In the rush to commercialize cloud computing, is security getting overlooked?

The promising technology of Cloud computing recently suffered its first serious bout of growing pains when Microsoft/Danger, which provides cloud computing services crashed and lost all of T-Mobile Sidekick customers’ mobile phone information on their servers and back-up. That has to have cast a pall of concern over corporate customers evaluating the wisdom of outsourcing their relationship with their customers to a third party. Microsoft was at fault, but T-Mobile gets the blame. The other reasoning that has to be running through customers’ mind is that with an emerging technology, what can go wrong will. Anyone who has experienced Microsoft’s blue screen of death can attest to this.

The other vulnerability cloud computing customers face is security. Imagine if the T-Mobile Sidekick disaster had been a raid by hackers instead of a server farm and back-up meltdown. In a world of computer hackers that have become expert at finding the flaws in each new release of software, cloud computing has to offer an appealing target. And it’s not only financial records. Cracking into a server farm is the equivalent of breaking into the vault of a Swiss bank: personal records in the millions and not just one credit card company but charge accounts for them all. All of these problems will get solved in time as vulnerabilities get identified and fixes are implemented. The question for anyone contemplating being an early adopter is “do I want to be the guinea pig that finds the bug?” like T-Mobile.

Perhaps the greatest vulnerability is the lack of a single point of contact ensuring the security of the cloud computing solution. If a client buys the computing resource and storage capacity from Amazon, Microsoft, Google, or another cloud supplier; he purchases middleware from one or more third parties; and he gets applications software from someone else, the only one that has a vested interest in security across these different vendors is the client buying the service. If a break-in occurs finger pointing ensues. More importantly, hackers understand this vulnerability and seek out the weakest link in the collection of elements comprising a solution for any given client. For example, they might find the back door in a middleware program that can be used to gain entry into the main database.

Google’s cloud computing solution is called the Google App Engine. When asked after his introductory remarks at the Google Internet Summit May 5 and 6, 2009, in Mountain View, California to comment of security not being built into the architecture for cloud computing, Google CEO Eric Schmidt made the following statement. “The answer to your question depends upon where you think security should lie. Do you think it should be at the application layer? Or do you think it should be at some middleware layer... I think it’s too early to really know. It’s very strategic for us that people build—think of them as Ajax applications, Ajax++ (see note) with all the extensions—because that displaces the traditional PC dedicated client architecture… I don’t know how security will play out. I’m not aware within Google of a lot of activity at the applications level in security because the kinds of questions that are asked are still relatively early. Maybe we should fix that.”

Cloud computing is relearning all the security lessons that previous computing generation—the early mainframes, the minicomputers, and the PCs—already experienced. For those not familiar with them, the book “Cyberpunk” by Katie Hafner and John Markoff is an entertaining and informative place to start. You’ll follow the exploits of, among others, Kevin Mitnick who exploited the lax security that protected most minicomputer systems 30 years ago. In 1979, Mitnick gained unauthorized access to Ark, the computer system Digital Equipment Corp. (now part of Hewlett Packard) and stole DEC’s next generation RSTS/E operating system software—then in development, a crime for which he was charged and convicted in 1988.

Maybe security should be given more consideration in the development of cloud computing architectures.

Note: according to Wikipedia, Ajax (asynchronous JavaScript + XML) is a group of interrelated web development techniques used on the client-side to create interactive web applications. With Ajax, web applications can retrieve data from the server asynchronously in the background without interfering with the display and behavior of the existing page. The use of Ajax techniques has led to an increase in interactive or dynamic interfaces on web page and better quality of Web services due to the asynchronous mode. Data is usually retrieved using the XMLHttpRequest object.

Computing in the Cloud: Re-Emergence of the Mainframe

Waking at 5:30 in the morning on Thursday August 13th hoping to beat the rush of commuters, I got dress and on the road to San Francisco from San Jose to attend the 2009 OpenSource World, Next Generation Data Center and CloudWorld conference at Moscone Center. It is a shadow of the O’Reilly OSCON event in San Jose from July 20th to 24th, I overheard a fellow Open Source attendee say as we waited for the first keynote of the morning from Lew Tucker, VP and CTO at Sun’s Cloud Computing operation. (Without his aviator frame glasses, Tucker bears a resemblance to the actor Steve Buscemi—the talkative kidnapper in the movie “Fargo.”)

After a welcome and introduction from Jeff Kaplan, THINKstrategies and CloudWorld Conference Chair, Tucker took the stage to began his keynote “If Cloud Computing is the Answer, What is the Question?” Tucker comes with the right credentials for discussing the topic. He started out as director of advanced development at Thinking Machines Corp.—the massively parallel processor (MPP) company founded in Waltham, Massachusetts in 1982; their bankrupt assets acquired by Sun in 1994. MPP was one of parallel processing various schools, containing the symmetric multiprocessor branch—today found in its simplest form in the dual core processor in PCs and Macs—and the massively parallel branch—found now in the blade servers of the large-scale compute farms populating the Internet.

The blade server MPP architecture is the workhorse of Internet commerce. Every time a user logs onto Amazon.com and places an order, he’s talking to one of the e-tailer’s several geographically dispersed compute farms. The large-scale deployment of these computing resources is reducing the cost of computing to on the order of 10 cents per CPU hour, according to Tucker. This economic reality is making cloud computing attractive to Fortune 1000 companies looking to reduce their IT costs, by adopting a “pay as you go model” rather than the large upfront equipment investment amortized over time. Ironically, in the early days of computing, the high cost of computers made it manditory to centralize the computing resource and make it available by remote terminals. Today, the opposite is true, the low-cost of computing is making it more practical to distribute low-cost cloud computing via remote terminals. (See afterword below.)

Tucker stated that the ubiquitous availability of broadband is the other factor contributing to the desirability of cloud computing. The widespread adoption of self-service e-commerce and the large accumulation of data on the web have also combined to validate the cloud-computing model. Tucker sees this only increasing with the expansion of machine-to-machine communications—On-Star calling in upon detecting air bag deploying, vending machines reporting low inventory, a building computer system monitoring and reporting on equipment operation, energy use and maintenance requirements, and the list goes on. This availability Tucker said is tempting large corporations to consider renting cloud computing resources rather than building the capacity in house. He points to Amazon’s success with SmugMug as evidence for cloud computing.

Started three years ago, SmugMug is a photo-sharing site that hosts the photos of professional photographers (they looked professional to me). The company of 50 employees uses Amazon S3 (Simple Storage Service) cloud solution to store its 686,256,409 photos (adding at a rate of 10 terabytes of new images each month). According to Amazon, the company has saved roughly $500,000 in storage expenditures and cut its disk storage array costs in half—all with no increase in staff or datacenter space. A most high profile example is salesforce.com, which offers a cloud platform that customer develops applications on. Adtran Inc., for example, created an app for mobile devices that allowed its sales force to access customer information. The crown jewels of a corporation—its sales information—residing in the cloud.

To listen to Tucker, you begin to see information technology as a set of Lego blocks that anyone with software expertise to provide the connection can put together to achieve a desired solution. The server farms provide the physical plant. A data center OS deals with this physical plant and an applications OS deals with the software plant. For example, Google’s cloud computing platform, Google App Engine, is essentially, “HTML 5, web browser applications, with a back-end server that uses TCP/IP and RPC (Remote Procedure Call (RPC),” according to Google CEO Schmidt. Developers create applications on Google’s infrastructure free up to a point.

Information technology development is a continuous work in progress and cloud computing is the latest incarnation. Its greatest adherents are companies—salesforce.com—emerging to serve new needs (increasing the productivity of sales teams) that didn’t exist before. When and if mainstream enterprises decide to follow suit en masse is anyone’s guess, but I suspect it’s not a matter of if but only when if history is any indication.

Afterword:

Mainframe time-sharing found its first commercial success at Dartmouth College in 1964 in the form of DTSS (Dartmouth Time Sharing System). Students submitting programs to be run on the college mainframe, a GE-235, could enter the program using a Teletype (TTY) machine (an electro-mechanical printer and keyboard that had a communications facility to talk to other TTYs. The DTSS system used another mainframe, a GE DN-30 (Datanet-30) to handle communications to and from the TTYs. It was a one to many architecture with the TTYs at the ends and the mainframes, emulating a TTY machine in the center. DTSS was the creation of Tom Kurtz and John Kemeny. The web site http://www.dtss.org/ has been set up to recreate the first DTSS for those interested in seeing what the precursor to cloud computing was like in the early 1970s. The site offers web-based emulators for both Mac and Windows.

Plus ça change, plus c'est la même chose.

Brainstorming at the Elephant Bar in Campbell

I had lunch recently at the Elephant Bar in Campbell, CA with Tom Miller who is the executive director at the Society For Information Display. In the few minutes I spent waiting for Tom, the lunch crowd I noticed was a mixed demographic: middle-aged businessmen strategizing, retirees getting together to catch up on family and friends, soccer moms treating themselves to a Friday lunch. Tom and I fit into the first group. He was on the editorial advisory board when I worked at ISD Magazine in the late 90s. Tom is a great source of information on a wide range of technology areas from displays to web ventures he’s come across in his consulting work. After we were shown to a booth with seats so close to the table they resembled coach class on an airplane—Tom’s analogy, the young waitress asked us for drink orders—diet coke for Tom, sparkling water for me.

The last time we got together, he and I spoke about Emagin, a display company that makes an OLED (optical light emitting diode) array built into military near-eye helmet-mounted display applications. I mentioned that the company had turned a profit and we got into a discussion on commercial application of the technology—watching video, video gamers (especially combat games), etc. He brought up the drawback for consumers. Being so near the eye the display can cause motion sickness and dizziness. The problems have been solved for military applications, Emagin’s target market—a $1B-oportunity last year and tripling by 2012 says the McLaughlin Consulting Group. Producing a cost effective consumer offering is yet to happen, though there was buzz last year that Apple and Sony were developing navigation/video sunglasses, apparently overzealous speculation.

The waitress took our order: soup and salad for me and a chicken salad for Tom. From displays we got onto the topic of print publications and their plight as advertising abandons print for on-line; the reality made plain by the Conde Nast’s closure earlier this month of “Gourmet,” “Cookie,” and “Modern Bride” on the advice of McKensey & Company. The “New York Times” reported that the publishing company had lost 8000 ad pages. Assuming a modest ad page rate of $3k to $5k that’s $24M to $30M in lost revenue.

The alternatives to save print magazines we discussed ranged from taking the loss in the print publication and generating revenue elsewhere—in-person conferences—and selling conference proceedings afterwards, selling e-mail lists, fee-based on-line activity such as webinars, marketing surveys, social networking communities. The print edition would serve as outbound communications vehicle that hits subscribers’ desks every month to build readership loyalty.

Tom mentioned an effort at Stanford University being led by government and major publishing companies to improve the efficiency of the business model for print media. On the expense side of the ledger, besides the variable expenditure for paper, there’s the large fixed cost in administrative and editorial labor, postage for distribution, and the printing plant. There has to be enough advertising revenue to cover these outlays. Government incentives can help—postage for example. Revenue has to cover the rest and here too government incentives could help—e.g. tax breaks for running print ads.

The waitress interrupted us with our orders and refreshed our drinks as Tom and I got onto the topic of the free business model of the web. He asked if I had heard of changethis.com. I hadn’t. It’s a site that publishes manifestos. Later in the day, I downloaded "Your Butt’s in the Wrong Seat, A Manifesto for Public Transportation," a 12-page piece by Ryan Barton making a case for using public transit. The model looks very labor intensive Tom said. You submit your manifesto to an editorial evaluation and only those that pass muster gets published (perhaps a staff of volunteers that administer and edit?). The site is owned by 800ceoread.com, which publishes business books, presumably with some success to afford changethiscom, (which could potentially find book authors for its parent).

Tom brought up another site with a free model, AnchorFree.com founded in 2005 by Silicon Valley entrepreneurs, David Gorodyansky and Eugene Malobrodsky. Their goal was to impact user privacy on the Internet by putting users in control of their data while online. Tom described the software you download for free as enabling browsing through a VPN, thus keeping your activity on the web private. With some venture funding the founders are now looking to monetize the site’s 300 million downloads (!) by offering ad space within the VPN. You would think this a no brainer. I suggested monetizing AnchorFree by soliciting donations from users. With that many download, asking for a dollar donation each and getting a 10 percent return would pay the bills for a while.

We finished our meals and the waitress returned to bus the table. All in all the meal had been most enjoyable and informative. Tom picked up the tab—thanks Tom—and we headed out into a bright, warm and humid Santa Clara Autumn afternoon.

Trapped in a enclosed space at Stanford Radiology MRI Lab for 90 minutes

It’s Monday morning, October 5, 2009 and I’m being shot up with gadolinium in my left arm as I lay strapped onto a sliding table the width of my shoulders and over seven feet long. I’m in the home stretch of a procedure that will eventually run for around 90 minutes. Having arrived here at 7:00 o’clock this morning and voluntarily submitted to this procedure, I’m in a room that reminds me of the sterile inside of a UFO as abductees describe it. Set to accommodate the huge white General Electric MRI machine, the temperature makes me feel chilly, dressed as I am in flannel one-size fits all open-front hospital gown and baggy pants. The long table I’m on is at the mouth of a tunnel that is three-feet in diameter. (Freud would have a field day.)

I began the day at 5:30 this morning, outside still dark with the temperature in the low 50s Fahrenheit. It’s the ideal coolness for my morning run that I’m delaying to drive to Stanford Medical Center in Palo Alto for an MRI of my heart my doctor has ordered. I have a heart muscle that has shown signs of wall thickening as a result of 30 years of daily running. Though this occurs in everyone who regularly exercises vigorously, doctors are looking at heart wall thickening as a possible cause of athletes, who appear perfectly normal, keeling over from heart failure. This can occur for a whole host of reasons: leaking heart valve, undetected heart damage from disease or injury or a genetic heart defect, among others. Considering the over-60,000 miles I’ve put on my heart over the years, I’m expecting this MRI angiography to eliminate all of these culprits.

The drive north from San Jose to Palo Alto retraces my commute in past years, having worked in offices at Waverly and Lytton and Emerson near Hamilton: North on Monterey Highway to just past East Alma Avenue, there a right turn and then left onto Third, north to East Reed Street and right for a block and right again on South Fourth Street and the on-ramp to Interstate 280. On 280 west for less than a quarter mile, a San Jose Police Cruiser merging into the lane just ahead of me as we both begin the 50-MPH right curve atop the elevated on-ramp from 280 to Highway 87, the Discovery Museum barely visible off to our right and on our left two separate lines of headlights streaming to confluence with us at the San Carlos Street off ramp from 87. Cars from the two left lanes wanting over to the right; most of the cars in our lane wanting over to the left to avoid having to exit the freeway. Finally, the police cruiser—on its way to the police garage‎ on North San Pedro Street at the end of its shift—and I merge into the slow lane of 87 and begin the northward run to Highway 101. All of us spend our lives going somewhere, the stream of traffic on the main arteries a metaphor for the flow of blood racing through our veins.

The MRI procedure began with me getting out of my civilian clothes and donning hospital attire. I’m told to use the facilities before we begin because it will be a long time before I get another chance. I take the point. Pattering into the sterile room in white running socks, I’m struck by the size of the MRI machine, how white it is, and the size of the tunnel I will be rolled into. The attractive lady lab technician asks if I’m claustrophobic. I gulp, smile, and answer that I didn’t think so. As I lay on the table, my legs extending into the machine’s open mouth, she explains the drill I’ll be required to perform during the time I’m in the tunnel.

On her command, I’m to take in a breath, let it out and refrain from taking a breath until she says inhale—15 to 20 seconds tops, she says. She asks if I want a blanket and I quickly accept—I’m chilled by the air conditioning set to cool the equipment. After placing four electrodes on my chest in the general area of my heart, she straps me onto the table, wraps another sensor around by diaphragm—to monitor my breathing. Because the machine is imaging a moving object, instead of a relatively static one such as the brain or a knee joint, it needs to compensate for breathing and heart movement to create the 3-D image. The final apparatus is a curved plastic breastplate—I’m told it helps align the image—which she straps across my chest before we begin.

The drive north on Highway 101 from the Highway 87 on-ramp in San Jose to the Embarcadero Road exit in Palo Alto moved at the limit this morning, just before the full stream of northbound commuters floods the artery. Like my own arteries, the asphalt and concrete thoroughfare bearing the load of 101 traffic has deteriorated over the past 30 years, the analogy not lost on me as I travel toward the MRI that will reveal how well mine have fared over the same number of years.

One last thing, she says, stuffing my ears with plugs. You’ll need these as it gets noisy inside the machine. I’m not to be alarmed as it’s the sound the machine makes as it pulses a magnetic field through me to first align then flip the magnetic orientation of hydrogen atom protons in the water, comprising 75 percent of lean muscle in the heart. The protons’ rotation produces a miniscule magnetic flux that the MRI detects, thus creating a three-dimensional picture of the heart. Incidentally, these machines exert a magnetic force around 60,000 times the earth's own magnetic field effects—though nothing to be concerned about as magnetic flux produces no ill affects in tissue and cells.

A few seconds after she leaves the room, I hear her disembodied voice from speakers inside the dimly lit tunnel, that I now find myself in, and quickly close my eyes realizing I am going to freak if I keep them open. Just as I get my momentary panic under control and my breathing less labored, she asks if I’m comfortable and I say I am—liar, but I can’t admit to being a wimp. She says if I’m ready we would begin. I prepare for the sound and as soon as it starts that labored breathing returns. The sound is the shrill alarm of a truck backing up, but at a faster rate, two or three pulses a second it seems, and a different pitch. The sound reminds me of the staccato screeches accompanying the shower scene in “Psycho”—that rhythmic intensity but at a different pitch. I resist the flight response the sound invokes in me and will myself to relax. She’s no doubt aware of how I’m reacting to the machine. My breathing slowly becomes normal as I become accustomed to the sound.

When we begin the breathing drill, the tempo of the machine’s sound changes: same staccato beat, but slower. I count 15 to 16 repetitions as I hold my breath and wait for her to allow me to inhale again. Then she periodically changes the routine, telling me that the next time I must hold my breath longer and I count 20 repetitions before I breath again.

When I’m pulled out of the tunnel halfway through the procedure, I open my eyes and take in the bright light and expanded space of the larger room. She asks for my left arm for the gadolinium injection. According to Wikipedia, solutions of organic gadolinium—symbol Gd and atomic number 64 in the periodic table of the elements—are the most popular intravenous MRI contrast agents to enhance images. However, for anyone with impaired kidneys gadolinium side affects include hard, shiny, darkened skin that tightens and becomes extremely painful, joint inflexibility, loss of movement, yellow-colored eyes, painful joints, and lung, heart and organ damage. My kidneys are pretty healthy so I’m not concerned though I should have been informed rather than finding out from a google search.

Sliding back into the tunnel the second time was a piece of cake. I had become accustomed to the confined space. We finished the series of breathing drills and concluded with the same sequence of loud staccato pulses that began the procedure. And then like every event in life it’s over and I look forward to the prospect of caffeine, something I’d been denied for 24 hours before the procedure. As she removes my constraints and unhooks the electrodes, I ask her how long before the results are in and she says my doctor will have them within the week. I thank her for getting me through the process and return to claim my civilian clothes and start my day. It’s 9:00 o’clock on a beautiful October morn. What could be better than that?

Boom in SMS digital mobile phones depositing and dispensing electronic currency

The international financial services industry is beginning to leverage the enormous subscriber base mobile network operators (MNOs) command, 4 billion in 2008 according to Wireless Intelligence, the GSMA (the GSM mobile phone operators trade association) research arm in London. Banks are initially targeting consumers in the third world by converting their mobile phones into a mobile wallet where cash can be deposited to and spent from. The mobile wallet has generated great excitement and has demonstrated a huge potential in the third world. Electronic currency enables the mobile handset to dispense cash and accept deposits through a bank-affiliated merchant or MNO airtime reseller, thus enabling customer savings and even microloans. The capability leverages the short message service (SMS) on nearly every mobile phone.

Today, most electronic currency successes have been within national borders, but enabling the 190 million migrant workers—3 percent of the world population—to send electronic currency home via mobile phones is the next application financial institutions and MNOs are targeting. And for good reason, according to the World Bank, in 2008, migrant workers sent $433 billion to their home countries, most in the third world.

What’s surprising is how rapidly electronic currency is taking hold in the third world. At the Mobile Money Summit 2009 from June 22 to 25 in Barcelona, Caroline Pulver, FSD (Financial Sector Deepening) Kenya, an independent trust developing inclusive financial markets reported on the impact M-PESA (mobile, PESA money in Swahili) has had on the country. Pulver’s research found that by May this year, 40 percent of Kenya’s adults had used the service. The table below shows what Pulver found Kenyans spent their electronic currency on.

Usage Percentage
Store/save money for everyday use 14 percent
Store/save money for emergencies 7 percent
Pay bills 2 percent
Send money 25 percent
Receive money 28 percent
Buy airtime for someone else, 8 percent
Buy airtime for myself 14 percent

According to the central bank of Kenya, at the start of 2009, there were over 7000 M-PESA agents. This represented substantially more points of service than the combined number of bank branches (887) and ATM (1,435) in the country—serving 6 million customers or 15.3 percent of Kenya’s 39 million population. Since the program’s launch in March 2007 until February 2009, the cumulative value of M-PESA money transfers had reached $1.5 billion. As of February 2009, the monthly value of person-to-person transfers was $190.3 million.

Sponsored by the UK-based Department for International Development, M-PESA began by using Safaricom’s (a subsidiary of UK-based Vodaphone) airtime resellers to issue microloans that borrowers would repay at an interest rate reduced by eliminating the overhead conventional microloans carried. However, the tech-savvy, skilled worker in Kenya began using the facility to transfer cash from working husbands in the city to their families in the country: Safaricom had unintentionally become a bank with its handset providing a teller function and it airtime resellars dispensing cash. Today, according to Stephen Rasmussen, technology program manager at CGAP, an independent policy and research center housed at the World Bank, 70 percent of M-PESA subscribers are banking customers, not the unbanked customers originally targeted.

The service’s popularity drew the attention the Western Union Company, which has a 17 percent share of the international remittance market. (The World Bank estimated that Sub-Saharan Africa received around $20 billion in remittances in 2008, with Kenya accounting for $1.3 billion.) In December, last year, Western Union partnered with Vodafone, parent of Safaricom, to pilot a cross-border Mobile Money Transfer (MMT) service between the U.K. and Kenya. The service would enable customers to send remittances directly to Safaricom mobile subscribers in Kenya in minutes from the UK. The World Bank estimates the fees for transferring $200 cash from the UK to Kenya at $26.64: $15.25 for the money transfer and $5.69 for the currency conversion. It will be interesting to see if the cost comes down or is increased by $0.11 charge for the SMS message charge for an electronic currency transfer.

In June this year, Western Union expanded its reach in international remittance signing a deal with Zain, owned by Kuwait-based Mobile Telecommunications Company KSC, to enable Western Union currency transfers to Zain handset with the Zap platform. Zain’s service is available in Tanzania, where it’s larger than Safaricom, and Kenya where it’s smaller. Zain other distinction from Safaricom is enabling consumer-to-merchant purchase eliminating the need for a cash transaction. For the unbanked the additional fee will makes the transaction uneconomical. However, for business-to-business transactions, the service will have great appeal.

Celpay, owned by South African FirstRand bank, is the another service that has gotten a substantial following in Zambia and the Democratic Republic of the Congo where the DRC government uses Celpay to distribute government payments to former soldiers who have turned in their guns. Registered customers can use their electronic currency for merchant transactions, monthly bill payments, and fund transfer between participating phones. The company’s model is unique first because it provides solutions to businesses rather than end customers. Second, its nascent P2P model reaches unbanked customers without mobile phones, by sending the payment to agents with phones who perform money transfers or dispense cash. In June this year Celpay was processing $25 million per month in gross transactions.

One common element that permeates these successes is that all flourished because they were plowing a green field. Nothing existed before they emerged to provide the service. Another is that each found regulatory agencies willing and able to permit the services to take hold and flourish. In the case of M-PESA, once its popularity got notice, the conventional financial services sector attempted to derail the project only to be rejected by the Kenyan government. In the case of the DRC, electronic currency was an effective means to pacify a military force surrendering its arms.

According to the GSMA, the successes in Africa are being attempted elsewhere in the world. A greenfield deployment in Indonesia, the AXIS mDUIT project, is due to launch in December, 2009. In the Philippines, the SMART Communications’ Island Activations Program hopes to bring electronic banking to isolated customers on remote islands. Mobile network operator Roshan hopes to build an M-PESA-like service in war torn Afghanistan. Electronic currency is taking hold in the third world and in won’t be long before it will get a foothold in the developed world as well.

ARM-Google Alliance Confronts Intel-Microsoft Dominion: Out of Chaos Comes Order

We’re in the throes of one of those major discontinuities that occur in technology evolution periodically. Actually there are two occurring concurrent and affecting one another. Entrenched suppliers hate such events because they are forced to develop new business models for producing revenue. One discontinuity happened with the announcement of the iPhone, which heralded the age of the mobile Internet. The second, precipitated by a genuine desire to bridge the digital divide between the first and third worlds, markedly drove down the cost of computing and heralded two new classes of computing device: the netbook and the smartbook.

The two computing devices are entirely different creatures. The netbook is the product of the traditional PC business, caught unawares when a social experiment got terribly out of hand: an experiment to create a low-cost product for the third world and somehow prevent it from being purchased by the first world. The smartbook is the result of the social networking explosion on the web spurred on by the iPhone creating a web application epidemic.

The netbook came out of the “One Laptop Per Child” initiative that Nicholas Negroponte, started while head of the MIT Media Lab. The program was a noble, well-meaning effort to provide a computer to every child in the third world: roughly a half a billion for an unachievable price of $100 each. That meant open source software and the lowest cost silicon—Linux instead of Microsoft, AMD instead of Intel. The nonprofit organization Negroponte formed, One Laptop per Child, to distribute the PC, shipped its first product the XO-1 at twice the target price: $199. Quanta Computer Inc. based in Tao Yuan Shien, Taiwan manufactured the unit with production stumbling along in fits and starts beginning in November 2007.

Quanta also announced plan to build a version of the laptop for the commercial market, something Asus International also had in mind with its Eee PC, which Asus showcased in two versions at Computex in June 2007. (Negroponte’s hardware and software reference design was well known and easily duplicated using an Intel CPU instead of the AMD unit.) The Asus offering initially contained a Celeron M mobile processor. Asus has since shifted to the Atom CPU, which is the main engine in nearly every netbook currently on the market as is Windows Vista—Microsoft couldn’t be shut out of a major class of portable computing platform. (Search “netbook” on net retailer’s tigerdirect.com and every unit displayed will feature Intel Atom and Windows Vista.)

The price tag on the Eee PC when it shipped in September 2007 ran $349—nearly twice the price of an XO-1 but still pretty inexpensive for a web browsing PC. Needless to say, Asus had plenty of orders to fill when production began. A rush of competitors hurriedly jumped on the bandwagon and the rest is history. The low-cost PC intended for the third world had jumped into the first.

Meanwhile, Intel shut out of the OLPC project in a disagreement with the organization set about building a comparable unit called the Classmate PC. In August this year, CTL Corp. of Portland, OR introduced its 2Go version of the Intel design priced at $399. The design is sold under other brands worldwide. Intel wanted the hearts and minds of the next generation of computer users. Building brand awareness and familiarity in school ensures loyal customers later in life.

As to which has come out the winner, the OLPC organization estimates around 750,000 XO laptops installed worldwide through March this year. Intel says it has shipped 700,000 Classmate PC's in 2008 alone and predicts it will sell over two million Classmate PCs in 2009. Capitalism triumphs over socialism but at a cost. Negroponte’s social experiment had the consequence of lowering computing cost for both the first and third. The average selling price for netbooks today is around $350, according to Taipei-based tech publication, Digitimes. The ASP for a notebook at the start of this year had been pushed down to around $795 according to Port Washington, NY-based market research firm NPD. And the lower priced netbooks are eating into notebook sales.

Figures from market research firm DisplaySearch shows netbooks represent 22 percent of the portable computer shipments the second quarter this year, up from 6 percent in the second quarter of last year. One reason for the popularity of netbooks could be the economy; consumers are opting for the lower priced computer while corporate buyers prefer to hold off replacing laptops until a better economic climate arrives. By then Intel and Microsoft and PC hardware OEMs can return to business as usual. Right? Not if Cambridge UK-based, ARM Ltd and Sunnyvale, CA-based Google and their allies have their way.

The advent of the low-cost netbook almost coincided with the arrival of the iPhone in June 2007 and the birth of the web browsing smart phone. The proliferation of web applications that followed the iPhone introduction cried out for a platform with a larger multi-touch, touch-screen display and keyboard. Enter the smartbook, which is an ARM-based smart phone in a PC enclosure. It runs Linux, Android, or eventually Chrome not a Microsoft OS—all but Win CE having not been ported to the ARM processor. However, the version now being showed doesn’t pose much of a threat. The platform that will challenge the Intel-Microsoft dominion is the +1 GHz-ARM-9 Cortex running the Google Chrome operating system expected out mid-2010.

Smart phone users wanting the web-friendly experience they have come to expect will now find it on a smartbook: instant on, day-long battery life, multi-touch touch-screen display, immediate access to social networking sites like YouTube, MySpace, Facebook, Linkedin, SMS, and a full up Qwerty keyboard all with a price tag much lower than a netbook. To be fair, network service providers will subsidize that lower price. And the subsidy will apply to netbooks and smartbooks, but the user experience will favor the latter over the former. The remaining questions are will the netbook close the user experience gap by the time the killer ARM-Google platform rolls out and will the ARM-Google solution deliver a compelling enough reason to switch.

Regardless of the outcome of the struggle between the Intel-Microsoft and ARM-Google camps, the bottom line is that hardware prices will be reduced. Scottsdale, AZ-based market research firm, In-Stat has suggested that pressure from some of the ARM chip vendors may push Intel to further lower prices on some of their computing devices in the future. That reduction will come from fiercely competitive market share battles in the growth regions of China, India, and South America—where price is a major concern. It will also come from competition for buyers in the U.S. and Asia Pacific. The high-tech world is changing quarter to quarter and the netbook-smartbook evolution is accelerating the process.

Fixing problems plaguing media-intensive, web-browsing mobile handsets

There are about 4 billion mobile devices in the world today, said Len Lauer, of which about 830 million are 3G today, but the vast majority of the remainder will be migrating to 3G in the next five to seven years. The COO of Qualcomm was speaking with Stacey Higgenbotham a staff writer with GigaOM during the Mobilize 09 conference held in San Francisco on Thursday September 10th defending the position that there’s plenty of life left in 3G now that 4G has begun to appear in the market. I was a fly on the wall listening to their conversation over the Internet thanks to LiveStream.com.

As with previous wireless technology transitions, 4G handsets will be a multimode devices switching from 4G to 3G when outside a 4G service area, which for the near future will be limited to dense metropolitan areas such as LA, New York, London, Paris, Mumbai… Lauer referred to the CTO of Verizon Wireless, Tony Malone, speculating that 3G networks would be carrying voice for the next decade. The major difference between wireless generations is in the bandwidth provided users: from 56 kbit/s up to 114 kbit/s for the previous generation 2G networks, up to 348 kbit/s to 7 Mbit/s for 3G depending on whether the handset was mobile or stationary, respectively. Next generation 4G will see bandwidths of 100 Mbit/s for mobile operation and 1 Gbit/s for stationary. These 4G data rates will certainly be required if social networking users begin capturing and sharing HD video and still images on their favorite on-line community.

However, bandwidth expansion is not a well-ordered process, more a series of fits and starts as the troubles plaguing AT&T in the wake of the new iPhone 3GS launch attests: dropped calls, extremely slow connections and a generally unpleasant experience. This contradicts the incredible, amazing, awesome… experience touted at the Apple rollout. Today the problem exists in the backhaul, the link between the cell tower and the wireless carrier’s network core, which routes the call to its final destination. AT&T needs to invest in boosting its backhaul capacity and it’s investing elsewhere—increasing the number of cell sites, etc.—to the chagrin of Apple.

And you can kind of understand AT&T’s behavior. The Smart Phone represents only 15 percent of the total market and contrary to the popular notion, a good many iPhones are being brought by the well-heeled consumer that can afford the acquisition cost as well as the $100/month subscription. According to the Wireless Association CTIA, there were 270 million wireless subscribers in the U.S. at the end of last year and 85 percent of this total, 229 million subscribers, are also demanding service providers’ attention.

What’s the problem with wireless carrier backhaul? As bandwidth speeds on cellular networks increase and packet-based mobile services attract more users, traffic growth is making traditional backhaul network designs unmanageable. To accommodate 3G build-outs, service providers are reengineering the mobile backhaul infrastructure using Carrier Ethernet technologies. The problem with Ethernet has been that packet delivery was non-deterministic. If the network got overloaded packets could be dropped, something voice packet cannot tolerate.

The problem is now being addressed with Ethernet IEEE 1588 Precision Time Protocol (PTP) and Synchronous Ethernet ITU G.8261, two standards that make Ethernet packet delivery more deterministic. Used together, the two achieve a high level of frequency synchronization a common defined time. Realistic studies in large-scale deployment scenarios indicate an accuracy of 50 ns—more than sufficient to ensure voice packets are delivered as effectively as the existing circuit switch delivery used today.

Still the technology may be available, but the will to implement lies with the service provider. Their concern as Lauer points out is getting a sufficient return to justify the investment. Lauer observes that for the service providers to reach a larger subscriber base, they have to reduce monthly access costs, while making larger infrastructure investments. It’ll be interesting to see how they solve the problem.

A short history of consumer driven technology development

We’re in the midst of yet another evolution in communications. This one is the social networking transformation in which mobile devices are not merely used for voice and E–mail but now Internet terminals for the many social networks we all belong to. It’s yet another example of an activity that began on our desktop and notebook PCs that have migrated over to our handsets, just as text messaging and e-mail did before. And as with every disruptive social phenomenon, those trying to serve this fast moving trend have been caught unawares and are trying desperately to catch up.

In the early part of this decade, users in the 100s of millions outside the U.S.—Asia, the Pacific Rim, and Europe—began to use instant text messaging as a lower cost alternative to voice. The carriers supplied this data service in the spectrum unused for voice calls, which cost them next to nothing and for which they reaped large profits. Instant and short text messaging became its own social phenomenon, with a use model unique from voice and e-mail. The messages were likened to whispering in someone ear—especially during meetings or when you didn’t want anyone but the recipient to know what was being said. In The Philippines text-messaging, citizens-organized daily protests resulted in the ouster of Philippine President Joseph Ejercito Estrada in 2001.

While instant text messaging continued building a following in the U.S., Internet-base social networking on a PC started taking off in early 2004 with the debut of MySpace. Membership went from zero to a million users from January to February of that year and the numbers kept rising from there. Social networkers were now hanging out on MySpace with their PC, talking on their cell phone and/or texting on their cell phone. Cellular service providers in the U.S. were oblivious of the trend. They continued making it more expensive to text than talk, while in the rest of the world service providers did the opposite. Is there any wonder European cellphone users were texting more than twice as much as U.S. users (according to Forrester Research reporting in 2005)?

By mid century, U.S. service providers finally realized that data service was a viable business model. In 2005, CTIA-The Wireless Association, cited an installed base of 190 million cell phones and 90 percent could send text messages and 60 percent of those texting were aged 18 to 27. (A great many of the texters were voting for their favorites on “American Idol.”) By this time, too, the Blackberry demonstrated to telephone service providers that there was a business providing e-mail access via a mobile handset for enterprise users. But, who would want to surf the web with a mobile handset?

In January 2007, with the advent of the iPhone, the notion of providing total Internet browsing on a handset took hold. The idea wasn’t entirely foreign to service providers as they had dabbled with the notion by supplying radios you could plug into your laptop and access the Internet over the cellular infrastructure. And the Blackberry could be pressed into surfing duties, but the experience was painful and cumbersome. However, service providers had no idea of what it was going to take to keep up with millions of iPhone users accessing and moving large media files around the 3G network, something they are now reluctantly coming to terms with.

It took a year but the rest of the smart phone vendors with the service providers excluded from carrying iPhones finally caught on to how to provide web browsing and similar handset functionality—a compelling user experience. This is where service providers find themselves today, facing growing numbers of smart phone users disenchanted with the slow response from the web. And it’s only going to get worse as Apple is no doubt on the verge of introducing an iPhone with full 1080p HD video capture and playback, 20-megapixel still image capture, and no doubt higher fidelity audio capture and playback.

For wireless service providers the once the wireless spectrum is completely utilized, there is nowhere to go except to offload traffic onto the wired infrastructure. The handsets and wireless infrastructure will have to contain increased intelligence to route wireless connections so as to preserve bandwidth while still providing a responsive experience to the user. It’s conceivable that, like toll lanes on congested highways, wireless service providers will begin charging a toll for a faster browsing experience. Those unwilling to pay will be subject to operating speeds that will begin to resemble dial-up 64 kbits/s or less as large numbers of users flood the system during prime usage time.

The more things change the more they stay the same.

Augmented Reality, Do I Want to Join in?

I’ve been interested in the next big enablers of the mobile Internet and I keep reading that they are likely to be LTE—the 4G wireless replacement for 3G and location technologies—augmented reality (much more intriguing). LTE is simply next generation technology replacing the previous and we can take that as a given. Everything will run faster; you’ll be able to move large files around quicker, etc.

Augmented reality, on the other hand, suggests something unique. According to Wikipedia, AR is a “real direct or indirect view of a physical real-world environment whose elements are merged with, or augmented by, virtual computer-generated imagery.” Your phone knows where you are using its on-board GPS and by accessing Google maps, it can determine what’s around you and can—with a touch-enabled screen—tell you about what’s around you.

I connected the term, which I heard today, with the Apple iPhone 3GS ad "Travel" in which the voice over asked if you want your own personal tour of Paris and declares “there’s an app for that” at which time the iPhone articulates “you’re standing at the center of Paris…” with a picture on the iPhone of the front of Notre Dame and the legend below “Point Zero & Notre Dame.” The iPhone app has a series of sites installed which pops up when the phone comes within range of the landmark (using its onboard GPS location finder) and voila!

I get the impression that the ultimate realization of AR will be a phone that is tied into a cloud-resident data base of all landmarks—not a preselected few a free app on the iPhone can store away. With the right app on your portable device, you will be able to ask the phone about anything you’re in the vicinity of—natural or man made—and it will give you all the relevant facts.

The reason AR will be successful is because of the enormous commercial potential the technology affords. The system that knows the exact location of Notre Dame in Paris will also know the location of nearby coffee shops, restaurants, and every other commercial establishment. Furthermore, the software that can tell you about the world around you is also cleverly evaluating you to determine whether to present you an offer for 10 percent off on a Latte from a nearby merchant or a special deal on a French author the software has determined you might like.

The great problem of becoming an integral part of an AR is that you’re being marketed to by the behavior you exhibit in the augmented reality. And the phone is the device that’s enabling it to happen. The device has not become big brother yet. All it currently has is GPS—the network knows where you are at all times (ironically, the average honest citizen is better monitored than nearly every parolee from a correctional institution), a compass—so the network knows which way you’re going, and an accelerometer which could detect if you’re moving or stationary. In the future, the plan is to attach biometric monitors—great for detecting medical emergencies, but wonderful for marketing to you if your blood sugar is low and you need a sugar fix—the patisserie is offering croissants at 10 percent discount with coffee purchase.

I begin to feel as if I’m part of a closed loop feedback system in which I respond to stimuli that are then readjusted to achieve some kind of behavior in me. The Stimuli are marketing incentives and the response from me is the purchase of a good. Great, I’ve become an element in a machine works that’s designed to endlessly cycle virtual coinage.

Presenting our lives for the social graph to view in full 1080p HD

I’ve had a chance to read through a number of articles this Labor Day Weekend on the next generation of smart phones. I’ve been struck by the innovation that chip suppliers and mobile handset makers are cramming into these small portable devices. All this innovation aims to serve users increasingly employing handset as a terminal into the “social graph.” I love the term social graph as it connotes a collective consciousness: what all the connections on all the on-line social networks have become.

And what are we putting into our on-line social networks: pictures, video, audio, and lots of text. These multimedia and text files provide tangible evidence of the significant as well as trivial moments of our lives: reminding ourselves as well as our connections of that trip to London, Paris, Taipei…; the birth of our first, second,… child; the Duran Duran, Grateful Dead,… concert…; the minutes and seconds of our lives.

Up until the first decade of the 21st Century, most of these memories resided in our mind, on paper, or stored away in boxes of photographs, 8-mm film, or VHS cassettes and DAT tape. Now, all of that emotional memorabilia has found a home in the social graph, stored away for as long as we keep our accounts active and available for others to view.

What’s making all this possible is the continuing availability of low cost silicon. This eighth most common element in the universe by mass, a tetravalent metalloid with the symbol Si, atomic number 14, and atomic mass 28.0855, has become to the information age what coal was to the industrial revolution. For the social networker silicon is providing the continuous improvement in the fidelity of these captured moments.

Texas Instruments’ new OMAP chip is promising to allow HD quality image and video capture and playback. The specs call for 20-megapixel photographs and 1080p HD video capture in handheld smart phone. How incredible is that! You will be able to capture an unheard of amount of visual detail to share with your connections. Though the images and moving pictures will only be as good as the eye that captures them, the detail will be there in every frame.

What’s propelling the continuing drive to electronically capture and share these transient moments? Are we all modern day Robinson Crusoe’s stranded on planet earth and needing the affirmation of our man Friday that our lives are meaningful, that what we do is contributing to some collective good for the world around us, and—most important of all—that we’re not alone in our small part of the infinitesimal huge universe?

Or maybe we just need to hangout and brag about what we've done.

Viral Marketing through Social Media

A couple weeks ago, I received a call from NZ, a serial entrepreneur I met a while back when I was an editor and he was a marketing exec at a high tech company. He was now teaching a class for the women 2.0 organization, which moves from venue to venue. This event was held in an office building on University near Alma in Palo Alto. NZ asked me to present 12 to 14 slides on leveraging social networking for marketing.

I had some free time and was already digging into the new phenomenon. I had been on LinkedIn for several years, pestering all the people I had met during my years in technical journalism to link in with me. Not only did it get me back in touch with long lost contacts, it also showed the power of all these connections, one being NZ. I also had a blog begun back in Autumn 2004, but I had not leveraged Twitter to help drive readership. I was also active on YouTube having posted some 30 odd videos. However, I was simply experimenting with a phenomenon.

I was now being asked to explain to a group of aspiring entrepreneurs how to leverage this social networking to make money. Where do I begin? In the world of on-line marketing, everything begins with a web site, the storefront where you meet your customers. Building a web site is pretty standard faire and I couldn’t add much to what was common knowledge.

Then it struck me. What modern marketing is all about is telling a story, the same story over and over adding unique twist with each telling. The most obvious example is the BMW-produced short videos starring Clive Owen in some clever plot twist aimed at convincing the viewer that BMW is “the Ultimate Driving Machine.”

The entire marketing effort at BMW from their commercials showing the construction of vehicles, to BMWs’ roles in movies like the James Bond series and more recently “Shoot ‘em Up,” keeps telling the story. As evidence of their success, the “BMW, The Ultimate Driving Machine” Facebook page has 30,873 fans, presumably owners or those aspiring to be.

How does an upstart entrepreneur tell their story with no money? For the short presentation to the Women 2.0 audience, I suggested finding an idea related to their business that goes viral. It’s a concept described in “The Tipping Point: How Little Things Can Make a Big Difference,” a book by Malcolm Gladwell. It’s what BMW and every major brand has spent $billions over time producing.

For my example, I suggested a wedding planner business started by a couple, Jill and Kevin. I suggested that J&K might create a website called J&K Weddings. To promote their business they might plan their own wedding, film it and put it on YouTube with their company name and website on the ending credits. To make the video compelling they might do a different walk down the aisle to the alter.

The result might look like the YouTube video JK Wedding Entrance Dance (http://www.youtube.com/watch?v=4-94JhLEiN0), which has garnered, nearly 23 million views in the month it’s been posted and still growing. Whatever business Jill and Kevin were in, it could have leveraged their viral YouTube video and the resulting mainstream publicity (appearance on “Good Morning America” and the Today Show (http://www.youtube.com/watch?v=Xd79E6I5CV4).

I wonder if the idea took hold in any of those in the audience. I keep checking the hot new videos on YouTube just in case.

What’s fueling the explosion of receiver/transmitters in cell phones?

The average smartphone today has a number of radios to serve all the communications functions being crammed onboard this compact portable device. To start, there’s the 3G or CDMA transceiver. Next, comes Bluetooth, the second most pervasive transceiver in today’s handset, according to Scottsdale, Arizona market research firm In-Stat. After Bluetooth, WiFi is the next most prevalent receiver. Finally, the GPS receiver is the last of the radios found on these devices, though more are planned. They include NFC (near field communication) and RFID. The former is typically used on application like automatic toll taking and the latter for tagging merchandise or automotive keyless entry. NFC is the technology associated with electronic money—paying for fast food or favorite café latte. With such a large number of radios, the average smartphone is beginning to look like a miniature microwave antenna farm.

Bluetooth was intended initially as a personal area network for moving voice and data very short distances. However, with the advent of large multimedia files, Bluetooth is being pushed—Bluetooth 3.0—into higher data rates to accommodate video and picture sharing phone to phone or phone to consumer device or PC. While Bluetooth has been pushing up in speed, WiFi—initially added to handsets to allow Internet browsing at local hotspots is being offered as the natural means of transferring multimedia files. WiFi is being pushed with the latest version—802.11N—to achieve data rate from 54 Mbit/s to a maximum of 600 Mbit/s. “Wi-Fi's penetration into handsets has more momentum than the bad economy,” says industry analyst Michael Morgan with Oyster Bay, NY-based ABI Research. "This year WiFi is on track to see 144 million handsets shipped, with forecasts for 2011 at just over 300 million."

Look for GPS to be the next radio to begin receiving from the average smartphone, thanks to national legislation that requires phones transmit their position for emergency response teams. Boston, Mass. Market research firm Strategy Analytics reckons “global GPS penetration of total handset shipments reached 15% worldwide in 2008 and is expected to reach 21% by the end of 2009. “ Fuelled by the Oct-07 acquisition of NavTeq, Nokia GPS enabled smartphones dominate the global market. But with increasing interest in navigation and mapping apps, Research in Motion and, particularly Apple, are closing in on Nokia's lead.

Which of the other radios possible on a cellphone will experience similar explosive growth is anyone’s guess, but one is sure to emerge.

PC Industry Looks Poised for Growth

Good news came out of China during the ViMicro International second quarter financial results conference call. Shipments of the company PC camera processor chips showed a 123 percent increase in the second quarter. The company continues to experience strong demand into the second half of the year. David Tang ViMicro CFO points to netbooks as the major driver behind this growth. However, he also sees strong demand for camera processors for high-end desktops as well as for notebooks.

Austin, Texas-based market research firm DisplaySearch echos Tang's accessment predicting mini-notebook (netbook) shipments to double year over year to more than 30m units in 2009, while notebook shipments flatten. Netbook growth in China will exceed all other regions of the world jumping from 1.1 million to 3.9 million from 2008 to 2009. http://www.displaysearch.com/cps/rde/xchg/displaysearch/hs.xsl/071309_mini_note_netbook_shipments_to_double_y_y_to_more_than_30m_units_in_2009.asp

This is good news for the high tech sector that has languished in recent months owing to the worldwide economic recession. Forrester Research is holding out for high tech to hit bottom in the third quarter and rebound in the Q4. Research firm IDC is predicting new product introductions coming this fall, including low-cost, thin-and-light consumer portables, low-cost Intel Atom-based all-in-ones, and, of course, Windows 7, should provide a spark that helps to push market towards positive shipment growth over the next 12 months.

Leveraging “I Love Lucy” to a Sell Network Processor

When I worked for Lexra, a start-up since sold to its rival MIPS Technologies several years back, we were faced with the challenge of explaining in easy-to-understand terms the operation of Lexra’s network processor unit (NPU), the LX8000, nicknamed NetVortex. If the Lexra NPU were an internal combustion engine, its equivalent would be the BMW S70/2 V-12 power plant inside the McLaren F1, which on March 31, 1998 set the record for the fastest production car in the world at 240.1 mph (386 km/h). In other words, the LX8000 was flat out fast.

It was in 2000 and ST Microelectronics was in the process of building a network processor chip to compete with every other chip company hoping to cash in on the Internet build out happening at the end of the last decade. In addition, several high-profile billion-dollar acquisitions of network processor design companies were creating urgency among major semiconductor companies to build or acquire an NPU solution. Even Intel was rushing its XScale line of network processors into production. We saw the potential for a big time buyout if we got the right deal and we were betting this was it.

Our sales guy, ML had set up a meeting to present the NetVortex solution to ST Micro’s decision-making team and we needed something to grab the team’s attention. I suggested a clip from an episode of “I Love Lucy” to demonstrate the problem before launching into the full explanation of how NetVortex provided the most elegant solution: a high speed pipeline running fast enough to keep up with OC192 bandwidth—just under 10 gigabits per second; a series of packet processors along the pipeline each handling a data packet; and a control processor handling the control information to route the packet to the next stop in the network.

I called my buddy Michael Labash at designbymikee.com and asked him to digitize the clip from the “I Love Lucy” episode for me. I dropped the clip into the PowerPoint presentation we were using for the pitch. MJ and our CEO CC flew to Europe, made the pitch, and played the video. It shows Lucy and Ethel on a chocolate candy assembly line with a belt rolling past them containing equally spaced truffles. Their job is to take individual truffles and wrap them in paper and put them back on the assembly line—sounds like packet processing, yes? The belt moves slowly at first then picks up speed as comedy ensues.

The clip was received with the hardy laughter we had hoped for from the international audience attending the meeting and we got to move to the next stage of negotiations—getting upper management to sign the P.O. Unfortunately, unknown to all of us, the Dot-Com Bubble had burst on March 10th and every major corporation worldwide was dealing with the fallout. The deal we thought was done quickly became undone and no amount of humor was going to put it back together.

In search of painkillers in Taipei

It’s around eight in the morning on Wednesday June 3rd at the Grand Hyatt Taipei and my cell phone is ringing. I answer to find TP at the other end of the line in a voice tinged with pain. “I need something stronger than Tylenol, the pain has gotten to be too much,” he intones in that deep bass sounding voice of his that sound like Hans Solo’s sidekick Wookie from Star Wars. With his thick mane of blond gray hair and droopy mustache and matching height he also resembles the hairy hero in bearing and gait. He’s a guy my age but a full-time geek, unlike me who is at best a part-time geek.

TP and I are in Taipei attending the Computex 2009 Conference, “the” PC and consumer show in Asia—CES in size and importance, especially for the 2009 Christmas buying season (whatever gets sold during this week will appear in products this year). We’re here with a bunch of other folks from our California high tech company pitching audio enrichment software. TP is an audio mastering engineer who used to work for the Grateful Dead and other rock legends. How he came to be at the tech company we both worked for is another story on its own. And no, TP, is not into elicit drugs, nor alcohol—not even beer and wine, though he is addicted to Red Bull—I know because our PR firm AccessPR scored every last case the Taipei Costco had in stock along with several jumbo bags of Mars miniature candy bars and a half dozen jumbo jars of nuts. Red Bull was no longer being stocked because of the misguided suspicion that the beverage contained trace amounts of cocaine. It does have lots of caffeine, though.

I tell TP there has to be a pharmacy close by that we can get a prescription filled, “can you call your doc in California and have him fax a prescription to the business office of the Hyatt.” That’s where I am when his call comes to my cell phone bouncing stateside to AT&T Wireless and relayed back to Taipei to the local wireless carrier here—roaming charges Cha-Chinging away. It’s just past five in the evening on the West Coast but TP has his doc cell phone number. As a backup plan I check the front desk halfway across the sprawling lobby of the Grand Hyatt to ask if they have a doctor on duty to check TP out and write a prescription in Chinese. The clerk directs me to the nurse station, where I find that the only way TP is going to get any prescription painkillers is to go to the hospital and have a doctor examine him.

I check back with TP and sure enough he got hold of his doc, who will fax the prescription. I tell him it’s no good we have to go to the hospital. The kind of painkillers TP needs are controlled substances and you’ll get mandatory jail time if you’re caught with them in your possession without a doctor’s prescription. I tell him to suit up and meet me in the lobby as soon as he can. In the meantime, I find CS our PR account exec at AccessPR and ask if she’ll accompany Tom and me to the hospital. “No problem,” which is the response I always get when I make a request from AccessPR. I just ask for something to happen and it does. CS tells the cab driver where we need to go and we’re off.

TP came to his state of pain as a result of something that happen on Saturday May 30th. I met him inside the International Terminal at SFO. I was to be his mule as he brought with him two large Pelican cases filled with audio “stuff”—cables, keyboards, PCs,… Since the airlines have begun limiting the amount of checked baggage per person, I’m checking in one and he’s checking in the other. We’re joined by CS who will carry a third Pelican he’s brought along similarly crammed full of gear. These three Pelicans represent what didn’t make the shipment from San Francisco to Taipei two weeks earlier—something like 12 Pelicans flown by a freight forwarding provider and awaiting us in Taipei. There are two EVA Airways flights leaving SFO within an hour of one another this Saturday night. The one TP and I are on, BR0007 lifts off just after midnight and the one CS is on, BR0017 departs about an hour later.

During the process of unloading the two Pelican cases from his ride to the airport, TP “does something” to his back and he’s not throwing the cases around as nimbly as he usually does. CS and I know he’s having trouble and though it irks him not to be able to manhandle the bulky black boxes, he’s content to let the two of us do the heavy lifting. Once we arrive we check in at the Grand Hyatt Taipei and TP unloads every Pelican we’ve shipped over in his corner suite on the 15th floor. He gets busy putting together over a half dozen demos for our two demo suites at the Grand Hyatt five floors below.

We arrive at the hospital and the three of us exit the cab and I’m so focused on getting TP into the hospital I neglect to pay the cabbie, who is speaking frantically in Chinese to get my attention. CS realizes the problem at the same time I do and I beat her to the punch paying the cabbie, tipping him profusely for the mistake—five bucks U.S. including tip. We enter the hospital and CS learns quickly we need to go to the second floor and sign in at reception. Remarkably, upon arriving, the whole registration process takes place in English with TP providing all the information without needing CS to translate. We wait a half hour and TP is finally taken into an examining room where, we learn later, the doctor is fluent in English and proceeds to lecture TP on the evils of companies exploiting their workers and causing them work related injuries. To be sure, TP’s trouble was work related.

While TP is in the examining room with the doctor, CS and I wait, making small talk about the event, how TP came to be in the state he’s in… I’m surprised by the number of westerners in the waiting room: adults, kids, and older folk. At the reception desk with its four clerks serving the slow but steady stream of arrivals, I hear nearly as much English as Mandarin spoken.

TP appears forty-five minutes later. He’s smiling and relieved to be done with the visit. He’s got his supply of prescription Vicodin-equivalent painkiller and it’s cost him less than sixty bucks. No, this is not the co-pay, it’s the total cost. We take the cab ride back to the hotel and back to the grind.

What's beyond Facebook and Twitter?

I recently listened to a panel with the suggestive title “Beyond Facebook & Twitter: The Social-Media Future” moderated by Bambi Francisco, the journalist turned entrepreneur heading up Vator.tv. It took place at the AlwaysOn Conference Thursday afternoon, July 30^th. The panel examined how start-ups were leveraging the “social graph”—the sticky title blogger Brad Fitzpatrick described as "the global mapping of everybody and how they're related" to offer users new forms of information and entertainment.

As networking technology moves forward, the newest innovation—facebook, MySpace, Twitter, YouTube… have, in turn, become the platform that the next wave of entrepreneurs is building upon. The site colleca.com, for example, uses the social graph for streaming real time search. A visitor to the site might search on a real time event such as the “launch of the space shuttle” Collecta CEO Gerry Campbell explains. The site’s search engine then searches across every news feed—Reuters, AP, ABC, etc and every social networking site including youtube to locate any current or recent posting about the space shuttle launch and provides the information to the visitor.

Entering the search term “Afghans vote for president,” into Collecta produced 10 results. Most were twitter posts with links to an Associated Press new story. The results also included Twitter pointers to the Kansas City Star, Philippine Star, Boston Herald, and WBAY, an ABC affiliate in Wisconsin, however these all were reprints of the AP report. Entering the term “Michael Jackson” produced a larger and more varied set of results including stories in different languages, however, most were from Twitter postings—with commentary or references to blogs or news stories. It’s an interesting concept still in Beta.

Another new venture hoping to leverage off the social graph is Aardvark.com, which has yet to go live. It hopes to use the collective knowledge of all those actively on line at any given moment as a form of real time information resource. “It’s about getting into the experience and knowledge of your friends and their friends that no one would ever write down but if you happen to run into them and ask ‘where should I go in Belize?’ And someone says, ‘I lived there for four years, check out this, this, and this…’” Max Ventilla, Aardvark CEO said. “That’s an incredibly satisfying experience for both of you, (which) we’re able to productize because these platforms (social networks) not only have created the data (but) open themselves up to third parties.”

The third panelist, Shervin Pishevar, CEO of Social Gaming Network, had a more conventional approach to exploiting social networks by offering Facebook users interactive games, such as “Nicknames” and (fluff)Friends—which plays across Facebook, MySpace and the iPhone. The offerings seem to be a hit as (fluff)Friends has 584,137 monthly active users and 22,892 fans and Nicknames has 440,720 monthly active users and 24,211 fans, both building the SGN brand rather than generating income. SGN’s real money seems to be in iPhone games such as F.A.S.T. downloadable from the apps store on iTunes for $0.99. Bambi asked Shervin to confirm a million downloads, but without success. Shervin did state that SGN has recorded around 15 million installs of his software on the iPhone. That has to be worth a few million in real money.

The final panelist Clara Shih, CEO of Hearsay Labs, not to be confused with the Hearsay Lab offering from IrregularStuff Academic, was less forthcoming about how her company planned to draft off the social graph. “We’re developing tools for marketers to measure and optimize their campaign interactions across Facebook, Twitter and their own web site,” Ms. Shih stated. Her background building Faceconnector gives some clues to her new venture. Faceconnector is an integration between Facebook and SalesForce.com CRM (customer relationship management), which in many ways suggests that Facebook and Twitter are the new CRM. The concept of mixing anything “management” with a social networking site sounds a bit Orwellian.

The takeaway from this panel discussion seems to be that the metamorphosis of the “continuously connected” world from high speed connection—the 1980s, to web storefronts and search—the 1990s, to social networks—the double “00s” is moving to the next stage as the new decade looms. Let’s see if the next Facebook is among any of these early ventures.

Innovating out of Recession: The Next “Next Thing”

The AlwaysOn & STVP (Stanford Technology Ventures Program) Summit at Frances C. Arrillaga Alumni Center on the Stanford University campus featured a panel with the unwieldy title "Silicon Valley in the New Millennium: Chief Geeks & VCs of the Old Guard lay out the New Software & Computing Agenda." It was an attempt to articulate the next “next thing” for Silicon Valley in the wake of social media, the iPhone, and a major recession. As panels go, this one touched on the conventional wisdom appearing in every tech story about futures: Cloud computing, social networking, media technology, and portable devices.

However, a couple of impressions from the discussion, moderated by Craig Menden, a partner at Sonnenschein Nath & Rosenthal LLP, are noteworthy. Foremost is that content is being developed without consideration for the devices consumers will use to access it. Furthermore, devices are being developed without considering the content that these devices will be accessing. Furthermore, neither content creator, nor device manufacturer are creating devices that address the use model of the consumer. To be fair often the consumer has not found the use model until a device has become available. Who at Apple anticipated the Tsunami of apps flooding the iPhone?

Panelist Dan Scheinman, senior VP and GM for the Media Solutions Group at Cisco Systems, Inc. articulated the position big media companies find themselves in: struck dumb with Google-envy. Scheinman cites a big media company committing 95 percent of its revenue to developing technology. He cited Turner Broadcasting System, Inc.’s CNN as the model for what big media should be doing: creating new content tailored to a new media distribution system—cable versus over the air broadcast. He said that the “CNN” of the Internet has yet to arrive—though you could argue that the Yahoo web portal and Google search constitute successful content models tailored for the web.

Norm Fogelsong, general partner, Institutional Venture Partners, another panelist raised the point that it’s a three-screen world: portable media device, desktop/laptop PC, and the 40+ inch screen in everyone’s living room. Furthermore, he contended that media has to be fluid across these screens—instead of siloed as they are today. The solution said panelist Tom Malloy, chief software architect at Adobe Systems Inc. is smart content that automatically adapts to the device the consumer is using. A crude example is a web browser that conforms to handheld devices. Malloy cited the PDF and Flash platforms as early versions of tools to create such content.

One question from the audience asked, what’s being done to have technology serve humanity rather than the other way around? Scheinman articulated the answer earlier in the panel discussion by stating that long term the consumer will be in charge, “consumers want to be able to access whatever they want, whenever they want, on whatever device they want.” Scheinman stated that ultimately, the value is going to reside in knowledge of the consumer. For example, when the consumer logs on, the system will know he’s on a Blackberry, that he’s an avid baseball fan, and that he wants to learn something about the Major League Baseball trade deadline, without him having to click around to find it.

As to who will be financing the next “next thing”, don’t expect deep-pocketed venture capitalists to be overly forthcoming. “Venture capital is going to go through a painful adjustment cycle,” said panelist Fred Wang, general partner, Trinity Ventures, “right-sizeing itself to something that looks like $15 to $20 billion a year, about a half to a third of what it’s been. The companies that venture capital will fund will have to be much more capital efficient.”

However, don’t right off Silicon Valley just yet, Fogelsong concluded, “once you get to the point we are now, the system feeds on itself. Everybody here wants to be an entrepreneur. Half the students at this campus have a business plan they’re working on for the next Google. Ah! “Silicon Valley in the New Millennium.”