Friday, October 29, 2010

The Latest from TechCrunch

The Latest from TechCrunch

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Take-Two Interactive Software CEO Ben Feder To Step Down

Posted: 29 Oct 2010 05:56 AM PDT

News just got out about a serious management transition over at Take-Two Interactive Software, the major US-based publisher, developer, and distributor of video games and video game peripherals.

Chief exec Ben Feder has decided to step down, effective January 1, 2011, in order to pursue plans to travel in Asia with his family for an extended period.

Strauss Zelnick, Take-Two's Executive Chairman, will take on the additional role of Chief Executive Officer.

Karl Slatoff, an EVP of Take-Two since 2008, has been named to the newly created role of COO. Slatoff previously worked with BMG Entertainment and The Walt Disney Company.

The news comes after the company earlier this week announced that it is changing its fiscal year to end March 31 instead of Oct. 31 to align its financial reporting more closely with the seasonality of its business.

Take-Two’s headquarters are in New York City, with international headquarters in Windsor, United Kingdom. Development studio locations include San Diego, Vancouver, Toronto and Austin, Texas.

Take-Two, which wholly owns 2K Games and Rockstar Games, has developed and published many notable games, including the Grand Theft Auto series, the Serious Sam shooter series, the Midnight Club racing series and BioShock.

The company was the target of hostile takeover bids from rival Electronic Arts issued in February 2008. The multi-billion dollar bid expired August 18, 2008.



AOL Sells Buildings, Land To CB Richard Ellis Realty Trust For $144.5 Million In Cash

Posted: 29 Oct 2010 05:31 AM PDT

AOL, our new owner, this morning announced that it has entered into an agreement for the sale of four office buildings it says it no longer utilizes, in addition to two undeveloped parcels of land on the East side of its Dulles campus. The buyer is CB Richard Ellis Realty Trust, who’s taking over AOL’s corporate park for $144.5 million in cash.

AOL says this means it has approximately $750 million of cash on hand as of October 29.

The deal is expected to close by mid-November and is subject to customary closing conditions.

In a statement, AOL EVP and Chief Financial and Administrative Officer Artie Minson says the company had already moved its Dulles workforce to one side of the campus, making the rest of the property effectively a “non-core asset”. He adds:

“With a long-term lease in place it made sense for us to pursue a sale to realize maximum value of these assets and add significant cash to our balance sheet."

The combined total office space CB Richard Ellis is buying is approximately 700,000 rentable square feet in the four buildings and is known as Pacific Corporate Park. The two parcels of undeveloped land total approximately 22 acres.

AOL, which originally purchased the land located on the East side of its campus back in 1996, had vacated the office buildings by early 2010.

AOL continues to have over 1,800 full-time employees on its Dulles campus in three office buildings. AOL also maintains two data centers in Virginia — one on its Dulles campus and one in Manassas.

(Disclosure: TechCrunch was acquired by AOL back a few weeks ago. We didn’t, however, have prior knowledge to this deal.)



Yahoo Embedding Groupon Code In Global Distribution Deal

Posted: 29 Oct 2010 05:26 AM PDT

Groupon is accelerating pretty fast. It’s signed a partnership deal with eBay recently and there continue to be rumours of a Yahoo acquisition.

However, just as Mike Arrington confirmed in the above analysis piece, we’ve heard today that Yahoo is in the process of implementing a global distribution deal with Groupon, not an acquisition.



Cloud Computing Startup Nomadesk Raises $7 Million To Support US Expansion

Posted: 29 Oct 2010 02:57 AM PDT

Nomadesk, formerly known as Aventiv, offers one of the most elegant cloud-based data sharing, synchronization and storage solutions on the market, and you’ve probably never even heard of it.

Perhaps this will change in the near future, as the Belgian company has just raised $7 million in Series B financing to support its plans for expansion in North America.

The capital injection comes from previous backer GIMV and a new investor, BAMS Angel Fund.

To bring its solutions to market, Nomadesk partners with operators and OEMs, and it’s precisely that indirect business that it aims to accelerate using the new funds. The company already boasts agreements with leading ISPs and hosting companies in Belgium, namely Telenet and Hostbasket, but has also struck partnerships with US-based Novatel Wireless and Canada's Bell.

With the new funds, Nomadesk intends to expand its international presence as its pipeline for new partners in North America and other parts of the world is filling up nicely, according to the company.

Nomadesk, for the first time to my knowledge, also publicly disclosed who sits on its board of directors. Apart from management and investor representatives, the board includes people like Yves Michali (formerly at Novell, Microsoft, Mobiclick and Groove Networks) and Yvan Morel de Westgaver (previously an executive at EDS and now an active private equity investor).

Nomadesk has now raised more than $10 million in venture capital.



Boticca, An Online Marketplace For More Original Accessories

Posted: 29 Oct 2010 01:47 AM PDT


Boticca is an ecommerce startup launched this week by former Accel Partners associate Avid Larizadeh and Kiyan Foroughi as a unique marketplace for original jewelry and other accessories. In the same conceptual online accessory space as Gemvara and Jewelmint, what sets Boticca apart from most ecommerce sites is its design, curation, content and community features.

Says founder Foroughi, “The most singular thing about the site is how the site combines fashion aesthetics and ecommerce usability in a way that hasn’t been done to date.”

In fact Boticca’s website is beautiful, simple to navigate and user friendly. Aside from sorting by “Jewelry,” “Bags” and “Accessories” as well as staff picks, you can also search and scroll through individual designer profiles through the “Designers” page. Each designer profile allows you to read background information and actually interact with the designers, hence Boticca’s tagline “I’d rather wear a unique story.” The profiles also show the most popular pieces and commentary for each design.

The Boticca team including Chiara Cirella, formerly a designer for the Italian National Opera, searches internationally for its unusual designs and has already amassed a community of over 130 designers from 40 countries. Would-be designers can apply through the site and need to uphold the “Designer Charter” in order to ensure quality of both product and customer service.

Based in London, Boticca is currently bootstrapped as well as funded by angel investors from Europe and the US. Aside from getting celebrity traction from the likes of Lady Gaga and othersBoticca is also in the running for TechCrunch’s The Europas European startup competition. You can take a look at other TechCrunch Europe Awards finalists here.



The Banned White iPhone 4 Promo [Humor]

Posted: 29 Oct 2010 12:09 AM PDT

If you waited for the white iPhone, you’re an idiot. You’re a stupid human being who has waited 5 months for a phone that’s a different color. That you’re just gonna put a cover on anyway. So you’re a fool. In fact, why don’t you go get an EVO or something? Or a Droid. 2. They apparently does.

Back in July, a group named jLe Productions made a great mock iPhone 4 commercial addressing the antenna issues. Now they’re back. And this time they have a promo for the mythical white iPhone 4. And once again it’s great.

Watch it above, or watch their earlier spoof below.

And here are some of our other favorite humorous Apple-related videos from the past few months. Yes, there have been a lot of them:



Siemens Wins $466 Million Contract To Build 70 Green Trains

Posted: 29 Oct 2010 12:06 AM PDT

Siemens has snapped up a $466 million six-year contract to build 70 electric trains for Amtrak.

The deal, which is Siemens’ first major contract with the rail operator, is a significant coup for the company which is trying to aggressively expand its footprint in America.

Although Siemens has dominated in the light rail category in the US— with one out of every three light rail vehicles made by Siemens— the company is eager to lock up new deals, especially those outside of urban zones. In particular, Siemens is trying to become a major player in the high-speed rail market, which should accelerate in the coming years thanks to federal dollars.

Under the Amtrak deal, Siemens will add 200 jobs at its light rail manufacturing plant in Sacramento, California and 50 jobs at plants in Georgia, which will build motors and propulsion containers for the trains. Although the manufacturing process isn’t completely green, the Sacramento plant uses solar energy for up to 80% of its power, according to Siemens’ press release. The first trains will hit the track in 2013.

The new trains, called Amtrack Cities Sprinters, will be a step up from the average locomotives on the market and will feature a few green highlights to improve energy efficiency. Modeled after the European version, the EuroSprinter, these trains be able to easily maintain speeds of 125 mph. Amtrak plans to use them on the Northeast Corridor, a line that connects DC to Boston, and the Keystone Corridor (from Philadelphia to Harrisburg).

“This isn’t your grandfather’s locomotive,” Oliver Hauck, president of  Siemens Industry’s Mobility Division, said in a statement.  “Not only will we use renewable energy to build them, the locomotives will also include energy efficient features, such as regenerative braking that can feed up to 100 percent of the energy generated during braking back to the power grid.”

A feature which will also reduce wear on the breaks. More efficient breaks will not reinvent the green wheel of the industry, but it’s certainly an incremental gain.



It’s Kinda Rough For MySpace Over on Quora

Posted: 28 Oct 2010 11:12 PM PDT

A simple question on Quora yields some fascinating comments: “Is MySpace likely to recover?”

Google VP Corporate Development David Lawee left a brief and sarcastic “Is this a real question?” response. Which is noteworthy because Google is a major advertising partner to MySpace. Generally speaking, partners are nice to each other in public, but not here.

Investor Chris Fralic says “Define recover.”

The top answer though is from Sean Moriarty, the former CEO of TicketMaster, who says “Precipitous decline in user base, organizational turmoil, weak technology platform, fierce competition, and media conglomerate ownership make likelihood of recovery low.”

And one of the people who up-voted Moriarty’s comment on October 6 is David Bard, the Senior Interaction Design Strategist at MySpace. He’s likely one of the key guys on the front line of Futura, MySpace’s last push for relevance. And he apparently agrees that the “likelihood of recovery low.”

At least MySpace has one thing going for it – senior employees who are willing to speak their mind, whether it’s sharing internal data with us or upvoting comments on Quora. Most Yahoo’ers always waited until after they’d left to really unload on their former employer.



Where in the World Is Eduardo Saverin? In Singapore Funding Facebook Games.

Posted: 28 Oct 2010 07:07 PM PDT

I haven’t run into him, but have confirmed from at least ten local programmers and angel investors that Eduardo Saverin– the Brazilian-born estranged Facebook co-founder who helped Ben Mezrich write a devastating revenge book of his ouster before taking a settlement and disappearing from the face of the US tech scene– has been hiding out in Singapore for the better part of the last year-and-a-half. I’m told he lives in the penthouse of the tallest building of the city, and is a regular at Singapore’s club hot spots, especially a place called The Butter Factory.

Rolling with the city’s socialites aside, locals say that Saverin is pretty low-key. No one I spoke with had ever heard him refer to himself as the “co-founder” of Facebook. It either goes unsaid or, on one occassion, he told someone who’d never heard of him he was merely a “programmer of Facebook games.” I don’t know how much coding he’s doing, but he’s reportedly using that Facebook settlement money to fund a variety of Facebook game developers from his perch in Singapore– a perch that happens to be just next door to Facebook’s second largest market, Indonesia. He may be hiding out from the limelight and attention, but he’s certainly not trying to get away from Facebook itself.

By many accounts Saverin is well liked here and people are protective of him. In everyday conversation, people refer to Saverin’s role creating Facebook, not Mark Zuckerberg’s, which let’s just say, you don’t hear a lot in the Valley. One source did a deal with him and wanted to make sure I said he was “the most honorable guy I’ve ever dealt with in business.”

Given TechCrunch’s experience with Singaporean businessmen, I could make a catty comment about that being a low bar. But I’ve met a lot of honorable people this week in Singapore, and it seems like Saverin is keeping his head down, trying to build something on his own and avoid the film limelight his tell all account helped create. I give him credit for that. It’ll exciting to see what games he winds up funding for the platform that seems to have caused him a lot of pain and made him a billionaire household name. With any luck,  his games will do well enough that Aaron Sorkin can fictionalize a sequel.



Singapore: Why Innovate in Utopia?

Posted: 28 Oct 2010 06:21 PM PDT

SINGAPORE– On the eve of my trip to Indonesia last May, I was having dinner in Cape Town with someone from an investment firm that has been killing it in Asia. When I told him Indonesia was my first trip to Southeast Asia he almost spit out his Springbok, saying “My God! You are starting with the hardest one first!”

On the eve of this trip to Singapore, I was having coffee in San Francisco with a venture capitalist who has been killing it in the Valley, after four years of living in Southeast Asia. He gave the same observation a decidedly Valley twist: “You are going to be bored to death in Singapore.”

Bored is hardly the word I’d use– it’s hard to be bored when you are running from meeting to meeting, not to mention eating some of the most awesome food known to man. But Singapore is most definitely an Asia with training wheels. And that’s the Singapore blessing when it comes to globalization, but it may be its curse when it comes to entrepreneurship.

Singapore is easy, clean and staunchly non-corrupt at a country level. The trees are immaculately groomed. Any 7/11 can give you a week of Blackberry service for less than $20 and double as full-on tech support if something goes wrong. You think of a cab, and it’s there, clean and cheap. When I landed in Singapore on Sunday, there was a white haze over the sky– that looked almost like a dome. Combine that with the clean streets and lush foliage and my jetlag-hazed drive from the airport to the hotel looked like I was in the episode of Battestar Gallactica where Starbuck and Apollo grab some faux rays on Cloud 9. People here call it “an experiment” and a “startup country.”  But James Chan, of the incubator/ venture fund Neotany Labs co-founded by Joi Ito and advised by Reid Hoffman, says what they really mean: “It’s utopia.” (More from Chan in Friday’s Ask a VC.)

Of course there’s a reason few people call it utopia. You don’t have to be a science fiction junkie to know utopia always has a catch, and obnoxious American reporter that I am, I’ve been looking for it since I arrived. So far– from what I can gather– people aren’t murdered when they reach the age of 30, homeless people aren’t repurposed into crackers, or encouraged to have meaningless sex as long as they don’t procreate and stay drugged up on Soma. But Singapore has one big challenge: How to create a country of entrepreneurial problem solvers and hackers when there’s no chaos, total practicality and a culture of obediently going-with-the-flow.

People call Singapore a police state because of its heavy authoritarian reach, punishment by caning, one of the highest rates of capital punishment in the world, and– you know– the whole ban on gum, to which people here get defensive and say “That’s totally overstated! You can chew gum, it’s just that no one is allowed to sell it.” (So, you get it from….?)

But that’s not really apt. Unlike a lot of authoritarian regimes, Singapore is ruled by practicality not some force-fed morality. When the population was growing too fast it instituted a “two is enough” campaign. When people reacted by having fewer than two children per household the government mandated that local TV stations devote their final hour of programming to romantic soaps to get people in the mood. I’m not sure if that story is really true or apocryphal, but its certainly believed by a wide swath of people here I’ve asked.

An even better example, which may also be apocryphal: The government wanted to encourage the development of a more vibrant artistic culture, and a study revealed that societies with more open gay and lesbian populations had more artistic achievements. So Singapore’s Prime Minister went on TV and expressed support for “our gay brothers”– nevermind homosexuality had been illegal before. Locals have told me Singapore has one of the more accepting cultures of homosexuality in Asia today.

For the last few years, the government is trying mightily to spur high-growth entrepreneurship. Unlike, the US, which is punishing immigrants and proposing laws to restrict angel investing, Singapore is doing all the sensible, practical things. The red carpet is rolled out for skilled immigrants, who now make up some 40% of the population. After years of investing hundreds of millions directly in entrepreneurs, Singapore is now taking a lead from how Israel created its venture capital ecosystem. It partners with venture firms, allowing them to make the best investment decisions and given them up to 6-to-1 matching funds. In other words, a firm invests $15 million and the government will invest $85 million for a convertible note. Under other programs the government will pay 50% of small companies R&D costs, ensuring they are focused on building something differentiated.

Billions are spent in government-run R&D labs that produce crazily disruptive innovations and “science fair projects” that capitalist, short-term thinking VCs in the US would never fund. Government programs send kids to the United States where they can work with startups, see behind the glamor, and hopefully catch the entrepreneur bug. They’re trying to augment an already rigorous education program that focuses on math and science to include more exercises on reasoning and problem-solving. Looking at the highly-practical policy free of moralistic, protectionist grandstanding, you can see why Singapore– a tiny nation of just five million people with comparatively few natural resources relative to its neighbors– has so outperformed on a per capital economic basis, with a stunning 18% growth rate.

Practical as ever, most Singaporeans I’ve met with this week have told me up until now, it’s excelled at being a global hub, but it hasn’t excelled when it comes to local high-growth entrepreneurship. Can it legislate its way there? It’s unclear. If any place can it’s likely Singapore. I mean, if local stories are true it helped legislate who people have sex with and how frequently they do it.

But my gut says that chaos and problem solving go hand-in-hand. When things are too comfortable, why take risk?Disproportionately immigrants make better entrepreneurs than trust fund kids. Small companies are the ones who actually innovate more than large, publicly-held market incumbents, who like to buy innovators or just throw the word around. (OK, Google, you and your flying cars get a pass…for now.) Countries in chaos tend to have greater needs– and great market holes to exploit.

It’s hard to find any corner of chaos in Singapore. The system is engineered with one outcome, Chan says: “Making people good economic units for society.” Is there room for a high-beta version of good economic units of society– one that could succeed disproportionately or fail disproportionately in a culture so tied to obediance? The big “what’s-wrong-with-youth-today?” scandal of late has been kids getting out of school and taking all the tables up at Starbucks with their endless studying. Lily Chan, CEO of the National University of Singapore’s Enterprise program, thinks it’ll take generations for Singapore to truly develop a culture of entrepreneurship– and she blames the parents. In a place replete with accountant and banker jobs, where buying a house is more expensive than most places in the United States the pressure not to waste your time building something speculative is high. There’s also another problem: One employer has optimized the system to find and make lucrative offers to the smartest kids in the system– that’s right, the Government. People who could have made the country’s top entrepreneurs instead make comfortable salaries trying to craft policy to encourage people to be entrepreneurs.

But just because an ecosystem isn’t poised to give rise to a disruptive potentially $1 billion dollar company doesn’t mean it’s not innovating and doesn’t mean the Valley doesn’t need to pay attention. I’ll detail how Singapore is accomplishing both of those in future posts.



Mailgun Gives Developers An API For Creating And Managing Online Mailboxes

Posted: 28 Oct 2010 05:58 PM PDT

These days, it’s a given that the latest web service you sign up for is going to be using email for something. The better services make these messages interactive — when someone leaves a message on your Facebook Wall, you don’t have to head back to Facebook.com to respond; you can just reply to that email message. Unfortunately, from a development standpoint, this is a bit easier said than done.

Mailgun is a new service launching today that wants to make this kind of functionality easy to implement: it offers a ‘Mailbox API’ that lets you bake Email functionality into your application. The service is now open to the public, and the first 50 people to sign up for a paid account and use the signup code ‘TCRUNCH’ will be entered into a drawing for a new Macbook Air.

So what exactly is Mailgun for? Well, it’s certainly possible to use Mailgun to send notifications, newsletters, or whatever other content you want to distribute on a broad scale — but there are already other services that can perform these tasks. Mailgun differentiates itself with features that extend beyond just sending messages.

The most obvious usecases are for the interactive Email notifications described above. Beyond these notifications, CEO Ev Kontsevoy gave me a few examples illustrating how a developer might put Mailgun to work.

  • Say a developer wants to offer a mobile game where every user can submit their moves and accompanying photos via Email. Mailgun would allow the developer to programmatically create a mailbox for each user, allowing users to send in these commands, with the added benefit of having an automatic archive of each message that’s submitted.
  • A service like Stickybits, which lets you create virtual presences for real-world objects by sticking a barcode sticker on them, could set up a mailbox for each real-world object. It would then be possible for users to simply send a photo or message to this email address, in case they had a phone without a barcode scanner app.

As with other API-based services, Mailgun’s success will really come down to demand — how many developers are looking to outsource these tasks, and how many are willing to pay for it? Given how ubiquitous email is, I think Mailgun has a fighting chance, provided their service proves to be reliable (and saves developers as much time as they say it will).



YouTube CEO Chad Hurley Leaving Position To Take Advisory Role

Posted: 28 Oct 2010 04:57 PM PDT

I’m currently in Dublin, Ireland, for a (most excellent) event dubbed Founders, where I was invited to handle a fireside chat / interview with YouTube cofounder and CEO Chad Hurley earlier tonight. We had an interesting conversation about the company, although nothing particularly newsworthy came out of it, except for this little nugget: Hurley is moving to an advisory role at the Google subsidiary and will soon focus most of his attention on other projects.

Hurley casually mentioned this when I asked if he still felt as motivated as he was in early 2005, when he started the company along with fellow ex-PayPal employees Steve Chen and Jawed Karim.

The company ended up getting picked up by Google for roughly $1.65 billion in 2006, Hurley made a bundle, and I was interested to know if, after almost 6 years, he wasn’t ready for change.

Fully vested for a couple of years now, I actually wondered what kept Hurley at YouTube / Google for so long in the first place. In a conversation at dinner after the interview, he explained to me that he started to transition into a somewhat more advisory role two years ago already, but felt that he needed to stick around to accomplish a number of things in terms of growth on multiple levels, product development and other aspects of the business.

The time to move on has now come, said Hurley, adding that he’s already working on other projects, but declining to detail what those are exactly. For the record, we’re not talking about his adventures in Formula One world or the fashion business called Hlaska he co-founded, but actual Internet businesses.

To clarify, Hurley said that former VP of web applications at Google, Salar Kamangar, is currently handling most of the day-to-day operations at YouTube already. The message he wanted to convey: it’s not like that much would change at YouTube where he to leave anyway.

Asked if he had any interest in becoming an active angel investor, Hurley told me that that sort of thing just is simply not what makes him tick. In fact, he said in no unclear terms that he feels as though there’s something of an ‘angel bubble’ swelling up in Silicon Valley these days.

Hopefully someone captured our talk on video — we’ll post a recording of the event if we find one.

(Image via Flickr / World Economic Forum)



Microsoft Runs Basically The Worst Internet Startup Ever. 1 Year, Over $2 Billion In Losses

Posted: 28 Oct 2010 04:44 PM PDT

When you hear the word “startup”, you most likely think of an Internet startup. Maybe it’s funded, maybe not, but its burn rate almost for sure puts it in the red each quarter. Obviously, Microsoft is not a startup. Nor have they been a startup for a long time. But what if you thought of their Online Division as an Internet startup? One funded by Microsoft. The thought it terrifying. Or it should be. To Microsoft.

Microsoft released their Q1 2011 earnings today. The results were very good except for one very big blemish: the Online Division. Last quarter, the division lost $560 million for Microsoft. That’s better than the previous quarter when it lost a staggering $696 million, but it’s much worse than a year ago, when it lost $477 million. In the past year, Microsoft has lost well over $2 billion from the division.

Let me repeat that: 1 year, a $2 billion loss.

Obviously, any startup that did that would have long since gone under — with that kind of burn rate, they probably would have gotten the plug pulled a few weeks into existence no matter how well-funded they were. But Microsoft keeps pumping money into the division. And they have to. Because even they realize it’s the future.

Of all the money Microsoft makes, the vast majority comes from two divisions: Windows & Windows Live Division (Windows) and Microsoft Business Division (Office). They make a good amount of money from the Server & Tools division too, but it’s less than half of those other two. And both of those two are under direct assault.

The web is making Windows (and every operating system) less vital, while at the same time coming up with free and/or cheap tools to replace the relatively expensive Office. And new devices like smartphones and tablets have created an ecosystem where Windows is essentially a non-player (though we’ll see what happened with the just-released Windows Phone 7). And Office is basically non-existent in these spaces.

As this past quarter has shown, Microsoft is fine for the foreseeable future still. People (mainly companies) are still buying Windows and Office licenses. But only a fool would think this is perpetual.

Microsoft needs to have a heavy presence online in order to maintain their power going forward. And that’s why they’re dumping so much money into it. And you could argue that this strategy has worked with products like Bing. But Microsoft needs more than just this presence, they need to make money here. And not only are they failing at that. They’re failing in spectacular fashion.

Five years ago, Microsoft’s Online Division was actually making money. Granted, it wasn’t a lot. But they were in the black. But for the past 19 quarters in a row now, Microsoft has lost money in this division. And as this chart put together last quarter by SAI shows, the losses have actually gotten worse over time. It’s a bloodbath being covered up by the profits from other divisions.

People talk a lot about Google’s failure to make money off of YouTube. But at least they’re not bleeding money to this extent. And they may actually be close to profitability. And while it’s true that Apple hasn’t been hugely successful online, they really haven’t tried much. They have MobileMe, which isn’t hugely popular, but they do make money on. Twitter is another company talked about a lot as not making money. They too seem much closer than Microsoft is at this point. I think it’s a safe bet that they’re not running $500 million in the red each quarter.

So can Microsoft turn this around? With Bing continuing to gain some popularity and Microsoft now in complete control of Yahoo’s search business, there’s some hope. But even with those, there doesn’t seem to be a clear cut way to start making real money without pouring a ton more in. Yahoo Search is in decline and while Microsoft is monetizing Bing, they’re also spending a huge amount advertising it to get the eyeballs they eventually monetize. 19 quarters of losses in a row is bad enough; the fact that the profit trend is going the wrong way is even more troubling.

Is it too late to buy Facebook outright (they own a very small stake)? Of course it is, but maybe they can head to SecondMarket and allocate at least some of the $2 billion a year they’re blowing to buy up some Facebook stock. That would be one way to make money online.

[image: Warner Brothers]



Nerds Carve Android Halloween Pumpkin

Posted: 28 Oct 2010 04:25 PM PDT

Okay okay, maybe “nerds” is a strong word to use here because the above Android fanboy Jack O’ Lantern is actually kind of awesome. There is something so heartwarming about that “Android Peeing On Apple” icon carved into TechCrunch reader Lee Arnold’s family (!) pumpkin.

Arnold sent this in as a Halloween-themed tip to TechCrunch, just because he thought we would like it. Heads up Lee, we totally do — All of us except for MG of course, who was too busy staring at his own pumpkin to notice.



Better Get Ready Europe, TechCrunch Partybus is Heading Your Way

Posted: 28 Oct 2010 04:08 PM PDT

On the other side of the Atlantic, TechCrunch events have been causing all kinds of disruption (yes, lame joke, I know) this year. Back in May, Disrupt unleashed the infamous linguistic talent of Yahoo CEO Carol Bartz and just last month, the Bin 38 crew and MC Hammer rocked the show just prior to the announcement of our acquisition by AOL. From New York to San Francisco, Disrupt has definitely proved to be one tech's hottest events...but now what about in Europe ? Europe definitely counts a number of absolutely fantastic tech events - with one of my all-time favorites, LeWeb, coming-up right before the holidays. But this year, both TechCrunch France and TechCrunch Europe are also puting a little startup kick in pre-holiday events with the Europas and Remix.


WITN: “On Paper, Singapore Shouldn’t Have Done as Well as it Has”

Posted: 28 Oct 2010 03:09 PM PDT

Given Paul's ability to get into fights even in sleepy towns like Camden, Maine, it’s lucky Sarah does the lion's share of the travelling.

This week, she's in Singapore – on a week-long trip to take the island's entrepreneurial pulse and next week she'll be returning to Jakarta to do similar there (hopefully, you've already sent in your questions for her special South-East Asia editions of Ask A VC).

You can read more about Sarah's trip in a series of posts coming over the next few days, but first, with Paul safely back in the studio, we caught up via Skype to discuss some of the interesting startups she's found so far – and also how Singapore's colonial past and uber-efficient present has affected its entrepreneurial outlook.

Video below.




Facebook’s Dominance Leaves President No Choice

Posted: 28 Oct 2010 03:02 PM PDT

In an effort to increase voter turnout for next Tuesday’s Congressional Election, President Barack Obama has put out a call on Twitter for constituents to install a Facebook application called the “Commit to Vote Challenge.” Like a more noble version of Fast Company’s Influence Project, the Commit to Vote Challenge takes advantage of the “network effect” by using Facebook to spam your friends about voting. Facebook’s population is currently greater than that of the United States.

Right now according to the app, I’m a humble “Committer” and all I need to “reach the next level” is inspire just one more friend to vote. I can also “compete with my friends to inspire the most commitments” which is a serious case of social gaming mechanics taken too far. Paid for by the DNC and Organizing for America, I bet this thing is assuming your Facebook friends are Democrats.

Take a look at the Commit to Vote Challenge interface below, it’s scary. Also: Why is our (American) President tweeting using the (Canadian) Hootsuite?



Android Market Is On The Fritz (Updated)

Posted: 28 Oct 2010 02:32 PM PDT

Some of the most common complaints about Android are related to Android Market, the official Google storefront through which the vast majority of Android users get their Apps (yes, you can download from other sources, but most people don’t). Most of the problems have revolved around international support (which the Android team has recently improved) but now there’s another issue that’s becoming a problem: downtime.

For the last hour or so I haven’t been able to download apps or updates from Android Market — every time I try I get a “Download Unsuccessful” error. Many other Twitter users are reporting similar problems. Some tweets have suggested that the downtime may be related to the upcoming PayPal support. It’s possible this is only affecting a fraction of Android users — I’ve reached out to Google for comment.

Update, 3:15PM PST: The problems seem to have been resolved for me — we’re asking Google what the issue was and if it’s been fixed.
Update, 5:00PM PST: The Android developer twitter account just tweeted that the issue should be fixed:

Market download issue seems resolved. Problem started around noon PDT, lasted a few hours. Sorry about that.

To be fair, Apple’s App Store isn’t exactly perfect. I’ve personally come across a frustrating error on my iPad a few times that says that my downloads have failed, only to have it work when I try downloading the same app a few minutes later.

But Market is still clearly behind — the UI isn’t as nice looking as the App Store’s, there isn’t support for in-app purchases, and for the most part developers aren’t having as much success getting users to pay for their apps. Fortunately Google has a total Market revamp in the works that was previewed at Google I/O. But it’s unclear how soon this is coming — when I asked Google if it would be part of the upcoming Gingerbread update, they declined to comment.



In Preparation For Sale To Rubicon Project, Fox Audience Network Fires Half Its Staff

Posted: 28 Oct 2010 02:25 PM PDT

News Corp is on the verge of unloading another one of its digital businesses under Fox Interactive Media, the Fox Audience Network (FAN), to Los Angeles-based ad-optimization startup The Rubicon Project. The deal has not been signed yet and may still fall apart, but the two companies are in the final stages of negotiation, according to sources with direct knowledge of the deal. (Talks have been heating up over the past month). In preparation for the sale, or continuation as a standalone business, about half of its 300 employees were let go yesterday, most of them sales people. Rubicon is more interested in the ad technology.

If the proposed deal with Rubicon goes through, it will get certain assets including FAN’s ad server technology, its self-serve banner advertising platform called MyAds, and about 100 employees to help run those parts of the business. In return, News Corp will get about 20 percent of Rubicon’s shares. (When Fox Interactive Media disposed of Rotten Tomatoes, it structured a similar asset-for-equity swap with Flixster). The fact that the ad server technology is one of the key assets here is particularly noteworthy, given that Rubicon’s public posturing in the past was that the ad server is dead.

FAN also runs one of the largest ad networks on the Internet. However, about half of the ad impressions on the ad network are generated by MySpace. Whether or not that will be part of the deal is one of the last items to be determined. Either way, MySpace is unlikely to continue to run it as a third-party network.

The writing’s been on the wall for FAN for a long time. News Corp started to shop it around last March. A small round of layoffs hit in June, and then Adam Bain, the president of FAN, left to become top revenue officer of Twitter. News Corp was planning to fold FAN into MySpace when interest picked up from suitors including Rubicon.

Rubicon is an advertising technology company that launched in 2007. helps advertisers figure out which ad networks and sites to run their display ads on based on clicks, views, and other metrics. It’s ultimate goal is to build an alternative to Google-owned DoubelClick’s DART, and some of the technology built by FAN can help it get there. That is why it doesn’t need all the sales people. A few may move over to deal with remnant and other lower-quality ads, but Rubicon is primarily a technology play. The company has raised a total of $42 million in venture capital.



Yep, Apple Rocketed Past Microsoft In Revenue This Past Quarter By Over $4 Billion

Posted: 28 Oct 2010 02:00 PM PDT

When Apple passed Microsoft in market cap this past May, the Microsoft fanboys were out in full force. “This means nothing.” “Microsoft still makes so much more money than Apple.” “Look at the revenues.” Okay, let’s look at the revenues.

Microsoft just posted their earnings for last quarter. The result? $16.2 billion in revenue. A very strong number, easily beating what the Street was projecting. But just 10 days ago, Apple posted their revenues for this past quarter. The result there? $20.34 billion. Yep.

During the last round of earnings results in July, some people had been predicting that Apple would pass Microsoft in revenue (though, for the record, I wasn’t so sure). But sure enough, Microsoft stayed barely ahead of Apple by about $700 million. But as we noted at the time:

It seems quite likely that next quarter Apple will surpass Microsoft in revenue. Assuming that iPhone 4 sales are huge and that the iPad continues to grow, Apple's momentum in revenue is simply too great for Microsoft to keep up with. Apple may or may not hit $20 billion in revenues next quarter (they're projecting $18 billion, but they always low-ball that number so they can beat it).

And here we go. Not only did Apple hit that $20 billion revenue quarter, Microsoft’s quarter-to-quarter total only went up slightly (around $200 million). And so Apple zoomed right by them.

Naturally, it’s important to note that Microsoft still has a lead in profit — $5.41 billion to $4.31 billion — but that’s because one is mainly a software maker (huge margins), while the other is mainly a hardware maker (lower margins). If this trend continues, that will change soon shortly as well. Remember, it’s the holiday quarter now.

Meanwhile, in terms of market cap, Apple now holds a $52 billion lead (remember when there was still some doubt this would happen?). And Google is inching closer to Microsoft as well.

[photo: flickr/NASA]



Google, HP, eBay And Yahoo Fund Group Behind Pro-Death Penalty Attack Ads

Posted: 28 Oct 2010 01:57 PM PDT

California politics blog Calitics has unearthed some interesting data about the $1 million in funding behind the recent round of television ads against Democratic attorney general candidate Kamala Harris. Digging deeper into the contribution history of the Republican State Leadership Committee, the Karl Rove led group behind the ad campaign, reveals contributions from four top Silicon Valley tech firms.

The ads attack Harris on her opposition to the death penalty (which most Californians are in favor of) but it’s hard to imagine Google, HP, eBay and Yahoo taking a stance so out of step with the beliefs of many of their executives and employees.

The Huffington Post provides a more thorough explanation of the motivations behind the unprecedented corporate involvement in next Tuesday’s attorney general race — “State attorneys general are increasingly at the front lines of major political issues that affect big-business bottom lines” including those in the tech industry.

The last time Harris and the tech sector sparred was during the Democratic AG primary, where her campaign launched an offensive against former Facebook executive Chris Kelly for spearheading the Facebook “Instant Personalization” program which included ads that ended with the brusque statement, “Chris Kelly released your private information.”

As both Net Neutrality and Internet Privacy continue to be major political issues, with both Facebook and Google dropping cash on California lobbying efforts, the big four are trying to ensure that the candidate that will go easiest on them wins.

Harris is currently trailing in the polls against Republican Steve Cooley, and her campaign has come out against the Republican State Leadership Committee for not disclosing its top financial contributors within the ad itself.

A Google representative responded to our inquiries about the search company’s involvement, stating that it was dismayed by the allocation of its contribution.

“Google gives to campaign committees of both parties to help support their campaign activities at the national level. The RSLC is one of those groups. We were not consulted about this ad or any other particular ad the RSLC has paid for, and are disappointed to learn the committee chose to spend their funds in this manner.”

HP released their official statement:

"HP contributes equally to both Republican and Democratic campaign committees. HP has no involvement in the campaign's strategy and tactics and was not consulted on the ad."

And so did Yahoo:

"Yahoo! pays membership contributions to the RSLC and its Democratic counterpart, and takes part in a range of issue conferences and other activities that these organizations host year round. We are not consulted on the groups' ad campaigns."

eBay has not yet gotten back to us.




Microsoft Beats The Street: Net Income Up 51 Percent, Office Revenue Up 15 Percent

Posted: 28 Oct 2010 01:25 PM PDT

Microsoft just released better than expected Q1 earnings, posting first-quarter revenue of $16.2 billion, an 25% increase from the same period of the prior year. Analysts expected revenue to come in at $15.8 billion. Operating income, net income and diluted earnings per share for the quarter were $7.12 billion, $5.41 billion and $0.62 per share, which represented increases of 59%, 51% and 55%, respectively, when compared with the prior year period. Analysts were expecting diluted earnings per share of $0.55.

Microsoft said that the company saw year-over-year growth across all business segments. Revenue from Office 2010 grew over 15% in its first full quarter in market. The entertainment division saw strong growth as Xbox 360 console sales increased by 38%. The biggest growth came from Windows, with revenue up 66% to $4.8 billion. Windows operating profits up 124% to $3.2 billion (from $1.5 billion last year) and Windows Azure subscriptions grew by 40%.

Revenue from online business, which includes Bing, didn’t see quite as big of an uptick. Sales were up 8%, with online advertising up 13% for the quarter. Unfortunately, Microsoft reported that online business still lost $560 million in operating income.

Peter Klein, chief financial officer at Microsoft said in a statement: “This was an exceptional quarter, combining solid enterprise growth and continued strong consumer demand for Office 2010, Windows 7, and Xbox 360 consoles and games…Our ability to grow revenue while continuing to control costs allowed us to deliver another quarter of year-over-year margin expansion."

We’ve embedded the slides and a table with segment revenues and operating profits below.

Microsoft Corporation
Segment Revenue and Operating Income   (Loss)
(In millions)(Unaudited)
Three Months Ended
September 30,
2010 2009
Revenue
Windows & Windows Live Division $4,785 $2,880
Server and Tools 3,959 3,550
Online Services Division 527 487
Microsoft Business Division 5,126 4,514
Entertainment and Devices Division 1,795 1,412
Unallocated and other 3 77
Consolidated $16,195 $12,920
Operating income (loss)
Windows & Windows Live Division $3,323 $1,483
Server and Tools 1,630 1,237
Online Services Division (560) (477)
Microsoft Business Division 3,388 2,827
Entertainment and Devices Division 382 260
Corporate-level activity (1,047) (848)
Consolidated $7,116 $4,482


Experimental Real-Time Location Tracking Comes To Google Latitude On Android

Posted: 28 Oct 2010 01:01 PM PDT

Google has just released a series of updates for their Google Maps Android application. Two of these updates are useful: Place page reviews and the ability to filter search results. But one of them is really interesting: real-time location updating in Google Latitude.

To be clear, this feature is an experimental one that Google is trying out. But if you enable it, your friends on the service will be able to see where you are in real-time (and vice versa, if they enable it too). Previously, location updates through Latitude would occur regularly, but not in real-time. The reason is that this constant sending of location data can wear down mobile phone batteries much quicker. Many service that update location in the background instead tend to ping towers to see if you’ve moved periodically.

But this new real-time feature is meant for short-term usage if you’re going to meet up with a friend, for example. It make sense to make this a more temporary option for both battery life, and because of the creepy factor. Even if people opt-in to using Latitude, if you know you’re being tracked in real-time, that’s fairly creepy.

Sounds awesome. Can’t wait to try it out.

This is all a part of Google Maps 4.6 for Android (1.6 and later). It’s available now in the Market or if you click here from your device.



Nearing Profitability, YouTube Hits 500 Million Promoted Video Views

Posted: 28 Oct 2010 12:39 PM PDT

YouTube has just announced that it has served its 500 millionth promoted video view. The video ad format, which the company launched a few years ago, essentially allows advertisers pay to promote videos in search results and on the YouTube home page.

The product is similar to an AdWords for YouTube. So advertisers buy a keyword, and when someone did a search for that term, the advertiser’s video will show up as a promoted result. Last year, YouTube also started to place Promoted Videos on the 'Watch' pages, where videos are actually shown alongside comments and related other content, replicating AdSense in some ways.

Promoted Video campaigns can now also implemented in a number of countries outside the U.S.. And YouTube’s Promoted Video API is now in AdWords in beta so agencies can use Promoted Videos to manage ad campaigns across multiple clients.

YouTube also said that the average Promoted Video is approximately three minutes and it would take someone 2,853 years to watch them all. The company also says that they have seen “six-fold increase” in the number of times viewers have clicked to watch a Promoted Video.

That’s of course good news for YouTube and for advertisers who are looking to attract eyes on the video platform. Advertising is a steadily growing for YouTube. During Google’s most recent earnings call, the company revealed that YouTube is now monetizing 2 billion views per week (there are about 2 billion total views per day through the service). The monetization rate is up 50 percent year-over-year.

And after a number of years in the red, the platform is finally nearing profitability, according to comments made by Google CEO Eric Schmidt in September. This milestone could be accelerated by the increase in ad revenue coming through the platform.



Moshi Monsters: $100 Million in Projected Product Sales and You’ve Never Heard of Them

Posted: 28 Oct 2010 12:20 PM PDT

A quick disclosure: readers of my last book will be familiar with the story (which you can read here) of London-based entrepreneur Michael Acton Smith.

Smith co-founded boy's toys e-tailer Firebox.com straight out of university, before moving on to launch an interactive puzzle start-up called Mind Candy. By the end of the book, Mind Candy had gained success with its ambitious Perplexcity alternative reality game (ARG) but hadn't quite tipped over to the mass-market.

Michael is a friend – and a fellow Brit – so, obviously, I was really rooting for the company to deliver on its potential. I was one of the first to write about Mind Candy when I was at the Guardian and I promised that, when the company finally tipped, I'd be the first to write a follow up.

And yet, when I left London in 2008, that tipping point seemed further off than ever. Mind Candy had launched Moshi Monsters, a virtual pet product where kids can adopt little pet monsters and buy them cool stuff by solving puzzles — but everyone knew this was the company's last roll of the dice. Michael won't discuss specifics but rumours around London were that his investors (which include Accel, Index and Spark Ventures) were trying to force a change of management, and were all-but taking over what was left of Mind Candy. Speaking to Michael by phone earlier today, he still wouldn't comment on the specifics, but I did get him to admit one thing: "yeah, we were screwed".

But he can laugh about all that now. Because some time between the end of 2008 and the middle of 2009, something strange happened to Moshi Monsters. It got successful. How successful?

Today, the game has 29m registered accounts across 150 different countries, with 20m of those accounts added in the last year (35% of signups are in the US while the UK accounts for 30%). One in three children (aged 7-11) in the UK has adopted a Moshi Monster and 150 million+ puzzle games have been played. At TechCrunch we're slightly obsessed with Angry Birds, but Moshi's numbers eclipse it on almost every metric.

What's even more impressive is that a growing number of these users are paying to further their Moshi obsession; or, the least, their parents are. The basic game is free, but for £5 (about $7.50), players can buy a "Moshi Passport" which gives them access to additional parts of the Moshi world. The company won't reveal exact subscription numbers but the company became cashflow positive in 2009 and has been profitable ever since.

As promised then, I wanted to revisit the Mind Candy story; not least because it's one of the few companies coming out of London that's competing with the US in terms of profitability and traction. And yet, like Bebo before it, its profile in the US (except amongst those millions of young players) is virtually non-existent.

First though, I wanted to understand how the company went from death's door to projected sales of $100 million next year.

The first answer, according to Smith, is an understanding that, when parents are footing the bill, it's important to keep things simple and un-scammy. The five pounds subscription cost is the maximum possible cost for playing the game. There are no SMS payments for virtual goods, or any scamville-type nonsenses to buy credits. "That stuff might work when the person playing is the same as the person paying the credit card bill, but it wouldn't work for us."

The second is the realisation that "kids want to communicate with their friends as much as adults". Moshi added a ‘friends tree’ and personal pinboards to allow players to connect around the game’s various puzzles, and user numbers exploded.

The final secret to Moshi's success is breaking out into real-world products. Angry Birds has its plush toys, but Moshi is going several steps further: yes, there'll be toys (the company has signed licencing deals with Vivid Imaginations in the UK and Spin Master in the US) but the educational aspects of the Moshi puzzles has also lead to a contract with Scholastic to produce a range of puzzle books and other print spin-offs. The first of these physical goods roll off the production line in early 2011 and it's those sales which push the company towards their magical $100 million projection.

But, but, but… even if 2011 is a bumper year, what will happen in 2012? The Bebo comparison works both ways, and provides a cautionary tale for anyone running a hugely successful social network for young users. In 2008, AOL bought Bebo for $850 million, two years later they sold it again for "around ten million dollars". Kids are fickle and, as Smith admits, "the world is littered with forgotten fads."

And yet, he argues, there are also countless fads that have stayed the course (he mentions Pokemon, Hot Wheels and Barbie). "The secret is to keep the world fresh, and that's what we're trying to do by making sure there's a continuing narrative, and new games, puzzles and animations."

So what's next for Smith himself? Despite the fact that he's been building Mind Candy since 2004 and has – if the rumours are true – had a pretty bumpy relationship with his investors, he gives the standard entrepreneur's denial when I ask about an exit.

"I'm very focussed on Moshi right now,” he says. And his relationship with his investors? "We've had our ups and downs," he concedes, coyly "but everything is fine now."

And – well – yes, with $100 million in projected sales revenue, it probably should be.



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