Consolidation Begins In Online Ad Market As Adknowledge Buys Super Rewards

July 22, 2009

Adknowledge hopes to open up a new chapter of the online advertising market with its purchase of Super Rewards, a deal it announced Wednesday.

Its a new way to think about advertising, says Adknowledges Scott Lynn

"It's a new way to think about advertising," says Adknowledge's Scott Lynn

No financial terms were released. However, the transaction appears to be many times larger than any of Adknowledge’s previous takeovers. The company has made five acquisitions in two years recently buying the media division of MIVA for $11.6 million.

The deal pairs a more tradition approach to online advertising – Adknowledge runs a network for placing display, or banner, ads and positions itself as an alternative to Google or Yahoo – with Super Rewards’ focus on virtual currencies.

“It’s a new way to think about advertising,’ says Adknowledge CEO Scott Lynn.

The combination of the two will likely create a formidable competitor and one that will be closely watched. Virtual currency is already a $600 million market in the U.S. and has been growing at a 600 percent pace, according to some estimates. “It is clearly not a fad,” says Lynn.

As the largest virtual currency company, Super Rewards, a division of KITN Media, has said it will generate about $100 million in revenue this year. Adknowledge will have revenue in excess of $250 million.

The company offers its currency to developers of online games and applications on social networks, such as Facebook and MySpace. Consumers earn it by signing up for advertised offers and then redeem it for virtual goods and services in the games they play.

The deal could indeed be a trendsetter. With virtual goods a new bright spot in the social advertising market, other firms will look at ways to respond and capitalize for themselves.

The could make Super Rewards competitors hot properties.

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Posted by Mark Boslet

IPod Market Dwindles As IPod Touch And Apple IPhone Take Over

July 21, 2009

Apple steered a steady course through the difficult economy with quarterly revenue up 12 percent and profits ahead of Wall Street expectations.

But its iPod business hit a wall that analysts had anticipated for some time. Sales were down 11 percent in the company’s third quarter and units (10.2 million were sold) were off 7 percent.

Apples traditional iPod sales were down in the recent third quarter

Apple's traditional iPod sales were down in the recent third quarter

The company offered the explanation that traditional iPods (its Shuffle, Nano and Classic) were losing out to the iPod Touch and iPhone. The sales volume of the traditional models declined while the Touch rose 130 percent, said CFO Peter Oppenheimer on a Tuesday afternoon conference call.

The company expects a further decline over time as it “cannibalizes itself,” with the iPod Touch and iPhone, says Oppenheimer.

Caution aside, the iPod business will last for many more years, he added.

A slowdown in iPod sales has been predicted for several years as the market has become increasingly saturated with the tiny MP3 players. It seems to have finally arrived.

Apple investors were not overly concerned. The company’s shares rose 4 percent, or $6.60, in after-hours trading.

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Posted by Mark Boslet

Right Wing Defenders Of US Broadband Policy Out To Lunch

July 21, 2009

I’m continually bewildered by conservatives who defend U.S. broadband policy with a laissez-faire,  hands-off-the-market, ignore-the-facts claim it is working.

Conservative laissez-faire approach ignores the facts

Conservative laissez-faire approach ignores the facts

Imagine what online services might already be available in the states (including educational ones) if our broadband connections were three to four times faster than they are today.

But if we listen to the likes of the Progress and Freedom Foundation, we may never get there in the next decade or more.

In lengthy comments filed Tuesday with the Federal Communications Commission, W. Kenneth Ferree, president of the foundation, typifies the argument. He claims U.S. broadband markets are adequately competitive and generally successful at encouraging deployment. What is he smoking?

Of course he offers no statistics to back up his claim.

And he ignores perhaps the best source of data available worldwide on broadband deployment. Here is what the Organisation for Economic Co-Operation and Development said in May:

*The U.S. in 2008 slipped to 19th place in terms of the speeds commercial providers offer users. It was 13th in 2007;
*The average download speed in the U.S. is 9.6 Mbps, or a tenth of what is offered in Japan. Other countries ahead of the U.S.: France, Finland, Netherlands and Korea.

Many of the countries providing faster connections benefited from government intervention in their markets.

With this sort of data, how can we even listen to these guys at the Progress & Freedom Foundation? They simply ignore the realities.

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Posted by Mark Boslet

Top Ten Venture Deals Highlight Interest In Online Services, Healthcare

July 21, 2009

Second-quarter venture investing showed a modest 15 percent rebound from the depths of the dismal first quarter. But it was no great shakes.

Workday raised $75 million, the most of any IT company in the second quarter

Workday raised $75 million, the most of any IT company in the second quarter

Investments were still down 51 percent from a year ago, and there were no obvious signs of a coming uptick in spending.

In this environment, the top ten deals of the quarter reflected a restrained level of optimism about healthcare investing (now that the Obama Administration has raised hopes of healthcare reform) and online service delivery. These are themes are likely to continue in the months ahead, even if the negative cast of the industry remains.

The top deal of the quarter, according to the National Venture Capital Association, PricewaterhouseCoopers and Thomson Reuters, went to biotech firm Clovis Oncology of Boulder, CO, which raised $140 million. The company is working on anti-cancer drugs.

Three other healthcare transactions made the list: Hyperion Therapeutics of South San Francisco; PhotoThera of Carlsbad; and Cempra Pharmaceuticals of Chapel Hill, NC. Hyperion took in $60 million, PhotoThera, $50 million and Cempra, $46 million.

Companies developing software or online services were led by Workday of Pleasanton, which raised $75 million from Greylock Partners and New Enterprise Associates. The company develops software delivered as a service to human resources departments.

ExactTarget of Indianapolis raised almost $70 million and Revolution Money of St Petersburg, FL, took in $42 million. Security services company LifeLock of Tempe, AZ, raised about $40 million.

Also on the top ten list as well were Phoenix Services of Unionville, PA, and Fusion-io of Salt Lake City.

It is not surprising to see VCs pour buckets of money into later stage and expansion deals since the nation’s public markets refuse. (Most of the IT deals on the list fell into this category.) The question is whether there will be big paydays for some of these more mature companies.

My bet is there could be, but not until more sustained optimism returns to Wall Street.

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Posted by Mark Boslet

Samsung To Make Cuts In Greenhouse Gases But Waffles On Goal

July 21, 2009

Samsung has climbed abroad the global warming bandwagon. But the Korean conglomerate hedged its do-good initiative to protect the bottom line.

The electronics and semiconductor maker set out commendable goals for cutting greenhouse gases from its manufacturing plants. It said it would slash emissions by 50 percent in the five years through 2013. It also said it would reduce the carbon impact of its products by 84 million tons.

Samsung ties eco-manufacturing initiative to sales, not overall emissions

Samsung ties eco-manufacturing initiative to sales, not overall emissions

But then it backed away from the manufacturing targets – explaining that its reductions would vary depending on sales.

Global warming of course is the environmental crisis threatening the world’s climate (and indirectly its animal and plant life). Corporations with true altruism are stepping to up reduce emissions of gases, such as carbon dioxide, just as the administration of Barack Obama reverses the head-in-the-sand approach of George Bush.

But in Samsung’s case, the reductions will be made on a “financial emissions intensity basis,” whatever that is. In plain language, the company appears to have based its reductions on sales levels, not overall emissions.

To the company’s credit, it said in a Monday press release it would invest 5.4 trillion Korean won in the manufacturing and product efforts. But then why dent the initiative with the “per-sales” restraint? Unfortunately global warming is coming whether sales increase or decrease.

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Posted by Mark Boslet

TwitterGate: Google Is Weakest Link

July 20, 2009
Attempting to hacking a Google Apps account is easy, with apparently no limits and no warnings from Google

Hacking a Google Apps account is easy, with apparently no limits in the number of attempts and no warnings from Google to the victim

It was not about just a weak password after all.

The reason why 300+ confidential documents were stolen from Twitter’s Google Apps account was actually because of Google’s totally insecure login process.

Don’t believe me? Just try login at docs.twitter.com as… say “ev” like in Evan Williams, Twitter’s co-founder (“biz” would be another alternative). Of course, unless you really know the password or use some sort of an automated password tool, you won’t get in.

So Google is secure, right?

Wrong! For Sophos security analyst Chet Wisniewski, the problem is actually as simple as the vulnerability is huge: Google will not throw you out after, let’s say 25 attempts guessing Ev’s password.

Actually, Google doesn’t even seem to impose any limits on fraudulous attempts – I couldn’t get this confirmed by Google who will not talk openly about its security process.

Worse, because of Google’s lack of security, Twitter’s co-founder wouldn’t even know that someone has tried to breach into his account. “Even my Linux machine will warn me when my wife tries unsuccessfully to login,” jokes Wisniewski.

Its mind boggling that Google lets anyone try to reset the administrator password for Twitters domain!

It's mind-boggling that Google lets anyone try to reset the administrator password for Twitter's domain!

In the end, Google Apps is a security nightmare for its users as they have to totally rely on Google for all things security. “And because it’s in the cloud, there’s no way to prevent data leaking out, unless you opt for an on-premise version of Google Apps,” adds Jamz Yaneza, a threat research manager at Trend Micro.

And just for the fun of it, you can even reset the admin password for Twitter’s Google Apps domain. It’s that easy!

Google Apps needs security overall redesign before enterprises put confidential data

So does the TwitterGate means you shouldn’t leave your documents online? Well for McAfee, Trend Micro and Sophos security experts I talked to, enterprises should not put their most confidential documents online: it should be behind a firewall, and on the company’s servers.

However, in defense of Google’s security, 2-factor authentication solutions for its for fee Apps Premier edition are available from third-parties that will solve the weak password issue; which Twitter now uses.

But this should not prevent Google from redesigning it’s security process to fully protect all its Google Apps customers, as well as users of the company’s consumer apps.

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Posted by TechPulse 360

Healthcare Is A Venture Capital Bright Spot And Psilos Group Explains Why

July 20, 2009

The economy is down, the IPO market stalled and venture capitalists are sitting on their wallets instead of opening them.

So why is an admittedly apprehensive investor like Albert Waxman spending money at roughly the same pace as last year?

I think you will see entrepreneurs respond to the healthcare crisis, says Psilos Albert Waxman.

"I think you will see entrepreneurs respond to the healthcare crisis," says Psilos' Albert Waxman.

“We’re very cautious,” acknowledges the CEO and senior managing member of Psilos Group. But startup pricing is down and fewer firms are willing to compete for deals, he says.

The net result is Psilos expects two and three deals this year, including an investment in Gamma Medica-Ideas that Waxman hopes to close within 45 days. Gamma Medica develops more effective and lower cost technology for breast screenings.

Waxman is clearly not alone in applying a steady approach to venture capital. Healthcare proved a relative bright spot in an otherwise dim VC investment horizon in the second quarter.

Spending on startups rose 62 percent from the first quarter and for the first time outpaced investments in information-technology companies. The sector sprung back to spending levels before the financial collapse last fall.

Waxman says his aim is to find companies using information technology in the health-care market. There are enormous opportunities for these firms, especially with the health-care push coming from the Obama Administration.

“I think we will see entrepreneurs respond to the healthcare crisis and the business opportunities it creates,” says Waxman.

For many VCs, healthcare is becoming the new frontier. The industry has a desperate need of technology to improve efficiencies and lower costs. Thirty years into the technology revolution, its use of technology is still crude, says Waxman, and this at a time when the world needs big changes in patient care.

Whether there is money to be made is another question. But for now, change is on the horizon and that spells opportunity for those willing to take a chance.

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Posted by Mark Boslet

Clean Tech Investing Is Victim Of Downturn

July 20, 2009

Venture capital investing sprang back a bit in the second quarter as general partners poured money into healthcare startups.

But clean-tech investing continued to suffer. Investment levels fell back to the early days of the category in 2006.

Green tech investing was down 70 percent in the second quarter

Green tech investing was down 70 percent in the second quarter

Clearly concerns such as falling demand and over capacity weighed heavily on general partners. With an energy bill taking a back seat to healthcare, government policy also appeared a bit murky to investors.

According to Dow Jones VentureSource, venture capitalists put just $317 million into clean-tech deals in the second quarter. While that is up 52 percent from the tepid first quarter, it is down a whopping 70 percent from a year ago.

Investments in renewable energy companies fell an even greater 75 percent. Only 16 deals were done compared with 30 last year.

Expect the cold feet to continue. Venture capitalists will likely need to see the demand picture brighten before thawing out their wallets.

Unless, of course, global warming acts first.

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Posted by Mark Boslet

Venture Investors Shift To Healthcare, Abandon IT

July 20, 2009

Venture capitalists reopened their doors for business in the second quarter – at least a crack – but abandoned their traditional focus on information technology for healthcare.

Source: Dow Jones VentureSource

Source: Dow Jones VentureSource

Money placed with startups rebounded 32 percent from the first three months of the year to $5.3 billion, even as it fell 37 percent from the same quarter last year, according to Dow Jones VentureSource.

General partners appear to be convinced the Obama Administration’s push for healthcare reform will bear fruit. Investing in healthcare startups jumped to levels from before the financial crisis hit last fall.

Venture firms put $2.2 billion into healthcare portfolio companies, a remarkable 62 percent improvement from the first quarter and only a 14 percent decline from a year ago.

It was the first time healthcare investing surpassed that of information technology, where checks written to IT startups fell 41 percent. Leading the IT decline was the software sector. Investments fell 52 percent.

The information-technology total was the lowest in 12 years, according to VentureSource, and suggests the confidence in the high-tech economy hasn’t returned.
It also says something that is becoming increasingly obvious to policy makers in Washington and business people across the country: the economic rebound is going to be slow and painful.

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Posted by Mark Boslet

Users Of Online Search Becoming More Sophisticated

July 17, 2009

Most of the buzz in the online search space has been about Bing, Microsoft’s new search engine.

The improvements in Bing, or so the common wisdom goes, will help Microsoft better compete with market leader Google.

Search queries are becoming more complex and longer, says Google

Search queries are becoming more complex and longer, says Google

But the praise being heaped on Bing may be diverting attention from an even more important industry development: that search users are becoming rapidly more sophisticated, and engines of all types are having a difficult time keeping up.

So far the Bing magic hasn’t played out in the market. According to comScore, Bing did give Microsoft a modest boost in the June rankings. Its market share grew 0.4 points to 8.4 percent. But the gain came entirely from Yahoo, not Google.

Google held its own, with its share unchanged at 65 percent. Yahoo slumped 0.5 points to a 19.6 percent share.

That may have something to do with growing consumer expectations. On a conference call Thursday evening, Google Senior Vice President Jonathan Rosenberg said the company has noticed power users are running more complex searches with longer queries and higher expectations.

He said Google has tried to respond with its new options feature.  But much more needs to be done in the realm of adding personalization and intelligence to search responses.

“Search is still an unsolved problem,” says Google CEO Eric Schmidt.  So running hard with new products is a little like standing in place. The target keeps moving.

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Posted by Mark Boslet

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