Updated at the bottom: We have short memories in Silicon Valley, which is both a blessing and a curse. We forget the bad times as quickly as we forget the good times.
At the turn of the century, everything went to hell with the dot-com bust. Then the pendulum started to swing the other way; the pessimism that once reigned supreme was being replaced by wild-eyed optimism. Now Silicon Valley is in for a long-overdue reality check, one that should worry one and all. Why? Because the news coming out of advertising-focused companies is not good.
Yesterday ValueClick, a display advertising network, said it now expects its second-quarter revenues to range from $162 million to $164 million, lower than the previously forecasted $170 million. The company also cut its full-year 2008 sales guidance by about 10 percent, to between $655 million and $675 million. It blamed weakness in its display and comparison advertising business, and flatness even in its lead-generation business.
Time Warner’s Platform-A advertising division isn’t doing so well either, according to some of my sources. The company is instituting wide-scale belt-tightening measures, including freezing travel budgets. Pali Capital in a blog post today forecast, “AOL’s display advertising revenues down about 8% in Q2 (Q1 ‘08 was down about 10% organically), with the back-half down mid-single digits.”
Microsoft, in its fourth-quarter 2008 earnings call today, also admitted that online advertising was tough. “The one proviso to that is in the online advertising space…it was weak in the fourth quarter. There is a direct impact and we’re not immune in the online space, ” Microsoft CFO Chris Liddel said in a conference call with analysts. “The online advertising area is part of the business that we think is most challenging…the online advertising area is very difficult at the moment.”
And if that wasn’t enough, Google just announced spectacular growth in its second-quarter revenues — about 39 percent over the same period lat year — but fell short of Wall Street’s profit expectations. Between The Lines blog notes that Google CEO Eric Schmidt, in his company’s conference call with investors, said they would survive the downturn because there will be a flight to quality, and that they will provide a better return on investment. Maybe! Larry Dignan hit the nail on the head when he wrote:
“Color me skeptical. Anyone that lived through the dot-com bust has heard these lines before and no company is immune if there’s a recession.”
Like him, the skeptical me went straight to the traffic acquisition costs (TAC), which is where I think the real story lies. If you look at the image below you’ll see that Google’s traffic acquisition costs have declined rapidly while its revenues have ballooned. TAC in general and AdSense specifically are like a black box – no one quite knows how much Google gives out. Sometimes it feels like Google can use this “black box” to come up with pretty much any numbers it wants to.

We’ll get a better sense of the overall health of the market when Yahoo reports its latest numbers, but the way I see it, things are sort of troubling. We wrote about this nagging problem back in May. I think that as we go forward things are only going to get worse — and even Silicon Valley can’t ignore what’s been going on in the overall economy.
The housing crisis is being replaced by a much scarier problem: the personal credit crunch. In a recent report, American Express noted that it has started to see a sharp increase in late card payments. Now folks, this is American Express, whose customers skew towards the affluent, especially compared to those of its competitors. The company has boosted loss provisions for its U.S. card business, profits have declined, and defaults are up.
Will these problems escalate? Probably. Consumers struggling with the housing crisis and rising fuel costs — and thus higher basic living expenses — will be forced to cut back on other spending, which will lead to slower sales and in turn, less money for advertising.
We know the housing and financial sector-related ads have already declined drastically, now we’re going to start to see other sectors cut back on advertising, too — and that is going to have a negative impact on everyone from large social networks to ad networks to Yahoo and Google to small startups, including weblogs like ours. I guess Provigil sales are going to take a nosedive in the Valley as we stay up all night worrying about everything.
Update: And there’s more bad news today. The Wall Street Journal reports that General Motors is going to sharply cut back on advertising. GM is one of the big spenders in U.S. — last year the company spent about 32 percent of its $2.3 billion dollar ad budget on newspapers and 11 percent on television networks — but it looks like those expenditures are going to get hacked. It’s not clear from the report how this move will impact Internet advertising.
Photo courtesy of ZDNet

About six months ago, I heard that Yahoo was contemplating offering its entire search platform as a web service, much like Amazon’s S3 storage and EC2 computing services. Since the rumor was short on details and Yahoo was already in the midst of a gut-wrenching upheaval, I didn’t put much stock in it. Apparently I should have, for Yahoo today announced the beta version of BOSS (Build Your Own Search Service), which essentially turns its core search and other related technologies into a free web service that can be used by anyone who wants to build their own search engine.
This isn’t simply access to Yahoo’s search results; Google did that ages ago, though I wonder if anyone actually uses it. Rather BOSS will allow anyone to rank, arrange and display search results that befit their own algorithm, without as much as acknowledging that the results are coming from Yahoo.
Yahoo News Search, Image Search and Yahoo Spell Checker services will all be offered as part of this effort. Combine this with Yahoo’s recently introduced SearchMonkey tool, and you could build a search engine that is entirely your own.

Prabhakar Raghavan, chief strategist for Yahoo Search, said it typically costs around $300 million to build a search engine and its related infrastructure, which is why there are so few players. He has a point: Powerset recently sold out to Microsoft for precisely those reasons.
Raghavan hopes that BOSS could help foster a lot of experimentation around search, and more importantly, around the search experience, because startups will no longer have to spend millions on infrastructure. “The opening up of our search is a philosophical shift, and we are saying that if you can be better than us, so be it,” said Raghavan. “There is no shortage of search ideas, though the barriers were only a few hundred million dollars. You have to be willing to have your lunch eaten in order to disrupt.”
The BOSS service is being offered for free, though as part of the deal users will have to use Yahoo’s Search Advertising. Yahoo believes that by boosting query volumes, it can create more volume for its search advertising and thus begin to grow against its nemeses: Google & Microsoft.
It’s a very bold move by the hobbled online giant, as it puts its own search business at risk. “We are trying to disrupt the market by allowing people to come and build on our platform,” Raghavan admitted. Two startups, Hakia and Me.dium, have already signed on for the service.
But I think it’s a risk worth taking, for it will shake up the search status quo and offer a way in for the little guys and all their creativity. Far more importantly, however, it helps people to think of Internet search beyond the tried and tired paradigm of proactively “finding” information.
Unlimited queries, the ability to mix with other content including news, and research from universities and other such repositories could really change the game. By allowing folks to use its engines in tandem with their proprietary data (such as a proprietary social graph), Yahoo will allow them to build a different kind of user experience. “We don’t need to see proprietary data but work with them,” Raghavan said.
This isn’t a slam dunk, however. Yahoo still has some serious challenges ahead of it. The company’s hope is to show big gains in search queries and search-query related advertising revenues. Just like I hope to be the starting pitcher for the Yankees.
Yahoo executives didn’t answer my repeated questions about the potential impact on their business. Notably, they are asking startups to sign up for their search monetization system — the very same system that is going to use Google to drum up ads. That isn’t a very confidence-inspiring move. And if this monetization tool was so great, Yahoo wouldn’t be in the kind of trouble it’s in. If you’re a startup, do you want to hitch your wagon to a wanna-be ad system?
My reservations aside, this is a big, gutsy move by Yahoo to emerge from the stupor that has enveloped the company and the search industry at large. I’m looking forward to seeing the results of this experiment.
Yahoo’s Blog has more details on the new offering.

A few minutes after she delivered a speech at our Structure 08 conference in San Francisco, I caught up with Microsoft’s corporate VP of global foundation services, Debra Chrapaty, for a video chat. I think a more appropriate title for her would be Mr. Softie’s Internet Infrastructure Czar. I found her very knowledgeable, engaging and open with her opinions. “We have some new innovations up our sleeve that are going to knock the socks of anything anyone is doing, including our friends down south,” she told me. She didn’t name Google, of course, but we all know who she was talking about.
Her candor was one of the reasons I wanted decided to share the video with you guys. The common theme of the conversation: Microsoft is spending liberally to build out its Internet infrastructure, including upgrading its backbone network and scaling out its data center infrastructure by adding new technologies.
When I asked her exactly how much Microsoft was spending on it, she dodged the question, saying just that it was a big number. This much we do know: Two years ago, the company was spending close to $2 billion on its infrastructure; it has since undertaken the development of six data centers, with parts of two networks already online.
| Adding 10,000 servers a month |
| New data centers being planned/under construction are equivalent of over 15 US football fields of data center space. |
| Plans to cut of 30% to 40% in data-center power costs company-wide over the next two years. |
| Current network backbone runs at about 100 gigabits per second, but soon Microsoft plans to bump it to 500 Gigabits. I think this could be big for Level 3, long time partner of Microsoft. |
| Building out its own CDN (Edge) network - 99 nodes on a 100 gigabit per second backbone. |
| For Microsoft, total data grows ten times every three years. The data in near future will soon approach 100s of petabytes. This includes data from all of their online services. |
| Source: Microsoft, GigaOM |
| When complete, it will consume 48 megawatts of energy. Microsoft can tap up to 72 MW of energy coming from hydro power. Microsoft is paying about 1.8 cents per kilowatt, but will rise to between 2.6-to-2.9 cents per kilowatt as more capacity goes online. Two data centers in this location. | |
| It will be 447,000 square feet on 44 acres. Microsoft is building two data centers here | |
| first Windows Live data center outside the U.S. | |
| The first floor of this facility is going to be entirely made of containers and would house Microsoft search. | |
| Source: Microsoft |
Watch the video to get the full low-down, but if you’re in a hurry, here are some highlights, including her quotes from our conversation.

Yesterday, I read a post on Google’s blog about their focus on improving search quality. Today, I read a press release from Microsoft in which it said its Live Search product will be used to give “cash back” to those who use it to find and buy things. Innovation vs. buying your way into the market…in my book, that kinda speaks for itself.
Microsoft’s “Live Search cashback” site…promises to pay back a portion of the purchase price — ranging from about 2 percent to more than 30 percent — to people who use it to find designated products and buy them online from participating retailers…including the online sites of large retailers such as Barnes & Noble, Sears, Home Depot, J&R Electronics, Office Depot and others. [via]
Instead of jumping to conclusions, I decided to make a list of my thoughts on this, many of which the folks at Microsoft are not going to like.
Final thought: Microsoft’s traditional strategy of “We will charge less and crush the competition” really doesn’t cut it anymore. How long do you think merchant partners are going to stick around and waste their resources if they can’t make money? This is not some PC-maker-schmuck they have in a headlock. Take a look at all the other new technologies where Microsoft hasn’t been able to dominate — this is a sad reflection on that trend.

Technology buzzwords come and go…virtualization, green, SaaS…and after sitting through the Google Friend Connect announcement, reading about Facebook’s Connect service and writing about last week’s MySpace Data Availability launch, “open” appears to be just the latest. But open is one of those words whose definition can be spun into a variety of meanings.
While Facebook isn’t yet releasing much detail on its efforts and may completely surprise me, Google’s Friend Connect program today highlights how open standards such as OpenID, OAuth and OpenSocial can be used to create a platform that’s pretty closed. The service, which will launch tonight and only expects to have between 12 and 24 sites participating while it’s in preview mode over the next few months, will allow site publishers to put some code on their sites. If a user visits a site with the appropriate code, she can get access, via an IFrame, to applications built in OpenSocial. A user can also share her activities on a participating site with her contacts, as well as through her news feeds on participating social networking sites.
Last week, I pointed out that MySpace’s Data Availability efforts were welcome in that they expand the number of sites on which a user can use her MySpace data, but that MySpace still had a lock on the user data since it hosted and determined who could display that data by approving site partners. If MySpace’s efforts were three steps forward in opening up user profiles, then Google’s Friend Connect represents two steps back.
The use of the IFrame means that site owners have no way to change or work with user data, they can only display it. MySpace doesn’t allow sites to store user data on anyone’s servers other than its own, but it does allow that data to be used directly in the outside site. For more differences among the three services, please check out the chart below.
While none of these services are entirely open yet — and may never be, given security and data abuse problems — the trend toward a more social web is clear. With broadband more prevalent than ever and voice fading as the primary means of communicating with people who aren’t in the room, enabling a truly open social web is the next big step in communication. But in order for that to happen, the user needs to be able to reach across walled gardens and gain granular control as to what he or she shares and with whom.
There’s open source (really open in that anyone with knowledge can participate in how the code evolves), open standards (open only in that anyone can participate using a pre-defined version of the standard), and open APIs (open in that anyone can take the pre-defined standard and build something for a closed platform such as Facebook). Knowing this, the efforts to open up a user’s data on a social network (their social graph, if you will) by these three companies falls somewhere between an open platform and an open standard.
| unknown, but Facebook API is likely | OAuth, OpenID, OpenSocial | OAuth |
| basic profile information, profile picture, friends, photos, events, groups | Applications built with OpenSocial, contacts, activities on participating sites published back to a news feed | Profiles, friends, photos and videos |
| unknown | Web site owners must apply to Google and be accepted | Web site owners must agree to MySpace terms and conditions, but MySpace will allow anyone who doesn’t abuse the user data to participate |
| will launch within a few weeks | First 12-24 sites will go live in the next few days and the rest of the web will take a few more months | Launched on May 8 and adding more partners within the next few weeks |
| unannounced | Plaxo, Orkut, Hi5 and Facebook | Yahoo!, Twitter, eBay and Photobucket |
| unannounced | On Google servers and displayed only via an iFrame | On MySpace Servers, but can be displayed however the participating site wishes |
| A user’s privacy settings will follow him around the web | Users opt in to Friend Connect and can limit their profile sharing to existing contacts only; a user can elect on which sites he wants to share his activities, can also instantly change privacy settings across all participating sites | Users can control their privacy settings (right now, only which sites get access to their data) on a central page. Partner sites must accept changes in real time and sharing profile data is an opt-in service |

You can all Xohm now — and call it Clearwire. The much talked about WiMAX joint venture between Clearwire and Sprint Nextel is going to happen and the news is going to come as soon as tomorrow. The combined company is going to be worth $12 billion, The Wall Street Journal reports. Here are some facts:
Other details are sketchy, but here are my thoughts:
The elephant in the room:
This is a spaghetti-like mess of conflicts and self-interests. I wonder how open this network is going to be? Clearwire has a history of blocking other services such as VoIP carriers. Comcast is a known P2P offender. Will Google be our only search option?
The final word:
I told you so comes to mind :-)

Update: The Wall Street Journal reports that Yahoo and Google are going to work together on an experiment that might lead to big things. In other words, a two-week test that is limited to Yahoo’s U.S. traffic will carry Google ads. These ads will be limited to “no more than 3% of Yahoo’s Web search queries.” If all goes well, then a broader search outsourcing arrangement could be struck by the two companies.
Loose translation: With its bid for Yahoo, Microsoft made a checkmate move. Yahoo is out of suitors. Its shareholders don’t give it a prayer of a chance, and further more, the company is still as listless as it was six months ago. So what does it do? It goes and sleeps with the enemy!
Just a reminder of Yahoo’s cluelessness: In 2000, it outsourced its search queries to Google. It renewed the deal in 2002, and has become a minor player in the search business. Anyway, about this new-found friendship, I wonder if the U.S. government is going to let this one through. I mean, this is one instance in which antitrust concerns could actually hold some merit.
Microsoft is pretty clear about its position. As Brad Smith, Microsoft’s General Counsel, told the WSJ:
“Any definitive agreement between Yahoo! and Google would consolidate over 90% of the search advertising market in Google’s hands. This would make the market far less competitive, in sharp contrast to our own proposal to acquire Yahoo!”
Either way, in this deal, heads or tails, Google comes away a winner. If Yahoo goes to Microsoft, the ensuing chaos is going to benefit Google. If Yahoo gives away its search ad business, Google is a winner.
Update: The Wall Street Journal is reporting that Yahoo and Time Warner are planning on putting together a deal where Yahoo will get AOL which is being valued at $10 billion. In exchange Time Warner will get 20% of the combined company (Yahoo) and will make a cash investment. Google will be the search-ad-partner. Yahoo would spend the money it gets from Time Warner $10 billion buying back its own stock and beating down Microsoft. With Legg Mason, 7% owner of Yahoo opposing the Microsoft offer, the new plan could work. To make this plan come apart at seams unravel, Microsoft has to up the offer by a few dollars per share. I say this again, Yahoo has some serious problems. Buying AOL, already troubled in its own right, is only going to compound problems.

WiMAX in the U.S. has been a bit on the ropes, but it isn’t dead yet. And if you believe The Wall Street Journal, a miraculous comeback maybe in the offering, thanks to some deep-pocketed cable companies’ willingness to write megamillion-dollar checks.
The WSJ reports that Comcast, Time Warner Cable and Bright House Networks are contemplating investing $1.6 billion in a new company that would be operated by Sprint-Nextel and Clearwire. This is in addition to $1 billion that Intel is rumored to be putting into the new company, along with hundreds of millions of dollars coming from Google. The new company is aiming to raise about $3 billion. Here is how the total rumored funding for the new company breaks down:
Just to recap the back story, WiMAX has been in trouble since Sprint-Nextel hit the skids. Clearwire, another WiMAX proponent, has seen its shares plummet in recent months. The two companies were contemplating a joint venture but then dropped the idea. I proposed perhaps Silicon Valley companies could get Sprint to spin off its WiMAX business, and then fund what essentially would be a wholesale network. Apparently someone else was thinking along those lines.
A few months ago it emerged that Sprint-Nextel and Clearwire might throw their WiMAX lot together and create a brand-new company backed by some heavyweight Silicon Valley investors. The reports/rumors of this NewCo have been floating around for a few months now, but now there seems to be an urgency around the idea.
WSJ reports that new CEO Dan Hesse has been pushing all involved and wants to get things wrapped up before the CTIA show next week. He also wants to get the network up and running so they can upstage AT&T and Verizon in the 4G race. (Read: LTE vs. WiMAX) Sprint did quite well when it launched its PCS network before its rivals and won market share by touting its better quality in the early days of the cellular boom.
Cable companies have previously bought spectrum and dabbled in ill-conceived (and equally poorly executed) joint ventures with Sprint, with little or nothing to show for it. This time, it seems they might be serious about fighting the phone companies in the wireless arena. Verizon and AT&T are sitting on 700 MHz spectrum that can be used by those companies to steal cable companies’ customers.
Whatever the reasons, I hope this new company is established, and adds as a competitive counterweight. And I hope they call it Xohm!
How did We Get Here? A Sprint/Clearwire Timeline:

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Microsoft is fighting a war — one in which it’s being attacked on three sides. Cut through the flurry of announcements out of its Mix conference this week and what emerges is the Redmond giant’s three-pronged defense strategy: consumer, enterprise and developer. Only by understanding the battles Microsoft is fighting does it become clear where the company is headed. So we’ve broken it out for you here.
The consumer attack
The front: Desktops, handsets and consoles. Flanked by Apple’s cooler desktops and devices, Google’s insight into users, and the Nintendo/Sony console world, Microsoft is struggling. Windows Mobile isn’t a consumer handset like the iPhone. Live hasn’t really taken off. Vista flopped, with the company embroiled in claims that it overstated the number of machines on which it would run. And the Xbox, despite its success, has an alarmingly high recall rate. Perhaps most frighteningly, it’s becoming clear that when it comes to consumers, advertising is paying for it all (what Chris Anderson calls the “freeconomy”). But Microsoft isn’t plugged into that ad stream.
The defense: One OS to rule them all. Users have dozens of devices, and Ray Ozzie wants them all to work seamlessly together. Expect Danger, Zune, Xbox and Vista to share and synchronize automatically. Carriers and labels will love it. Consumers will settle for it. And once they’ve got a central identity, they’ll be able to carry their desktop applications (with varying degrees of functionality) from their desk, to their car, to their hip, to their sofa.
But how to pay for it? What Microsoft needs is an ad network like Yahoo, and media formats like Silverlight that lure advertisers. Ballmer’s clearly not resistant to the concept of advertising: In an on-stage Mix interview with Guy Kawasaki, he performed a mini-monkeyboy dance, only to demand of the person who had requested the jig: “If your buddy behind you just gave you a buck, I want 50 cents.” He knows where his consumer revenue’s coming from down the road.
The enterprise attack
The front: On-demand apps and a mobile workforce. Salesforce.com has gone from a turnkey contact manager to a full-fledged ecosystem for developing CRM applications. Amazon lets hundreds of upstarts build project planning, accounting, word processing, messaging and more — apps that traditionally filled Microsoft’s coffers. Standards like OpenID give interoperability without buying a suite. As companies realize the inevitability of on-demand computing, Microsoft has to completely change its business model. And on the mobile front, Windows Mobile can’t hold a candle to the BlackBerry.
The defense: Connected productivity and an easy move into the cloud. Expect the firm to retrench on mobility. Exchange still holds the bulk of business users’ internal relationships. More and more, it’s focusing on workflows and business process. Moving those processes between the enterprise server, the mobile device and the web — seamlessly — would be a big win that companies will love. With Danger, Windows Mobile can stop being a tweener and go after Research In Motion. And Microsoft’s asp.net architecture is still the easiest way for its legions of developers to build online applications.
When companies are ready to port their data centers into the cloud, Microsoft will make the transition as painless and transparent as possible using Windows Live Storage, SQL Server Data Center Services, and other services with codenames like CloudDB, Horizon, and Live Core that execs are still tight-lipped about.
The developer attack
The front: Open source, web apps and video. The thing Bill’s always done right is focus on developers. He put in functions. He opened up APIs. He showered them with development resources. And it worked. But today, we have Sourceforge for snippets of code. Eclipse gives ActiveVisual Studio a run for its money. We built Web 2.0 with Flash, AJAX, Ruby, Python — the language of the web isn’t .net, and it hurts. When it comes to video, Microsoft’s Silverlight seduces content providers with tracking and ad support, but we’ve already built those things out of Flash ourselves. And Microsoft’s notoriously long release cycle for Longhorn impacted its ability to react to market changes.
The defense: New Lego. Remember old Lego, which only had a few pieces? You had to carefully build the front of a spaceship from thin rectangles and dozens of identical bricks. But new Lego is different. There’s a single piece for the front of the spaceship. And while old-school Lego types cry foul, now pretty much anyone can build a spaceship.
That’s Microsoft. New features in Internet Explorer 8, working in concert with the company’s web servers, will make it easy to drag-and-drop sex appeal into the application without needing much talent. And enterprise developers will embrace it, as they always do, because it’s easy. Things like Feedsync and Sliverlight will make it that way. Even the Popfly site makes anyone who can drag a mouse a coder, performance be damned. By breaking the software into services, there will be less delay between releases, which should fix the Longhorn drought.
How will the battle go?
Mix08 was an upbeat event. But read between the lines, and it’s clear that the company is bracing for a fight from several sides at once. Don’t write off Microsoft: We were here once before, when Netscape was going to put the company out of business. But Gates issued an edict, the company turned on a dime, and a few years later IE was the dominant web browser.
But you never want to fight a war on multiple fronts, and that’s what Microsoft faces in battles for consumers, enterprises and developers. If it survives, the Microsoft of tomorrow will be a very different company.

This Friday marks the beginning of South by Southwest in Austin, starting with the Interactive Festival. Every year, geeks galore descend on my hometown, only to be replaced by filmmakers and then musicians. The geeks are my favorites, but you knew I’d say that.
As a reporter I look forward to the event, and as a resident I bemoan the lack of parking downtown, the full restaurants and the deluge of hipsters alternately making plans to move here or dissing the place for its provincialism. This year’s interactive lineup has an impressive array of companies who have built their business on the web, from Yahoo and Google to startups such as Facebook and MOG.
And 1,700 miles away in the colder climate of Philadelphia, about 1,200 network engineers will gather to perform the less-celebrated task of making sure the Internet keeps humming along. The Internet Engineering Task Force is holding one of its thrice-annual meetings to talk about the transition to IPv6, the problem of building faster routers when there’s ever more routing information to take into consideration, and a host of other issues relating to the core of the Internet.
Listening to Jari Arkko, an area director for the IETF, talk about the goals at this IETF meeting, it struck me how much the Internet has changed technology. I’m very much a hardware geek, in love with data center infrastructure, networking and chips, so I am now amazed at what a technology company can do without this level of engineering.
In the early days of the Internet, many of these technology firms had to at least figure out their data center architectures and how they would deliver and support their online shopping sites or web auction houses. But thanks to hosted services, that’s less important today. You no longer have to be a techie to start a technology company.
This is great for the billions of people using the Internet to access services and content, and speaks to the maturity of the web. However, it’s important to give credit where credit is due. So while the technology companies attending SXSW are slamming down the drinks and hobnobbing with the digerati, let’s take a moment to toast the engineers who make it all possible. And for those network engineers in Philly, it’s Beer Week up there next week, so sneak out of those plenary sessions and toss one back. Hack into my online bank account, and it’s on me.

Google acquired JotSpot eons ago, so long ago that one almost forgets about the wiki company and its founder, Joe Krause. Apparently Google didn’t let it go to waste. It is now the underpinning of Google Sites, a web-based collaboration software service that is going to be part of the Google Apps and will be available later on Thursday.
It is a simple and easy way to build a web site where you can share information with your team, including files, calendars and presentations. You can put content from other Google products, including YouTube, Google Calendar and Picasa. Google hopes that small business, wide-spread teams, classrooms and even political organizations would use this new offering in tandem with its current Google App offerings.
Google is not the first one to make a collaboration available — 37Signals’ Basecamp, Microsoft ’s Office Live WorkSpace, Zoho and GoPlan come to mind — but it has come up a pretty compelling offering that is going to challenge competitors.
“Creating a team web site has always been too complicated, requiring dedicated hardware and software as well as programming skills,” said Dave Girouard, vice president and general manager of enterprise, Google.
I was pleasantly surprised by new offerings’ ease of use. Sure, some power users are going to be disappointed but I suspect a majority will find its simplicity appealing. Moreover, it is tightly integrated with Google Apps, which would make its adoption easier, just like Google Docs and Google Talk.
I bet like me, no one wants to deal with another wiki. Funny how Google is taking a page out of Microsoft’s playbook, and offering an “integrated suite.”
WebWorkerDaily, which follows collaboration software quite closely had outlined similar approach.
Take GMail, GCal, plus Google Docs & Spreadsheets and you could manage a project reasonably well…If you wanted dashboard or notification-type features, you’d probably have to custom-build them yourself, though, and that’s a serious undertaking.
Looks like Google fixed that problem. My initial enthusiasm aside, I am still withholding final judgement on this product for now. Like most Google apps, the limitations become obvious after one has had a week or two and real-work situations to put the service through, a case in point being the marginal IMAP experience on GMail.
Related Post: An in-depth review of Google Sites over on WebWorkerDaily

Google is buying a piece of a new transpacific fiber optic cable, according to research firm TeleGeography. This will be yet another piece of what can be loosely described as GoogleNet, a fiber network built and leased by the search engine and advertising giant to meet its ever-growing bandwidth requirements. Google is one of the six investors in the “Unity” undersea cable that will connect the U.S. and Japan. The new cable is going to be built by Tyco Telecommunications and NEC for about $300 million.
TeleGeography says that Google has been trying to buy a piece of a transpacific cable for a while now. Google CEO Eric Schmidt had admitted to as much a few months back. I have written about how Google is using its infrastructure (including network) as a strategic advantage, and this latest move is an extension of that philosophy. It has been buying dark fiber to grow its network, as I had first reported back in 2005.
TeleGeography estimates that transpacific bandwidth is eight times higher than transatlantic routes. Google can now get capacity at cost, and it can also squeeze more out of its infrastructure. Our good friend Alan Maudlin, TeleGeography research director, doesn’t think this is going to start a trend.
“While Google is the first non-telecom company to take an active role in ownership of a submarine cable, it’s not likely that this is the beginning of a new trend,” commented TeleGeography Research Director Alan Mauldin. “Although many non-telecom companies have high bandwidth requirements, few will venture into owning submarine cables anytime soon.”
Update: Google’s manager of network acquisitions, Francois Sterin, on their blog writes about why they chose to invest in the Unity cable.
As more and more people conduct online searches and interact with applications like Gmail, Google Earth and YouTube, we’ve had to think outside the box to create a more scalable, affordable and easy to manage network that meets our users’ needs worldwide. One of the biggest challenges we face is staying ahead of our broadband capacity needs, especially across Asia.
This is the first time Google has admitted to building and buying fiber to build their own network. I have often received denials from their PR folks, but I guess my sources were better.
If you’re wondering whether we’re going into the undersea cable business, the answer is no. We’re not competing with telecom providers, but the volume of data we need to move around the world has grown to the point where in some cases we’ve exceeded the ability traditional players can offer. Our partnership with these companies is just another step in ensuring that we’re delivering the best possible experience to people around the world.
Update #2: Google press release has some details about the Unity Cable.
The Unity consortium is a joint effort by Bharti Airtel, Global Transit, Google, KDDI Corporation, Pacnet and SingTel. The name Unity was chosen to signify a new type of consortium, born out of potentially competing systems, to emerge as a system within a system, offering ownership and management of individual fiber pairs. This new 10,000 kilometer (km) Trans–Pacific cable will provide connectivity between Chikura, located off the coast near Tokyo, to Los Angeles and other West Coast network points of presence. At Chikura, Unity will be seamlessly connected to other cable systems, further enhancing connectivity into Asia.

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Looking back at 2007, we will remember it as a year Google finally grew up and showed its true colors. Sure there was Facebook and all the hoopla around its platform and privacy, but the big story of year was still Google. The Mountain View, Calif.-based company that still gets a majority of its revenues from advertising made moves that would help expand its reach into new markets.
Wireless, Voice and Applications were three areas of major push - and if that meant taking on the telcos, the FCC, Microsoft, Wikipedia and even Facebook, so be it. And along the way it is estimated to add $1.7 billion to its $10 billion or so sales in 2006. No wonder it commands a market capitalization of $217 billion. Here are some of the major developments of a very Google-y 2007.

I had reported on Mozilla jumping into “online services” earlier this month. Today, they quietly announced a new project called Weave, that allows you to take control of your metadata and store it on Mozilla servers, once you set up an account.

The idea behind Weave is that all your personal information — bookmarks, passwords and account names, for example — are synced to your Mozilla account via Firefox. If you lose your computer, you can download Firefox, log into your account and you can restore all that information. You can do some of this today if you use Google Browser Sync and Dot Mac services. You can start by creating an account with Mozilla Services. You will need Firefox 3.0 or higher to get this working.
Mozilla has set-up a code of ethics, which make me view this project more positively. For instance, all client side data is encrypted. I like the fact that Mozilla is a neutral entity and is less likely to commercially abuse the information at their disposal. If you take a longer term view, Mozilla can become the data broker for all future web services, especially for those who don’t want to throw in their lot with commercial vendors such as Google, Microsoft and Facebook.

As everyone knows, you get what you pay for. That maxim certainly holds true for Internet infrastructure, especially when it comes to servers. Over the past few years there has been an explosion of low-cost appliance servers – also known as pizza box servers — and they now account for a formidable portion of the Internet infrastructure. And though cheap in price, they are turning out to be power hogs.
“These servers are cheap to buy but consume a lot of energy and their utilization is pretty low,” said Jonathan Koomey, project scientist at Lawrence Berkeley National Laboratory and consulting professor at Stanford University, who recently conducted a study on the power requirements for servers. “The utilization is below 20 percent and we really need to focus on virtualization to get more from these boxes.”
According to his estimates, volume servers, or the low-end devices that include the pizza box servers, consumed over 50.5 billion kilowatt hours in 2005, up from 19.7 billion kWh in 2000. That number surely must have increased by now. From 1996 through 2006, the sales of volume servers jumped from 1.41 million units to 7.282 million units, according to information collected by International Data Corp., a market research firm.
“Some of these (pizza box servers) throw up a lot of heat and are power hogs,” said Tim Sullivan, Chief Technology Officer of Internap, a data center and CDN provider, during a call with company’s management earlier today. He said that they are asking clients to better utilize the data center space and putting fewer of these pizza boxes in a more efficient manner.
One of the reasons these pizza box servers are inefficient is because they’re being made to do tasks for which they were not built. Back in the late 1990s, the form factor became popular with the large corporations, and there was plenty of space (and power) in the data centers. However, as web infrastructure needs have increased, so has the number of servers. Even tiny startups are beginning to buy 1,000 of these boxes to just stay in business.
As their numbers increase, and the problems mount, it makes me wonder if we’ll soon see the pendulum swing to the “big iron.” Thoughts, anyone?

Amazon continues to amaze us with its Amazon Web Services series of offerings. The latest is SimpleDB, which will be available in limited beta in a few weeks. And it is bound to have a major impact on web infrastructure. As Amazon says in its email to existing developers:
This service works in close conjunction with Amazon Simple Storage Service (Amazon S3) and Amazon Elastic Compute Cloud (Amazon EC2), collectively providing the ability to store, process and query data sets in the cloud.
As we’ve already noted,
…the center of gravity is shifting away from monolithic centralized data management to massively parallel distributed data management.
If you are in the business of managing massive amounts of distributed data, you cannot gloss over the Amazon WS trifecta — data-in-the-cloud is the future and with WS, Amazon is way ahead of the pack.What about the offerings of other vendors? Google, for example, has BigTable, and truth be told, SimpleDB has a distinctly BigTable-ish feel to it. But a side-by-side comparison makes it clear that Amazon WS in general – and SimpleDB in particular — is superior, for the following reasons:
Tersely put, SimpleDB is hugely disruptive. It will take some time to evolve the new thinking patterns and new design disciplines that this technology forces us to consider. To do so, consider this breakdown of the similarities and differences between SimpleDB and conventional relational databases.
Very, very simplistically speaking, domains are like tables, with items like rows and attributes like columns. A query cannot cross domains, so in this analogy you can’t “join” domains. But that sort of thinking is a holdover from the relational database normalized model.In reality a domain is much more like a database, so we have to stop thinking in terms of tables and joins.
Say we had an SQL database, with tables for “Company,” “Departments” and “Employees.” In SimpleDB, the items (rows) for all three could all go in one domain (database), with it you can run queries on this domain and using operators like UNION and INTERSECT, you can do the equivalent of joins.Existing web technologies such as Ruby on Rails, Django and Hibernate all have an Object Relational Mapper (ORM), which maps language objects to relational database tables.
If designers of these ORMs want to stay in the scalable apps game, they should take a serious look at using SimpleDB as a data store. Better yet, they should build ORMs from the ground up to integrate with SimpleDB.More than two years ago I wrote that Web 2.0 needs Data 2.0. The combination of EC2, S3 and SimpleDB is a toolkit for assembling massively scalable REST addressable web databases. Data 2.0 is now officially here. May the fun and games begin.
Nitin Borwankar is a database guru based in San Francisco Bay Area. You can find his writings on hisblog, TagSchema.
In some strange, twisted sort of a way, Google’s foray into social content, aka Knols, is a tip of the hat to entities whose results have started to show up really high in the search results — Wikipedia and Mahalo, for example. Mathew Ingram points out this can hurt not only them, but others as well. It is also a sign that Google (GOOG) is finally beginning to show its monopolist claws.
It is also a tactical admission by a company that believed that the machine was more powerful than the “human” that it isn’t the case. First, what are knols? Udi Manber, Google’s VP of Engineering describes knols as …
…a new, free tool that we are calling “knol”, which stands for a unit of knowledge. Our goal is to encourage people who know a particular subject to write an authoritative article about it…A knol on a particular topic is meant to be the first thing someone who searches for this topic for the first time will want to read.
He goes on to extoll the virtues of authors, and how they need to be highlighted. This is a smackdown on Wikipedia, where the individual contributions remain part of the collective and are not the focus — and rightfully so. As Nick Carr writes,
For the past year, Chief Wikipedian Jimmy Wales has been doing a lot of trash-talking about taking on Google in the search business. Now Google’s striking back.
Whether it will be successful or not remains to be seen. Now if you think about it, the knol, despite its fancy name, is nothing but a classic move by a quasi-monopolist that wants to ensure it keeps getting the raw material (in this case, content on knols) for free, so that it can keep selling it at a premium. I stopped believing in Google’s “do no evil” ethos a long time ago, so that is why I am worried by comments this like from Manber:
Our job in Search Quality will be to rank the knols appropriately when they appear in Google search results.
Which is to say that they won’t start making knols appear higher in the search results. Maybe it is the jet lag, but I don’t see knols as revolutionary as others are making them out to be. After all, you can set up a blog, make an expert page, maintain it and even put Google Ad Sense to monetize it. So how does this make knols special?
Sure there are APIs that allow knols to be shared with others, and Google maintains that it won’t give special weight to the knols, but who’s to know what they do inside their four walls. Search Engine Land’s Danny Sullivan, who has the single best post on this subject, is a bit disconcerted by knols, it seems.
Google using its page rank system to its own benefit. Think of it this way: Google’s mysterious Page Rank system is what Internet Explorer was to Microsoft in the late 1990s: a way to control the destiny of others.
(Check out my interview with Jimmy Wales of Wikipedia)