MediaFile

Amazon and the tablet market’s 7 / 10 split

Amazon is going where few have dared to tread, announcing a “full size” tablet that takes on Apple directly — and has the gall to be cheaper than the iPad. The tablet highway is littered with the remains of wannabe iPad killers from big hardware names — Motorola, Blackberry, Samsung. Even Google, whose Android software powers the Amazon tablets, didn’t bother to poke the Cupertino giant when it released its Nexus 7, choosing to make a tablet a smidge under two inches smaller than the iPad.

Amazon’s new large tablet, the 8.9-inch Fire HD, has a slightly smaller screen than the iPad’s 9.7 inches. But the entry-level price, announced today, is $300 — $200 less than the iPad equivalent, and only $100 more than the industry standard price for the new 7-inch interlopers, pioneered by Amazon.

Why bother overtly taking on Apple? Because Amazon can — and almost only Amazon can.

Apple is expected to sell 73 million iPads this year, about 61 percent of the global tablet market, Gartner Group estimates. There’s plenty of gold in them thar hills, even if you believe (as I do) that seven inches will become the dominant tablet size in the next year or so.

Amazon has pricing power that the Motorolas, BlackBerrys and Samsungs of the world don’t, accepting margins that Apple doesn’t (yet) have to contemplate. It’s convinced that the best way to mine the gold is by selling picks to the miners at a discount.

“How are these prices possible?” Bezos mused rhetorically near the end of a news conference announcing the new line of tablets. “We want to make money when people use our devices, not when they buy our devices.” (How things have changed. Remember that the original Kindle, released five years ago, was priced at $400, $100 more than the far-more-versatile Fire HD tablet announced today.)

Amazon's new large tablet has a slightly smaller screen than the iPad's 9.7 inches. But the entry-level price is $200 less and only $100 more than the industry standard price for the new 7-inch interlopers, pioneered by Amazon. Why bother overtly taking on Apple? Because Amazon can – and almost only Amazon can. Join Discussion

Will Twitter’s uncanny luck ever run out?

Editor’s note: This piece was originally published at PandoDaily.com

This past week I heard two rational arguments on the fate of Twitter from two smart investors.

One was an argument that it’ll likely fail in its bid to become a public company. The logic went like this: Facebook, Groupon and Zynga have proven the private markets are fundamentally horrible at valuing companies. In the early stages, that doesn’t particularly matter. But when you get into pre-IPO secondary shares being bought and sold, it does. Just ask the people who bought pre-IPO shares of all three of those companies.

Twitter – with its relative lack of a business – was always a more dubious growth bet than those other three, buoyed by the sheer strength of its product. And now, there’s just no way it’s worth anything close to the $8 billion it was valued at at the last round, this person argued. If Facebook, Groupon and Zynga have all had a greater than 50 percent haircut – Twitter can’t even dream of going public now.

This doesn’t mean Twitter is going under. The company has enough cash to grind it out, and it could always raise more money – albeit a larger valuation might prove a challenge until some of the questions around its business model are answered. But odds are, this person argued, in this new public market reality, with Twitter’s business still very much TBD, the company will sell for less than its last valuation to a Google or a Microsoft.

The other argument was for why Twitter is in a far better position than Facebook. This had to do less with its current revenues or valuations, and more with future prospects. Twitter’s ads – while nascent – just work better, this person argued. Twitter is a simpler product (or will be, now that it’s asserting more control over how users interact with it), and when inserted in a stream responsibly, people don’t tune their ads out the way they do on Facebook. Also, unlike Facebook, its audience transitioning from Web-to-mobile isn’t a problem for its business. Twitter has always been heavily mobile. Its ad products can work equally well on either.

The uncertainty over what to make of Twitter goes well beyond recent macro events. Twitter has long defied all startup reason. Join Discussion

Apple and the burden of being a behemoth

In the annals of meaningless milestones, Apple’s latest achievement — surpassing Microsoft, circa 1999, as the largest U.S. company ever — is right up there. I mean, how high is up? How big is BIG? What does Apple win, Johnny!?

But it did get me to thinking again about the lifespan of successful tech and Internet companies. There seems to be a trajectory that grants them life in the fast lane for 10 to 20 years before they are overtaken, made obsolete or dismissed as boring. The general public is a punishing grader that deifies promising, charismatic kids with hoodies and burn rates (at least for a while) but dismisses massive companies — like Microsoft, Oracle, Silicon Graphics and IBM — that print money and arguably control the world but aren’t sexy.

Microsoft is, of course, more IBM than Palm or even Sony on my spectrum. It was one of the original Harvard dropout startups and among the first of them to mint wealthy employees (called Microsoft Millionaires). And in December 1999, at the height of the dot-com boom, Microsoft became worth $616.34 billion — more than any U.S. company had ever been. (By one metric it still holds the record: Apple would have to reach a market cap of $842.5 billion, Microsoft’s inflation-adjusted market cap, to be the clear winner of this meaningless milestone sweepstakes.)

During the tech bubble of the late ’90s there were a lot of screwy valuations for companies that are now worth exactly nothing. Netscape was valued at $4.2 billion by AOL. Yahoo paid $5 billion for Broadcast.com. CMGI bought a search engine called AltaVista for $2.3 billion and scotched a deal to sell another, Lycos, for more than $100 a share. Terra then purchased Lycos for $12.5 billion.

Microsoft came by its valuation honestly. It powered virtually all of the computers in the world, and its Office suite was ubiquitous — and neither of these facts has changed. Microsoft hasn’t faded as much as its buzz has.

Can Apple avoid doing the same?

I think the answer is a qualified yes, for the opposite reason that Microsoft was fated to fade.

In the annals of meaningless milestones, Apple's latest achievement -- surpassing Microsoft, circa 1999, as the largest U.S. company ever -- is right up there. I mean, how high is up? How big is BIG? What does Apple win, Johnny!? Join Discussion

Stick a fork in it: Dell is done

Editor’s Note: This piece was originally published on PandoDaily.com. It is being republished with permission.

Sometimes when life gets too stressful, I try to remind myself that things could be rougher. Sure, I’ve got a raucous toddler and three deadlines in two days, but at least I’m not a coal miner. At least I don’t toil in a factory that renders pink slime. And best of all, at least I’m not running a large American personal computer company that has no conceivable way of combating an existential threat to its business.

I highly recommend this as a stress-reducing technique: However ugly your life gets, just try to put yourself in Michael Dell’s shoes. Imagine what that’s like. Picture yourself at the helm of a company that rakes in $60 billion in annual revenue — and then watch the money evaporating, floating away on a post-PC cloud. You built this company on the theory that computers were a forever-business, that the world would never fall out of love with the PC, and that you would be the guy to supply their fix.

The tragedy is that you were right: The world will never fall out of love with the PC. The PC is still riding high, the PC will be bigger than ever. What blindsided you is how the word “personal computer” would come to be redefined.

The PC is not the standalone, high-maintenance, low-end commodity device that it once was, the device that made you, Michael Dell, the king of computers. The PC is now a dozen different kinds of devices that are connected through one of two or three dominant platforms. The PC includes not just laptops and desktops but also big tablets, small tablets, and surely a coming wave of hybrid devices that function as several of these things at once. All these products favor the skills that Dell, as a commodity bottom-line chaser, has never had a chance to develop: An eye for design, a flair for user interfaces, seamless data management, excellent customer service, magical marketing, and the ability to present a coherent story about how the products can fit into people’s lives.

In a week and a half, Dell will announce its second-quarter earnings results. Expect a bloodbath. In the first quarter, back in May, Dell gave the market a goose egg — analysts had expected Dell’s revenue and earnings to fall from a year ago, but the company slumped way worse than people were guessing it would. Shares tanked, and they haven’t recovered. Analysts aren’t expecting anything stellar this time — Dell said its outlook was weak — but I suspect Dell could deliver another shock, presenting numbers that will begin to confirm a permanent downward trend.

It's all the iPad's fault. Join Discussion

Data shows thousands circumvented NBC Olympics coverage

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At least one company benefited from Olympics fans in the United States who tried to circumvent NBC’s television coverage during the London Games. AnchorFree, the Mountain View, Calif.-based startup released data to Reuters on Monday showing a major bump in users who installed a product that gives U.S. users an anonymous IP address in the United Kingdom. Presumably the people who signed up for the product, called ExpatShield, used it to watch BBC’s online streams of the Olympics.

According to the data, the number of installs of the free software surged 1,153 percent in the United States during the games. The company, which recorded an average of 220 installs a day before the Olympics, saw the number of installs increase to 2,753 installs during the 17-day event.

Its daily number of users also quadrupled to 8,121 compared to 2,040 average users before the Olympics. The peak day was on July 31 when 10,105 users logged in to catch the  U.S. women take gold in the gymnastics team final while in swimming, South Africa’s Chad le Clos edged out Michael Phelps in the 200 meter butterfly.

While these aren’t massive numbers, it’s just one company that people turned to during the Olympics to find a workaround to NBC. Others said they used TunnelBear and StreamVia while some tech savvy people like Walnut Creek, California-resident Jason Legate devised their own methods.

AnchorFree’s best known product is Hotspot shield, which lets users in certain countries visit blocked U.S. websites by offering an anonymous American IP address. The company has caught the attention of Goldman Sachs, which led the company’s last funding round of $52 million.

At least one company benefited from Olympics fans in the United States trying to circumvent NBC's television coverage and heavy use of the tape delay during the London Games. AnchorFree, the Mountain View, Calif.-based startup released data to Reuters on Monday showing a a major bump in users who installed a product that gives U.S. users an anonymous IP address in the United Kingdom. Presumably the people who signed up for the product, called ExpatShield, used it to watch BBC's online streams of the Olympics. Join Discussion

HuffPost launches live streaming with live comments

The Huffington Post on Monday launched its latest foray into video with a twist: Live programs that are intended to get people to talk about the segment in real time.

HuffPost Live “airs” its programs in real time -- some examples include Mitt Romney’s veep choice of Paul Ryan and  how white supremacy groups are using music as a recruiting too — though the videos can be watched even after they have been shown live. It is streaming 12 hours of programming, five days a week from its  studios in AOL’s New York headquarters, Los Angeles and Washington D.C.

“When we starting thinking about this we wanted to make this the most social video experience possible,” said Roy Sekoff president and co-creator of HuffPost Live and founding editor of the Huffington Post. “People are about real time. They want to tweet about something as it is happening.

Sekoff said it took about 8 months to get the project off the ground after it was given the green light and has a staff of about 100 people working on it full time.

To show just how active visitors to the main Huffiington Post website are, the company said it attracts an average 2 million comments a week.

Cadillac and Verizon are the founding sponsors of HuffPost Live.

 (Image curtesty of Huffington Post)

The Huffington Post launched its latest foray into video with a twist: Live programs that are intended to get people to talk about the segment in real time. Join Discussion

Starbucks and Square want your phone to be your wallet

After years of fits and starts, the prospect of using your phone to make purchases instead of your credit and debit cards is entering a promising era. The struggle for who will control your virtual wallet is intensifying, and while it’s far from certain what will replace plastic, it’s almost certain something will, very soon.

This isn’t about a gimmicky new way to separate you from your money. It’s about replacing credit and debit cards, and all of their vulnerabilities, with your phone. That phone will be linked to those same cards (and bank accounts), potentially enabling you to pay as you go without toting around cards or cash, and even without taking anything out of your pocket.

Within this revolution, there are two different technologies hoping to become the default. This time, instead of Betamax and VHS, we have NFC (Near Field Communication) and GPS (the same kind you use to navigate a map).

NFC backers – and there are plenty of them – are pushing a technology that sends payment information using radio waves from one device to another. GPS’s contingent is led by Square, a startup founded by Twitter inventor Jack Dorsey, and uses the location-awareness functionality of smartphones to establish a connection between you and a vendor.

This week, Starbucks announced it was partnering with Square, the best evidence yet that GPS might have an edge over NFC. For Starbucks, a $25 million investment in Square is pocket change, but the deal also puts visionary CEO Howard Schultz on the startup’s board and “Pay with Square” in every Starbucks, (eventually) letting caffeine addicts pay for their latte fixes with little more than a smile.

GPS mobile payments are at the opposite end of the conceptual spectrum from NFC, and therein lies their power. NFC is specifically designed to work only over tiny distances – a few centimeters – the better to avoid mishaps that might occur if you were just walking past a terminal. But that means the consumer is invisible to the retailer until she’s paying for something. GPS, on the other hand, can alert consumers to nearby establishments’ special offers, and alert establishments when returning customers are on the premises. That creates untold opportunities to cultivate customers, not just take their money.

Mobile payments are coming, and Starbucks, partnering with Square, thinks it can take them mainstream with a technology that helps cultivate customers, not just take their money. Will they have an edge over Google's Wallet? In the end retailers, not customers, will decide. Join Discussion

COMMENT

@CommonSensLogic If you can get by without credit cards, you are absolutely correct — my uncle does, in fact. But the truth is that, if you use credit cards, the physical card itself, and careless handling of your information by retailers, account for nearly all of the vulnerability and fraud. With card replacement systems you never divulge you information at point of sale, and the payment is made on a very back end.

If we can get rid of cards then fraud really shrivels up.

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Archery is the ‘new’ curling? I don’t think so, NBC

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Alan Wurtzel, NBC’s president of research and development, said on the network’s Olympics conference call Thursday that archery is the new curling.

As a former “vice skip”* on my high school’s curling team, I have a message for Mr. Wurtzel: archery is no curling, sir.

Of course I am being a bit tongue-in-cheek here and I’m not that offended. Plus, Wurtzel has some compelling numbers to back up his claim.

He said curling was the most-viewed Olympics sport on cable this year, even ranking ahead of basketball and its TV-ready athletes like LeBron James

“Archery is the new curling. The numbers for archery have been nothing less than huge,” said Wurtzel. “It delivered an average of 1.5 million cable viewers, the highest rated cable sport, beating out basketball. Now maybe it’s the Hunger Games phenomenon, or Brady Ellison orKhatuna Lorig who taught Jennifer Lawrence how to shoot for the film,  it really doesn’t matter but we’re going to keep an eye on that.”

I have to admit that even I got caught up in the archery hype. I reveled in the nail-biting suspense of the U.S. archery team’s silver medal performance Saturday and watched as members tried to nail bullseyes under pressure.

But as a former curler from Canada, I couldn’t help but feel a little treasonous listening to NBC on Thursday. Curling is not as popular as hockey by any means but it’s still one of the frozen national pastimes back home. And it’s spilled over the border too–curling’s popularity has been steadily growing in the U.S. since the last Winter Olympics, according to this AP story.

Alan Wurtzel, NBC’s president of research and development, said on the network’s Olympics conference call Thursday that archery is the new curling. As a former “vice skip”* on my high school’s curling team, I have a message for Mr. Wurtzel: archery is no curling, sir. Join Discussion

COMMENT

As a sagittarial proselytizer, I will also admit to having watched (and enjoyed) curling. Once. Ok, maybe twice. The fact that curling is a winter games sport, and archery is a year-round outdoor event seen also at the summer games tells me that I can enjoy both!
And of course, NBC is right, archery is so very new, having only been documented by historical evidence (arrow head points) to have been around oh, 50,000 years or so….
Name another Olympic sport where the US has had 18 yo and 52 yo women on the same team? Or where several para archers have also shot well enough to compete in the Olympics as well as the Paralympics? Archery is cool for many reasons, while curling is fun but cold, ice cold

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Yuri Milner: Funding the impractical in physics

Editor’s Note: This piece was originally published on PandoDaily.com. It is being republished with permission.

Well, this is a different side of Yuri Milner… The famed Russian tech investor and founder of Russian Web giant Mail.ru, has launched the Milner Foundation, with the aim of doing nothing more than advancing our knowledge of the universe.

The $27 million foundation will annually award $3 million to fundamental physicists doing great work. And just let them keep doing that work. There are no expectations to be met, no commercialization that has to come out of it. Milner simply thinks it’s important that we understand the universe better than we do now. ”My background is in theoretical physics, and it’s something very close to my heart,” he said in an interview from Moscow this morning. “We, as a mankind, are not rewarding the best fundamental scientists the way we should, and this is one way to do that.”

On one hand, this development seems surprisingly impractical for a man who up to now has been like a heat-seeking missile, finding highly practical – if unconventional – new ways to upend the tech investing world. Milner has pulled off something that almost no one else has as long as I’ve been covering Silicon Valley: He came in from the outside, saw a gaping hole in a venture market that everyone thought was oversaturated with cash, and was so right that he forced many of the most powerful Valley insiders to radically change their game plan.

Put simply, there was a clear liquidity gap in the market, as companies like Facebook didn’t want to go public. He solved it.

Sure, VCs pooh-poohed his approach at first as merely overpaying without board representation. But entrepreneurs loved it – witness Zynga’s Mark Pincus calling Milner the ideal investor at last month’s PandoMonthly. As Web giants put off going public longer and Milner’s spoils became even bigger, many of the biggest investors pulled an about-face and outright stole his playbook.

The famed Russian tech investor and founder of Russian Web giant Mail.ru, has launched the $27 million Milner Foundation, with the aim of doing nothing more than advancing our knowledge of the universe. Join Discussion

NBC’s Olympic contortions

It’s a toss-up which of this summer’s Olympics controversies will be the one most remembered. Twitter’s censorship (er, enforcement of terms of service) of an NBC critic and Empty Seat-gate are strong contenders. But for me NBC’s decision to tape-delay and edit live events after bragging that it would provide unprecedented real-time online access takes the gold.

Somehow our emotional attachment to television — and not video — remains incredibly strong. How else to explain the torrent of hate begat by NBC’s online blackout and broadcast delay of the Olympics opening ceremony in a day and age when alternatives and workarounds abound and time-shifting itself is considered a basic human right?

No, this feels like an “Occupy TV” moment: We, the 99 percent are galled that NBC won’t give us what we want when we want it, and that NBC is doing it because of a profit motive that requires it to manufacture appointment TV.

Over the weekend, Dan Levy, of sports site Bleacher Report, tweeted: “Folks, to think NBC cares about our complaints is ridiculous. They don’t care about sports fans. They care about ratings. We knew this.” NYU professor and media watchdog Jay Rosen tweeted in response: “Have you ever noticed how often people use the word ‘ratings’ as a synonym for ‘…so  just shut up.’”

NBC can, more or less, do what it wants with the games as it paid $1.2 billion for them. Its goal is to make a profit despite the eye-popping licensing fee and the tens of millions more in production costs. It is about the ratings, like it or not.

But would ratings suffer if NBC unleashed all the video on the Web and aired marquee events live?

The network's moves to keep its prime-time TV audience pumped up are more involved than a gymnast’s - and entirely unnecessary. While there is surely an audience for online streaming, there is a massive audience that wants, and will continue to desire, the group hug that is TV. Join Discussion

COMMENT

Wow, and I always read about the evil “Faux” news. CNN and NBC have shown us who really puts out fake news. Don’t stop ragging on Fox, though. I know it gives many of your lives meaning.

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