SiliconBeat

Last Friday, Jay Yarow at Business Insider reported the following tantalizing nugget:

“Apple made $1 billion off Google last year by having it as the default search engine in Safari, says Macquarie analyst Ben Schachter in a note this morning.”

Fascinating. But also not true.

I might just let this slide, except you can see how quickly this number has been spread around the Web in a few days, and has largely been accepted as a concrete fact.

I called Schachter on Monday to discuss the note that Yarow cites, and the analyst emphasized that the figures were rough guesses to make a larger point about the relationship between Apple and Google. More on that in a moment. Read the rest of this entry »

It’s an article of faith in Silicon Valley for almost every start-up. Get users first, figure out the business model second. The faith part comes into play because there is unwavering belief that enough users will somehow create financial opportunity, even if you can’t see what that would be today.

And that brings us to Twitter. Gawker has a big scoop today, with financial data from the past two years. Let’s cut to the bottom line: The company is deep in the red. And after six years in existence, there are no signs it’s getting anywhere near the break even point.

The numbers Gawker obtained are for 2010, and the first quarter of 2011. And they are bleak: Read the rest of this entry »

It seems like over the past few months, we’ve seen an increased pace of online activism, an onslaught of campaigns. There was the SOPA campaign, the Occupy Wall Street social media meme, and last year the Arab Spring. Recently, Rush Limbaugh has been feeling the heat of a social media campaign stemming from his inflammatory remarks about a woman.

But over the past 24 hours, the latest social media campaign to explode is called “Kony 2012.” The centerpiece is a 30-minute video posted by Jason Russell. The goal is to raise awareness, and create international pressure for the arrest of Joseph Kony:

Since 1987, Joseph Kony has abducted more than 30,000 children in Central Africa and forced them to be child soldiers in his Lord’s Resistance Army. The KONY 2012 campaign employs film, social media, street art, and face-to-face interaction to make the case that the arrest of Joseph Kony this year is one thing we can all agree on.

In the video, Russell says he intends to use the power of the Web, via this video, to create a groundswell for justice: “If we succeed, we change the course of human history…Its only goal is to stop the rebel group, the LRA, and its leader, Joseph Kony,” Russell says. “And I’m going to tell you how we’re going to do it.”
Read the rest of this entry »

New York Times blogger Nick Bilton wrote a post over the weekend about how some Silicon Valley companies, in becoming big, were losing their sense of “fun.”

“The Internet, with companies sniping at one another and blithely ignoring major privacy violations, is on the verge of the same fate as the true-blue American industries before it: losing its sense of fun.”

Bilton is on to something interesting, but thinking about the issue in terms of “fun” is the wrong way to frame it.

I’m not sure the industries he mentioned, such as airlines or cars, were ever really known for being fun in their early days. I mean, Henry Ford wasn’t known for his ability to generate yuks and smiles. If anything, the notion of the assembly process he championed was uber dull, breaking each task down into its simplest stage and stamping out lots of cars all the same color. Pretty drab.

Okay, that’s not really the main issue. Bilton frets over this sense that companies like Google and Apple  have lost their sense of joy because they’re doing all sorts of un-fun things like pilfering users’ data behind their back. While he doesn’t mention the, I would throw Facebook into this pile as well.

He cites plenty of anecdotes that are all valid. But they point me toward another thought.

Rather than “fun,” the issue seems to be that these actions are evidence that these companies have shifted away from being focused on the user first, the bottom line second.

Now, I’m not naive. We all know these companies are for-profit and are in the game, ultimately, to make money.

Yet the way they went about that originally, seemed to be built around being obsessively focused on the users’ experience. Apple, famously, has its human-centered approach to design that spurned things like focus groups and market research. Google was so worried about the purity of its search experience, it vowed to always be neutral in search results and left its homepage ad-free, a move that probably has left billions of dollars on the table.

And even Facebook, especially in its early years, reportedly turned down big ad deals because founder Mark Zuckerberg worried that they would undermine the user experience. Now there is a creeping feeling that, with the IPO looming, the company is launching all sorts of changes like “branded pages” and “social ads” that threaten to gum up out newsfeeds with pitches for soap.

The problem, then, given the examples Bilton cites, is that there is growing evidence that these companies are making decisions aimed their bottom line first. Again, no one’s kidding themselves that these companies were charities.

But in making this philosophical and strategic shift, if that is indeed what is happening, the companies are possibly abandoning the basic formula that has made the successful. At its heart, that formula held that by focusing first on the user, the business would take care of itself because users would be passionate adopters of the products or services. And that passion, would in term, make those customers the best possible ambassadors of the service.

By doing things that appear to be aimed at increasing profits first, the companies risk breaking that virtuous cycle. If customers start to feel like, well, just customers, then their loyalty will slowly fade. They become a little bit more leery of the company’s intentions when it comes to new products or features are rolled out.

It’s not something that happens all at once. Now, obviously, from a financial standpoint, all three companies are still going gangbusters. If there is an impact, it will be more like a slow, almost imperceptible decline.

I think all these companies genuinely wrestle this this tension, and it’s not too late for any of them to make a course correction. Because here’s the thing about Silicon Valley. We want love our gadgets and services. That love often goes to those companies that make us feel like they’re putting our needs above the desire to make a quick buck.

The danger for Facebook, Google, and Apple is that by appearing to chose the buck first over love, they risk losing both over the long term.

This one kind of got  lost in the crush of other news, but it’s an interesting development for Hewlett-Packard here in Silicon Valley:

HP, which is in the process of closing its longtime campus in Cupertino, confirmed earlier this month that it will move the local operations of its PC division to the Sunnyvale complex on Maude Avenue that was once home base for Palm, the smartphone maker that HP bought in 2010.

The remaining Palm business, essentially a downsized webOS software group, is leaving Sunnyvale for smaller quarters in Cupertino – not to the old HP campus, but to the former offices of ArcSight, the security software company that HP acquired in a separate deal two years ago.

ArcSight, meanwhile, has moved to the new Moffett Towers office complex in Sunnyvale, where HP is consolidating several commercial software groups, including the recently acquired Fortify and some folks who were based at HP’s old Cupertino campus.

It’s all part of the ebb and flow for a huge tech conglomerate. The dominos started to fall back in 2010 when HP announced it no longer needed the old Cupertino campus. City records show that site housed about 3,000 employees last year, which is a lot less than the 4,600 who worked there in 2002. (HP officials, by policy, won’t confirm how many employees they have at any particular location.)

HP initially had said it would move most of the Cupertino workers to its under-utilized main campus  in Palo Alto. City records indicate HP’s Palo Alto workforce has also declined - from 3,400 in 2001 to about 2000 people last year. But members of the PC group seem pleased about the change of plans.

PC division chief Todd Bradley, who used to be CEO of Palm, described the Maude Avenue complex as offering “fresh, creative and inspirational workplace environments,” in an internal memo obtained by the webOS Nation blog, which first reported the move.

Meanwhile, HP has sold its 100-acre Cupertino campus to Apple, which plans to build a shiny new headquarters there for its own growing workforce.

Brandon Bailey writes about enterprise IT and other tech subjects. Contact him at bbailey@mercurynews.com or 408-920-5022.

I’ll miss Craig Silverstein, Google’s first employee, who confirmed to me Thursday that he’s leaving Google to work for the educational beacon Khan Academy. He was always a great interview, had a great sense of humor, and seemed to be one of the relatively few people left at Google who felt free to say what he really thought about the place, on the record, warts and all, even when it came to CEO Larry Page.

He confirmed his departure in a typically irreverent email to me a few hours ago, saying:

“You’ve pretty much covered it.  It’s hard to leave Google after so
long, but I’m excited by the opportunities at Khan.  I don’t know
exactly what I’ll be doing at Khan — programming of some sort — but
I’m sure I’ll find out more next week. :-)”

A few weeks ago, I went to the Googleplex for an interview with Craig about the culture of the company, which had just been selected as the best place to work in America. Craig video-conferenced in from New York, and walked into the interview carrying a lumpy object. “Can you tell what this is?” he said, holding it out. It was bread that Craig had just baked, which he proceeded to bite into with gusto.

Craig said that he’d started baking bread at Google in the earliest days, all the way back to when Google was in Susan Wojcicki’s garage in Menlo Park. There were no good stores nearby, and Page, Silverstein and co-founder Sergey Brin didn’t want to bike or drive all the way to downtown Palo Alto, so Craig started baking bread.

Over time, Craig said, it became an important symbol of Google’s culture - not because people like fresh bread, they do - but because it was something other companies just did not do. It was a marker of Google’s uniqueness.

I can’t help but think that part of that Googley uniqueness is headed out the door with Craig’s departure.

Here’s a link to the interview I did with Craig in 2010: http://www.mercurynews.com/ci_16291970

Would Oracle CEO Larry Ellison seriously contemplate a hostile takeover of Hewlett-Packard?

Oracle and HP escalated their feud in the courts of law and public opinion this week, after a judge made several rulings in a dispute between the two tech giants over Oracle’s decision to stop making new software for HP’s high-end servers that use Intel’s Itanium chips.

HP fired first on Monday, trumpeting the fact that a Santa Clara County judge had thrown out Oracle’s claim that HP somehow committed “fraud” when it was negotiating a settlement with former HP CEO Mark Hurd, after HP sued Hurd for going to work for Oracle.

Oracle had argued that HP obtained the settlement agreement under false pretenses because HP had not revealed that it planned to hire two of Oracle’s arch-enemies, former SAP chief Leo Apotheker and former Oracle president Ray Lane, as HP’s CEO and board chairman, respectively.

Judge James Kleinberg agreed with HP that this did not constitute fraud. He also denied Oracle’s motion to keep sealed an HP document that contains some examples of Oracle’s hardball efforts to go after HP’s customers by portraying Itanium as a product line that’s nearing its end of life.

Oracle fired back by noting that the judge also agreed with Oracle’s motion to unseal its cross-complaint against HP, which offers up some details of what Oracle contends was an HP effort to hide Intel’s intentions regarding Itanium’s future.

As an example, Oracle maintains that HP negotiated a secret agreement in 2008 to pay Intel a whopping $440 million to keep making Itanium for another three generations of chips, and an additional $250 million under a later agreement, in order to make customers think that HP’s servers had a long-term viable future. HP has not confirmed the numbers but says in court papers that it’s no secret that it agreed to contribute to the chip’s development costs.

And then there’s another point that neither company mentioned in its press releases. In his order, Judge Kleinberg also denied HP’s motion to keep secret some details of the confidential agreement that HP negotiated with Hurd after he went to work for Oracle.

That agreement contained an 18-month “standstill” provision, during which Oracle agreed not to launch a hostile takeover bid for HP, according to the judge. Kleinberg said HP apparently feared that Hurd’s intimate knowledge of HP’s business would give Oracle an unfair advantage should it attempt such a bid.

HP may have sought the standstill agreement out of an abundance of caution; a spokesman declined comment. Oracle spokeswoman Deborah Hellinger said: “We viewed HP’s insistence on a standstill as hilarious, so we gave it to them.”

The case continues in Santa Clara County Superior Court.

Brandon Bailey writes about enterprise IT and other tech subjects. Contact him at bbailey@mercurynews.com or 408-920-5022.

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.

Read the rest of this entry »

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.