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Wrap: Kashya wins, Servgate loses, Google's problem, Vonage's panic

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BitTorrent deal not greatest -- Warner Brothers will use the file-sharing technology of San Francisco's BitTorrent to distribute movies and television shows online. But the pricing will be about the same as a DVD for the same content, and the download will only be available at the same time as the DVD release. What's more, it can only play on one machine: your computer. So you're paying same for fewer options. Om Malik weighs in with more info about BitTorrent's own limitations and competition.

Boring is beautiful -- How many Web. 2.0 companies do you think will get sold for more than $100 million? Five? Some of the best action is off the beaten track: San Jose's Kashya started six years ago, and built "an information and management storage" product, and raised $21.5 million in venture capital backing from firms like Battery Ventures, Jerusalem Global Ventures and TL Ventures. It has just been sold for $153 million to EMC.

Bubble-era companies still folding -- Servgate, the 1999-founded Milpitas company that built a line of security products for the gateway between a company's own internal networks and the public Internet network, has folded. At least that's the info we got from an upset vendor who's gotten stuck with an unpaid $18K bill that ServGate owed him. Servgate raised $30 million, from the likes of Trident (Taiwan), ChinaVest, ComVentures and others. We called the company to confirm this, but mailboxes were full; no one at main line was answering.

Vonage panics: It tabs 15 percent of its IPO for early customers -- Yep, Vonage will give 15 percent of its IPO to people who opened their Vonage account on or before Dec. 15, 2006, giving them shares at the IPO price. Why is it doing this? Doesn't it think anyone will buy its shares without the carrot? Well, we think Vonage's shares will be really risky, considering it is losing money on every customer, and when almost every day there are announcements from giants who are entering the space at more favorable terms, sometimes free, and sometimes just pennies cheaper. Just in past couple of days there was AOL, but the killer comes from Verizon, which is not only cutting the price of its VoiceWing service to pennies less than Vonage's most popular unlimited calling plan for consumers, but also offering free activation. Vonage charges $24.99. Also, Verizon's price change will automatically apply to current customers. Ouch!

Google's click-fraud problem -- We've talked about Yahoo's click-fraud problem. But wow, this AP story suggests that click-fraud accounts for up to 40 percent of the bills some sites are paying for their advertising with Google. Scarier, is just how vague all this is. No one seems to know how big this problem is going to get for Google. There is no arbiter -- and it could very likely get worse. John Thys, of Radiators, says 35 percent of his $20,000 ad bill may stem from fraud. So Google does an analysis, tells Thys it has internal safeguards, and tells him to trust Google. But Thys says Google doesn't provide any proof of this, and simply gets an e-mail signed by "Ray" from Google's click quality team. In a suit, Google then makes what it says is a "fair" offer to cover the fraud part of an advertisers' bill. This settlement's value is as high as $90 million. Where does this end?

That Valleywag "kid," Nick Douglas -- People we chat with say they're shocked at how young the Valleywag guy is. He was 21 when tapped six months ago for the job, and had never been to the Bay Area. Here's the BusinessWeek story about the phenom. (Update: Nick clarifies below in comment: He's 22 now, and more importantly, single.)


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Comments

Just a point of clarification: Vonage's price is $24.99 not $29.99.

Brooke Schulz on May 9, 2006 12:12 PM
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Thanks, got it from another source. Fixed!

Matt Marshall on May 9, 2006 12:29 PM
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Just FYI, it's "fewer" options, not "less" options, as options are enumerable.

Tiernan Ray on May 9, 2006 1:11 PM
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i need an editor. thx, i've fixed.

Matt Marshall on May 9, 2006 1:31 PM
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22 now. And single.

Just sayin'.

Nick Douglas on May 9, 2006 3:37 PM
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Sorry Nick, that's an important clarification. Updated!

Matt Marshall on May 9, 2006 4:13 PM
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