All Things Digital

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.”

Microsoft (MSFT) and Yahoo (YHOO) have apparently taken some of their merger negotiations out of the press and into the boardroom. The two companies are said to be in “last-ditch” negotiations to reach a friendly deal, despite threats from the software giant this week that it would launch a hostile proxy bid or walk away from the deal entirely.

DealBook, citing a person involved in the talks, says Microsoft has upped its offer by several dollars a share and refers to the fresh talks as an “enormous breakthrough.” That said, the person also cautions that talks could still be postponed or collapse entirely.

Oh, one last thing: a deal is still not imminent. My God, what a fascinating new development.

Anyway, it seems Microsoft’s sweetened offer isn’t yet sweet enough for Yahoo, which worries that the merged companies would be forced to divest their email and instant-messaging assets by antitrust regulators. “We need a lot of reason to do the deal, because it could be very bumpy once we agree,” a Yahoo insider told BoomTown. “How damaged would Yahoo be if it did not go through or if important pieces of Yahoo had to be separated from the company?”

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.”

Yahoo’s paid search performance may be the fastest growing in the industry, but that doesn’t mean it’s the most effective. In fact, some companies would argue it’s not that effective at all. Companies like BigReds.com, which is suing Yahoo (YHOO) for more than $1 million for click fraud.

The collectibles retailer claims it paid Yahoo’s Search Marketing unit, formerly known as Overture Services, some $936,000 between 2002 and 2006 for click-throughs. It assumed these click-throughs were from legitimate customers, but it turned out they were generated by Yahoo/Overture affiliates who received commissions based on the number of clicks their sites generated for advertisers.

“These clicks were not actual traffic, but were fraudulent clicks,” BigReds claims in the suit. “Affiliates of Overture used software programs, employed people, and/or directed people other than actual customers to click on plaintiffs’ links from keyword search results.”

To be fair, Yahoo did offer BigReds a refund for the fraudulent clicks. It just wasn’t as large as the retailer had hoped–$17,082.80.

Get this: A new report from the Standish Group claims that FOSS–free and open source software–is decimating the software market. To wit:

Open Source software is raising havoc throughout the software market. It is the ultimate in disruptive technology, and while to it is only 6% of estimated trillion dollars IT budgeted annually, it represents a real loss of $60 billion in annual revenues to software companies.”

Quite a claim. A contentious one too, since, according to research outfit IDC, Linux software actually contributed $10 billion to the market and is expected to contribute $31 billion by 2011. The 2011 forecast for spending on the entire Linux ecosystem? More than $49 billion.

Oh, and in case you were wondering, a Web search for “Standish Group”+Microsoft+”sponsored by” didn’t return any documents.

Salesforce.com will be acquired in 2007. We believe the growing importance of online delivery of software and business services will make Salesforce.com (and particularly its AppExchange hub) a very tempting target to both large players (like IBM, SAP, Oracle, Microsoft) still struggling to scale down and move online, and consumer-heavy players (like Google, Yahoo, AOL) trying to ’scale up’ to the business market as a way to further monetize their online presence.”

–IDC Predictions 2007

Salesforce.com CEO Marc Benioff (photo, right) wasn’t kidding when he said in May of 2007, “We’re the Google of business.” The customer-relationship software pioneer this morning announced an alliance with Google (GOOG) that will see it integrating Google’s online services into the Salesforce.com (CRM) platform.

Christened Salesforce for Google Apps, the offering embeds Gmail, Google Calendar, Google Talk and Google Docs directly into Salesforce.com’s core sales force automation, marketing and customer-service applications.

The partnership is quite an endorsement of business-workspace applications delivered from the cloud. It’s also an aggressive move against Microsoft’s (MSFT) Dynamics Live CRM, Redmond’s customer relationship management software, which is integrated with its Office suite.

Together Google and Salesforce.com are clearly seeking to challenge Microsoft’s multibillion-dollar Office franchise. As Marc Benioff, CEO of Salesforce.com, told the New York Times, “The enemy of my enemy is my friend, so that makes Google my best friend.” And perhaps even a potential acquirer.

Add Capital Research & Management Co. to the list of Yahoo (YHOO) shareholders apparently convinced the company will be acquired by Microsoft (MSFT). In a regulatory filing published yesterday, the company revealed that it had nearly doubled its stake in Yahoo.

On Dec. 31, 2007, Capital held 5.2% of Yahoo’s outstanding shares. As of March 31, it holds 10.1%. Now, while it’s possible that the company could have increased its Yahoo stake before Microsoft’s acquisition offer Feb. 1, it’s more likely that it increased it afterward, betting that the software giant would be forced to raise its bid to close the deal.

“That was smart,” analyst David Hilal said of the move, which makes Capital the largest Yahoo shareholder. “I’m still of the belief that Microsoft is going to buy Yahoo and they’re going to raise their bid. And I’m assuming they’re making the same bet over there [at Capital].”

In the run-up to Apple’s (AAPL) World Wide Developer’s Conference in June, the Mac faithful are sifting entrails for portents of iPhones to come.

Yesterday the creators of the popular ZiPhone jailbreak discovered in the latest test firmware for iPhone developers a reference to Infineon’s (IFX) SGOLD3H chipset–a chipset that supports 3G wireless broadband of up to 7.2 Mbit/s.

Now “industry sources” cited by TG Daily are claiming that the next-gen iPhone that runs on that chip will debut at WWDC. And there’s more. The device will be slimmer than its predecessor (by about 2.5 mm) and it will be offered in least two configurations at current price points: an 8GB version for $399 and a 16GB $499.

Normally a consumer product announcement at WWDC would seem unlikely. That said, it would make sense for Apple to uncrate a next-gen iPhone at the event this year, given its recent software roadmap and SDK announcement. Wouldn’t it?

According to the results of the 2007 CoreBrand Power 100 study (PDF), Microsoft (MSFT) has suffered significant erosion of its brand power since 2004. The software giant fell to No. 59 in Corebrand’s ranking of global brands for 2007, down from No. 11 in 2004.

Why? The market research firm speculates that the decline could have something to do with Apple’s (AAPL) “Hi, I’m a Mac” ads.

“The effect of Apple’s ‘Hi, I’m a Mac’ advertising campaign may have taken its toll on Microsoft,” CoreBrand CEO James Gregory said in a statement. “The launch of a series of new products, following a long, relatively dormant period, will be closely watched to see if it will have a positive impact on the Microsoft brand.”

Yeah, Vista probably had nothing to do with it …

Remarkable. Downtrodden handset maker Palm (PALM) has somehow managed to poach another Apple (AAPL) veteran: Lynn Fox, the company’s now former director of Mac PR.

First Jon Rubinstein, former head of hardware engineering at Apple. Then Mike Bell the company’s VP of CPU software, in the Macintosh hardware division. And now Fox.

What does Palm have up its sleeve that could possibly inspire Rubinstein, Bell and Fox to leave Apple at a time like this?