This is just a hunch, but after reading through the filing, I can’t help but think the company is really angling for a sale, rather than an IPO. Time will tell, but this looks and feels like a company that needs an exit soon. And given the numbers and history, I’m betting they’re hoping to attract interested buyers. If they get all the way to the IPO, I’ll be a bit surprised.

Here’s why:First, I’ll start with the press release. I received it in an email from Reply.com with a the subject line “possible IPO” and the first paragraph refers to a “a proposed initial public offering of its common stock.” Sounds like a company hedging its bets.

Second, let’s look at the numbers. Over at TechCrunch, Erick Schonfeld does a good job hitting the main ones:

“Revenues rose 75 percent in 2009 to $32.6 million. The company operates with a 50 percent gross margin, and turned its first net profit in 2009 of $2.5 million. The business produced $4.7 million in cash flow in 2009, but it ended the year with only $1.3 million in cash.”

And:

“Since 2005, the company has raised $27.5 million from Scale Venture Partners, Outlook Ventures, ATEL Ventures, and Debi Coleman, a former CFO of Apple. CEO Payam Zamani is the largest stockholder. He owns 43 percent of shares outstanding (before the offering). Scale is the second largest shareholder, with 21.5 percent.

Zamani was previously the co-founder of Autoweb, and he’s been bankrolling the Reply.com. Over the past two years, the company has been dipping into his personal lines of credit to improve its liquidity. According to the filing, the “aggregate principal amount that we repaid under these credit lines to Mr. Zamani through December 31, 2009 was $5.9 million.”

The company was founded in 2001, so they get kudos for hanging on this long. And the reason behind the revenue surge last year was that the company just introduced its new auction marketplace in December 2008. So it must have done a major reboot in the past year after getting its finances under control.

But even though it’s been around for nine years, the new business is about one year old. Granted, it’s profitable. But the revenues are still tiny. There’s a lot of talk that in the best of times, it will be tough for a company with $200 million in revenues to make it out. Reply.com is well below that.

So that’s why I suspect this is really a subtle way of announcing the company is ready to listen to offers. Sounds like they have a promising product, so I won’t be surprised if they get some decent offers that earn the investors a healthy return on their investments and gives the founders a nice return on their years of sweat equity.

It’s just not likely going to be enough to buy anyone an island in the Carribean.

Over at TechCrunch

But the number of public companies has dropped for nine straight years now. Even when IPOs briefly reappeared in 2006 and 2007, they weren’t enough to overcome the net loss of public companies through acquisitions or bankruptcy.

In 2008, the number had fallen to 261. We just updated our records and the latest figure is 241.

That’s not just less than the dot-com era, that’s well below the 315 public companies the valley had in 1994 when the Mercury News started keeping track.

Here’s why I think this is a big deal.

First, it points to the massive consolidation at the top of the pile. The biggest companies continue to get bigger, in large part through acquisitions. This includes Hewlett-Packard, Oracle, Cisco Systems and now Google. We’re known for our start-ups, but increasingly the valley landscape is becoming dominated by these big enchiladas. That’s bound to have an impact on the rate of innovation.

Next, the IPO remains a lost dream. Yes, it briefly reappeared last decade, but even in the good times last decade, they were nowhere near the pace of the early and mid 1990s. The IPO is dead, and it’s time to let go and rethink the way innovation gets funded and rewarded.

Increasingly, venture capitalists have to look to acquisitions as the best hope for an exit. And these simply don’t produce the returns that an IPO homerun does. That means a big shakeout in the VC community is inevitable. Though it will unfold over many years, in a kind of slow motion implosion.

Each year, we publish our SV150 section that looks at the top 150 public companies in the valley. At the pace we’re going, by the end of this decade, we won’t even have that many public companies.

The valley has always managed to adapt to such fundamental changes. But I think the continued disappearance of public companies will pose one of the valley’s greatest challenges. If the valley remains on top in 10 years, it will be because the innovation economy looks far different than it does today.

I have a few other stray thoughts that didn’t make it into the main story. And a few questions I want to follow up on in the coming weeks.

First, the stray thoughts.

What I still find amazing is the headcount which stands at 304,000 at the end of the last fiscal year, even after 75,505 cuts. HP made the point that it has dramatically expanded headcount since 2000 when it only had 88,000 employees. That’s true. But one important distinction that I’d make is this: The company hasn’t created any net new jobs.

Let me explain. Among others, the company has acquired Compaq, Mercury Interactive, Opsware and EDS over the past decade. If you take these companies’ pre-HP employment and added it to the HP headcount of 88,000, then you’d get roughly the same number of jobs today. The main difference is that those jobs are under one corporate shell, rather than several.

Yes, that means HP is a dramatically larger company. But in terms of the world economy, there has neither been a sizable net gain or loss of jobs.

Those 75,505 cuts represent a dramatic level of churn. While HP was pushing employees out one door, it was busy waving them in another. Granted, it was getting rid of some overlap and duplication. But if there was really any savings, where did they come from? Moving jobs overseas? Hiring people who earned less? We don’t know.

One thing that came through in emails from HP employees, former and current, is that they feel morale is slow, and there is constant anxiety created by the drumbeat of cuts. One sample comment from a former HP employee:

“If you are going to use HP as a case study, then the real issues is what happens to the people who are left at the company. It turns out lay offs can be capricious and arbitrary. If you are in the wrong place at the wrong time you are gone, regardless of performance. The objective is to keep the workforce young, hungry and a bit n the ruthless side. There are no longer any serious rewards for longevity, except for a few senior executives. The company really does not want people to work there very long. It is a little like the Survivor TV show. the most uncaring and cold-blooded survive and the rest are expected to go. That attitude permeates our whole society today. Think about, Donald Trump gets great headlines for saying, “You’re fired.” “

“…over the last two decades layoffs have become an increasingly common part of corporate life—in good times as well as bad. Companies now routinely cut workers even when profits are rising.”

I think much of this data is out there, it’ll just take time to dig through the filings and pull it together. When I get around to it, of course, I’ll share it here.

I’d also note that right in our backyard, we have two alternative examples of how to reinvent a company in this era. The first is Oracle, which has been an acquisition monster, but has conducted far fewer layoffs than HP (I’m going to tally that up). The decision to cut “only” 1,000 from Sun Micrsosystems is a good example, a low number given that I and many analysts expected the number of cuts to be over 10,000.

And then there’s Apple. They are a great example of how to innovate your way to growth. Compare Apple’s track record to that of HP’s. Through all the acquisitions and growth, there’s no major innovation that people would associate with HP over the past 10 years. New products, sure. But nothing revolutionary.

Finally, I had all but forgotten about HP’s deal to buy 3Com. But it looks like that will close soon. We’ll have to wait to see how many job cuts follow.

The first impulse I have is to fight is the despair over creating and learning a new social networking tool. Facebook and Twitter work well for me, despite some imperfections. I won’t say there isn’t room for improvement. But any new service has to clear a pretty high barrier to become part of my daily routine.

After digging in and following a few friends on Google Buzz, the next thing that strikes me as interesting about Google Buzz is how much it mirrors the approach to social that Yahoo is taking. And there’s something I wouldn’t expect to be writing: How Google is following Yahoo.

Yes, Yahoo re-made their homepage to make it more social. But really, Yahoo’s social strategy revolves around Yahoo Mail, which is still more popular than Gmail. Rather than building a central feed of activity, like Facebook, Yahoo awhile back decided to try to leverage Yahoo Mail’s leadership by making it more social. And now when you go to Yahoo Mail, it links your account to an enhanced Yahoo profile page where you can add other services where friends can follow your activity.

Back in the main Yahoo Mail page, you also have an applications window.

Beyond that there’s the name: Google Buzz. Not to be confused with Yahoo Buzz, a Digg-like voting and ranking service. Was there really not something else available? At least they didn’t call it Googlebook or Gitter.

Okay, beyond the quick comparisons, there remains the question of utility. On Google Buzz, I can pull in tweets, but can’t publish them out. And there’s no ability to link my Facebook account. Those are both big flaws in my view. If I’m going to build a new social network on someone else’s platform, I want it to work well with the others I’ve already created.

As it stands now, I can’t integrate these networks as much as I’d like. So I have to choose between them. And of course Google Buzz will stay way back in the back.

On the other hand, I like to tell people who get all giddy about social networking that email still remains the most social of all applications. We spend endless amounts of time on email, so it’s not a bad place to try to capture people’s activity. And as an email utility, Gmail is way better than Facebook’s messaging system. And it shouldn’t be hard for Google to do a better job integrating search than Facebook has done.

Ultimately, what will really determine the utility of Google Buzz for me is how much the rest of my network uses it. And then there is the wild card of how this will fit into my mobile usage. I’ll have to try it on my BlackBerry for a bit and see.

Finally, here’s the thing I still worry about when it comes to Google. The company has long said that while it seeks to innovate in a number of different areas, it believes that search remains the Internet’s killer app. I think that mindset left them in denial about the rise of the social Web, and has also made it difficult for them to grasp it in a way the really serves users.  Google clearly is getting the message that for many of us, social is becoming as important, if not more so, than search in terms of how we use the Web and how we discover information.

It’s smart for Google to go hard at the social Web. They need to do better here. We’ll see whether Google Buzz gets them back in the game.

If you’re playing with Google Buzz today, please share your thoughts so far.

It may need that money to ward off Google, which is ramping up its local advertising offerings. The new service places Yelp directly in Google’s scope. And I wonder if it won’t lead Yelp to regret not selling when they had the chance.

Google is now testing a paid, enhanced advertising feature that lets small businesses add all sorts of content to the listing people find via Google: coupon, website, photos, videos, menu, reservation, and directions. These will all be available starting for $25 per month via Google’s Local Business Center. Yelp business accounts cost from $300 to $1,000 per month and allow a business to promote themselves via sponsored listings.

Google launched the Local Business Center last year. Basically, it allows a business to “claim” their listing and monitor all sorts of search metrics about how and when people are finding their listing.

The new services, being tested in San Jose and Houston, allows a business to control even more information about their listing. Here’s a screenshot of how it will look in the LBC dashboard:

Yelp will still have the advantage when it comes to its community or reviewers. And Yelp still has one of the best location-based mobile phone apps around.

Still, it will be interesting to see how this affects consumers’ search behavior. If they’re getting so much additional information right in the Google search result, will they still need to click on the Yelp link that probably also showed up? I wonder how much Yelp traffic comes via Google, and how it will affect that.

In any case, it shows Google has big ambitions in the local ad market. We’ll see how disruptive this new service proves to be.

Noah Wyle as Steve Jobs and Anthony Michael Hall as Bill Gates

A few months back, I noticed a bunch of folks tweeting about the 1999 made-for-TV-movie “Pirates of Silicon Valley.” I remember hearing about the movie just as I was moving to Silicon Valley that year, but never got around to watching it. I had heard mixed things about the movie, and its accuracy, but the tweets seemed pretty positive, so I decided to rent it and see for myself.

It exceeded my tremendously low expectations. Though as far as factual accuracy, it’s hard to say where truth ends and creative license takes over. The movie hits some of the high points of the emerging battle between Microsoft and Apple as told through the stories of Steve Jobs and Bill Gates. And narrated by their wingmen: Steve Wozniak and Steve Ballmer.

There’s an amusing scene, about 20 minutes in when Wozniak and Jobs walk out of the famed Homebrew Club in 1976, having triumphantly demonstrated a version of their personal computer:

Jobs: “IBM is going to be loading in their pants!”

Wozniak: “Steve, I don’t think IBM even knows who we are.”

Jobs: “That’s okay. Because they’re the enemy.”

And later, in a conversation with John Sculley:

Sculley: ”Steve, I’m worried. About what’s happening. All the “them versus us” stuff. Macintosh versus Apple II.”

Jobs: “You don’t understand, John. People need a cause.”

Creative license aside, back in the late 1970s, and the early 1980s, Jobs had enormous power and the ability to impose his will. If you wanted to play with Apple, you did things Jobs’ way. And he wasn’t afraid to define his enemies and go after them (IBM, Microsoft). That is, until he was ousted in 1985 and Apple began its long, slow decline. And even after Jobs’ return in 1996, Apple was just happy to still be around, even striking a deal with Microsoft to invest to keep it going.

Apple’s clout has grown steadily over the past decade, thanks to the success of the iPod and the iPhone. With the iPad announcement a week behind us, it seems the the gadget itself may turn out to be less interesting than some of the things it tells us about the state of Steve Jobs and Apple. With the iPad, it appears that Jobs is confident that he’s once again in a position to dictate terms and define the opposition in a way he hasn’t been able to since the early days depicted in Pirates of Silicon Valley.

You could feel this renewed swagger when Apple announced it recent earnings. Jobs said in a press release:

“If you annualize our quarterly revenue, it’s surprising that Apple is now a $50+ billion company,” Jobs said. “The new products we are planning to release this year are very strong, starting this week with a major new product that we’re really excited about.”

That was a not-so-subtle reminder of Apple’s financial strength. Consider that Apple has closed the gap in terms of market capitalization with Microsoft. This is from Silicon Valley Insider last November:

“In May 2000, Apple’s market capitalization was $17 billion. Today it’s $182 billion. Meanwhile, Microsoft was around $356 billion in May 2000. Today it’s around $261 billion.”

By the way, Google’s market cap is $171.73 billion as of mid-day Wednesday.

Since the release of the iPad and iTunes, Apple has had the music industry under its thumb. And with the iPhone, Apple was able to change the balance of power between device makers and phone companies. But with the iPad, let’s look at the new ways Jobs is flexing those growing muscles:

1. The chip: For the first time, Apple has built it’s own chip for a product. For years, the company has worked with others, first Motorola and then IBM, to build its processors. But for the iPad, the company debuted its A4 chip. The chip came via its acquistion of P.A. Semi in 2008. Building its own chip reportedly was one of the key reasons Apple was able to bring the cost of the iPad down. But early reviewers have also noted the iPad’s speed at rendering Web pages. The A4 potentially puts Apple in a position to build more of its own chips, and it also sets up a new rivalry against Intel for the mobile computing business.

2. Flash: One of the most talked-about missing features of the iPad was its lack of support for Adobe’s Flash. This has turned a somewhat obscure discussion that started with the iPhone into a full-blown geek fight: Why doesn’t Apple like Flash? We got the answer indirectly thanks to some leaked remarks from an Apple town hall reported by several bloggers, including Wired’s Epicenter:

“They are lazy,” Jobs says. “They have all this potential to do interesting things but they just refuse to do it. They don’t do anything with the approaches that Apple is taking, like Carbon. Apple does not support Flash because it is so buggy, he says. Whenever a Mac crashes more often than not it’s because of Flash. No one will be using Flash, he says. The world is moving to HTML5.”

3. Phone companies: With the iPhone, Apple managed to re-define the relationship with carriers by carving out an exclusive deal with AT&T that gave Apple favorable financial terms. With the iPad, he’s taken that sway a step further by securing a 3G wireless plan from AT&T for $29.99 per month, about half what it costs from rivals. We’ll have to see whether AT&T’s network is ready for another surge of traffic.

4. iBooks: Amazon has recently been fighting with book publisher Macmillan, which wants to charge more for e-books. Part of the issue appears to be that Apple’s new book store, announced with the iPad, will let publishers charge more. And they’re using that option to leverage concessions from companies like Amazon which would prefer to keep the price lower.

5. Google: During the town hall, Jobs also wasn’t afraid to define Google as the enemy:

“We did not enter the search business, Jobs said. They entered the phone business. Make no mistake they want to kill the iPhone. We won’t let them.”

So, Apple has defined the opposition: Adobe, Intel, Google. And they still have Microsoft in their scope. And Apple using its power to affect wireless plans and possibly e-book prices. Apple maintains a tight grip on the music business and calls the shots when it comes to building applications that run on the iPhone and iPad.

The question now is how successful Apple will be as it seeks to assert itself even more. It still hasn’t managed to get all the TV networks and movie studios to agree to its terms, and as a result, selection on iTunes for video content is still weak.

And we’ll have to see where else Apple will wield its power. And whether that will be good for consumers or not. But for now, Apple employees have plenty of new causes and enemies to battle to keep them busy on several fronts for years to come.

Naturally, I left out a some details. While the story focused on money, there are other ways Google has been trying to extend its influence. And their adoption of these strategies shows how quickly the company has become savvy in the ways of Washington.

Let’s run through a few of these.

Google’s lobbying team includes the usual requisite of former government officials from agencies that have been having an impact on the company’s business. The lobbying team includes former employees from the Justice Department, Treasury, the FCC, and Congressional staffs, according to the Center for Responsive Politics.

One of the interesting things you can see from that data at CPR’s OpenSecrets.org is the growing range of issues that Google is lobbying on. In 2009, the top issues included advertising, energy, trade, telecom and anti-trust. Of those, only trade was listed among Google’s issues in 2005. And the list of agencies and branches of government that Google lobbies has grown extensively.

Of course, it’s no surprise that anti-trust is near the top of the list of issues. Just in the last couple of years, Google faced this anti-trust inquiries with its acquisition of DoubleClick, saw its search deal with Yahoo scuttled, and now faces a review of its plans to buy AdMob.

Google has also been savvy about hiring former government officials in non-lobbying positions. For instance, in 2008 and 2009, the U.S. Securities and Exchange Commission was concerned about some of the ways Google was accounting for various costs related to traffic acquisition, and also had questions about whether the company was being transparent enough on some issues such as whether or not it was disclosing enough information about letting a large group of contractors go. These questions were all resolved without the SEC taking any formal actions. The Google official reponding to those questions? It was Mark Fuchs, Google’s vice president of finance and chief accountant, who used to work at the SEC.

Going in the other direction, several Google employees have gone to work in the Obama administration:

• Andrew McLauglin, former Google policy chief, serves as Obama’s deputy chief technology officer.
• Katie Stanton, former principal of Google’s New Business Development team, is now Obama’s director of citizen participation.
• Sonal Shah, a Google lobbyist and head of global development issues at Google.org, served as an adivsor on the Obama transition team. She previously worked in the Treasury Department.
• Sumit Agarwal, Google’s head of mobile product management, will become deputy assistant secretary of defense for outreach and social media in the Office of the Assistant Secretary of Defense ,it was announced last week.
• CEO Eric Schmidt is a member of President Obama’s Council of Advisors on Science and Technology.

In addition, Schmidt has become chair of the New America Foundation, a non-partisan Wahshington think tank. That’s a lot of involvement in D.C. for a guy who told the Washington Post last fall he doesn’t care much for the scene:

As for Google’s relationship with Washington’s power structure, Schmidt said the tech industry is still not as strong as others in its lobbying representation on Capitol Hill, but that that’s fine with him. Google, and the tech industry, does better for itself when it focuses on ideas and innovation — and not politics, he said.

“The part of politics in Washington that’s ‘who you know’ and all that kind of stuff, it’s just not very interesting,” he said.

The company has also established a summer policy fellowship where it funds about a dozen or more undergraduate and graduate students to work with various policy organizations. Those include some that have found themselves on the opposite side of issues from Google. For instance, last summer, Google paid for one Wisconsin student to work at the American Library Association, an organization that has been opposing the company’s plans to scan books.

As I noted in the column, none of this is illegal, or unusual. What bears watching is how Google uses this growing influence. There are a lot of issues where I agree with them, and am glad to have them fighting. But there are others where I disagree (i.e., book search)

But when it comes to Washington msucle, you certainly can’t call them the underdog anymore.

Other companies likely to be affected include such heavy weights as Cisco Systems and Tivo.

Often such changes take months for companies to adopt. And in this case, companies have until 2011 to adopt them. But this one is different because it will give companies a significant bump in short-term revenue. So many are racing ahead. As such, investors need to watch carefully to see if a company adopted the new standard, and if they reconciled old numbers to take the new standard into account.

On Monday, Apple disclosed the accounting change up front for this year, and also adopted it retrospectively for the past two years and reconciled past earnings in an amended annual filing. Companies are not required to do adopt it for past years. So good for Apple. Many companies may only make the change going forward, making comparisons harder.

This change is not trivial. To see the impact on revenue, look at the revised numbers from years past. The change bumped revenue for Q1 2009 (last year) from $10.2 billion (0ld) to $11.9 billion (new). As far as I can tell, the company didn’t disclose what the current quarter revenue would have been under the old standard.

Still, that didn’t stop the company, in a press release, from crowing about the big numbers:

“If you annualize our quarterly revenue, it’s surprising that Apple is now a $50+ billion company,” said Steve Jobs, Apple’s CEO. “The new products we are planning to release this year are very strong, starting this week with a major new product that we’re really excited about.”

That’s true. But under the old standard, Apple’s annualized revenue wouldn’t be quite as high. It would probably be four or five billion less, though still over $50 billion.

So what’s going on? For the details, read on.

FASB adopted the new rules in September, dubbed Accounting Standards Updates 2009-13 and 2009-14.

Last fall, I had a chance to talk with Kelley Wall, a senior consultant at RoseRyan, a Newark-based accounting and finance consulting firm, who walked me through the upcoming changes.

“We are going to see a spike in revenue,” Wall said. “Revenue won’t be smoothed over time.”

As Wall explained, the change affects companies that sell a product that contains a bundle of things, such as hardware, software and services. If you just sell software, you recognize the revenue over an extended period of time, as a kind of subscription, because the accounting assumes that you’ll be offering periodic updates for free over that time.

Where things have been muddled in the past is when you sell a gadget that includes both hardware and software. Do you recognize the revenue all at once? Or spread it out? Companies like Apple have been spreading it out for products like the iPhone and Apple TV.

You may recall that last summer, when Palm started selling the Pre, it switched from recognizing all the revenue up front for its gadget, to recognizing them over two years. After that big change, Palm will now have to switch back.

This can be a good thing, as in the case of Palm, because the company said last summer that the change would allow it to offer free software updates without having to count them as additional costs or to charge for them. On the other hand, it can be extremely confusing for investors who didn’t know the changes were coming. Also, as Wall points out, different companies will adopt at different times, making comparisons with competitors dicey over the coming year.

Despite the big impact, the FASB discussions hadn’t been on the radar for many analysts who were scrambling after Apple’s earnings to re-calculate their projections based on the new accounting.

While this seems to be good news in the short term, the problems with the changes, if there are any, might be seen over time. When counting revenue over time, companies have a baseline that makes their income seem less volatile, or bumpy. But if you count the sale all at once, then there could be more swings from quarter to quarter which will be tied much more closely to sales that period.

In other words, the short-term sales numbers will be much more clear, and so will the need to keep them growing. You can’t rely on the lingering revenue from quarters passed to make things look healthy.

Boy, is that an understatement.

I have been learning that lesson all week since we published my story Monday on  “Why we didn’t get a Wii for Christmas.” The story, which I figured was a pretty innocent tale of my family’s decision, has sent some members of the gaming community off the deep end.

To recap: My wife and I had planned to get a Wii video gaming console for Christmas. Like a fool, I didn’t do my research beforehand and didn’t realize all the extra accessories I’d have to buy when I got to the store. But as parents, we also weren’t really sure, in the end, that we were ready for a video game console in our house since we’re still trying to figure out how to achieve the right balance with our kids.

That challenge there brought home to me with a Kaiser study that was released this week indicating that kids between the ages of 8 and 18 spend an average of 53 hours a week in front of screens of some kind. From the L.A. Times:

“Young people now devote an average of seven hours and 38 minutes to daily media use, or about 53 hours a week — more than a full-time job — according to Kaiser Family Foundation findings released today.

A few years ago, the same researchers thought that teens and tweens were consuming about as much media as humanly possible in the hours available. But somehow, young people have found a way to pack in even more.

But in the last five years, the time that America’s 8- to 18-year-olds spend watching TV, playing video games and using a computer for entertainment has risen by one hour, 17 minutes a day, the Kaiser study found.

“What surprised me the most is the sheer amount of media content coming into their lives each day,” said Kaiser’s Vicky Rideout, who directed the study. “When you step back and look at the big picture, it’s a little overwhelming.”

Yep. That’s an understatement. It’s not that I condemn any of the activities on their own. It’s the total lack of balance and moderation that results that causes me concern.

Beyond this issue, though, my kids had plenty of free video games to play online. So we figured: Let’s wait a year. We’ll consider how we want to have a Wii in our house, figure out a budget for it, and make some reasoned, careful decisions.

That sounded perfectly legit to me. But to those in the gaming community, well, let’s just say that it’s nothing short of pure heresy.

My first taste of the vitriol came on the comments on the column at MercuryNews.com:

Sharky wrote: “I’m sure you can get the console, two controllers and a good game for under $300. grinch!”

Angel37 wrote: “You didn’t have the stomach for the long term cost of the device.  Don’t make it about raising your children the “right” way.  Do you need your cell phone or blackberry?  Not really, they make your life easier, but not really better.  We still got by 20 years ago with a land line and basic pc with word processing.  Why don’t you give up your cell phones and save $1200 a year.”

Champ Kind wrote: “If you’re not willing to spend $300 on a gift for your children, that is nothing to be ashamed of. Just don’t go writing a newspaper article to make it seem like this is about protecting your children from the evil technology monster.”

Debbie Downer wrote: “I agree. A cheap parent, who throws out excuses on why he didnt deem it appropriate to spend his hard earned money on his kid.”

Fortunately, as the thread wore on, and I responded to some of the comments, the tone shifted and an interesting conversation emerged about the legitimate issues about how much exposure to video games and media is healthy. As just one example:

Cynical critic writes:  ”I have built hardware/software for video game  consoles,  PC Multimedia cards and in the process played many video games for testing them.  In fact I can easily build my own box if needed.  My observation (both personal and kids) is the kids who play even moderate amount of video games (30 min day)  have shorter attention span and do poorly in standardized tests.”

No such luck, however, at a gaming site called Kotaku, where a blogger posted an excerpt of the column that touched off a fire-breathing frenzy of anger. As of the writing of this, the post has attracted 881 comments, which seems on the high end for the site. The post basically summarized the column like this: I went to buy the Wii. Discovered the “hidden” costs. And took it back. End of story:

“The father of two bought his kids a Wii for Christmas, but returned it. Too many hidden costs.

The San Jose Mercury News columnist recently explained the sticker shock that had him returning his $199 Wii and all the stuff he felt he had to buy along with it.”

The tone of the post is pretty neutral. The comments are not, most of which are from folks who naturally didn’t bother to read the column itself (surprise!).

JazzNeurotic writes: “This is a useless article by a moron, not to put too fine a point on it. There is no reason at all to make this sort of complaint unless one has been living away from all sorts of technology with the Amish, or in a coma, for the past 25 years.”

RockyRan writes: “If you read the column you’ll see that his problem was beyond the hidden costs. He didn’t know how to establish “rules” for the Wii, and that the other gifts would be “overshadowed” by the Wii. In short, it was going to require regulation and parenting, and rather than let the kids have a fantastic Christmas with an awesome Wii they returned the whole thing to save themselves the trouble. Laziness is what I’m reading between the lines here.”

So to recap: I’m a cheap, lazy, stupid parent because I won’t fork over $300 for a present and because I don’t let the kids do whatever they want, when they want. Okay.

I was outed by Blore07, who discovered my “hidden agenda”: “I think a lot of people are ignoring the fact that this guy probably knows nothing nor cares about videogames, he just wrote the story to stirr up and divide the masses and get some attention.”

Yes, I was hoping to start an online riot. Exactly.

Fortunately, there were some voices of sanity:

Lionkitten writes: “Wow. The anger of the commenters in this thread is mind-numbing.How dare this guy not know/anticipate every detail about video gaming, seeing as how he hasn’t had a system or followed the industry closely in over 20 years. How dare he. Because no one in this thread was EVER surprised by the exclusion of an item in a purchase before. Never. Gamers forget just how much they actually know about their hobby - - how many years it took to acquire all that knowledge.

Well said.

Oddly enough, there is debate within the comments about the fact the many consoles do have hidden costs, and whether that’s to be expected or whether it’s a sneaky, price-gouging stunt.

In the column, I acknowledged that I blew it by not doing my research beforehand. That was picked up by some commenters, but not many. As far as expense, at the end of the day, let’s have a reality check: A video game console is a luxury, not a necessity. If my kids are happy playing free games online, well, that’s still cheaper than any money I’d pay for a game console.

But beyond that, it’s clear most of these commenters can’t seem to conceive of a world where everyone doesn’t play video games all day long. Or that there might be any consequences to that lifestyle. Like I said in the column, I’m not anti-video games. We let our kids play them (though apparently we’re torturing them by limiting that to 30 minutes a week!). And we will probably get a Wii next year. I’m especially excited about the recent deal with Netflix to stream movies on the Wii, since I’m a big fan of Netflix.

Happily, I also got dozens of emails (and some comments) from readers who were sympathetic, from parents who took time to describe their own challenges in striking that balance. I even got a couple emails from parents who bought the Wii for Christmas and have been regretting it do the fights and stress it’s caused. One of my favorites:

“My husband and I also decided not to get a Wii this year. Our reasons closely matched yours, though my husband also had to add his own concern that he’d get a bit too competitive on the games with our children.

Now, our 2 girls are a little older than your children, so we had a bit more pressure from that side. In fact, our second grader wrote an essay for school, “Why I want a Wii”!

Well, we hung in, despite many hints and letters to Santa and did not get a Wii. However, as I write, my second grader is in our living room playing “Bash Party” on the Wii that grandma sent home with the girls this weekend, “just to try out…”. You see, in this valley, sometimes grandma works for a game company and really wants to use her employee discount to get the grandchildren some fun Wii games! This challenge to our Wii-free life is, I believe, not something we can stop.

One final note: This column is getting picked up around the world. The latest was the Taiwan News. You’ll be happy to know this international celebrity has not gone to the kids’ heads.

Looks like it’s full steam ahead for Google. Revenues rose 17 percent to $6.7 billion. Non-GAAP earnings jumped 35 percent to $2.2 billion.