Venture Capital Industry To Shrink Further, Sonsini Predicts

March 23, 2009
The ever optimistic NEA Partner, Pete Sonsini, is less so about his own industry

The ever optimistic NEA Partner, Pete Sonsini, is less so about his own industry

More venture capital firms are going out of business and the trend is accelerating.

Speaking today at SDForum’s Global Open Source Colloquium in San Francisco, NEA‘s partner, Pete Sonsini, didn’t sound very optimistic on his own industry.

“For the past 8 to 9 years, venture capital returns have not been there… It’s [the VC business] going to contract a lot,” adds Sonsini.

The venture capitalist pointed that at the height of the Internet bubble, there has been over 1,200 venture firms. In 2007, the number shrunk to 800, including 200 that were not very active. And today, only the ones posting good returns will survive.

Where are all those venture capitalists going? Retiring? Not quite.

“Some are going back into operations,” said Sonsini.

The advantage I see for an ex-VC to run your company is that s/he could ask her/his “friends” to fund it :-)


Travel Industry Could Find Real Value In Social Networks

March 23, 2009

Social networks have leapt from a technology to a social phenomenon.

Hotel referrals from social networks growing rapdily

Hotel referrals from social networks growing rapdily

Traffic to these sites – including the popular Facebook – is up 60 percent in the past year, with 2.5 billion visits logged in February 2009 alone.

Helping to drive the growth are older age groups, whose imaginations have been captured by the ease of connecting to friends online. In the past year, baby boomers (45 years and older) have flocked to Facebook and other sites faster than their younger peers.

With all this attention, it makes sense that companies will eventually find ways to benefit from social networks through the placement of advertising and marketing.

It is not surprising to me that the travel industry might be the first. The business is certainly in the right spot to try. According to Compete, referrals from social networks to hotel websites are up 151 percent since February 2008.

And why not? What better way to get a hotel suggestion than ask a friend?

The challenge is figuring out how to capitalize. Traditional ads flogging an inn or resort might be easily overlooked. Creativity will be needed, such as offering coupons for future travel to site members who describe trips (and accommodations) they enjoyed.

The benefits might be considerable. According to Compete, the conversion rate for hotel referrals from social networking sites is growing rapidly as well: up 98 percent since last year.


M&A Shoot Out Seen For The Datacenter

March 23, 2009

Three broad-shouldered tech titan have their sites on the datacenter.

They all have plenty of money in their pockets. And they all have plenty of desire to capitalize on the big changes coming to way corporations manage and store the tons of digital data they create.

Cisco, IBM and H-P have the datacenter in their sights

Cisco, IBM and H-P have the datacenter in their sights

So it is not hard to imagine a coming acquisitions binge as they try to out-position each other.

The heated battle went public last week when Cisco Systems announced its data center strategy and the introduced a blade server, taking it directly into the path of IBM and Hewlett-Packard.

Cisco, more so, raised $4 billion in February, which analysts believe it will use for mergers and buyouts to supplement the partnerships it is forging to strengthen its product portfolio.

It may not  be alone. IBM is said to be considering an acquisition of Sun Microsystems, with its tape storage and other datacenter businesses.

Meanwhile, H-P last year acquired integration and consulting firm EDS, dramatically increasing its capabilities in corporate technology services.

So, which companies are most likely on the block? According to UBS analyst Nikos Theodosopoulos, possible candidates include Juniper Networks, Brocade Communications Systems, Netapp,, Accenture, EMC, VMware and BMC Software.

Cisco could easily be the most aggressive.

However, “we view the convergence of storage and networking in the data center as at least two years away,” says Theodosopoulos, with the recession “the lack of confidence on unified standards pushing out this market.”


Microsoft BizPark Program To Attract 10,000 Startups In 6 Months!

March 23, 2009
BizPark provides free Microsoft software and services to startups, says corporate VP Danl Lewin

BizPark provides free Microsoft software and services to startups, says corporate VP Dan'l Lewin

If you’re a “hungry” or a “starving” startup and familiar with Microsoft’s software and development tools, you might want to consider the BizPark program, designed to help startups grow by giving them free Microsoft software and services.

I recently spoke with Dan’l Lewin, Microsoft’s corporate vice president for Strategic and Emerging Business Development, spearheading BizSpark that launched last November; and he now expects the program to attract 10,000 startups in its first 6 months.

With Bizpark, “qualified” startups get access at no charge – and for 3-years – to all of Microsoft’s core technology i.e development/server tools and software, to build a Web facing business at any scale, including the company’s cloud service, Azure.

Qualified startups? Less than 3 years old, less than a $1 million in anualized revenues and private.

The startups have to be “nominated” into the program by a Microsoft employee, “a champion”, or one of the 1,000 network partners (venture capitalist, angel investors, a tech transfer office of a University, mentors, government incubator…).

Below is the video excerpt of my conversation with Lewin.


Andy Grove To Receive National Inventors Award

March 23, 2009

Former Intel CEO and company pioneer Andy Grove will receive a lifetime achievement award from the National Inventors Hall of Fame on May 2.

Andy Grove isnt the only Intel veteran to be honored. Gordon Moore will enter the Inventors Hall of Fame

Andy Grove isn't the only Intel veteran to be honored. Gordon Moore will enter the Inventors Hall of Fame

More than 40 years have passed since Intel’s founding. And Grove has largely moved out of the Silicon Valley spotlight.

But the award is more than fitting, as it coincides with roughly 50 years of integrated circuit development in the valley.

A ceremony is being held at the Computer History Museum in Mountain View.

Along with Grove’s award, a raft of other semiconductor pioneers are being enrolled in the National Inventors Hall of Fame, including Intel co-founder Gordon Moore. Also on the list are Larry Hornbeck, Carver Mead, Frank Wanlass, George Heilmeier, Alfred Cho, Martin Atalla and, posthumously, Jean Hoerni, Ross Freeman and Gordon Teal.

The Hall of Fame was started by the U.S. Patent and Trademark Office.


Skype Targets Enterprise Telephony

March 23, 2009

Enterprise telephony is big business for Skype, potentially

Enterprise telephony is big business for Skype, potentially

In a blog post today, Skype announced the launch of the beta of “Skype For SIP,” a service geared to small and large businesses looking to reduce their telephony costs.

SIP is the leading voice over Internet protocol used in businesses telephony networks – there are millions of installations across the globe, says Peter Parks, a Skype’s spokersperson.

According to IDC, 438,000 IP PBXs were shipped worldwide in 2008.

With Skype for SIP, companies can use Skype’s VOIP network to make domestic and international calls using their existing telephone systems (PBXs and traditional phones) rather than their PCs.

Initially, Skype will charge about 2.1 cents per minute for calls to cellphones and fixed lines, but Skype-to-Skype calls will be free. Much cheaper than using a carrier. Now you’re talking!


Older Americans Embrace Technology Faster Than Younger Ones

March 22, 2009

The assumption has been that younger American use technology more readily than their older, more technophobic peers. This seems to be changing.

Baby boomers (45 years and older) are rushing to catch up to generations X and Y at an accelerating pace. In doing so, they are bring the digital age to the broad swath of the American population like never before.

According to a survey from Accenture, baby boomers sharply accelerated their adoption of digital technologies over the past year while members of Gen Y (18 to 24) went into something of a holding pattern.

The study found boomers embraced new technologies 20 times faster than their younger country mates, with special cravings for social sites, podcasts and blogs.

For example, boomers showed a 59 percent increase in their willingness to connect on social networks, compared with only a 2 percent increase for Gen Y. They demonstrated a 67 percent jump in reading blogs and listening to podcasts compared with essentially no increase for Gen Y.

This same trend held true over the past year for posting online video, playing video games and listening to iPods.

In other words, the technology gap between the young and old is closing.

The finding from the November and December survey of 3,000 online consumers caught Accenture executives by surprise “The acceleration by baby boomers struck us,” says Kumu Puri, Accenture’s senior executive of its consumer technology practice. “It was the rate of growth I found surprising.”

So what is the explanation for the shift? Perhaps older consumers want to stay relevant to the workplace with the assumption they will have to work until later in life, says Puri. They also might want to stay up to date with the nation’s changing social fabric.

On the other hand, the features in some of these technologies might not be changing fast enough to keep the interest of the young, adds Puri. As if to prove this point, Gen Y’s interest in the rapidly changing arena of mobile data technologies was greater than that of the boomers.

As well, saturation likely played a role. Gen Y’s adoption of social networks has slowed, but then 82 percent of them already belong. Their interest in game consoles is down, but then 70 percent already own a console.

Perhaps the survey’s most important message is to technology companies. “We think it’s going to require them to think differently about their businesses,” says Puri.


The Other German Software Company – Software AG – Hits $1 Billion In Sales

March 20, 2009

Germany’s other software company – Software AG – announced a milestone on Friday: 2008 revenue passed $1 billion for the first time.

Software AG is benefiting from its acquisition of webMethods

Software AG is benefiting from its acquisition of webMethods

The company sees more growth ahead. This year, sales are projected to grow 4 percent to 8 percent with margins improving.

The firm isn’t the only business software maker to dodge the worst of the economic firestorm sweeping the globe. This week Oracle also impressed Wall Street with its steady financial results.

Part of the explanation is the software business model. Customers pay regular, annual fees to maintain their software and receive updates. At Software AG, 60 percent of revenue and 70 percent of profits come from maintenance, upgrades and follow-on business.

But the company says as well that software continue to be a priority purchase for corporations determined to cut costs, find new efficiencies and position their businesses for growth.

The developer, which gets far fewer headlines than Germany’s SAP,  also is benefiting from its 2007 acquisition of webMethods. WebMethods has “become the company’s growth engine,” accounting for 44 percent of revenue in 2008, according to an e-mail.


Australian Internet Censorship List Includes Dentist Office

March 20, 2009

Interesting story from the Associated Press out of Sydney.

As has been widely reported, the government of Australia is considering censoring the Internet to block access to sites promoting child pornography and sexual violence.

Australia wants to censor sites promoting child pornography and sexual violence

Australia wants to censor sites promoting child pornography and sexual violence

But the Australian Communications and Media Authority has refused to release the blacklist of sites it wants service providers to filter from the public.

That list now appears to have been published on the Web site Wikileak – an organization that specializes in the publishing sensitive government material.  And it includes a dentist’s office, a kennel,  a school-cafeteria consultancy firm and online poker parlors.

(I couldn’t reach Wikileak to see for myself. The site seemed to be overloaded with traffic.)

The government’s first reaction was to hide: it claimed the list was not its list. But a manager at the dentist’s office confirmed that her site was indeed on the government blacklist, according to the Associated Press.

The question is whether Australia is taking a cue from China.


Tables Turning In Telecom With Video Trumping Voice

March 20, 2009

It used to be telecommunications carriers made a living connecting phone calls.

But this year could be the first where the new video services offered by AT&T and Verizon grow faster than the telephone services cable companies are selling to their customers.

This year could be the first where new video customers at top telcos exceed new cable voice customers

This year could be the first where new video customers at top telcos exceed new cable voice customers

This analysis comes from the Wall Street firm of Stifel Nicholaus.

Up to now, the cables have made inroads into the teleco’s home turf, stealing voice customers faster than AT&T and Verizon could attract customers to their new fiber-optic networks, over which they deliver high-speed Internet connections and TV programming.

In 2008, for instance, two Baby Bells added 1.8 million video customers while the top four cable companies, such as Comcast, signed up nearly 4.8 million voice subscribers.

But the video programming has been popular with consumers, and both telecommunications carriers have received high marks for customer service.
In addition, voice signups at the cable companies have slowed, with new subscribers falling from 1.2 million in the third quarter of 2008 to 870,000 in the fourth quarter, says Stifel Nicolaus.

“We view telcos as the likely market-share winners over the course of the next couple of years, as cable’s core video product will continue to be stripped away by competitive telco offerings,” the firm said.


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