ImaginativePRO Blog

HACK JOB: AIRMEDIAPLAYER GIVES WINDOWS USERS THE ABILITY TO USE APPLE'S AIRPLAY TO STREAM ITUNES VIDEOS

We heard it was in development just two days ago and now we've got a first glimpse at Apple's AirPlay media streamer working a Windows PC.   The hack comes courtesy of the free AirMediaPlayer client for Windows client (currently at version 1.0.5) that leverages the Microsoft .NET framework 3.5 SP1, Quicktime, and Bonjour for Windows to enable AirPlay media streaming from any iOS device back a XP, Vista, or Windows 7 PC.  Possibly good to news for those of you with PC-based media centers. Catch all the hot Apple on Microsoft video action after the break.

This German video explains the whole thing.

 

This video is in Japanese:

 

COMMENTARY:  AirPlay, a feature incorporated in iOS 4.2 that was released in late November 2010,  lets you stream digital media wirelessly from your iPhone, iPad, and iPod touch to the new Apple TV or any AirPlay-enabled speakers.  So you can watch movies and photos on your widescreen TV and play music through the best speakers in the house.  

It is cool that Steve Jobs will allow PC users the ability to view iTunes videos on their desktops and laptops.  

Courtesy of an article dated December 23, 2010 appearing in Engadget

SKYPE VIDEO CALLING FOR IPHONE IS AVAILABLE NOW, COMES ON HEELS OF CHINA'S BAN OF SKYPE

Skype's video calling feature for the Apple iPhone has been rumored for several days, but it was expected that  Skype would wait to make the official announcement at the upcoming Las Vegas International Computer Electronics Show CES running January 6-9, 2011.  

Skype's official iOS client has finally sprouted the ability to make video calls, allowing iPhone 3GS, iPhone 4, and fourth-generation iPod touch users to share real-time video amongst each other and users of Skype's Windows, Mac, and Linux clients along with the ASUS Videophone (obviously, 3GS users won't have the convenience of a front-facing camera, but they'll still be able to broadcast video from the rear-facing one).

 

Additionally, you'll be able to receive video from others if you're using an iPad or a third-generation iPod touch. The service is free and works over both WiFi and 3G -- and considering Skype's existing PC footprint, we'd argue this stands a very real chance of putting the hurt on FaceTime usage. No word on when Skype will be making video-capable clients available for Android or other mobile platforms, but Skype says that there'll be "plenty more" announcements in Vegas next week, so we wouldn't be surprised.

Update: So we just gave 3.0 a spin, calling iPhone-to-iPhone (both WiFi), iPhone-to-desktop (both WiFi), and again iPhone-to-iPhone (both 3G). The first two worked great, although the desktop camera produced better quality. As for the worst-case scenario, 3G-to-3G video calling, well... we wouldn't recommend it unless absolutely necessary. Video after the break, and be sure to note the battery life -- after about 10 minutes of use, we dropped from 66 percent to 61.

COMMENTARY:  This announcement comes after it became known that China was banning Skype and all VoIP companies located outside of China.  I mentioned this in my blog post of December 30, 2010.   According to Skype, they found out about the ban from the media.  I love those Communist Chinese.  If the ban is not true, I really went to a lot of work determine the loss to Skype. 

Courtesy of an article dated December 30, 2010 appearing in Engadget

BOMBSHELL: CHINA BANS SKYPE AND OTHER VOIP SERVICE PROVIDERS OUTSIDE OF CHINA, SKYPE WILL REALLY FEEL THE EFFECT IN 2011

Skype received a booting from China today, the same day the company announced the addition of video calling to its iPhone app (and iPad and iPod Touch). The ban says that only China Telecom and China Unicom are allowed to operate VoIP services in the country--all private carriers are now deemed illegal.

The Chinese government has announced that any VoIP service administered outside of China Telecom and China Unicom are now deemed illegal, effectively making Skype and other VoIP services banned from use in China. The news comes on the same day that Skype announced the addition of video calling to its iPhone app, as well as the iPad and iPod Touch.

 

The decision points to an increasing monopoly on the part of the two state-run players, securing revenues for them and them only and of course ensuring state-watch over all VoIP communications. The addition of video calling is likely to be cause for extra concern for the tightly controlled media environment of China.

China previously banned all private carriers until 2008, the year of the Beijing Olympics, in an effort to give the government time to think about how to compete with players such as Skype. So this time the ban appears to be another stalling tactic--giving the country time to either beef up its own VoIP video calling capabilities to compete or plan strategies to stifle on-the-ground video reports (think if Nobel Peace Prize winner Liu Xiabo's wife, Liu Xia, was able to make Skype video calls with the outside world from an iPhone just prior to her house arrest).

Thomas Crampton, a former Asia-based correspondent with the New York Times who now strategizes social media campaigns for Ogilvy clients in Asia says that what's happening in China, though, is more of a "step in the direction of making a decision," he tells Fast Company. Crampton, based in Hong Kong, is cautious to glean China's news as an all-out ban.

"Skype and other VoIp services have become a mainstay of the Chinese economy," says Crampton.

As for Skype's response?

"Skype is tied in with [Skype's China partner] Tom.com--I don't see Skype taking a Google-like stance. I see them trying to resolve this behind the scenes because of their ties."

Netizens are already raising the question of how, exactly, China will go about enforcing the ban. Pornography is also illegal in China, relying on firewall blocks, but that is only so effective. The creator of China's largest porn site was actually sentenced to life in prison in 2006, so who knows what would happen to a corporate customer dependent on Skype for large volumes of calls, for example.

"It's ridiculous," Kan Kaili, a professor at Beijing University of Posts and Telecommunications told the People's Daily Online. "VoIP is a popular technology worldwide."

We'll post more updates here in the coming days and weeks as it becomes clearer what exactly China is up to.

COMMENTARY:   China is a huge trading partner with the West, so banning Skype is really going to hurt Skype's business on both sides of the Pacific.   In May 2006, Skype reported that it had 13 million users within China or roughly 13% of the Skype's 100 million internet users at that time.  This did not the include the number of Skype users calling China from outside the country.  

At the end of 2006, China has 100 million internet users.  As of June 2010, China has 420 million internet users.   If the proportion of Skype users to internet users in 2006 (13%) remains constant, then by Mid-2010, the estimated number of Skype users in China would be 54.6 million.  At the end of 2009 and June 2010, Skype had 474 million and 560 million users worldwide respectively. If we calculate the number of Skype users within China, for December 2009 and June 2010, using a 13% Skype usage rate, then the estimated number of Skype users in China were 61.6 million and 72.8 million respectively.  

According to Skype's SEC $100 million IPO filing of August 2010,  revenues were $406 million in June 2010 (see above graph).    This is just a rough estimate, but China's ban could cost Skype in the neighborhood of $55.7 million in lost revenues as of June 30, 2011 (year-to-year)  and $62.66 million for the entire year 2011, using the following assumptions:

1) Registered user growth rate for 2011 (assuming no China ban) = 40%  (per SEC IPO filing)

2) Revenue growth rate for 2011 (assuming no China ban) = 25% (per SEC IPO filing)

3) Estimated registered users end of 2011:  474 million x 40% growth rate = 663.6 million registered users - June 30, 2011

4) Estimated gross revenues end of 2011:   $406 million x 25% growth rate = $507.5 million gross revenues - June 30, 2011

5) Average revenue per registered user:  $507.5 million / 663.6 million registered users = $0.7647

6) Revenue increase between June 2010 and June 2011:  $507.5 million less $406 million = $101.5 million.  

7) Estimated number of registered users in China as of June 30, 2010:  72.8 million (see above)

8) Potential lost revenues due to China ban:  72.8 million x $0.7647 = $55.7 million

9) Since revenues were growing at a 25% compounded annual growth rate.  The revenue loss for the entire year 2011 from the China ban would be $55.7 million x 12.5% (25%/2) = $62.66 million

Skype generated a profit of $13.1 million for the six month period ending June 30, 2010.   Skype's estimated gross revenues for the six month period ending June 30, 2011 is $507.5 million.  If we annualize this for the entire year, then estimated gross revenues would be $571 million ($507.5 million * (25% / 2).  

If we use Skype's profit margin of 3.22% for the six month period ending June 30, 2010, then their profit for the year ending December 31, 2011 would be about $18.38 million before the China ban.   If we adjust this figure by the effect of the China ban, profits would be reduced by $2.01 million ($62.66 million x 3.22%) so estimated year end profits after the ban would be $16.36 million.

As I said early on, the above figures are raw estimates, and the actual financial affect on revenues and profits could be higher when you consider that Skype's incredible growth rate is due to China.

The actual loss to the American and Chinese consumer will be sizable because business calls between both countries would have to go over regular land or cellular lines.   This is going to be ugly.      

Courtesy of an article dated December 30, 2010 appearing in Fast Company, an article dated August 12, 2010 appearing in Aquarius.biz and an information about China's estimated internet usage for 2010 appearing in Internet World Stats

AN INTERVIEW WITH PETER VESTERBACKA, FOUNDER OF ROVIO, THE MAKER OF THE INCREDIBLY POPULAR 'ANGRY BIRDS' MOBILE GAME

There are many speculations regarding the cause of the recent global economic recession, but we all know the truth. It was the Angry Birds and their affect on the productivity of the work force. Angry Birds is a true mobile wonder with over 50 million downloads, 80% of users keeping the app installed, and as Peter Verterbacka, the “Mighty Eagle” of Rovio, makers of Angry Birds puts it, that number is without the holiday stats, which broke a record of a million downloads a day.

Another mind boggling statistic about Angry Birds, and you should sit down for this one, is that there are 200 million minutes played a day on a global scale. As Peter put it, that number compares favorably to anything, including prime time TV, which indicates that 2011 will be a big year in the shift of advertisers’ attention from TV to mobile. As a person who is starting a new position at Inneractive, a company that specializes in monetizing mobile apps using advertising, these predictions for 2011 put a smile on my face.

 

Finally, the Angry Birds recently participated in a peace treaty with the pigs on TV, a video which quickly experienced a viral explosion. You can watch that peace treaty video here.

1. Please tell me about yourself, the team, and how the Angry Birds phenomenon (so much more than a single app) came to be.

“Angry Birds came to be by a very analytical approach. Rovio has been in the business of mobile games since 2003 and has made 50+ games before Angry Birds, most of them work for hire for people like EA, GameHouse, Nokia etc. So the team knows how to make games, for example Bounce for Nokia has been installed on 250M+ devices. The team that created Angry Birds was 12 people, now Rovio is 50 people, quite a change in 12 months.

Anyway, the game was built around the characters that Jaakko Iisalo, our game designer, came up with. The original idea was very different, but everybody loved the birds, so it was decided to build a game around the birds. Over the next 8 months Angry Birds became the game we know today. Hit the appstore Dec 2009, slow start, number one in Finland, then Sweden, number one in UK in April and then things really took off. Have been number one since in both UK and US. Number one in 77 countries. Number one longer than anybody else. 50M+ downloads across platforms.”

2. You must have had some serious experts in various fields on the team when creating Angry Birds. Please share with us the preparation that went into it.

“Everybody on the team has more than 5 years of game making experience, so yes, serious experts;-)”

3. I have tried your games on various platforms including Maemo (Bounce). How do you view the various mobile OSs in regard to the future of mobile technology? Which will prevail?

“Apple will be the number one platform for a long time from a developer perspective, they have gotten so many things right. And they know what they are doing and they call the shots. Android is growing, but it’s also growing complexity at the same time. Device fragmentation not the issue, but rather the fragmentation of the ecosystem. So many different shops, so many different models. The carriers messing with the experience again. Open but not really open, a very Google centric ecosystem. And paid content just doesn’t work on Android.

Besides Apple and Google, it will be interesting to see how long it will take for Nokia to get their act together. MeeGo is clearly the future there, remains to be seen how big and how soon. HP-Palm webOS is a really cool OS and has been a pleasure developing for that one, but the volume is irrelevant for the time being. Everything else is more or less “interesting” right now, ie no real business to be had, at least not yet.”

4. I have heard Angry Birds was the most sold app on the App Store until it was recently surpassed by Cut the Rope. Have you tried Cut the Rope? What did you think?

“Angry Birds has been outselling Cut the Rope all the time except for a brief period of 2 weeks during the launch of Cut the Rope. It’s a great game and it deserves all the success it has had. And the guys that developed Cut the Rope have a long experience in building games, they are not new to games either, so have that in common.
 

5. How do you explain the wild success of Angry Birds? Luck, good promotion by you, or does all the credit go to the birds and their addictive nature?

A combination of many things. Optimized for touch, great characters, everybody loves the birds. And we like to think that we know a thing or two about how to work together with our fans and community too, ie the future of marketing.”

6. What are the most important steps a developer should take when creating a mobile app? Can you name the first five steps?

“1. Create a great app
2. Get the message out”

7. Your recent Android release was a huge success. Why did you choose Getjar over the Android Market and are you happy you did?

“We didn’t really pick one over the other, but we liked the attitude of the GetJar team, they really worked with us to make the launch a success and a big deal. Not just another game to them. We have been very happy with our results on Android and the fact that we decided to have a multiple storefront strategy. And most of all that we decided to go with a free, ad supported model. 15M+ downloads is a good start too.”

8. How important is the role of social media, specifically Twitter is the success of your apps and your company?

“It’s very important. For us twitter is a great way to keep our finger on the pulse, we very quickly know what our fans think about new features + our fans are great at alerting us about things. We hear about a lot of developments on twitter first. And in our business speed is of essence.”

9. Why did you decide to make the Android version free and is that going to change any time soon?

“Free is the way to go with Android. Nobody has been successful selling content on Android. We will offer a way to remove the ads by paying for the app, but we don’t expect that to be a huge revenue stream.”

NOTE:  CLICK THE BELOW LINK TO READ THE REMAINDER OF THIS ARTICLE

COMMENTARY:   I fooled around with Angry Birds recently, and I still don't understand the allure that this iPhone game has, but you can't argue with success--50 million downloads to date and counting.  This is the kind of game that kids and grownups both like.  

Courtesy of an article dated December 27, 2010 appearing in Tech 'N Marketing

MODULAR CARPET RECYCLING DEVELOPS METHOD FOR RECYCLING USED CARPETING INTO OIL AND RECYCLED NYLON

Modular Carpet Recycling (MCR), a startup out of Delaware, says it has come up with a precipitation process to efficiently recycle nylon fibers in old carpet, a material we’re swimming in even with the stall in construction.

Four billion pounds of carpet enter waste streams in the U.S. each year, says CEO Ron Simonetti. Five pounds of oil go into a single pound of nylon, so annually the U.S. could curb oil exports by millions of barrels via recycling.

“Two percent to three percent of the waste streams in California are carpet,” he said. “Every person in the U.S. uses 10 pounds of carpet a year.”

Just as important, MCR says it can produce recycled nylon, branded as Renewlon, for less than the cost of comparable virgin materials. Virgin nylon costs around $1.10 a pound to produce, and the price rises with spikes in oil. MCR can produce fiber for 90 cents a pound. The company sells it for $1.29 a pound and its margins increase as oil prices rise. The system wouldn’t work if oil dropped to $50 a barrel or lower, but oil right now is in the $80 range.

A very large fiber manufacturer has signed a right of first refusal to obtain the output from MCR’s factory, which can produce 5 million pounds of nylon a year. MCR hopes next to build more modular factories.

Recycling, like water and agriculture, is one of those green technology markets long on potential but short on actual profits, progress or interest from investors -- but that could change. New waste regulations combined with improving technology are making it more economical to refurbish.

Garbage giant Waste Management leads the charge on gritty green. It is transitioning from a trash company to a lifecycle services firm as well as investing in startups and experimenting with technologies like landfill-to-methane. Meanwhile, Autodesk is helping manufacturers to design with recycling in mind and investors such as Steve Jurvetson have spoken more enthusiastically about discards.

Startups to watch include Ostara (fertilizer from human waste -- YUCK!!), Lehigh Technologies (old rubber), Bioplastech (plastic recycling through microbes), Electronic Recyclers and iGPS (plastic pallets).

Carpet is already benefiting from legislation. California has passed a law that places a recycling fee on carpet. Delaware, Pennsylvania, New Jersey and Maryland are contemplating similar legislation. The EU has a ban on carpet in landfills. But instead of recycling, many people burn it, and a pound of carpet contains 15,000 BTUs. Talk about Eurotrash.

The key to MCR’s technology is a precipitation/distillation process it calls DynaSep. First, carpet goes to a recycler where it gets shaved. The backing, made of calcium carbonate, goes to one company and MCR takes the fibers.  

MCR dissolves the fiber in formic acid to make a nylon soup. Then comes the secret precipitation process. The process occurs at room temperature, but at an elevated pressure. In the end, the process fleeces out the dirt so that the company is left with 99 percent pure nylon and a reusable tub of formic acid.

“It is not a very energy-intensive process,” Simonetti said. “If we couldn’t reuse the chemicals we’d be dead in the water.”

The process was invented by co-founder Brian Waibel, an expert on separation and drying.

Other nylon recyclers with different processes achieve a 95 percent to 98 percent level of purity, but in this environment that’s enough to offset the economics. MCR’s next step involves boosting purity to 99.8 percent. It also working on a shaving process to get more fiber from old carpet: conventional techniques only yield about 50 percent of the fuzz.

Perhaps the biggest challenge that MCR faces is the stinginess of the American consumer. The MCR process only works with nylon and many manufacturers have begun to produce carpet out of PET.

“PET is technically recyclable, but economically, it doesn’t make sense,” said Simonetti.

MCR has received funds from Musea Ventures, a small firm with stakes in Kateeva (equipment for OLEDs), HelioVolt (superheated solar thermal) and Designer Energy (sugar), but is seeking more for expansion.

COMMENTARY:   Oil from used nylon carpets.  What a great idea.  Brazilians have found a way to recycle plastics into oil, so why not.  

MCR dissolves the fiber in formic acid to make a nylon soup. Then comes the secret precipitation process which appears to be a quasi-solven/supercritical fluid (SCF) method for separating polymers.  The process occurs at room temperature, which is a big plus since it does not consume as much energy, but at an elevated pressure.  In the end, the process fleeces out the dirt so that the company is left with 99 percent pure nylon and a reusable tub of formic acid.  

According to a research paper by Y. Wang, titled Carpet Recycling Technologies  of the School of Polymer, Textile and Fiber Engineering, Georgia Institute of Technology (Atlanta, GA), there are two commonly used methods for recycling used carpeting: 

• Solvent extraction has been used to separate the high value nylon from carpet waste. The solvents used include aliphatic alcohol, alkyl phenols and hydrochloric acid.  The drawbacks of solvent extraction is the use of toxic and caustic chemicals, waste removal, transportation, modest temperature and pressures required, and time required.
• Supercritical fluid (SCF) is another method used to recycle used nylon carpeting.  The SCF method extracts the individual polymers from the used carpet by using CO2 as a solvent at high pressures and temperatures (170-210 degrees centigrade) to extract the components from the used nylon carpets. 

I am very familiar with supercritical fluid (SCF) extraction, a process that is used in botanical extraction of scented oils and flavorings from vanilla beans, fruits, seeds, vegetables and other organic plant matter.

Very soon we will run out of oil.  We are already reaching a point where demand will exceed production, so this is not as crazy as it sounds.   With oil experts predicting that oil will exceed $150 a barrel in 2011, and gas will rise to $5.00 per gallon by 2012, this should insure that MCR becomes a successful startup.  

Still, I would much prefer that we stop using fossil fuels altogether.  This turning oil-->nylon-->oil is not going to work for me, but VC's are taking an active interest as the price of oil increases.  

Courtesy of an article dated December 29, 2010 appearing in GreenTechEnterprise

GROUPON FILES A FORM D TO RAISE $950 MILLION FROM PRIVATE INVESTORS

Fresh off the heels of Groupon's widely publicized Google rebuff, the discount e-commerce company has filed a certificate to authorize a $950 million Series G round of preferred stock. The certificate, which gives Groupon the capacity to raise $950 million, was filed on December 17. A Form D outlining the exact amount raised should be filed next week.

A Groupon spokesperson declined to comment on the filing.

The new round of financing gives Groupon a best-estimate post-money valuation of $6.4 billion, according to VC Experts Valuation and Deal Term Database.

There are a few key differences in terms and pricing between the Series G and its Series F, raised in April. The $135 million Series F, led by Digital Sky Technologies, was priced at $32.12 per share and was junior in liquidation preferences to all preferred shares. This round is priced $.53 less, at $31.59 per share and is senior to all.  The latest filing also increased the authorized shares of voting common to 250 million shares, and if all of them are issued, Groupon's valuation could be as high as $7.8 billion. The financing comes just weeks after Groupon's rejection of Google's $6 billion buyout offer. Groupon gave no official reason for the rejection, though reports speculated pricing, strategy and anti-trust issues were to blame.

Groupon CEO Andrew Mason has tamped down speculation over IPO plans, emphasizing overseas expansion instead. And now we know how they plan to finance that expansion. Chicago-based Groupon became a VC darling after turning a profit in just eight months of existence. Fast forward two years later, and the company's annual run rate is estimated at between $800 million and $2 billion. Previously Groupon had raised $169.8 million in venture backing from an A-list group including Digital Sky Technologies, Battery Ventures, Accel Partners and New Enterprise Associates. It's last round of funding was $135 million in April 2010.

Download the Groupon Certificate of Incorporation

COMMENTARY:   I have often been critical of some of the valuations for certain startups, namely Facebook and Twitter, now we find out that Groupon is doing a Form D filing to raise $950 million. That's quite a sum for a Form D.  Still, Groupon is a private company and their estimated annual revenues are not published, so it's difficult to determine whether its new valuation or post-money cap of $6.4 billion is real or just another wild guess on the part of VC's and blogger's like myself.

The biggest issue with Groupon is that many experts believe that their business model is not sustainable over the long run.  One glaring fact that stands out,  which I wrote about in a previous blog post, is that 40% of their customer's have complained they lost money listing their promotional offers on Groupon, and that they would not be coming back.  That's quite an attrition rate, and clear evidence that something is not right with their revenue model.

Having said this, Groupon is still the largest group buying site on the Web, and it has plans to get even bigger, expanding its concept internationally to both Latin and South America and Europe, hence the need for more capital, and lots of it.

The nation's high unemployment rate, drop in consumer confidence, and weak recovery (if there ever was one) has created a huge demand for discount coupons and group buying, the latest online promotions craze.  

Another concern of mine, which I failed to mention in previous blog posts, is what happens when the economy completely turns around.  Will consumer's continue to look for a deal?  Many experts say consumer frugality is here to stay, so it certainly appears that Groupon and Groupon-wannabe's have a secure future.

It's hard for me to criticize the new $6.4 billion valuation.  After all, Google did offer Groupon management a similar amount, and they turned it down because of anti-trust concerns.  

The ability to sell a Form D is difficult at best, but I have a feeling that the Google Offer is going to be a huge selling point for Groupon.   I bet there are dozens of broker's willing to kill to broker that Form D raise.

Courtesy of an article dated December 28, 2010 appearing in VC Experts 

BOLD MOVE OF THE WEEK: J.C. PENNEY PUTS A LOT ON THE LINE AS IT MOVES ITS ENTIRE PRODUCT CATALOG TO FACEBOOK

Ecommerce merchants have begun to approach social commerce with less trepidation than in the past. More are incorporating social sharing options into their websites and many are setting up shopping carts in Facebook. That's true for large brands and mom & pop shops as well.

To date, no company large or small has done what J. C. Penney did Tuesday. The century old retailer moved their entire product catalog to Facebook. Whatever products customers can buy at the company's ecommerce website can now be purchased on its Facebook Page.

What are the implications of this action where ecommerce is concerned? Five come to mind:

Facebook is a given for social commerce - Facebook is quickly moving toward 600 million users, 50 percent of whom logon at least once per day, according to its own statistics. What this means is that the social network has become the operating system of the social web. And, not unlike the Oklahoma land rush of the 1880s, retailers are lining up to to stake a claim in what is proving to be fertile territory.

"The value of Facebook and other social media sites to retailers is greater than previously thought," stated ecommerce consultant John Lawson, reporting on a recent survey conducted by social media marketing company Media Logic. "Out of 100 retailers participating in the study, all of them have seen tremendous growth on their respective Facebook pages," Lawson said.

Social shopping is becoming no big deal - Sure, it's a big deal now. There is ongoing contention over whether people will consider merchandising efforts by brands inside social networks to be an intrusion or will embrace them. Privacy concerns continue to be a hotbed issue as well. But, when a major retailer does something as bold as what J. C. Penney did Tuesday, the question becomes less about "why" and much more about "why not."

Other brands will follow suit - Have you ever attended a gathering of people with whom you were unfamiliar and waited until someone else broke the ice before conversing? "Breaking the ice" over the value of using Facebook as an ecommerce portal is essentially what J. C. Penney has done. By moving the entire product catalog to Facebook, they did it with a sledgehammer too! Precedent has now been set and it stands to reason other brands will follow suit.

Online privacy will become less of a concern - As the "digital natives" of Generation Y gain greater stature in the marketplace, concerns over privacy will take a back seat. Some refer to Gen Y as the "non-privacy generation." The idea of sharing via social media, including making online purchases, comes naturally to them.

A Pew Internet & American Life Project study released in May, Reputation Management and Social Media, said internet users have become less concerned about online privacy. "Just 33 percent of internet users say they worry about how much information is available about them online, down from 40% in December 2006," according to the study.

The shift toward the use of Facebook and other social networks for commerce has been incremental. Only last year the news was all about 1-800-Flowers setting up a store in Facebook. A few months ago, the attention was focused on Delta airlines opening a virtual "ticket window" inside Facebook. Now, it's J.C. Penney and, tomorrow, who knows. What is of greatest significance is that social media, especially Facebook, can no longer be considered an insignificant player in online retail marketing and sales.

Whether merchants choose to move the water cooler closer to the cash register by adding social sharing, Facebook's new registration tool (just announced today), ratings and reviews, or other elements of social media connectivity to their ecommerce sites, or, conversely, move the cash register closer to the water cooler by setting up a Facebook shopping cart (or both), those who are willing to take steps now will enjoy the benefits of first-mover advantage in the future when such activity becomes commonplace. Of course, if J. C. Penney's action is any indication, perhaps it already has.

COMMENTARY:   I never would've thought that J.C. Penney's would make this kind of bold, risky and exciting move.    This is the last company on my list that would do something like this.  

J.C. Penney's average customer is 35-53 years of age.  It's no secret that J.C. Penney's wants to tap into the younger and more lucrative 18-34 year old or Millennial market.  It's collaboration with Mango, a designer of young women's apparel caught a lot of retail marketer's by surprise.  I covered this in a blog post dated August 11, 2010 entitled "Penney's Bold Partnership With Barcelona's Mango To Attract Millennials".  

It now appears that Penney's strategy to move its entire product catalog to Facebook is part of its master plan to tap into the 42 million strong Millennial market.   Mango has a Facebook presence, but it does not have any ecommerce capability.  I did not see any cross promotion to J.C. Penney's Facebook page.  I am sure this will be fixed soon.  

Facebook offers a great marketplace for Penney's products, especially for the Mango line. According InsideFacebook.com, the 18 to 34 year old's make up 52%, or better than half of its users. Penney's has alway's been popular with parent's.   There is going to be an explosion in Millennial birth rates, and these young mother's spend a lot of time online, particularly on Facebook.  I think I get it now.       

Still this is not going to be an easy transition.   It's one thing for Penney's to add apparel that appeals to a younger demographic, its a different matter when it comes to marketing and engaging with a younger demographic like Millennial's and Gen-Y's.   What works for older consumer's doesn't work so well with Gen-Y's and Millennials.  

The real challenges for Penney's are cultural and generational.   For decades Penney's has targeted a much older demographic, and now must modify their marketing thinking and strategy, culture and execution to appeal to a much younger demographic.   In doing so, Penney's has to be careful that they do not alienate their older customer's and drive them to Sears.  

Only time will tell whether Penney's has successfully bridged the cultural and generational gap, and whether the decision to move their product catalog to Facebook was the right one.

This is going to be exciting.       

Courtesy of an article dated December 16, 2010 appearing in Practical eCommerce

SOCIAL NETWORKS ARE HOT IN JAPAN, MOBILE PHONES ARE USED TO ACCESS THEM, BUT FACEBOOK IS A HUGE FAILURE THERE

Social networks have become nearly universal in the US and marketers have taken notice. More marketers are spending on social networks, and according tocomScore, social media display ads account for an increasing share of impressions, but the channel remains one of cheapest forms of online marketing today.

In Japan, by contrast, social networks have been slow to take off. But some have found a niche that can turn nickel-and-dime online and mobile revenues into dollars—or yen—a mix of free and paid mobile social games and microtransactions.

Traditional social networking websites have been slow or unable to catch on in Japan, but mobile social networking rates are comparable to those in the US. According to an October 2010 survey conducted by the UK’s Office of Communications (Ofcom), mobile social network penetration in both Japan and the US was at 22% of mobile phone users.

In Japan internet user's access their social network's by smartphone instead of a desktop computer or laptop:

Japan’s Ministry of Internal Affairs and Communications published an interestingreport [PDF] about the country’s market for mobile content and services this week. According to the ministry, that market grew by 12% to hit 1.52 trillion yen ($17.3 billion) last year, including mobile advertising.

The $17.3 billion breaks down into mobile commerce, which was worth $11 billion and mobile content (games, ring tones, e-books etc.), which amounted to a $6.3 billion market (see graphic below – click to enlarge).

According to company reports from Japan’s three largest home-grown social networks, GREE, mixi and DeNA’s Mobage-town, in September 2010 each had between 21 million and 23 million users. All three have a strong mobile offering. GREE and Mobage-town heavily incorporate mobile social games, and both GREE and mixi see vastly more page views via mobile: In September 2010 GREE had 46.52 billion mobile and 500 million PC page views while mixi had 26.12 billion mobile and 4.62 billion PC page views. Mobage-town did not report a breakout of how users view the site, but page views may not tell the whole story of usage due to small screen size and the navigation structure of mobile sites.

GREE and Mobage-town have increased user numbers and engagement by offering hundreds of free and paid games, encouraging playing with and competing against friends, enabling microtransactions for in-game upgrades and maintaining leaderboard rankings.

As a result, profits are soaring. From July to September 2010 DeNA and GREE reported net sales of ¥27.1 billion and ¥12.4 billion, representing increases of 216% and 82% year over year, respectively. For DeNA, social games, including item billing, in-game ads, affiliate ads and avatars, represented 79.0% of total sales, while traditional display and contextual ads accounted for 6.3%. The rest consists of ecommerce and other revenues. The ratio was similar for GREE, with paid services accounting for 80.6% of total sales and the other 19.4% coming from ads. mixi, however, remains heavily dependent on advertising, and total sales are much lower than their home rivals—¥3.9 billion, for an increase of 22% over the year before. In an attempt to catch up, mixi opened its platform and has attracted outside developers including GREE, Facebook and Zynga to increase engagement and develop paid services like games.

Mobile internet and gaming are more widespread in Japan than the US but DeNA thinks that they have a solid chance of duplicating success across the Pacific, snapping up US-based mobile game developers Gameview Studios, Astro Ape Studios and ngmoco. In a December 2010 press conference, DeNA and ngmoco unveiled a new gaming platform, ngCore, which they expect to launch globally in April 2011 on the Android OS.

As DeNA takes Mobage global, what can US marketers expect? Not all trends that come out of Japan translate to the US, but gaming seems to be one exception. You only have to look at Nintendo and Sony for two of the biggest examples. And a sizeable percentage of internet users in the US are already playing casual online, social network and mobile games, according to a survey by Newzoo BV.

Inside Social Games estimated that tens of millions of social network users worldwide played games on Facebook and MySpace in December 2010. As mobile games add social elements and connectivity allows for individual ad delivery, marketers’ will want to pay attention to this growing audience. Brands will be able to engage captivated gamers on the go in a variety of ways, including through the use of in-game ads and promotions, specialty service packs and sponsorships.

COMMENTARY:   There are very few regions where Facebook has not been able to penetrate the market as it has in the West.  China, Russia and South Korea have all developed their own popular variants of the idea.  Japan also has its own social networking sites and the top three: Gree, Mixi and Mobage Town, are currently in a battle that has become so fierce that Facebook might not even stand a chance.   

So why has Facebook been such a failure in Japan?   There are three key reasons why Facebook has failed to catch on in Japan:

• Complacency and failure to adopt to cultural differences - Societal and cultural gaps are particularly evident in the case of Japan. Market entry in this country with a “What works in the US must also work over there”-attitude is going awry for both Facebook and MySpace. It’s not a stereotype that communication tends to be nonverbal in Japan. The society generally puts more emphasis on the community rather than on the individual. Also, security plays a major role in many aspects of Japanese life.  A perfect example of a cultural misconception: Mark Zuckerberg recently said in Tokyo one of Facebook’s unique selling points is the usage of real names and photos in profiles. This may be true but it’s exactly what Japanese web users usually try to avoid. And they already have a high-trust, invitation-based social network anyway: Mixi.
• Lost in Translation - MySpace opened a Tokyo office in 2006, three years after launch in the US. It took Facebook four years to initiate a user-generated translation of their site. Too late – in the meantime Mixi developed into a $1 billion-listed company without the slightest competition from abroad.  The quality of the site’s translation is amateurish in parts (at least in the initial version), a challenge MySpace’s local team was at least able to master. In addition, due to relatively weak English skills, most of the Facebook applications are pointless in the eyes of Japanese users. Without apps that make sense, Facebook is crippled. Facebook is also missing the function Japanese consumers deem fundamental in a social network: blogging. This paradox may be the site’s biggest drawback in blog-crazy Japan.
• Sites Not Optimized Japanese Mobile Phones - Perhaps an even bigger problem is that both Facebook and MySpace fail to offer an optimized version for Japanese handsets. Millions of Japanese are accustomed to using one thumb, a dialpad and a jog dial on their phones when accessing the web during their commutes to school and work. In this country, the mobile web is bigger than the PC web.

Success factors in Japan: Get in fast, show some respect, and find a local partner

Offering a country-specific version before a local copycat beats you to it is an obvious key factor for success, and not only in Japan. But being relatively complex entities, social networks face a trade-off between additional risks and potential gains in the course of localization. Overdoing the adoption to local tastes might compromise the big idea and infrastructure of the site (i.e. in the form of cluttered interfaces or fragmentation into culturally and linguistically walled “mini-networks”).

Practical experience from the Japanese web industry has shown that partnering up with a local company is the best way to diminish these dangers (see Yahoo Japan, the No. 1 site in the country, which is a joint venture run by Softbank). Japan has embraced just five American web brands which decided to go solo and none of them is a social network: Wikipedia, Google, YouTube, Twitter and Amazon.

MySpace’s establishing of a physical presence in Japan was received as a sign of long-term commitment, a move which melds with the local mentality. But in Japan, maintaining your autonomy comes with a price: It’s no secret that it usually takes foreign companies years to build up brand identity, trust, industry connections and general market knowledge.

The same is true for complex web products such as a social network – if the company behind it really means it. Currently it seems Facebook and (to a lesser degree) MySpace chose to start working the Japanese market with a minimum of resources. But in most cases, remote management is perceived in insular Japan as second-rate treatment. Apart from M&As, cooperating with an established local partner seems to be the best shortcut option conceivable. It’s almost impossible to win in Japan without close interaction with end users, press, developers, potential employees and advertisers.

But the Japanese market isn’t lost yet for MySpace and Facebook, despite Mixi’s dominance. If millions of Americans don’t mind registering to multiple social networks, why should the Japanese? Growth potential, especially for Facebook, also exists in the realm of connecting professionals online, which may be the reason why LinkedIn is currently pondering a market entry in Japan. In that specific field, they and designated partner Digital Garage (whichhelped Twitter build traction and earn money in Japan), see practically no competition in this country.

If Facebook cannot get there act together in Japan after four years there, it is not going to get any easier.  The Japanese have a favorite social networking site, and they are fiercely loyal to that site.   They have already invested a lot of time and effort or "social equity" into building their online network, so it will be next to impossible to draw them away and join Facebook.    

Sorry Zuck, but you Zuck in Japan.   

Courtesy of an article dated December 29, 2010 appearing in eMarketer, an article dated August 3, 2008 appearing in TechCrunch and an article dated September 15, 2010 appearing in The Japan Times Online

 

A FUTURE APPLE EVANGELIST IN THE MAKING, WATCHING KIDS PLAY WITH AN IPAD, THANKS TO DAD

These two youngsters are having a lot of fun playing Fishball on an iPad.  In case you didn't know, the Fishball game allows you to sling balls of "food" onto a stick as fast as you can.  Could come in handy for working a kibob joint.   Anyway, Fishball runs on your iPhone, iPod and iPad and is available at the iTunes store for only 99 cents.

 

A dad gives his 2-1/2 year old daughter a new "toy", a $600 iPad, so she can learn her ABC's while playing with the Cat game of some sort.  This cute little girl has apparently played with her iPad toy before, judging the way she navigates from one app to the next.  

 

This cute poney-tailed little darling is Eleanor and her daddy is letting her use his iPad to draw lines, color Woody, the cowboy in Toy Story, learn her ABC's,  feed the fish and stick little stars on dad's magical device.   From the looks of things, Eleanor is a pro with the iPad.  

 

These two adorable little girls are learning how to draw and apply little faces of animal characters on some kind of iPad game and play tic-tac-toe (notice they only used x's).   Dad teaches them to leaf through the pages of an children's story ebook.   A lot of finger pointing going on here.  The iPad is ideally suited for the little fingers of small kids.

 

Daddy teaches his 2-year old son how to play the piano using the iPad.  A future Liberace?  From the looks of things, this little Asian boy has every toy imaginable.   An only child no doubt, and bi-lingual too.   Could be a candidate for my iPad World Throwing Championship.

 

Another cute little Asian firl is only 17 months old and still suckling a milk bottle.  Daddy introduces her to the iPad.  A lot of finger pointing.  This little girl is picking up the game of pool real quick.  Anything requiring finger pointing is popular with this little one.

 

This little boy's name is Richard and he is two years old.  Dad teaches him how to draw using the iPad.  Too bad, no Dolphin to draw.  I guess a Tyrannasaurus Rex is better.  This little guy knows how to find game icons with the speed of light.  It is obvious that Richard is a hands-on iPad master, and a future Apple evangelist, thanks to dad.     

 

COMMENTARY:    The iPad will create a new generation of tech savvy children that will make us adults seem like Neanderthal Man.  I did notice that all these kids were introduced to the iPad by Dad.  Where is Mom?  Just something I noticed.  Will Facebook for Kids be next?  Zuck, are you listening?

Courtesy of "Kids Using an Ipad" thanks to YouTube

THE SEC INVESTIGATES THE TRADING OF STOCK OF NON-REGISTERED COMPANIES, LIKE FACEBOOK, ZYNGA, TWITTER AND LINKEDIN

A red-hot trading market has developed in the shares of the world’s leading social networking companies: Facebook, Twitter, Zynga and LinkedIn. What is unusual is that none of the companies are listed on a public stock exchange. Each is privately held.

Now, the Securities and Exchange Commission wants to learn more about the business of these stock trades. The agency has sent information requests to several participants in the buying and selling of stock in these four companies, according to two people with direct knowledge of the inquiry who requested anonymity because they were not authorized to speak about it.

It is unclear exactly what has piqued the agency’s interest. An S.E.C. spokesman declined to comment on the matter. But the S.E.C.’s interest comes as a crop of new exchanges is popping up to facilitate these trades.

Over the last year, several private exchanges have matched up buyers and sellers of shares in these fast-growing companies. Though the volume remains thin, the number of transactions is increasing each month.

At the same time, Wall Street brokerage firms have begun forming investment pools to buy these companies’ shares.

Driving this activity is the social networking phenomenon, which has created the hottest, and most hyped, segment in Silicon Valley in years. 

Businesses like Facebook, the social networking leader, and Zynga, a popular maker of online games, already generate hundreds of millions of dollars in revenue. Twitter has more than 150 million users, and just received $200 million in venture financing. LinkedIn, another social networking site, has become a Facebook for professionals.

Who is selling these shares? Much of the supply comes from former employees at these companies and their early stage venture capital investors looking to exit their stakes.

The buyers in these so-called secondary trading markets are mostly wealthy speculators looking to snag a piece of the next Apple, Microsoft or Google before the rest of the investing public can.

Part of what is driving this emerging market is the shifting dynamics of initial public offerings on Wall Street, particularly in the technology sector, as companies take longer to tap the public markets.

“We are serving a growing need,” said David Weir, the chief executive of SharesPost, an online marketplace for private investments started last year that now has 39,000 registered members. “A decade ago, these companies would be public by now. Investors can now buy into these businesses and sellers can exit their already valuable stakes.”

SecondMarket, the leading trading exchange handling transactions in these securities, is expected to execute about $400 million in trades involving about 40 private companies this year, roughly a fourfold increase from 2009, the first year it began making markets in the companies, according to a company spokesman.

Facebook, run by Mark Zuckerberg, is SecondMarket’s most actively traded company. Last month, SecondMarket held an auction in which approximately $40 million worth of Facebook shares changed hands.

As the volume has picked up, the worth of these nonpublic companies has ratcheted up as well. The combined value of the top 11 private venture-backed technology businesses has increased by 54 percent since June, according to a recent study by Nyppex, a brokerage firm that facilitates trading in private companies.

Facebook is now trading at an implied valuation of $42.4 billion, according to SharesPost, more than tripling in value from earlier in the year. Twitter is worth $3.6 billion, more than doubling over the last several months.

Another batch of small Wall Street firms is also trying to get in on the action. These companies, which include GreenCrest Capital and Felix Investments, are raising “Facebook funds” or “Twitter funds.” These firms are pooling their clients’ money into investment vehicles to acquire blocks of stock of these companies.

Investors are taking on substantial risk when buying shares in these private companies. Despite Facebook’s ubiquity (it is the subject of at least two books, countless magazine features and a critically acclaimed motion picture) it does not disclose its financial results. And Twitter, despite its popularity and influence, generates minimal revenue.

But investors are betting that Facebook, Twitter and their brethren will ultimately go public at sky-high valuations, delivering big profits similar to Google’s initial public offering in 2004.

It is uncertain what exactly the S.E.C. is looking into, but several securities lawyers say it could relate to understanding the number of shareholders at these companies.

That would be relevant to regulators because Facebook and other start-ups have a reason to keep the number of shareholders to under 499. If they had 500 shareholders, S.E.C. rules would require them to disclose their financial results to the public.

The pooled vehicles being set up to acquire Facebook stock, for instance, could push the company’s shareholder count above 499 if the S.E.C. counted the number of investors in the funds.

In 2008, the S.E.C. and Facebook tangled over a related issue. Then, the agency allowed Facebook to issue restricted stock to employees without having to register the securities, which would have required the company to provide financial information to prospective investors.

Although the trading in these companies has increased over the last year, the market remains illiquid.

The market is capped by the amount of stock for sale. At Facebook, for example, only former employees can sell stock. In March, Facebook announced a ban on current employees selling stock.

It also announced an “insider trading policy” to better comply with the securities laws and “to protect the interests of the company and its employees and shareholders.” Also, recently hired Facebook employees are given restricted stock units that do not have value unless the company goes public or is sold.

The number of potential buyers is also limited. Because these privately held companies are considered high-risk securities by the S.E.C., the agency’s rules permit only qualified institutions (like ones that manage $100 million or more) and accredited investors (individuals whose net worth exceeds $1 million) to buy their shares. Also, many of the companies, including Facebook, have the right of first refusal to buy any shares of their stock offered on these private exchanges.

COMMENTARY:   I have been following Facebook's stock sales activities involving SecondMarket in separate articles dated November 6, 2010 and November 16, 2010 because I am concerned that Facebook share prices could be easily manipulated.    

I have been a critique of Facebook's pre-registration valuation of $42 billion by SecondMarket, because the sale of just a few shares, is not representative of true market conditions, if the stock traded over a public stock exchange.   

Since Facebook is a private company, its revenues and profits are not disclosed to the public, increasing the public's risk, since there is a lack of transparency like there would be for a public company.   

Now we find out that investment groups are forming funds to acquire Facebook stock.  I view this nothing less than a vehicle to speculate in Facebook stock and tricky way to circumvent the SEC's Rule 144.   I can certainly understand the SEC's concerns, since each investment fund could include multiple private or institutional investors.      

I think the SEC made a huge mistake by allowing companies like SecondMarket and SharesPost to create a market for stock of unregistered private companies like Facebook, Twitter, LinkedIn and Zynga.  

I recommend that the SEC halt all trading in Facebook, Twitter, LinkedIn and Zynga stock since it invites speculation and further abuse, and that these companies must disclose their financial information to all holders of Facebook shares effective the end of year 2010.

It certainly will be very interesting if the SEC discovers illegal sales or improprieties.  There will be fines and the officers of some of these companies could be personally liable and even face imprisonment.  This is probably not likely to happen, but it is definitely going to be interesting.    

Courtesy of an article dated  December 27, 2010 appearing in DealBook