All Things Digital

Google’s (GOOG) Open Handset Alliance is going to have to do a lot better than a few early prototype demos if it truly hopes to unify mobile Linux around its Android specification. Because rival LiMo Foundation is stepping up its game. And fast.

Earlier this year, LiMo uncrated a first wave of handsets running on its Linux-based software platform for mobile devices–18 devices from seven vendors. And now the foundation is adding some big names to its roster of mobile-phone outfits. This morning, LiMo announced eight new members, among them: Mozilla, developer of the Firefox Web browser and Verizon Wireless (VZ).

The companies’ membership is an important endorsement for LiMo–Verizon’s in particular. The mobile-phone player seems quite invested in LiMo and its vision of mobile Linux, which is far more Democratic than the OHA, which is one of those wonderful we’re-Google-and-Google-always-knows-best democracies. So much so that Verizon has declared LiMo’s to be its preferred mobile OS.

“We are wholeheartedly endorsing LiMo’s approach, and we are investing company resources, but we see the opportunity to have both the OHA and LiMo succeed and/or work together,” Kyle Malady, vice president of networks at Verizon Wireless, said during a conference call with reporters this morning. “LiMo is our platform of choice, but if there comes a point where we see there is benefit for our customers we will use OHA as well.”

(Image Credit: ThinkGeek)

If the defining characteristics of Web 2.0 are “groundbreaking” Facebook widgets, easy access to dumb capital and haughty start-ups dangerously over-leveraged on other companies’ assets what (or who) will define the Web 3.0 epoch?

The answer’s obvious isn’t it? Salesforce.com CEO Marc Benioff.

Why? Because he says so, that’s why.

Speaking at the company’s DreamForce Europe event, Benioff said that Web 3.0 will be the Platform-as-a-Service (PaaS) era. A fascinating definition–convenient too, since this is precisely the sort of business Salesforce.com (CRM) is in. “We think Web 3.0 is now upon us. It’s the era of platforms,” said Benioff. “New platforms are coming right out of the cloud. It’s time to make a choice. You can continue to build your applications in the software model or you can move your applications to the new model of cloud computing. There is a new way to build your applications.”

So Web 3.0 is not, as Tim Berners-Lee, inventor of the World Wide Web, once suggested, the semantic Web–”day-to-day mechanisms of trade, bureaucracy and our daily lives handled by machines talking to machines.” Rather, it’s Web 2.0 with another 1.0’s worth of marketing BS. The “Whatever-I-Say-It-Is Web”–the “Al Franken Decade” of the Internet age.

Well, the “me” decade is almost over, and good riddance, and far as I’m concerned. … That’s right. I believe we’re entering what I like to call the Al Franken Decade. Oh, for me, Al Franken, the ’80s will be pretty much the same as the ’70s. I’ll still be thinking of me, Al Franken. But for you, you’ll be thinking more about how things affect me, Al Franken. When you see a news report, you’ll be thinking, ‘I wonder what Al Franken thinks about this thing?’, ‘I wonder how this inflation thing is hurting Al Franken?’ And you women will be thinking, ‘What can I wear that will please Al Franken?’, or ‘What can I not wear?’ You know, I know a lot of you out there are thinking, ‘Why Al Franken?’ Well, because I thought of it, and I’m on TV, so I’ve already gotten the jump on you.”

Who says Google (GOOG) is hoarding Silicon Valley’s tech talent? In August of 2007, Gideon Yu, a Valley train-hopper with stints at Yahoo (YHOO) and then YouTube, resigned from his position at the video-sharing site shortly after it was acquired by the search engine to become CFO of Facebook. A few months later, Benjamin “bling” Ling, described as one of “Larry and Sergey’s golden boys,” left Google to run Facebook’s platform program. Then this past March, Sheryl Sandberg, Google’s vice president of global online sales and operations, bailed to join the social network as chief operating officer. Ethan Beard, Google’s director of social media, followed shortly after, taking a job as Facebook’s director of business development.

Now another prominent Googler has train-hopped to the popular social-networking company as well. As first reported by BoomTown, Elliot Schrage, vice president of global communications and public affairs at Google, is leaving the search sovereign to become Facebook’s vice president of communications and public policy.

“[Elliot Schrage] will be responsible for developing the key messages we want people to understand about our products, our business and the growing global importance of social networking and what we do,” Facebook CEO Mark Zuckerberg said in an email to employees announcing the hire. “The goal here is to help people understand how the Internet can strengthen people’s relationships. Elliot will direct our efforts to work with users, media, governments and other entities around the world to ensure that Facebook’s policies are transparent, responsive, effective and are recognized as being those things. … This is a really important role for us and one that we’ve been trying to find the right person for a while. Elliot’s role will be critical to helping us scale based on our culture that values transparency, openness and honest internal communications.”

“Elliot’s role will be critical to helping us scale based on our culture that values transparency, openness, and honest internal communications”?

Clearly, Zuckerberg meant “build from the ground up a culture that values transparency, openness and honest internal communications.” Because it’s only been about six months since the Beacon fiasco, which demonstrated how grievously the company was lacking in those qualities (see “DiaperFetishFactory.com Is Sending a Story to Your Profile,” “Epicurious Has Added a Potential Privacy Violation to Your Facebook Profile,” “Fiascobook,” and “Fiascobook, Redux“).

Perhaps if Facebook recruits enough former Googlers, it too will be able to lay claim to a silly informal motto like “Don’t Be Evil.”

Microsoft may have fallen short of expectations for third-quarter sales, but it met and exceeded them for color commentary on the Yahoo deal.

On a post-earnings conference call this afternoon, Microsoft (MSFT) CFO Chris Liddell said Yahoo (YHOO), which insists Microsoft’s $31-per-share hostile offer “massively undervalues” it, has “unrealistic expectations” about its worth. “Our initial offer was extremely generous, more than a 100% premium for Yahoo’s core business, and our view on value is shaped by the long-term value of the company, and we intend to remain disciplined in our approach,” Liddell said. “The strongest argument that I’ve heard on why we should increase our bid–simply that we can afford to–is not one that I favor. We’ve yet to see tangible evidence that our bid substantially undervalues the company. In fact, we see the opposite. Yahoo continues to lose search share, and profitablity continues to decline year-on-year.”

It sure does. Yahoo’s operating income for the first quarter of 2008 was $121 million–a 28% decrease compared to $169 million for the same period of 2007. But then, Microsoft doesn’t want Yahoo for its profits; it wants it to make its own advertising platform more successful. Is that worth more than $31-per-share? Liddell clearly doesn’t seem to think so. “Unless we make progress with Yahoo toward an agreement by this weekend, we will reconsider our alternatives,” he said. “We will provide updates as appropriate next week. These alternatives clearly include taking an offer to Yahoo shareholders or to withdraw our proposal and focus on other opportunities, both organic and inorganic.”

Microsoft’s chief software architect Ray Ozzie has finally published the sequel to “The Internet Services Disruption,” the 2005 potboiler of a memo that charted Microsoft’s (MSFT) better-late-than-never software-as-a-service strategy. It’s called, intriguingly, “Services Strategy Update April 2008” and it describes in numbing detail Live Mesh, Microsoft’s ambitiously late entry into a rapidly growing cloud-computing market.

Live Mesh, though it takes Ozzie five pages to describe it, is essentially a “software-plus-services” platform that uses the Web to synchronize and share data among devices, applications and people (you’ll find a walk-through here and a good overview here).

“Over the past ten years, the PC era has given way to an era in which the Web is at the center of our experiences–experiences delivered not just through the browser but also through many different devices including PCs, phones, media players, game consoles, set-top boxes and televisions, cars, and more,” Ozzie writes. “It is our mission in this new era to create compelling, seamless experiences that combine the power of the Internet, with the magic of software, across a world of devices. … the Web is the hub of our social mesh and our device mesh.”

“The Web is the hub of our social mesh and our device mesh.”

Wait.

Does Bill Gates know that? Because last year he told CNN’s “American Morning,” “We’re making the PC the place where it all comes together.” Clearly, in the ensuing year, Gates and Microsoft noticed that Google (GOOG) et al. are fast shifting computational relevancy to the Web, away from the desktop and, more importantly, away from Microsoft.

Live Mesh, if it’s successful, will change that. Because, as Joe Wilcox notes over at Microsoft Watch, “Live Mesh is Microsoft’s attempt to turn operating system and proprietary services platforms into hubs that replace the Web. Microsoft is building a services-based operating system that transcends and extends Windows and also the function of Web browsers.” Adds Wilcox, “It’s bold, brilliant and downright scary.”

As a company, and as individuals, Microsoft (MSFT) really does value honesty and openness. Consider this: In a presentation yesterday at RSA 2008 in San Francisco, David Cross, a product unit manager at Microsoft, explained the design concept behind the User Account Control in Windows Vista in the following very honest, very open way:

The reason we put UAC into the platform was to annoy users. I’m serious.”

A true credit to the company, that Cross.

If that truly is the reason for UAC’s inclusion in Vista, it’s served its purpose well.

Here’s a clever way of streamlining the acquisition process: Become a platform-as-a-service provider and encourage developers to create Web applications using your proprietary database and your APIs (application programming interfaces).

That seems to be what Google (GOOG) has done with App Engine, a new service for developers who’d like to write and run their Web applications on the company’s infrastructure. With App Engine developers can establish their own little Google Labs outposts, building Google-friendly applications using Google’s own building blocks on the Google File System and Google will handle the scaling and fail-over issues.

That’s a compelling proposition–assuming you want Google to control your entire end-to-end development environment. And who wouldn’t these days? What better way to pique the search giant’s acquisitive interests than building a great big Web 2.0 sandcastle in its very own Web 2.0 sandbox? Who knows, you may be the next YouTube or, at the very least, the next Zingku or Jaiku. And if it turns out that you are, how convenient would it be for Google to acquire you, as Dave Winer noted a while back at Scripting News:

How much would it be worth to buy companies without having to transition their technology to their platform? There would be no retraining either, all the programmers in the companies they acquire would know how to work in the environment. Further, can you imagine that they’d charge universities to teach comp sci using their cloud?

“Given the cost of acquisitons, recruiting and training they can afford to blow a lot of money on free bandwidth, storage and CPU to make the buying and hiring process more efficient and increase the hit rate (the percentage of programmers who work out).”

Microsoft (MSFT) may have no choice but to raise its “generous” $31-per-share hostile bid for Yahoo (YHOO) if it hopes to acquire the company without a messy proxy fight. This according to Citigroup (C) analyst Mark Mahaney, who in a research note to clients today said Microsoft is unlikely to walk away from the deal. “We believe that a YHOO sale to MSFT–at a price likely higher than the initial $31 bid–is the most likely outcome,” Mahaney wrote, suggesting $34 per share as an agreeable price for a company of such strategic value to Microsoft.

After all, the software giant does need Yahoo to compete with Google (GOOG) effectively in the online advertising market–especially now that the search giant has acquired DoubleClick. “Google’s share of U.S. online advertising has significantly increased and the DoubleClick acquisition could materially ramp its display ad biz,” Mahaney said, adding that only by acquiring Yahoo can Microsoft potentially address the scale/liquidity challenge of its ad platform.

In order to build the necessary respect and win the mindshare of the Internet community, I recommend a recipe not unlike the one we’ve used with our TCP/IP efforts: embrace, extend, then innovate. Phase 1 (Embrace): All participants need to establish a solid understanding of the infostructure and the community–determine the needs and the trends of the user base. Only then can we effectively enable Microsoft system products to be great Internet systems. Phase 2 (Extend): Establish relationships with the appropriate organizations and corporations with goals similar to ours. Offer well-integrated tools and services compatible with established and popular standards that have been developed in the Internet community.”

–J Allard, corporate vice president of design and development for the Microsoft Entertainment and Devices Division, “Windows: The Next Killer Application on the Internet,” 1994

In February, Microsoft (MSFT) surprised industry watchers and embraced the idea of data portability, throwing its support behind OpenID, a decentralized digital-identity protocol.

This morning came the inevitable extension of that idea, the announcement of a partnership with five social networks on a new data-portability strategy. LinkedIn, Tagged, Hi5, Bebo (TWX) and Facebook have all agreed to use Mirosoft’s Windows Live Contacts API to, in the words of John Richards, director of Microsoft’s Windows Live Platform, “create a safe, secure two-way street for users to move their relationships between our respective services.”

In other words “Windows Live Messenger.” Certainly, it’s hard not to look at Microsoft’s announcement that way, given the simultaneous debut of invite2messenger.net, a new Microsoft Web site through which people can invite friends from participating social networks to join their Windows Live Messenger contact list.

“In completing this two-way street, both Windows Live and our partners have paid special attention to relationship context and privacy management in order to create the best possible user experience,” explains Richards. “We understand that just because people have a friend relationship with a contact on one social network, that doesn’t necessarily mean that they want that same relationship on another network. To preserve the context of the relationship, we are requiring that relationships be re-established in each experience with permission from the friend or contact, rather than automatically storing the data. We encourage you to visit www.invite2messenger.net to see these ideas in action, and to invite your Facebook, Bebo, Hi5, LinkedIn and Tagged friends to join you on the world’s largest instant messaging network, Windows Live Messenger.”

If the recording industry had its head any further in the sand, they’d have to insert a breathing tube.

Consider the British Phonographic Industry’s latest stroke of brilliance for combating illegal file-sharing: kick casual file-sharers off the Internet. Seems the BPI would like the British government to pass “three strikes” legislation that would require Internet service providers to take action against users who access pirated materials. A first offense would draw a warning, a second the suspension of Internet access, and a third the termination of that access. ISPs that refuse to comply could be prosecuted and might be forced to make the details of suspected offenders available to the courts.

“For years, ISPs have built a business on other people’s music,” said Geoff Taylor of the BPI. “Yet they have paid nothing to the creators of that music, and done little or nothing to address illegal downloading via their networks. … We simply want ISPs to advise customers if their account is being used to distribute music illegally, and then, if the advice is ignored, enforce their own terms and conditions about abuse of the account. But despite some agreements in principle, the ISPs refuse to do this on any meaningful scale.”

An astonishing demand, but one that the British government has taken seriously enough to include in a Green Paper its Department of Culture Media and Sport plans to release next week. Which, as some observers note, is really too bad. “Beyond shoving ISPs into the role of the entertainment industry’s police, judge, jury and jailer, it also is a legal solution to a business-model problem,” Mike Masnick writes over at TechDirt. “The entertainment industry is still unwilling to adapt its business model to the new distribution mechanisms of the Internet. That should be a reason to change the business models–not change the rules of the Internet. Only in the shortsighted minds of entertainment industry execs (and the politicians they support) would it make sense to change the platform to support a more limited business model, rather than embracing the new (more efficient) distribution platform and adjusting the business model.”

America Online acquired Time Warner for roughly $106 billion in stock and debt back in 2001. “I don’t think this is too much to say this really is a historic merger; a time when we’ve transformed the landscape of media and the Internet,” former AOL chairman and CEO Steve Case said at the time. “Time Warner will offer an incomparable portfolio of global brands that encompass the full spectrum of media and content.”

And it did. Problem was, AOL didn’t turn out to be one of them. And so today, Time Warner, which has been struggling for years now to turn AOL into the “digital media powerhouse” it was supposed to be, said it is splitting it in half.

“We need to complete AOL’s business-model transition and are working on separating AOL’s access and audiences business so we can run them independently,” said Time Warner CEO Jeff Bewkes. “This should significantly increase AOL’s strategic options for each of these main business sectors.”

“We have a lot to be excited about and there’s more good news to come.” This from Yahoo CEO Jerry Yang who, in his latest all-hands memo, seems to have forgotten not only about the “head winds” his company faces this year, but also about the 1,000 employees whose jobs he plans to “realign.” The full text of the memo (corrected for capitalization and punctuation) follows:

Subject: Building on our strengths

Yahoos -

First off, I want to thank you for the great job you’re doing staying focused on executing our priorities. There’s obviously been a lot of talk about Yahoo in recent days, and we won’t let it distract us from pursuing our transformation strategy.

Roy and I have communicated about the thorough review process our board is going through right now. The board is focused on maximizing the value of Yahoo’s tremendous assets for our shareholders. And it is going to take the time it needs to do it right.

As we’ve said, no decisions have been made about Microsoft’s proposal. Our board is thoughtfully evaluating a wide range of potential strategic alternatives in what is a complex and evolving landscape. And we’ve hired top advisers to assist through the process.

What’s become clear in the past few days is how much people care about this company. We’ve seen a strong show of support from our users, advertisers and publishers, reminding us how much they love our products and services. And I’ve heard from many of you–and from other friends and colleagues from around Silicon Valley and across the globe–that we need to do what’s best for Yahoo and our shareholders. I promise you that the board is going to do that.

The Microsoft interest highlights the tremendous strength of the Yahoo brand and assets: our half billion users around the world, our leading products and services, our open ad network, our technology and, most of all, our amazingly talented people.

We have a lot to be excited about, and there’s more good news to come. Yesterday we announced a digital music partnership with rhapsody and our acquisition of FoxyTunes, maker of the popular music toolbar plugin. Today we launched Zimbra 5.0, a next-generation email and collaboration suite that’s a great milestone in our open platform and starting-point strategies. And stay tuned for exciting announcements next week at the Mobile World Congress.

As we look to build on the progress we’ve been making, I want to make sure you all realize how essential you are to Yahoo’s success. As this process moves forward, we’re going to keep you informed. Your hard work and strong commitment are more important now than ever before.

Jerry