Crocodilian

Google's future is not what you think

<strong>RSS Undermines Advertiser Sponsored Business Model</strong>

Ad CTRs are dropping, software like AdBlock enables users to strip all ads from the web. But the real threat to the advertiser sponsored business model on the Internet is RSS feeds that strip ads from the content they support. See what this means for...

Yahoo to acquire Six Apart?

But Yahoo is working, got a blogging service out for Korea. [kr.blog.yahoo.com/]

Yahoo to acquire Six Apart?

I wonder if the strategy you propose is the best one.

It seems to me that if large sums of money are in play then the goal would be to search out and attract the best blogs. At this stage in the game very small incentives would get many on board and once the reputation of a particular set was good, that along with a share of future revenue would probably bring others.

With sets categorized in certain areas such as the financial, people would have a reasonably sized list to look at and with decent search engines focused on subsets the value of resources would increase.

While the concept of "let one million blogs blossum" is wonderful, I suspect the money is in sowing and developing those 10,000 that will attract readership and reputation.

But then again Yahoo has made no effort to do with this it's groups so the same approach may apply if they get into the blog business.

Five Internet Danger Signs To Watch For In 2005

<strong>Web 2.0 Weekly Wrap-up, 9-15 January 2005</strong>

Time for a look back at the week that was in Web 2.0...<p/>

SHOP price hike suggests increased profitability in Q2

Think of EBAY to WMT... Ebay does $3billion of sales and the customers pay ebay about 5% so that means that ebay is stealing from WMT about $50 to 60 billion of trade goods that say WMT or Target could be selling, or alternatively thinking about it one could say that EBAY is skimming the most profitable portion of a $60 billion a year business, with almost no capital employed.

Extend the parallel to SHOP and AMZN. Shop charges about 5% so a $100 million of shop revenue means that shopping merchants are selling about $2 billion of goods through the shopping.com network and shopping.com is taking a 5% fee to do this.

This is why amazon's market cap has not kept up with Yahoo and Google as one of the big 3 companies in the internet space. 3 years ago they were the only place to go to buy stuff on line, now Yahoo, google and others are aggregating the "trusted" stores sites and providing more competition for those who physically handle the goods. This is why AMZN's operating profit growth has slowed dramatically. The point I am making on the comparison of ebay to tgt or wmt is that ebay is skimming the most profitable portion of the sales transaction from the traditional merchant which 10 years ago was the only place to go and buy stuff, and I believe that the comparison shopping companies are going to do the same which is to skim the most profitable portion of the sale as the aggregator of customers that funnels the buyer to the merchant with the best price, delivery and service etc, almost like a real estate or stock broker, however again with little or no capital employed....

In summary the comparison shopping companies are shifting profit that was traditionally Amazon's or Blue Nile's or Wallmart.com's or Dell's etc to themselves.

Again, for disclosure we are long shopping.com.

TheStreet.com Says It's For Sale, But Will There Be Any Takers?

If advertising is so lucrative, wouldn't the low ad revenue suggest that there is unmined potential there? I think it's been the focus on the subscriptions and the polarizing personality of Cramer that have prevented tscm from being more ad friendly. Valuing it at a multiple of earnings doesn't make sense because it could be worth much more to a company with a large sales force.

Business Week says don't be too negative on Amazon

The assertion that Amazon's Consumer Electronics business outsold it's media products (CDs, books, & video) is very misleading. That they did so just for one weekend is one thing, but to do so for a whole quarter would be a massive change in their business model. Just for perspective, AMZN did about $3.3 billion in media sales in the first 3 quarters of 2004 and $1.0 billion in consumer electronics. To have consumer electronics beat media sales in any meaningful way would indicate huge changes for Amazon (not necessarily good ones).

Ameritrade tests $5 trades

Joe,

Thanks for the insightful and thoughtful comment. Quick question for you as an owner of AMTD: I also saw the Business Week interview with ET's CEO, and was baffled that he stated that he wants to acquire AMTD. AMTD has traded at a higher multiple that ET since the Datek acquisition because it has a larger brokerage business and it's a pure-play brokerage stock with more leverage to trading volumes. So ET would probably end up with less than half the combined company. (ET's market cap is currently less than AMTD's.) And AMTD has been a serial acquirer up until now. So, despite the obvious synergies of a deal, what's to think that AMTD would suddenly be willing to relinquish control to ET's management, and that ET thinks such a deal is plausible?

Any thoughts appreciated.
David

Technology Review highlights fragility of Google's competitive position

I have a lot of discomfort with this article. First of all the guy posts that he urged netscape to close web standards.

Destructive and probably impossible. He wanted Netscape to try and create it's own little AOL on the web?

The following statement is one of many subject to question:



----


These contests are extremely complex, but they have a common underlying logic, which Charles Morris and I described a decade ago in our book Computer Wars. The best technology does not always win; superior strategy is often more important. Winners do tend, however, to share several important characteristics. They provide general-purpose, hardware-independent architectures, like Microsoft’s operating systems, rather than bundled hardware and software, like Apple’s and Sun’s systems. Winning architectures are proprietary and difficult to clone,

-

Ok one of the examples he gave before was IBM's mainframe architecture. Believe me this intertwined hardware and software. The hardware was also cloned, that was the seventies Japanese computer industry. Only a court case allowed an independant software industry to develop.

AMD clones intel. Digital Research amoong others cloned DOS in the eighties, they did it better than MS but got little business. Windows is not for any practical use "hardware independant," it's welded to the Intel architecture.

The reality here is complex with permutations, but it is instead twisted to "prove" his thesis which despite a nod to the hundreds of competitors rising (yes google is threatened) that it will be MS that eats it.

First of all let's put the redesign of Windows into perspective. Yes MS at least temporarily won the browser wars, but it lost it's attempt to impose standards.

Microsoft products were redesigned and made exceedingly sophisticated to integrate *all* tools into the net. It was a replayy of Engelbart's augmentation systems, most people know bits and pieces such as the fact that you can look at spreadsheet columns in a word column, have them recalulate etc.

MS originally left all these powers on so it's powerful tools wouuld connect through email and other net connections. They are now off because any dummy can wreck a system using them, you have to turn them on.

Most people don't know about them. They have no idea of all the "meta" structures in word.

And Microsoft itself has announced that it is accepting the community decided standards of xml. These are the tags which allow things like rss. "Ontolgies" (xml hierarchies) to define things like medical records are being developed. To some extent they are shared.

These will work across a broad set of platforms including cell phones, but MS is going to coopt this and define standards that no other search system can use?

Nope. And much of the future of search depends on increasingly sophisticated and specialized approaches.

What can we expect in the future? Basic features such as figuring out "level" of discourse already in many word processors, crude AI parsing to translate complex queries, crude parsing to figure out if targets meet this, reputations systems to judge relevance and value of article... oh yeah and xml ontologies.

Lots and lots of things and approaches.

And MS will make the product that replaces all others?

The author announces with some triumph that interfaces will now have search built in. Useful, yes, but one wonders why Microsoft took so long to put easy capacities into their operating system, why the tags to associatively organize documents are so lacking and maybe, just maybe structures like the gmail you recently suggested using for backup might not evolve into the chosen base for many people.

Automatic backup, a system mantained externally, a simple interface easy for the majority of users, platform independant in the true sense in that you can access it from computer or cellphone or game box... And for applications share the resources, if you need to do some heavy processing on your photos maybe several hundred graphics processors will do it in parallel.

What the article argues is that because MS knows about the guts of Windows it has advantages, but most data people care about mining isn't in Windows. Most Window users needs rudimentary tools and a number of companies do a better job of providing looks into Windows than MS.

I don't know where this guy is coming from, but he is sggesting that IBM, Oracle... are going to say "Bill Gates wants us to store data this way so only he can get it! Boy we'd better start working overtime to change everything!"

Yep, just like there are only a "couple" of relevant search engines. There are a huge number. And some providers have made money 'data mining" corporate and other bases. This guy focuses on the unsophisticated user market, then extrapolates from that to the big corporate reality and all the huicy niche markets.

It's a surrealistic vision with no connection that I can see to the actual computer and social architectures.

Cramer on Internet stocks

There will be 125 million addtl. shares floated with the options lockup expiration on 1/14 and 2/14.

While it's public, i.e. in the prospectus, nobody seems to mention it until a day before the lockup happens.

GuruNet launches Answers.com

Actually answers.com is using Wikopedia as one of it's sources. Take a look at the guy who designed the mouse and is pretty bitter because we generally using far weaker tools than he prototyped in 1968, whose project broke up in part because of internal conflicts, in part because of protest against Vietnam and went to Xerox Parc and developed the altos which Steve Jobs saw except he didn't see the need for the objects (including links) and networking...

answers.com/main/ntque...=

Incidently I might some suggestions to the readers of this blog. Go to Wikipedia. Look up the financial and economic entries. If key words aren't there, define them, maybe dig up some good links.

You are using a system called the Internet which exists because thousands of people engaged in open collaborative effort, if it wasn't for them you'd be using AOL, being able to email to compuserve but not share resources and being somewhat jealous of the more powerful, but tech heavy bbs anarchy which would stil be a fraction of today's net.

To get some sense of the issues facing Wikipedia:

www.kuro5hin.org/story...

If nothing else look at the difference between an open source blog system and those built by the private market. Note comments are titled, threaded and can be linked to.

This is one features (diaries are another) that allows democratization of the "broadcast" model still implicit in most commercial blogs that assumes the blogger is the center and the various dialogues forming from comments are less important.

However if you look at the wikipedia critique you will see that many of the comments are at least as interesting and certainly develop many aspects of the subject.

- David Bennett

Five Internet Danger Signs To Watch For In 2005

Besides RSS there is "bloglines." One thing I find fascinating is that one can make certain directories public. Combine this with an adequete search engine (existing) and it becomes possible to search a selected set of blogs and other sites for various topics. Thus once the set of pages is made one can search several hundred sites for "investing China" comments in the last month. This reduces clutter.

And the impression that bloglines is giving is that they welcome suggestions, the technology can be shaped.

Short interest on Netflix looks uncomfortably high

Watch out what?

Do you think this means the stock is going to drop because lots of people are shorting it, or that lots of people are shorting it and are about to get badly burned because it's going to continue to rise?

Three lessons from the Google Zeitgeist

<strong>Carnival of the Capitalists</strong...

Welcome to this week's edition of the Carnival of the Capitalists. Today's show may not be big, but it's chock full of insight and ideas for the new year. In my favorite post of the carnival, Why Aren't There More...

IACI spin-off is an admission of failure

Not sure I understand your point - pretty clear, from the stock price, that failure was baked in - regardless of what Diller said on the calls. First of all, on 11/4/04, they announced an 80 million share buyback - so they're clearly working on that end. As for a dividend, I can partially agree if there aren't any good targets for Diller to buy - but that doesn't seem to be the case to me.

Also, if he is going to buy more companies, then I'd rather see a large cash component than more stock. We also don't know if he's going to pay a dividend - I'll be listening to the call to understand what he's going to do with IAC itself.

Clearly, however, he's admitting a number of things. First, he's admitting that the company's performance, across the entire business, was bad. Well, I think we know all that (I personally believe that IAC performs better in a down economy than in an up one, but that's for another day). He's admitting as well that there aren't the synergies that he pitched there would be - particularly with regard to HSN (which I never bought in the first place).

So why do it? Well, I think he's frustrated with the valuation relative to comps like Orbitz and has realized that the retail environment doesn't understand the business. He's also realized that having all these different types of companies limits his ability to do a larger transaction like merging with someone else that doesn't have the diversified businesses.

Have recent deals (meaning Lending Tree) been bad for shareholders? Yes. They've also been small. I had expected that he would have taken out Monster, or Rent.com (just purchased by EBay).

But does this deal unlock value for shareholders? In my opinion, it definitely looks like it does. The only question, in my mind, is what will he do with IAC? It seems like a pretty sad bunch of companies. Perhaps HSN will go to Malone to be merged with QVC. That is the outstanding question - but spinning of the company seems to be a good idea. Does it fix the problems with the travel business? No. But it does fix the story. (Full disclosure: long IACI).