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Why Microsoft Azure could have the last laugh in the cloud wars

CITEworld

Venture capitalist Brad Feld recently wrote an interesting post predicting the end of Amazon’s dominance of the cloud computing market, and concluded, “it’s suddenly a good time to be Microsoft or Google in the cloud computing wars.”

I’d go one step farther. Using Feld’s arguments, I’d say that Microsoft is in the driver’s seat.

First, the price war. Microsoft and Google are on approximately equal ground when it comes to cutting prices — both have highly profitable core businesses that they can use to subsidize a price war in cloud infrastructure, even to the point of sustaining losses for a while to gain market share. Amazon does not.

Second, the quality argument. Like Feld, we’ve also pointed out that there are niche cloud providers that do a better job than the big guys at providing infrastructure-as-a-service for specific verticals, but when you move all the way up the stack to full software-as-a-service applications, Microsoft has an edge among the big three with Office 365. Google has been making inroads into smaller businesses with Google Apps for almost a decade now, Microsoft remains the standard in the biggest and most profitable business customers — as this recent investigation from Dan Frommer at Quartz showed, only one company in the Fortune 50 uses Google Apps. (That company happens to be Google itself.)

The third argument, support, is mostly a wash. While Amazon’s support may be terrible (I have no evidence of this, but I’m taking Feld’s word for it), Microsoft and Google and their respective ecosystem partners do a decent job of supporting customers on their stacks. This hasn’t always been the case — Google used to treat support as an expensive afterthought — but in the case of Google Apps, at least, the company and its partners have stepped up significantly.

But then comes the fourth argument. Feld points out that once companies get to $200,000 per month of cloud-infrastructure spend, it’s actually significantly cheaper to build their own data centers.

Microsoft is the only one of the big three players with an on-premise offering — Windows Server and the rest of the Microsoft infrastructure family. Maybe the exact break-even point will change as the cloud price wars continue, but Microsoft has the most pieces customers would need to move from all-cloud to a hybrid or on-premise solution. Or, for that matter, for existing on-premise customers to begin experimenting moving some workloads to the cloud.

There’s one more point favoring Microsoft. Google’s core business is selling online advertising. That business makes up about 90% of Google’s revenue, and it has enviably high operating margins — around 30%, based on Google’s 2011 financial report. (I picked 2011 because that was before Google bought Motorola Mobility, which changed the margin structure.)

It’s unclear how the Google Cloud Engine helps that business. Are customers using Google’s cloud somehow more likely to advertise with Google? I don’t see it. Are Google advertising customers demanding to run other workloads on Google technology? I don’t see it.

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Why I’m Already Giving Up on Android Wear

Mashable

I believe in wearable technology. From Google Glass to smartwatches, the idea that you can have access to useful and essential information right when you need it — without digging a smartphone out of your pocket — is compelling. Once you have that convenience, you don’t want to go back.

That’s why it’s so jarring when that ability disappears after you’ve grown used to it. Ever since Google I/O in late June I’ve been wearing an Android Wear smartwatch, the Samsung Gear Live, fairly regularly. But too often I’ve picked up the watch from my desk or nightstand only to be greeted with a dead screen where my faux-sophisticated digital watchface is supposed to be.

It’s technically my own fault. This happens whenever I take off the watch and forget to put it back in its charging cradle. Android Wear smartwatches are designed to provide “all-day” battery life; the device expects — in fact, depends upon — me to remember to recharge it every single night, or else it reverts to what I like to call bracelet mode.

This is why Android Wear stumbles so badly right out of the gate. Although it feels logical to expect users to simply mirror their nightly smartphone recharge habit with another gadget, as I’ve discovered, that’s a wrongheaded assumption.

While a smartphone is easy to keep in a pocket in almost all situations, I often find the watch inconvenient to wear while playing with my kids (who are still young enough to be picked up) or, say, cooking. In those cases, off it goes to the coffee table, kitchen counter or nightstand — usually for the night.

That habit is deadly to an “all day” smartwatch because of its secondary role. For my smartphone, I will almost always remember to charge it because it’s my primary window into my digital life; if I forget to juice it up, I’ll be cut off from what’s now a fundamental part of the way I (and millions of others) live.

Smartwatch habits

For a smartwatch, though, things are different. While its notifications are convenient, they’re not always essential. I really only “need” the notifications when I’m working and tend to mute them at home. Add to that the expectation created by decades of wristwatches that a watch can be put down for days, weeks and even months and still just work (“Take a lickin’ and keep on tickin’,” etc.), and you practically guarantee that all but the most anally retentive will occasionally forget to charge their smartwatch.

Android Wear does give you warnings when the battery is running low, but given the poor battery life you probably won’t see them in the case of a forgotten overnight charge. If you’re at, say, 30% when you go to bed, the 20% alarm won’t trigger until a little later, and by morning the watch will probably be completely dead — especially if you have the watch face permanently displaying the time.

It certainly doesn’t help that most smartwatches require a cradle to charge, which usually means there’s no way to quickly recharge it with any cable you have conveniently lying around the office.

Pebble Chief Evangelist Myriam Joire recently said battery life was the biggest challenge facing wearables, and she’s dead right. Wisely Pebble built its smartwatch to run for several days at a time, which I now regard as table stakes for any device in the market.

Battery futures

There are more than a few positives about Android Wear — the gesture-based UI is quite good and setup is nice and simple — but the poor battery life is such an issue that the platform should never have been released in its current form. I have high hopes that future models (including the beautiful Moto 360) will last longer, but the first two products hint that that’s probably unlikely. After all, if it were possible to create a lightweight smartwatch with four- or five-day battery life using Android Wear, why didn’t Samsung and LG do that in the first place?

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If you can’t check in, is it really Foursquare?

IDG News Service

Foursquare unceremoniously dropped its “check in” feature this week.

Now, the service has been re-created as a third-rate Yelp instead of a first-rate Foursquare. Check-ins are now done via Swarm, a new app launched recently by Foursquare.

The trouble with this is that, for many of Foursquare’s most loyal and passionate users, checking in to locations is what Foursquare has always been about.

This kind of late-stage pivoting is something of an unhappy trend. I believe the cause of these strategic errors by companies is a combination of taking longtime and passionate users for granted while simultaneously coveting thy neighbor’s business model.

That’s a risky strategy. A company that goes that route could fail to succeed with the new model and also fail to hang on to its most passionate users. Then it could be acquired by Yahoo, never to be heard from again.

Twitter trouble

The poster child for this kind of error is Twitter.

People who love Twitter fell in love with it when it was a hyper-minimalist, quirky, secret-code-controlled text-centric microblog. It was minimalism that made Twitter great.

But Twitter got a bad case of Google andFacebook envy. The company redesigned its spare minimalism to look almost exactly like cluttered Facebook. The CEO of a company called Berg illustrated this perfectly by putting his Twitter and Facebook profiles side by side. The redesign is part of a larger direction for Twitter streams to move from text-based to picture-based. Twitter is joining Google+ and Facebook in the arms race that has broken out as people use images, rather than words, to compete for attention.

Twitter also embraced the card interface, which Google has rolled out to multiple properties, from Google+ to Android Wear.

Twitter has recently been testing a feature called “retweet with comment,” which gathers up the original tweet in a card and essentially attaches it to the retweet. This moves Twitter away from its core idea, which is forced brevity.

Of course, new features can fail their tests and may never be rolled out. But the nature of Twitter tests suggests that the company is making the dual mistakes of taking its core user base for granted and simultaneously flirting with the business models of competitors.

For example, Twitter tested a feature that causes a link to a movie trailer to automatically appear when a user types in a hashtag for that movie.

Twitter is even considering dropping both the @ symbol, for identifying and linking to specific user accounts, and the hashtag, for linking to specific kinds of content, according to some testing it has done.

Over time, Twitter is evolving from something that people loved to something that is just like other services and has has few differentiating features.

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Google continues to play it close to the vest on mobile ads

VentureBeats

Before Google’s earnings announcement today, many investors and analysts were hoping for details on progress in building and monetizing the massive corporation’s mobile ad network.

It’s an area of Google’s business that continues to see a lack of sunlight, even though it may be the most promising sector that the company’s playing in today.

True to form, in its earnings announcement today, Google again reported mobile ad revenues in a bundle with other ad business lines. Paid clicks from ads served through Google’s AdSense for Search, AdSense for Content, and AdMob businesses (that’s the mobile part) increased approximately 9 percent over the second quarter of 2013 but decreased 5 percent over the first quarter of 2014.

But we really don’t know much about the volume, price, or profitably of Google’s mobile ad business.

“Google has tended to take a holistic approach to advertising,” IDC analyst Scott Strawn tells VentureBeat. They tend to talk about ad results in terms of many different devices, Strawn says, but he wishes the company would talk about mobile cost-per-click numbers specifically.

“They’ve been successful in search and display, but in fact, over time, monitization on mobile should be as good or better,” says IDC analyst Scott Strawn. “But we haven’t really seen more detail, and that’s what’s needed to give investors a greater level of comfort.”

And, of course, when a public company is vague on the results of a business line, the natural reaction is to wonder if it’s hiding an area of poor performance. That skepticism may be warranted. Strawn says he’s talked to Googlers who have said openly that Google was “caught off guard” by the rapid growth in demand for mobile ads.

And, Gartner analyst Andrew Frank says, the industry reasons to believe that Google is facing challenges in mobile.

“It’s an interesting place to watch, especially with the tradeoff about volumes going forward and pricing pressure on clicks, which have been fairly volatile,” Frank told VentureBeat.

Frank explains that the mobile ad market is ruled by a supply-and-demand dynamic: The number of mobile users is going up, but the amount of mobile ad inventory may be increasing even faster. When there’s more inventory than people to view or click, the price of the inventory goes down, and mobile ad profits decline.

Google CFO Pachette said during the earnings call that he “took issue” with a question from an analyst concerning specific results of the mobile ad business.

The research shows that consumers view content on multiple screens, Pachette said. “They might start something on a smartphone or tablet then watch the rest on a smart TV.”

“So it becomes a question of how much attribution to give to each of these elements in the chain of views moving toward a purchase,” Pachette said. “What really matters is that you have a footprint of all of these devices.”

Google doesn’t feel the strong sense of urgency that Facebook felt when it dove into the mobile ad business. Facebook has been successful in mobile ads, the numbers show. Two years ago, people were criticizing the social network for having “no mobile strategy.” Today, mobile ads contribute half of Facebook’s revenue.

Google, meanwhile, is taking its time in what it sees as a developing market. “There’s long runway going forward,” Pachette said today. “I don’t think we have to fear the saturation of smartphone penetration for a while.”

Chrome gets sharp after dumping 30-year-old Windows technology

IDG News Service

Google last week said that it was finally ditching a 30-year-old technology to display fonts on Web pages in its Chrome browser for Windows.

In an announcement Thursday about some of the notable changes in Chrome for version 37, which reached Google’s Beta build channel earlier that day, a software engineer said the preview relied on Microsoft’s DirectWrite technology.

“Chrome 37 adds support for DirectWrite, an API on Windows for clear, high-quality text rendering even on high-DPI displays,” said Emil Eklund in a July 17 blog post.

Microsoft introduced the DirectWrite API with Windows 7, which shipped in the fall of 2009, and back-ported the technology to Windows Vista Service Pack 2 (SP2) at the same time with what it called a Platform Update. Windows XP, the now-retired operating system — but one that still powers one-in-four personal computers worldwide — does not support DirectWrite.

Prior to the switch to DisplayWrite, Chrome used Microsoft’s Graphics Device Interface (GDI), which was a core component of Windows since the graphical user interface’s (GUI) debut in late 1985. Microsoft had been working on GDI for at least two years before that.

Chrome 36, the current version out of Google’s Stable build channel, continues to use GDI to render text on Windows.

Eklund said that DirectWrite had been a top user request for years: An entry in Chromium’s bug tracker — Chromium is the open-source project that feeds code to Chrome proper — about adding DirectWrite support to the browser was penned Oct. 22, 2009, the same day Windows 7 launched.

As far as a reason for the long stretch between that entry and DirectWrite support making it into Chrome, Eklund said, “The switch to DirectWrite … required extensive re-architecting and streamlining of Chrome’s font rendering engine.”

Much of that difficulty stemmed from the sandboxing — an anti-exploit and anti-crash technology — of Chrome’s rendering engine; it wasn’t until February of this year that developers reported on the bug tracker that they’d managed to get DirectWrite to work inside the sandbox.

Other browsers have long since adopted DirectWrite. Mozilla’s Firefox, for example, switched from GDI to DirectWrite with version 4, which debuted in March 2011. Microsoft’s own Internet Explorer (IE9) began using DirectWrite with IE9, which also shipped in March 2011.

DirectWrite was one of the reasons why Microsoft declined to add the then-powerhouse Windows XP to the list of supported editions for IE9, a move that made the company the first major browser developer to drop support for XP.

If all goes according to plan, DirectWrite support will reach the Stable edition of Chrome with version 37. Google does not hew to a set timetable to browser upgrades, as does Mozilla, but it typically rolls out a new version every six to eight weeks.

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Are We Coming to the End of SEO?

Mashable

What are you hoping for when you search for something on Google?

Are you looking for a site that deployed every SEO tip and trick to game their way to the top of the list? Or a site that has relevant, reliable, authoritative content?

Most likely it is the latter, and it seems Google may want that too. If it happens to represent the antithesis of the results of good SEO, that’s just fine with Google. They don’t make a nickel on your optimized site and they are worried that users may become underwhelmed with their search results if the only links appearing above the fold are those not with the best content but with those deploying the most effective examples of chicanery we know as “SEO.”

When Google in 2013 stopped providing data about keyword popularity, this must have served as a shot across the bow of SEO. It signaled that Google wanted to put a damper on SEO because they had determined it was skewing the results in a way unhelpful to its users.

In the “old” days, SEO was a matter of stuffing your metatags with top keywords; then it became more complicated as Google continued to refine its search algorithm. The current state of SEO, in rather sober fashion, calls for “quality content,” no keyword stuffing, longevity of the domain, lack of duplicate content, a well-ordered site-map and other items more esoteric. Really, it’s become more about just building a great site with great (and focused) content. Phony inbound links are not supposed to cut it anymore, although sometimes this can slip by undetected.

SEO is a big industry. According to a site called State of Digital, 863 million websites mention SEO globally and every second 105 people search for SEO links on Google. Most of them seem to be looking for “services” or “companies,” which explains how there came to be so many SEO companies.

SEO is also an industry full of promises. Despite evidence to the contrary, many SEO mavens continue to insist they can fool the Google algorithm into getting your site – no matter what it is – higher in the rankings. That it is easy to see whether it works when you search for your own company makes it an appealing payoff. But the waters of SEO remain murky and it’s difficult to measure success of SEO in any meaningful way (in other words, even if you got to the top, did it improve your business or did you just accumulate a very high bounce rate?).

Now SEO may be going the way of Megalodon, a 100-foot shark rumored to exist but mostly accepted to have gone extinct a million years ago. If it isn’t functionally dead, it’s certainly in the sick-house. Google does not especially want the SEO industry playing games with its rankings, and what Google wants, especially in a case like this, Google gets.

Customers still ask for “top keyword” reports as if they have not read the news about the unavailability of it – perhaps because they believe that if you wish hard enough for a pony on Christmas, one will eventually find its way under the tree.

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World Tech Update- July 24, 2014

IDG News Service

Coming up on WTU Facebook reports huge sales, Apple patents a smart watch and a space robot gets some updates.

 

Wall Street Beat: Transition to mobile, cloud hits tech earnings

IDG News Service

With Google, IBM, SAP, Intel and other tech titans reporting earnings this week, the focus is again on mobile and cloud technology. The general trend appears to be that the further a tech vendor has moved away from its legacy desktop-oriented products, the better its earnings are.

IBM has launched ambitious cloud and mobile initiatives—but the resulting products are not quite fully baked. IBM officials themselves acknowledge as much, with IBM CEO Ginni Rometty talking about “positioning ourselves for growth over the long term” in the company’s earnings release Thursday.

Earlier this year, IBM announced a global competition to encourage developers to create mobile consumer and business apps powered by its Watson supercomputer platform. Just this week, IBM and Apple said they are teaming up to create business apps for Apple’s mobile phones and tablets.

But such projects have a ways to go before they reach fruition. Meanwhile, IBM revenue growth is flagging. Its second-quarter revenue was US$24.4 billion, down 2 percent year over year. Profit jumped 28 percent year over year, to $4.1 billion, but that was mainly because it compares to a quarter when net earnings were unusually low due to a billion-dollar charge the company took for workforce rebalancing.

Though both revenue and profit beat analyst forecasts, at first blush investors appeared disappointed, driving down IBM’s share price overnight. IBM shares gained back ground Friday but in early afternoon trading were still down by $0.60 at $191.89.

SAP seems to be riding the transition to cloud while incrementally boosting revenue. The company Thursday reported that, though software revenue continued to decline, cloud-based sales rose.

The maker of ERP (enterprise-resource-planning) software reported that revenue rose by 2 percent year over year to €4.2 billion (US$5.7 billion) in the quarter. SAP’s cloud subscription and support revenue was €241 million in the quarter, up 52 percent. Due to provisions for its patent dispute with software maker Versata, however, its net profit dropped year on year by 23 percent to €556 million.

As usual, Google was the earnings star of the week, reporting Thursday that its core advertising business fueled a 22 percent year-over-year increase in sales, to $15.96 billion. Profit was $3.42 billion, up almost 6 percent year over year.

It’s hard to say how much of this is due to mobile, since Google does not break out numbers for mobile and desktop ads. However, Google has been working on a range of projects designed to get its software on mobile devices. Many of those projects are years away from contributing significantly to the company’s bottom line, so for now the company essentially runs on its tremendous ad business.

One issue is that ads on mobile devices cost less than ads for other platforms and as a result, even as the company successfully makes the transition to mobile, the average cost-per-click of its ads went down by about 7 percent last quarter. Google officials say that as mobile computing becomes more imbued with work and recreation, ads on mobile platforms will become more remunerative.

Investors seem to agree, as Google shares rose Friday by $21.09 to hit $601.90 in afternoon trading.

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Report: Samsung and Google Butt Heads Over Smartwatches

Mashable

Are Google and Samsung fighting over Tizen’s role in wearables? According to a new report, the answer is yes.

According to The Information, Google CEO Larry Page met with Samsung Vice Chairman Jay Y. Lee at the Allen & Co. conference in Sun Valley. The purpose of the meeting? To discuss Samsung’s plans for wearables.

Evidently, the meeting wasn’t a success. The report reveals Page was unhappy to hear that Samsung still plans to focus most of its wearable efforts on its own Tizen operating system rather than giving more support to Android Wear.

Although Samsung has made a smartwatch that runs Android Wear — the Gear Live — the bulk of its smartwatch efforts are focused on Tizen.

Google and Samsung have a decidedly complicated relationship. Samsung is the most successful Android OEM by a large margin. As a result, Samsung wants to be able to differentiate and customize its experience. Sometimes, however, things go too far. In January, Samsung agreed totone down the extent to which it customizes Android’s user interface. Still, that hasn’t stopped Samsung from creating its own app store and doing its part to maintain the Galaxy branding.

With wearables, the situation becomes even more complex, because Samsung is essentially selling two competing devices. The Gear 2 smartwatch runs Samsung’s own software and works only with Galaxy smartphones. The Gear Live, on the other hand, has to follow Google’s rules and will work with any Android 4.3 or higher device — even if it’s made by someone other than Samsung.

The wearable market — especially the smartwatch part of it — is still new enough to allow Samsung to support both platforms. Assuming the smartwatch truly does go mainstream, however, Samsung may have to choose a platform and commit to it. For Google, the question then becomes, what does it need to do to keep its most important partner committed, without ceding control of its platform.

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From Google to Amazon: EU goes to war against power of US digital giants

The Guardian

Within the salons of the Elysée Palace, along the corridors of the European parliament and under the glass dome of the Reichstag, Old Europe is preparing for a new war. This is not a battle over religion or politics, over land or natural resources. The raw material that Paris, Brussels and Berlin are mobilising to defend is the digital environment of Europe’s inhabitants; their enemies are the Silicon Valley corporations that seek to dominate it.

Coal, gas and oil powered the industrial revolution, but in the digital era, data is replacing fossil fuels as the most valuable resource on Earth, and the ability to collect and interrogate it has created organisations with a power that can at times seem beyond the control of nation states. Amazon, Apple, Facebook and Google represent, in the words of Germany’s economy minister Sigmar Gabriel, “brutal information capitalism”, and Europe must act now to protect itself.

“Either we defend our freedom and change our policies, or we become digitally hypnotised subjects of a digital rulership,” Gabriel warned in apassionate call to action published by the Frankfurter Allgemeine. “It is the future of democracy in the digital age, and nothing less, that is at stake here, and with it, the freedom, emancipation, participation and self-determination of 500 million people in Europe.”

In France, economy minister Arnaud Montebourg believes Europe risks becoming a “digital colony of the global internet giants”, and ministers have called for Google to contribute to the cost of upgrading the country’s broadband infrastructure. Gabriel says Germany’s cartel office is currently examining whether Google should be regulated as a utility, like a telecoms supplier – the group has 91.2% market share of search in Germany.

He believes that, as a last resort, there may be a case for “unbundling” Google, separating its search arm from mobile, or YouTube, or services such as email.

As a first step, he is in favour of regulation that allows competitors to use the Google platform fairly. The pushback against Amazon has also begun: as of last year, the online retailer can no longer stop independent sellers on its German website from offering their own goods cheaper elsewhere, including on their own websites.

European regulators have also begun to take action. In May, the European court upheld a plea by a Spaniard, Mario Costeja González, who wanted pages hidden from any Google search for his name in the EU. Judges decided the past transgressions of private individuals have a right to be “forgotten”. The threats that ruling poses to freedom of the press are now being debated, but it was a watershed moment, representing Europe’s first major regulatory strike against the search and software colossus.

On 11 June, the European commission‘s competition regulator, Joaquín Almunia, wrote to colleagues to warn that his investigation into Google’s search rankings could be reopened, after new complainants had stepped forward. On the same day, he announced a potentially wide-ranging inquiry into tax avoidance, starting with a focus on three companies: Apple and its international headquarters in Ireland, and Starbucks and its head office in the Netherlands (the third company being carmaker Fiat). On Thursday, a leak from Brussels suggested Amazon, which operates through a European HQ in Luxembourg, was also being dragged into the net.

“In the current context of tight public budgets, it is particularly important that large multinationals pay their fair share of taxes,” Almunia said. His intervention was widely interpreted as a politically motivated act. It almost certainly was.

There are those who believe that Jean-Claude Juncker, the former Luxembourg prime minister who has just been elected as the next president of the European commission – despite vocal opposition from David Cameron – is out to get Google.

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