Technik

It's the data, stupid!

Fascinating insight from Tim O'Reilly in InfoWorld. He says open source licensing isn't working as planned, as the GNU license contemplates sharing of proprietary extensions for software that is redistributed.&. Instead what is happening is use of open source in web services such as Amazon, Google, etc. No need to share as no redistribution. Hence able to build proprietary extensions. More importantly, he suggests that the whole thrust of using Linux to defeat Windows is fighting the last war. Gates' insight was that software would become more important than hardware. Value would shift from computers to software. He was right. Now software is being commoditized. Value is shifting from software to data services like eBay, Amazon, Google. Someday Bill will wake up and see that his real threat came from that other tech company down the street in Seattle, Amazon.

Microsoft Blazes a Patent Trail (Of Tears)

Patents are rapidly rising in pre-eminence as we enter a period where large companies are much more nimble in buying or building new innovations than previously, avoiding the mistakes of IBM and DEC in the PC era of the early '80s.   Given that the innovator can be copied faster than they can establish a market position, IP becomes the critical competitive barrier.  InterTrust's success so far in their dispute suggests its victory or settlement with Microsoft is the next shoe to fall; at the moment the buzz is around Microsoft's recent loss to Eolas.  As Corante reports from an InfoWorld article

"Microsoft's loss to Eolas is sending a message to rest of the tech industry. Tech and legal experts are saying the ruling could affect a wide range of products that interact with Web browsers or services that rely on customer interaction through Web pages. The World Wide Web Consortium (W3C) is examining the impact of the ruling, but it could take months. Douglas Kline, chairman of the patent and intellectual property group at Boston law firm Testa, Hurwitz & Thiebeault, says it may be difficult for others to prove prior art. "Microsoft would know better than anybody what they were working on when the patent was filed. To the extent they did exhibit (prior art), the jury disagreed. So if Microsoft couldn't prove that their own activity didn't render a patent invalid, it could be difficult for anyone else to prove it."

The Rise of Machines

Thinking about the K Wave question, which is another way of asking, what is the Next Big Thing? Will the coming always-on world being brought to us by widespread broadband and wireless connectivity be the new factor of production that starts the cycle anew?

A broader new factor is digitization, of which the always-on world is a subset. It may finally take us out of the 'paperless' office into a new paradigm where documents are not created with the intention to print but created for a pure digital existence. More generally it will spawn a vast collection of web services, which are machine to machine communications.

We have only so much attention time to give to always on communication, but our machines can talk to each other orders of magnitude more. They will allow the scaling of an information economy beyond the bounds of the prior analog world.

Silicon Valley Tea Leaves: The End of the VC Game?

Friday's WSJ ran a front-page story on how difficult it may turn for new companies to make money in WiFi. Why? he quickness of the market dominant tech companies to respond.In the prior high-tech cycles, the entrenched tech leaders were often overtaken by the little furry mammal companies. This time the entrenched leaders have stolen from the VC playbook and quickly jumped into the WiFi arena. Cisco bought two leading compaes, Aeronet (Clarity) and Linksys, and dominates the access-point market. Intel is commoditizing WiFi chips so rapidly it caused the leader (Intersil) to sell out. Verizon and SBC are jumping into the hotspot business, following T-Mobile. Even Microsoft is involved, having launched its own consumer line of access points. In the mid-90s, James Fallows of The Atlantic told the tech leaders at Agenda that they were about to become a normal industry. How right he was. Now we are subjected to antitrust claims, get out-lobbied by the entertainment industry, get dissed by a standing President in favor of old-line industries, and are outsourcing feverishly to China, India and Russia. PCs are a slow-growth, mature business; enterprises have cut back on tech purchasing; and a debate rages in the Harvard Business Review over whether IT matters.

The implication is that the rules may have changed. Instead of this being another cyclical downturn in Silicon Valley, it may reflect a more fundamental maturing of the tech game. The 'normal' process of starting a company, getting VC funded, and making it rich, may be over.

Patent Power

Research in Motion (RIM) late yesterday was barred by a U.S. judge from selling its BlackBerry handheld or any accompanying services in the U.S. as a part of the company's ongoing legal battle with NTP. The injunction will remain in effect until all of NTP's related patents expire on May 12, 2012. The judge then stayed the injunction, pending an appeal by RIM. The court also ruled that RIM must pay NTP $53.7 million in damages. If RIM fails to win its appeal this decision could effectively end the company's ability to do business in the U.S. market. The decision has also quieted rumors that an IT integrator like Hewlett-Packard might acquire RIM. RIM and NTP have been engaged in a legal fight since late 2001, when NTP claimed that RIM infringed on its patents covering the use of wireless communications with email systems.

--> this following InterTrust's success in preliminary skirmishes in their patent suit against Microsoft. Imagine the impact if it were not settled and InterTrust succeeded; they would be able to shut down certain Windows operations in the US.

SIP = MP3

Web 2.0 is emerging as quite an interesting collection of technologies: WiFi, IM, blog, RSS, social networks .. and now SIP:

An Internet pioneer has started a Web phone company. Michael Robertson is marketing a device he says connects to broadband connections and lets users send and receive calls to other such phones around the world at no charge. "Today few people know about this," he said. "But it will fundamentally change the telephone business, just as MP3 has done with the music industry." Robertson founded MP3.com, one of the Web's first file-sharing sites. He is taking on Bill Gates through his next company, Lindows, which makes a Linux based windows OS. His new company, SIPphone Inc., is taking orders via its Web site for the devices, priced at $129.95 for a pair, but it shows no pictures of them.

Silicon Valley Tea Leaves: VC hit rock bottom?

AlwaysOn reports that Jim Breyer of Accel thinks "that we are near the bottom of the venture capital cycle. We are not quite there yet, but we sre getting close." He adds: "Our best experiences have been with startups that deliver their first product to market within 12 to 18 months ... If the target product development cycle& is longer than 18 months, then the chances of matching the product to the customer are greatly reduced. On the other hand, if it is under 12 months, one really questions the defensibility of the product. In our experience, that 12- to 18-month new product development sweet spot, with a group of 10 to 30 engineers or developers, is the ideal model."

Silicon Valley Tea Leaves

It appears that an interim bottom in VC investing occurred last Dec02 (some pundits say Feb03), as VC activity has picked up, although valuations haven't budged much. Yelnick noticed a change in attitude of the recently disemployed from seaking jobs to working on business plans. Headhunter activity also picked up. Were happy days about to be here again?

This turnaround seems to have slowed. Headhunters activity has slackened, and price discounting by the major search firms is rampant. (Several went public in the mania, and are visciously dropping price to maintain revenues - is a Martha Stewart story just ahead for them?) Many resumes chasing the open positions are coming from the employed not disemployed, and they are more often the ones hired, leading to a 'musical chairs' of new opens to replace old ones but only a modest increase in overall positions.

Perhaps this is the summer doldrums, perhaps a normal hesitation before a continuation of the trend (ie normal wave action), but it raises a momentary caution flag.

Mixed VC Signals

Activity has improved but not valuations, and until they do, best to hold off.

Tech industry's glass again looks half full - Wall Street Journal (sub req)
At the Wall Street Journal's "D: All Things Digital" conference,
technology executives appeared remarkably upbeat about the near term
fortunes for the sector. A few of the positive signs: new technologies
(e.g. wireless networking, digital music) appear to be gaining broad-based
acceptance, expectations are more realistic, and new start-up companies
are starting to attract VC financing. The consensus opinion appears to be
that "there's some light at the end of the tunnel" for the beleaguered
tech sector. For venture capitalists with the ability to look three years
ahead, now is "a good time to invest." Entrepreneurs are even starting to
accept the new investment environment: "Venture capitalists are not
funding stupid things anymore. It forces you to be more thorough, to build
a better team, so there is market pressure early on in the process." or a
venture capitalist's perspective on the WSJ conference, see Venture Blog.

VC rebound hopes stagnate - Silicon Valley Biz Ink
As you know, VC investment activity has slumped to a six-year low with
many Silicon Valley investors skeptical that the industry has yet to
stabilize. According to Bill Reichert of Garage Technology Ventures, "Both
you and I know we're not where we were in the mid-1990s. There is a huge
difference between the absolute level of activity and the direction of
activity. Clearly the fact [is that] the direction of VC investing is
dramatically different and that means the whole environment is different."

Bloggers Hack the Search Engines

How blogs increasingly "clog" online search results. While
commercial websites are paying to enhance their placement in search
results via keywords and other means, Wired says that "with no deliberate
effort, many dedicated weblog publishers are finding their blogs rank high
on search results for topics that, oftentimes, they claim to know
practically nothing about." Blogs often place high in search results
because of the frequency with which bloggers update their sites, and
because blogs often have lots of inbound links from other sites - two key
factors in typical search engine rankings. "More and more, I'm running
into myself on Google," said blogger Russ Beattie. The story is likely to
add fuel to the rumor that Google is preparing to remove blogs from its
main search results and create a separate search function for blogs.