel critics. But, the company also said that the biggest increase in revenue for the first six months of 2011 came from FarmVille, one of its relatively older games.

So, the takeaway seems to be that while the company faces challenges in holding the attention of more casual players, it’s doing a solid job in coaxing long-term, hardcore players to spend more money on its games. That’s good news for the company’s boosters.

The declining lifespan can be problematic, of course, because if new games have shorter lifespans, then the company will need to crank up investment in creating new games, or find ways to sustain interest in old ones. The filing shows that it’s having some luck at doing the latter. And at the Unleashed press event at Zynga’s new headquarters (which the filing says has increased in size from 345,000 square feet to 406,000 square feet) earlier this week, the company was trying to deliver the message that it has a big pipeline of games in the offing.

Two other important tidbits: The company selected the ticker sympbol “ZNGA” and revealed that it will trade on the Nasdaq. While this doesn’t tell us when the company expects to actually go public, it does indicate that it’s checked a couple more items off the IPO to-do list.

Now, back to the numbers.

The first clarification involved a somewhat arcane accounting issue, but one that had muddled questions about Zynga’s overall momentum. The company has provided more transparency on the issue, so kudos to them for doing so.

Zynga makes money primarily through the sale of virtual goods in its game which are free to play. There are two types of virtual goods: Consumable, which is something you buy and use right away; and Durable, which is something you buy and use essentially as long as you continue to play. More importantly, revenue from consumable virtual goods is recognized immediately, while revenue from durable virtual goods is recognized over the time the average person plays the game.

In previous filings, Zynga said the time period over which the company recognized that revenue was declining, from 19 months to 11 months. The problem was that it had averaged both durable and consumable virtual goods together, and so you couldn’t say conclusively that the decline meant that people were playing the games for shorter time periods. For instance, it could have been possible that people were buying more consumable virtual goods, which would also pull the average consumption period down.

But the new filing separates those two categories:

“Consumable virtual goods accounted for 40% and 32% of online game revenue in the six months ended June 30, 2010 and 2011, respectively. Revenue from consumable virtual goods accounted for 25% of the increase in online game revenue from the six months ended June 30, 2010 to the six months ended June 30, 2011.”

Then the company says:

“Durable virtual goods accounted for 60% and 68% of online game revenue in the six months ended June 30, 2010 and 2011. Revenue from durable virtual goods accounted for 75% of the increase in online game revenue from the six months ended June 30, 2010 to the six months ended June 30, 2011.

The company then plainly states that the average life of durable goods has declined from 19 months to 15 months for the six month period ending June 30, 2011. Thus, people are playing the games for shorter periods of time.

The company then also, for the first time, breaks out revenues by games:

“For the six months ended June 30, 2010 and 2011, Mafia Wars, FarmVille and Zynga Poker were our top three revenue-generating games and comprised 84% and 59%, respectively, of online game revenue.”

And just as impressive:

“Online game revenue increased $271.5 million from the six months ended June 30, 2010 to the six months ended June 30, 2011. FarmVille, FrontierVille and CityVille accounted for $76.6 million, $70.5 million of the increase, and $46.6 million of the increase, respectively.”

One caveat: Part of that increase for FarmVille, which launched in 2009, came from an accounting change, when the company decreased the lifespan of durable goods, that means it recognizes more revenue sooner. It would be nice if the company said how much of the increase was the result of the accounting change vs. organic growth in the amount of durable goods being purchased.

Still, my hunch is that the accounting change is likely only a small part, and it doesn’t seem to be a factor in the increase seen in the other games. If nothing else, I base that on the surprisingly large number of requests I keep getting from my FarmVille friends for help, even though I probably haven’t really spent any time in the game for, well, months.

One other tidbit: The filing says the company has filed for 248 patents, more than double what has previously been reported.

Finally, the big question that doesn’t get answered: When’s the IPO?

With millions of users and more joining every second, LinkedIn has become a data nerd’s delight. And it allows for intriguing experiments like the one recently conducted by Monica Rogati, LinkedIn’ senior data scientist.

Rogati was curious: What could that rich set of data tell her about the factors that go into making an entrepreneur? Or, as she put it in a study released today, “Sequencing the Startup DNA.”

If there was a big surprise for her, it was this:

“Geography matters, even if you like to think it doesn’t,” Rogati said. “Even if you like to think starting a company is democratic and the world is flat.”

Rogati basically took about 10,000 profiles of people who had started companies in some fashion. Interesting to note that only about 2 percent of those people go on to start another company, becoming so-called serial entrepreneurs.

But looking at geography, the most likely place someone will start a company is San Francisco. Indeed, someone is twice as likely to start a company in SF as they are in New York. And in turn, they are twice as likely to start a company in NY as they are in Boston.

The data on age is also interesting: 40 percent of founders were between 30 and 39 years old; 20 percent between 40 and 49; only 34 percent between 20 and 29. That means that over 40 percent were over 30, which challenges the conventional wisdom about startups being a game for the young.

The other data point likely to get tongues wagging is the schools where founders are mostly likely to come from. Number one is Stanford’s Graduate School of Business, followed by Harvard’s biz school, Berkeley’s Haas School of Business, MIT Sloan, and Tuck School of Business at Dartmouth.

There’s other data in there, of course. Check it out and post any other thoughts below.

Last January, the Merc’s Dana Hull wrote a tough but fair story about Solyndra, the solar manufacturer in Fremont that had fallen on rough times.

The company was in full denial. Just a few weeks earlier, when I was speaking at a media forum, I made reference to Solyndra’s problems. A PR rep came up to be after the event and insisted things were going well and the company had big plans.

And then, after Hull’s story ran, we received the following email from the Solyndra CEO:

“Fremont’s Solyndra is on the right track

Dana Hull’s article (Page 1E, Jan. 30) does not tell the full story of Solyndra’s potential.

The piece focused on old news, missing the facts that we cut costs in half in the past year, had record consumption in the fourth quarter, will ship our 100th megawatt within the month, and expect to be cash-flow positive this year. That sounds like a good news story to us.

Our company has had growing pains, like many Silicon Valley startups transitioning to full production. But we have moved forward, and are proud to manufacture here in Fremont. We invite the Mercury News, and anyone else interested in our future, rather than our past, to meet the Solyndra team and get the real Solyndra story.

Brian Harrison

President and CEO Solyndra, Inc.

Of course, on Wednesday, we finally got the real story: the company is shutting the doors. There’s no shame in failing. This is Silicon Valley, after all. But it’s hard to respect corporate leaders who expended so much energy spinning their problems, rather than facing up to them.

Following my Sunday column, “Who will be Silicon Valley’s next Steve Jobs?” the most common response I got was: Why wasn’t Twitter co-founder Jack Dorsey on the list? That was echoed in comments, tweets and emails.

In fact, I did strongly consider Dorsey. But ultimately, I dropped him.

There are certainly many intriguing parallels between the Twitter co-founder and Jobs. Like Jobs, Dorsey created a remarkable technology company that has had huge impact. And while there are several people considered co-founders of Twitter, Dorsey is usually credited with the concept, and the development. And, of course, he was the first CEO of Twitter before being pushed aside a couple of years ago — just like Jobs!

Rather than sulk and withdraw, Dorsey started another company, Square, a mobile payment service that has shown strong growth, attracting a recent venture round of $100 million that values the company at $1.6 billion.

And then, Dorsey made a triumphant return to Twitter earlier this year to lead product development, while remaining CEO of Square. Again, shades of Jobs, with his creation of NeXT, his role at Pixar, and then returning to Apple at first as an advisor.

And certainly, many others have made the Dorsey-Jobs connection. For instance, BetaBeat recently wrote:

“What we were startled by was the growing feeling feeling that there’s something about Mr. Dorsey that just sounds so familiar. A heavy emphasis on clean design. A charismatic presence at public announcements… wait a minute: @jack is kinda like a young Steve Jobs. Apple has even started selling Square in their retail stores.”

So, why didn’t I put him on the list? Part of it was the conceit of the list. I needed to keep it narrowly defined to be able to make comparisons, and so I decided to stick to people who were all CEOs. Yes, Dorsey is the CEO of Square, but that’s not why he’s such a big figure at the moment. Square is still tiny in impact compared to Twitter. It’s his role at Twitter, both as co-founder and now lead product designer that makes him a figure of note.

And in that regard, Twitter is still a mixed bag for me. The company still has scant revenue, and is still struggling to get its arms around a complex set of design and feature issues. The most interesting things about Twitter are often built by third parties, and the company needs to redefine its relationship with its ecsystem.

If Dorsey sorts all of that out, and he helps create a core, unified Twitter experience, then he’s certainly on the path to demonstrating a Jobs-like prowess. And if he can actually help the company figure out a business model, and even return to the CEO chair, then I think he’s someone to be considered for legendary status.

Everyone on that list has a lot to prove to be considered heir to Jobs’ legacy. But right now, compared to other folks on the list, Dorsey has even further to go.