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Amazon: Kindle Growth Is “Very Strong”, But That’s All We’re Saying

July 24th, 2009 admin No comments

During this afternoon’s Amazon Q2 conference call, there was one topic that was clearly on many analysts’ minds: the Kindle. With the recent release of the Kindle DX and the Kindle 2 only a few months before it, the financial success of the device is still very much a mystery, especially since Amazon has long been tightlipped about releasing any Kindle sales figures. CFO Tom Szkutak, who led the call, kept to that script.

Szkutak had little interest in getting into questions about the Kindle, other than to repeat that growth was “very strong” multiple times. When one analyst asked what kind of trends Amazon is seeing with regard to the Kindle cannibalizing book sales, Szkutak danced around the question, stating, “We’re not doing any updates in terms of the units, in terms of specific numbers. We’re seeing very good growth. It’s exceeding our expectations.”

One analyst also asked about Amazon’s recent decision to lower the price of the Kindle to $299, attempting to explore if the move was a result of cheaper production costs or if Amazon did it to increase market penetration. Szkutak vaguely responded, saying that the Kindle was currently getting better economies but not really answering the question: “We certainly are getting better economies, and given the growth in Kindle devices..we think that’s an appropriate price for customers, we think it’s helpful given the growth that we’re seeing.”

Another analyst asked about Amazon’s plans to finally bring the Kindle to an international audience (it has only been available in the US until now). Szkutak didn’t rule out the idea, but didn’t commit either, stating, “Kindle International is certainly an opportunity. Our customers have certainly expressed an interest. We’ve had a practice of not talking about what we might do, but certainly it’s an opportunity.” I’ll be very surprised if we don’t see more news in this area soon, as this is a huge untapped market.

Amazon’s lack of transparency is especially frustrating because the Kindle may well be something of a canary in a coal mine for the entire Ebook industry. No other E-book device has gotten as much exposure, and frankly the Kindle is likely the best device out there. Without statistics about how well Amazon’s Ebooks are selling, or even knowing if the Kindle is going to be available to the (very large) international audience, publishers and authors being left in the dark.

We’ve done our best to shed some light on the matter: according to our historically reliable sources, as of April, the Kindle 2 had sold 300,000 units at a pace two times that of the original device.

We should note that while Amazon’s acquisition of Zappos was briefly brought up during the call, few questions were focused on it. Also interesting: only a few hours before the call, Amazon CEO Jeff Bezos apologized for its bizarre decision to remotely delete copies of 1984 and Animal Farm from the Kindle.

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Microsoft’s Money Pit. Every Dollar Of Online Revenue Is Wiped Out By A Dollar Of Loss

July 24th, 2009 admin No comments

Microsoft just announced quarterly earnings and they are not pretty. Total revenues are down 17 percent to $13 billion, and net income is down 29 percent to $3 billion. Every business got hit hard, but the worst-performing business by far was the online business. It had the biggest operating loss of $732 million, which was $1 million more than its revenues of $731 million.

That means that every dollar of online revenue was wiped out by a dollar of operating loss. And those operating losses really stack up. For its fiscal year (which ended in June), the online business showed an operating loss of $2.2 billion, nearly two times as much as the year before.

Despite the much-ballyhooed launch of Bing, search revenue was flat in the quarter was flat. You’ve got to wonder how much of the ballooning operating loss is going into Bing, and whether those investments will ever pan out.

The client business (Windows), isn’t doing so hot either. Revenues in the quarter were down 29 percent to $3.1 billion, and it made $1 billion less in operating profit. The Entertainment business (Xbox) saw quarterly revenues decline 25 percent, but managed to reduce operating loses to only $130 million. 1.2 million Xboxes were sold in the quarter, and each Xbox owner has now bought an average of 8.6 games. At least servers and Tools under Bob Muglia seems to be holding up. Its revenues of $3.5 billion were only down by $200 million and its operating profit of $1.3 billion was essentially flat. (Click on segment breakdown below to enlarge).

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Review: T-Mobile myTouch 3G With Google Android

July 24th, 2009 admin No comments

It’s been twenty long months since the announcement of Android and nine months since its handset debut, but it’s finally picking up steam. On August 5th, the HTC-made T-Mobile myTouch 3G will become the second Android handset to make its way to the shelves of a US carrier. In the time its taken for T-Mobile to cross the t’s and dot the i’s, we’ve already had a chance to review HTC’s next handset: the bigger, badder, and (arguably) better Hero.

Alas, the Hero isn’t yet confirmed for any US carrier, so we’ll take what we can get. Was the myTouch 3G worth the wait? Read on for our review.


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Google’s Ronny Conway Joins Andreessen Horowitz

July 24th, 2009 admin No comments

Ronny Conway, an Associate at Google Ventures, has resigned from Google and joined the newly formed Andreessen Horowitz, we’ve confirmed. Conway, the son of prominent angel investor Ron Conway, has worked at Google for the last six years in a variety of business development, sales and venture roles.

This is the first confirmed outside hire by Andreessen Horowitz, a $300 million venture fund founded by Marc Andreessen and Ben Horowitz. The fund was first announced earlier this month.

Conway will become an Associate at the new fund starting sometime in August.

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The Online Payment Wars Continue: PayPal Officially Announces Flexible API

July 24th, 2009 admin No comments

While Ebay’s Q2 earnings yesterday showed that its marketplace business was slow, the company’s revenue was boosted by continued growth in its online payments business, including PayPal and BillMeLater. Both businesses saw 11 % growth in revenue in the quarter, compared to a year ago, and saw a 20% increase in registered accounts from last year, with 75.4 million accounts. On the heels of this good news, today PayPal is officially announcing the launch of its flexible payments API, called Adaptive Payments (which we scooped a few weeks ago here). The new platform will officially open up to developers in November but will be accepting beta testers until then.

Basically the new API is designed to give developers full access to PayPal’s features, allowing them a lot more freedom in building applications which include the ability to accept and distribute payments. PayPal’s President Scott Thompson says that developers will basically be able to do anything they want off of the PayPal platform, emphasizing the “global connectivity” of PayPal (transactions can be conducted in 19 currencies). He says $2000 flows through PayPal’s system every second, 365 days a year. Thompson says that what differentiates this new innovation is the ability to maintain security, while still extending the API far from PayPal.

Very similar to Amazon’s Flexible Payments Service (FPS), the Adaptive Payments API handles payments between a sender of a payment and one or more receivers of the payment. Adaptive Payments allows almost the same functionality as FPS. The new API lets developers become a payment aggregator, which we are told is something against PayPal’s current Terms of Service. Amazon’s FPS also lets developers aggregate payments. Moreover, Paypal’s Adaptive Payments has built in micropayments support, another feature of FPS. PayPal says that they think they can be a viable micropayments vehicle, but won’t reveal more information about what the support entails.

Microsoft cloud computing platform Azure is also utilizing Adaptive Payments to let developers who are building applications using PayPal seamless integrate their applications with Azure’s platform. Microsoft is working with PayPal to help developers easily embed billing and payment functionality into applications built off Azure and will offer interoperability between Azure and Adaptive Payments.

Some of the offerings of Adaptive Payments are sure to be attractive to developers. In what PayPal calls “Chained Payments,” developers can create applications that enable a sender to send a single payment to a primary receiver who may keep part of the payment and pay other, secondary receivers with the remainder of the funds. For example, an application might be an online travel agency that handles bookings for airfare, hotel reservations, and car rentals. The sender sees only the travel site as the primary receiver. But that site could allocate the payment for its commission and the actual cost of services provided by other merchants. PayPal would deduct the money from the sender’s account and deposit it in both the primary travel site’s account and the secondary receivers’ accounts.

PayPal has decoupled the approval process from the transaction, giving sellers more flexibility of how and when sender approval process can take place. PayPal says that over the next year, they plan to unveil more APIs to encourage developer to build of the platform.

Adaptive Payments will also offer “Parallel Payments,” which would let a sender send a single payment to multiple receivers. An example of this type of application might be a shopping cart that lets a buyer pay for items from several merchants with one payment. The shopping cart would allocate the payment to the merchants who actually provided the items. PayPal would then deduct money from the sender’s account and deposits it in the receivers’ accounts. Michael Ivey, founder and CEO of TwitPay, a way to send money over Twitter, is using PayPal’s Adaptive Payments API. Off of TwitPay’s payments platform, you can pay multiple recipients in one PayPal transaction.

LiveOps, an outsourcing marketplace and platform, is using the Adaptive Payments platform for several months. The platform uses PayPal to invoice; money is dynamically routed to workers from businesses. LiveWork says the advantage of using PayPal is that there is no credit card or financial information stored on LiveWork, with security being completely outsourced to PayPal.

PayPal says that pricing for Adaptive Payments will be announced in November. It’s unclear if the plan will be competitive with Amazon’s FPS pricing. The launch of the new API and services should surely heat up the competition between PayPal and Amazon (which bought Zappos yesterday). Amazon now has Amazon Payments and the beta of FPS, which allows more flexibility for developers than PayPal’s previous Direct Payments API offering. Now, PayPal has struck back with its own flexible API and is trying to engage the developer community to freely build applications off of its platform.

PI, so it should be interesting to see where developers go.

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TicketFlow: You Know, For Tickets

July 24th, 2009 admin No comments

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I was not aware that the live event marketplace was so crowded. Apparently there are hundreds of ticket websites out there including StubHub and TicketMaster. Luckily, TicketFlow is there to make sense of it for you.

TicketFlow is the self-described Kayak of ticket sites. You type in an artist, team, play, or musical and it digs through the various websites to find tickets that match your requirements. Want to see a cheap Bob Dylan concert? Head down to Virginia. Want to watch Toxic Avenger: The Musical? Why?

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The found, Justin Hartzman, worked with a buddy to aggregate all of the ticket sites into one simple-to-use interface. One other site, FanSnap, performs a similar function and also allows you to chose your seats at the venue.

The system also includes a suggestion engine. You tell it what you want to do and in what city – concert, play, sporting event – and it will find events in your time frame and budget. It seemed to work fairly well in New York except for an unfortunate typo in the application dialog but, as we all know, nobody is perfick. See if you can spot it…

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Generally this is an interesting and untapped market. The live music and event discovery world is still in its infancy and aside from the obvious sources – mostly weekly papers and some fan sites – you’re not going to hear that Willie and Bobby will be playing in your neck of the woods until it’s too late. The most important aspect here is obviously price comparisons, something that was once time-consuming.

Sadly, this does not do a search into the infinite future, ensuring that my life will be forever free of the pan flute for months – if not years – to come.
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Gmail Tries To Make It Easier To Unsubscribe From Spam Newsletters, But Fails

July 24th, 2009 admin No comments

When it comes to email, less is more. So I applaud Gmail’s efforts to try to reduce all the unwanted emails in my inbox. Its latest attempt to make it easier to unsubscribe from unwanted email newsletters is well-intentioned, but falls flat on its face in its current form. When you report a newsletter as spam, you may now see the notification box above asking you if you want to automagically unsubscribe as well. You would click “Unsubscribe and report as spam” and Gmail will unsubscribe for you.

Sounds too good to be true, right? Well, that is because it is. First of all, it only works for messages which include a “List-Unsusbcribe” header in the email with an accompanying “mailto” URL. No self-respecting spammer would include those. But wait, it gets worse. The feature is purposely not activated for known spammers. Brad Taylor, writes on the Gmail Blog:

This only works for some senders right now. We’re actively encouraging senders to support auto-unsubscribe — we think 100% should. We won’t provide the unsubscribe option on messages from spammers: we can’t trust that they’ll actually unsubscribe you, and they might even send you more spam. So you’ll only see the unsubscribe option for senders that we’re pretty sure are not spammers and will actually honor your unsubscribe request. We’re being pretty conservative about which senders to trust in the beginning; over time, we hope to offer the ability to unsubscribe from more email.

Just to repeat that: the unsubscribe-from-spam-newsletters feature does not work for known spam. Okay, I guess that makes sense. It’s a losing battle, and spammers will obviously not cooperate. But why then combine this feature with the report-spam button in the first place?

The Gmail team should separate the two functions. It should just make an unsubscribe button appear on email newsletters which contain the correct header information. I get annoyed at all the email newsletters that come into my inbox, but they are not all spam. Some of them I even subscribed to myself in moments of weakness, although most of them I have no idea how they start appearing in my inbox. But even for the unwanted ones, I realize it is not necessarily the publisher of those email newsletters who signed me up. And not all of them deserve being labeled as spam. I just want an easy way to unsubscribe.

Can you give that to me, Gmail?

Update I heard back from Google. They say a regular “unsubscribe” option already exists. It’s really hidden. You need to click on “show details” at the top of the email, and then there should be an unsubscribe option for those email newsletters with the proper header information. It would be much better if they just made it a big, glowing “unsubscribe” button that appears when available.

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The Mac Versus PC Debate Has Never Been Clearer

July 24th, 2009 admin No comments

mac-pcOur goal is not to build the most PCs. It’s to build the best.

That was Apple COO Tim Cook two days ago during Apple’s quarterly earnings call. Sure, it may sound like spin from an executive who doesn’t have a better answer as to why Apple isn’t competing in the low-end of the market, and thus, gaining market share. But it’s not.

You need look no further than numbers released today by NPD to understand Apple’s strategy. Its revenue share of the “premium” price market — that is, PCs over $1,000 — is a staggering 91%. This means that 9 out of every 10 retail dollars that is spent on PCs in that price range, goes to Apple, as Betanews’ Joe Wilcox points out. That, for lack of a better word, is insane.

Analysts and journalists are often quick to point out Apple’s relatively low overall market share (less than 10%). But that completely misses the point of Apple’s Mac business. If Apple wanted to make a range of low-end PCs, it absolutely could. And such machines would sell like crazy, boosting Apple’s market share. But there would have to be some trade-off in quality, and perhaps more importantly to Apple, to its high margins. And as it has proven time and time again, it has no desire to give up either.

Instead, Apple is content to keep churning out its high-quality, high-margin machines, and watch the profits roll in. If it happens to gain market share as a byproduct of that, that’s great. You can’t be so naive to think that Apple doesn’t care about that at all, of course it does, but it’s clearly a secondary goal, which most people don’t seem to understand.

It’s a metaphor that’s often used, but a way to think about it is if Windows-based PCs as a whole are thought of as a top selling car like the Toyota Camry, Apple’s Mac PCs would be more like a luxury car, like a Porsche. Porsche sales are just a fraction of Camry sales because it does not sell any models in the low-end price range. But at the same time, Porsche makes more money on each car sold and maintains a premium branding. If Porsche started selling cheap cars, it would move a lot more units, but it would no longer be the Porsche brand that we know.

That’s not to say the Camry sucks or that the Porsche is perfect. They’re just two different cars that cater to different markets. And they represent the two different goals that most Windows-based PCs have (market share) versus Apple’s Mac PCs (high-end revenue share).

And that’s why Microsoft’s recent Laptop Hunter commercials really never made a lot of sense. Sure, from a marketing perspective, I understand the idea: It’s a down economy, lets play up the fact that our PCs are cheaper. But in many of the spots, the shopper’s stated desired PC was simply not something that Apple even made. In the famous first commercial, Lauren wants a laptop with a 17-inch screen for under $1,000. Okay, Apple doesn’t make that product. So of course she’s not going to buy a Mac.

The real point is that people who are shopping for PCs where price is the key factor, were never going to buy Macs anyway. They never have. There is a reason Apple still has less than 10% market share. Did Microsoft need to spend millions of dollars on commercials to tell us that?

Instead, those commercials set up a narrative around the bifurcation of the PC-buying public. And today’s NPD numbers are the perfect ending to that story. If you’re a consumer looking for a bargain PC, you’re happy to save money buying a PC. If you’re looking for a premium PC, you’re happy to spend more money buying a Mac.

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Kontera Raises $15.5M For Annoying In-Text Advertising Technology

July 24th, 2009 admin No comments

In-text advertising technology provider Kontera has raised $15.5 million from its current investors Sequoia Capital, Carmel Ventures and Tenaya Capital, the former venture capital arm of Lehman Brothers. This is the second Israeli startup to announce multi-million VC rounds today after 5min informed the public about its $7.5 million Series B round, and once again first reported by business news site Globes.

Kontera provides publishers with real-time semantic analysis technology that can enhance content and other information to dynamically link terms that most accurately represent and predict user-intent and engagement. This is known as in-text advertising, and you might recognize the double-underlined words on some sites that make display ads pop up when you hover your mouse over them. Other market players include Vibrant Media and Infolinks.

Personally, I find this type of contextual advertising annoying from a reader perspective, and I don’t think I’ve ever clicked on any ads launched by in-text advertisements, unless it was by accident. But I keep hearing from publishers and advertisers who have implemented campaigns using in-text advertising that it’s actually a highly effective way of pay-per-click promotion, and you wouldn’t be the first to tell they were skeptical at first but lauding the technology afterwards.

With the fresh injection, the total amount of capital pumped into the company has now reached $32.8 million. The $10.3 million Series B round now dates back nearly two years.

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AOL May Spin Bebo Off Into Independent Company

July 24th, 2009 admin No comments

Interesting off hand comment by AOL CEO Tim Armstrong at the Fortune event this morning. Bebo, the social network AOL paid $850 million for in 2008, wasn’t mentioned on the list of AOL’s core product goals going forward. Late in the interview, though, Armstrong was asked where Bebo fits into that strategy. His answer, roughly quoted “Bebo may be better off under AOL Ventures, with it’s own P&L.”

Translation – AOL is looking to spin Bebo off into an independent company, and they’ll retain an equity interest via AOL Ventures.

This is pretty much in line with what he told Erick during an interview last week. During that interview he distanced himself from the acquisition: “I was not here during the acquisition of Bebo. Social networking was an unclaimed category, and growing quickly.” The reason he placed it in AOL Ventures is so that it can “focus on improving the consumer product,” he said. Armstrong added that one of the purposes of AOL Ventures is “to keep things on track that have not been on track. ”

But he noted that there is another purpose for AOL Ventures as well. In areas where product synergies “have not been realized, it gives us an opportunity to take it out of AOL, to make it groomed, and maybe attract outside investment.” It was pretty clear he was talking about Bebo.

AOL acquired Bebo in early 2008 for $850 million. But the property has languished since then and it has not been integrated much at all into AOL proper. Bebo had 8.7 million unique visitors in the U.S. in June, 2009, 20 percent down from its peak in March, 2009 (comScore). Globally, it is holding up better, with 24.2 million uniques in May, 2009 down 12 percent since March, 2009. But if Facebook is worth $6 billion to $10 billion, Bebo might still be able to get a decent valuation if it can hold onto its users.

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