18 May, 2012



Groupon investigated for odd stock spike prior to earnings report

Posted: 18 May 2012 09:02 AM PDT


Groupon is being investigated by the Financial Industry Regulatory Authority after the company’s stock made a sharp, upward turn Monday, before earnings beating expectations were delivered at the close of business that same day.

Finra, which watches for oddities within the market, was tipped off to strange Groupon activity when the company’s stock soared 18.5 percent with no real cause, according to the Wall Street Journal‘s sources. This is a big spike for the company, and came shortly before it released a favorable earnings report to investors that evening. Sixteen million shares were bought and sold, when only four million have been traded within the last month.

Given the earnings report, which put Groupon at $559.3 million in revenue, which beat analyst expectations by 29.3 million, it sounds like information was somehow leaked. The Journal reports that Finra is considering handing the investigation over the Securities and Exchange Commission.

Groupon has been involved in a number of other snafus during its road to and eventual IPO. The company’s Executive Chairman Eric Lefkofsky reportedly broke its quiet period saying the company was going to be “wildly profitable.” Later, Groupon’s chief executive Andrew Mason was investigated regarding an e-mail he sent to employees prior to the IPO, which was cause for quiet-period-concern. The company was also influenced to revise a weird accounting metric in its IPO filing that showed operating costs without including marketing costs. After its fourth quarters 2011 earnings report, Groupon also had to readjust its earnings to reflect less revenue that it had originally reported.

via The Wall Street Journal; Image via swanksalot/Flickr

Filed under: VentureBeat

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Facebook’s opening price values Instagram at $1.27B and Kevin Systrom at $506M

Posted: 18 May 2012 09:00 AM PDT

Facebook is looking mighty fine today — especially if you’re Instagram, the photo-sharing company that sold its hit mobile application to the social network one month ago for a cool $1 billion in cash and stock.

But wait. Did we say $1 billion? Scratch that. In actuality, the deal, after Facebook’s opening at $42 a share on the NASDAQ this morning, values Instagram at around $1.27 billion and counting.

If you recall, Facebook purchased Instagram in a hybrid cash-stock deal, giving the baby company $300 million in cash and 23 million shares. The actual value of the deal, then, is contingent on the market’s reception to Facebook as a public company.

In theory, paper multi-millionaire Instagram co-founder Kevin Systrom, who is said to hold a 40 percent stake in Instagram, saw his net worth bumped up by $37 million when trading started. At the $38 a share price, for instance, Systrom’s cut stood at around $469 million. At the opening price of $42 a share, however, we’re talking about roughly $506 million. Talk about an insta-win (though the market hasn’t sustained this sum in the first 30 mins of trading).

Other interesting questions still up for consideration: Did Facebook overpay? And can Instagram really earn its billion dollar plus value?

“We won't know whether Instagram was worth Facebook's outrageous investment until we see what they do with it,” Moor Insights & Strategy president and principal analyst Patrick Moorhead told VentureBeat.

“If Instagram's mobile platform can be leveraged to more quickly monetize Facebook's mobile platform, I can argue it was worth it. If it was a move to just remove a potential competitor, it will be a waste because there will be many, new, up-and-coming and compelling social media platforms that will arrive on the scene.”

Sterne Agee senior research analyst Arvind Bhatia views the deal a bit differently. “This is the beauty of [Facebook] using stock as currency,” he said in a phone interview with VentureBeat.

Facebook, in doling out more shares than cash, paid a fair price at the time the deal was negotiated, Bhatia believes. “Instagram will have to live with whatever the stock does,” he said. “It could be hurt if the stock doesn’t perform well.”

There’s the rub: Those 23 million shares won’t be issued until the acquisition closes, and that may not happen until the end of the year. After that, Systrom and co. may be under stock lock-up agreements that prevent them from selling their shares for several more months. By that point, Facebook could either be coasting along on the wave of public interest — Sterne Agee has set a one-year target price of $46 and a two-year target price of $59 — or careening backward toward a more down-to-earth fair value.

It’s important to note that none of this is lost on Facebook, or Instagram for that matter. “The value of the equity component of the final purchase price will be determined for accounting purposes based on the fair value of our common stock on the closing date,” Facebook clearly spelled out in its prospectus. “It is possible that the per share price of our common stock on that date could be significantly higher or lower than the initial public offering price.”

Ultimately, despite what appears to be a high price tag for Instagram, Facebook could come out the real winner in the deal depending on how the market reacts to the company and what the social network does with its sepia-toned friend.

“Mobile will be an interesting opportunity for Facebook. [Facebook] knows that the mobile web will be powerful, and it knows that real-estate is limited,” Bhatia said. Instagram, he added, will play a big role in whatever solution Facebook comes up with to tackle its mobile revenue challenges.

Photo credit: jec08290/Instagram

Filed under: deals, media, social

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Amid unexpected Facebook slump, other tech stocks sink

Posted: 18 May 2012 08:59 AM PDT

You know what they say about a rising tide lifting all the boats. Well, the same goes for a waning tide.

As Facebook stock dips lower and lower in early trading, other new tech stocks are also taking a beating. So far today, Yelp, Pandora, Zillow, and Zynga are all trading significantly lower, too.

UPDATE: As of 9:04 am Pacific Time, trading of Zynga shares has been halted. Shares were down 13 percent before trading stopped.

Interestingly, some more mature tech stocks are trading up. Google is up around 3 percent for the day, and Apple stock has seen an 8 percent lift.

Here’s a chart showing percent changes for the day. As you can see, tech stocks that have seen relatively recent IPOs are down 4-10 percent so far:

FB Chart

It’s still very early, so it’s hard to tell what the rest of the day will bring.

Most of the analysts we consulted weren’t expecting a big “pop” for Facebook shares today, but they were expecting trading to stay in the low to mid-$40s. This dip down to $38, which was the original listing price last night, is inauspicious but not necessarily a disaster — yet.

“Facebook has an opportunity to learn from Google's own IPO — which, by the way, had a rocky start — and subsequent business success,” said Lee Simmons, an industry expert at Dunn & Bradstreet.

Super investor Warren Buffet also predicted a rough start for Facebook, stating at the Berkshire Hathaway shareholders meeting, “We never buy into an offering…The idea that something coming out…that’s being offered with significant commissions, all kinds of publicity, the seller electing the time to sell, is going to be the best single investment that I can make in the world among thousands of choices is mathematically impossible.”

Stay tuned for more Facebook IPO news throughout the day.

Filed under: VentureBeat

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All eyes are on Facebook stock, trading now at $40 but unlikely to “pop”

Posted: 18 May 2012 08:15 AM PDT

Facebook shares are trading publicly for the first time ever today, and so far, we’re seeing small fluctuations in share price.

As of 11:30 Eastern time, trading had commenced at $42. Currently, shares are at $40.23. Highs and lows for the day are so far at $43.02 (a 13 percent increase from the original asking price of $38) and $38.

Analysts expect the price to remain in the low to mid-$40s throughout the rest of the day. Trading was expected to begin as early as 10:45 am Eastern Time but was delayed, likely due to the large volume of orders.

The eight-year-old company has offered 421.2 million shares today, bringing the deal’s total to slightly more than $16 billion with a market value between $93 billion and $104 billion.

Expected revenues for 2012 are $4 billion, with a $972 million net income, according to NASDAQ.

Facebook CEO Mark Zuckerberg chose to ring the bell remotely from his company’s Menlo Park, Calif., campus, where VentureBeat was on hand to get news and on-the-spot reactions — a welcome wave of verifiable narrative after several months of rampant speculation.

Hype be damned, this is the Big One

“The days leading to the IPO have been colored by an assemblage of facts, opinions, and rumors, from Mark Zuckerberg’s hoodie to the dampening effect of mobile growth on ad revenues,” said Gartner analyst Ray Valdez in a recent conversation with VentureBeat.

During the company’s quiet period between its S-1 filing and today, any actions or announcements from the company have indeed taken on added import, with the upcoming IPO throwing a long shadow over Facebook’s activities and subsequent media coverage.

“In aggregate, these ‘man-bites-dog’ stories serve to temper the early, somewhat irrational, exuberance around the IPO, which is likely a good thing for all concerned,” Valdez continued.

“Even if Facebook’s IPO comes in at the low end of the price range, it will have made history.”

History, indeed. Even at its starting price, Facebook has already broken three records, a fact that’s supported by statistics from NASDAQ. Here are a couple charts we made to show Facebook’s place in IPO history across all global stock exchanges as well as U.S. stock markets.

Moreover, Facebook dwarfs other Internet IPOs, both from this bubble and the last. Today’s deal is about 10 times larger than Google’s 2004 initial public offering, according to NASDAQ’s stats. It’s 16 times bigger than Zynga’s IPO and more than 20 times the size of Groupon’s.

Now, all we have to do is wait and watch as Facebook shares begin rising (and inevitably falling) on the stormy seas of the stock exchange floor. The question on everyone’s minds: Where will Facebook share be trading at the closing bell?

Don’t expect a “pop”

“This is now a $16 billion float — that is a ton of stock — so it's unlikely that the stock will double like LinkedIn did,” said Michael Pachter, managing director for equity research at Wedbush Securities.

Facebook’s IPO Is Here

Even analysts are putting their money where their mouths are

Facebook’s advertising drama has no impact on the IPO so far

Even after the IPO, Zuck remains in control

Facebook’s IPO is a record-breaker aready

Facebook rings the bell from its Menlo Park, Calif. campus

He continued to state that a “pop” only happens when stock is priced too low to begin with.

“I'm sure Facebook's IPO will be well-received, but don't expect the stock to go quite that high… I would expect the stock to be solidly in the mid-40s, as that's where the private market was.”

Mark Siegel, managing partner at Menlo Ventures, agrees that the $38 starting point isn’t leaving too much money on the table.

“I think it’s going to be priced to perfection quite efficiently,” he told us, stating that the $38 price point “certainly fully values the company based on today’s financial metrics.”

While all parties involved acknowledge that the hype and drama surrounding Facebook has led to rabid investor interest and an oversubscribed initial offering, no one thinks there will be a LinkedIn-like “feeding frenzy,” as Dunn & Bradstreet industry expert Lee Simmons put it.

“Google's shares rose 18 percent on its opening day, and LinkedIn jumped 109 percent. But LinkedIn floated less than 10 percent of its shares,” the analyst pointed out. “The combination of Facebook's comparatively large share offering and its increased price range indicates to me that its opening day will be less ripe for the proverbial pop.”

“Still, the day you see your company stock symbol moving across the ticker is one you never forget.”

On the eve of Facebook’s historic IPO, serial entrepreneur Scott Sellers reminisced about his own experiences in this department, saying, “Facebook going public will have a profound impact on Silicon Valley.”

Top image courtesy of Jolie O’Dell, Flickr

Filed under: deals, VentureBeat

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UK government breached from the inside, 1,000+ workers disciplined

Posted: 18 May 2012 08:14 AM PDT

UK government breach

Looks like it’s not just the newspapers snooping on UK citizens. The government itself has reported internal breaches, according to information released in a Freedom of Information request.

Over 1,000 breaches of personal information have occurred in the last year due to rogue civil servants accessing the data without permission, says ZDNet. These employees gain access to personal information, despite a lengthy vetting process giving them the permissible access in the first place. These employees came from the UK’s Department for Work and Pensions and The Department for Health. Only the Department for Work says it properly recorded breaches made, and revealed in 2011 there were around 1,000 civil servants punished for wrongful access to personal information. The latter says it did not record all the breaches, though it did record at least 150 of them.

Many of the security concerns we hear about are from external groups, such as Anonymous, other governments, and hackers working independently. They spread malware, take websites down, deface them, steal personally identifiable information and more. What people don’t realize is that these guys are the modern bank robbers. Just about anyone with access to a wealth of personally identifiable information has the opportunity to make a lot of money selling that data on the black markets. Indeed, while “hacktivists” and online protesting breaches have gotten much of the attention, hacking is still a financially lucrative game.

Companies and governments alike still need to realize that many hacks can come from within. ZDNet notes that those who do expose or illegally access personally identifiable information could be subject to a fine as expensive as $7,900. Whether or not those involved in the breaches have been fined is unknown.

via ZDNet, Tower Bridge image via Shutterstock

Filed under: security

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The DeanBeat: Can Microsoft’s Kinect gain cred from hardcore gamers?

Posted: 18 May 2012 08:00 AM PDT

Microsoft’s Kinect has always held out tantalizing promises. As a user interface, it brings computing devices to the edge of greatness but falls just a little short of our dreams of the Star Trek holodeck or the cool transparent, gesture-controlled computer that Tom Cruise used in the sci-fi film Minority Report. You can fantasize about being a Jedi Knight in Kinect Star Wars…until the system fails to recognize your lightsaber attack and you get pummeled instead.

But imperfect as it is, Kinect is slowly but surely expanding beyond its casual audience of former Wii fans to the hardcore gamers. New Kinect games that have appeared or will appear later this year are targeting the hardcore. But people like me are pretty picky when it comes to their gaming experiences. A slight delay in recognition of a gesture or an inaccuracy in parsing a verbal command can ruin the experience for us.

Microsoft’s Kudo Tsunoda, creative director for Kinect, said in an interview that the accuracy and fidelity of Kinect are getting better, and developers are learning how to craft good experiences around what it is capable of doing.

“It’s great to see stuff showing up in more hardcore genres,” said Tsunoda. “And I think the way that people are using it in their experiences really shows the breadth of what Kinect can do. It enables, I think, creative people to use Kinect in a way that really enhances their experiences in a meaningful way for people who love their franchises.”

Recognizing the accuracy problems with Kinect, game developers are learning how to craft experiences that use the system in a way that allows for errors. Electronic Arts’ BioWare division didn’t use the motion-sensing system in Kinect for Mass Effect 3, but it did tap the voice-recognition system so you could issue combat commands to two squad companions.

“Kinect is a pretty sophisticated and impressive piece of hardware,” said Casey Hudson, executive producer of Mass Effect 3. “When it first came out, a few of us at the studio either got one or had a chance to play with one, and it was pretty cool.  Beyond that, because it has a few different abilities, it makes you think about how they could be used in the games you're making.  As we discussed those possibilities, we got excited about the chance to integrate it into Mass Effect 3.”

The voice commands were a great fit with the tactical squad gameplay, and they use a lot less memory than motion-sensing commands, Hudson said. It took about nine months to integrate the voice commands into the game. They worked right away but needed refining and localization to make them work with multiple languages. In case the system doesn’t recognize your command (particularly in scenes with a lot of noise and music), you can always fall back to using the game controller. So the failure isn’t catastrophic for the game experience.

“The biggest lesson is to make sure the player has options,” Hudson said. “We saw enough positive reaction that we’ll consider it in future titles.”

Inspired by Mass Effect 3, Ricky Gonzalez (a developer at Bethesda Game Studios) modified The Elder Scrolls V: Skyrim to enable voice commands for things such as navigating through inventory or casting “dragon shout” spells that show off impressive special powers. He got the bare bones working, and then Bethesda decided it was interesting enough to assign a small team to it. Over a couple of months, they created the full set of features. Now you can issue around 200 different voice commands in the game that simplify what can be an otherwise unwieldy user interface.

Coming down the road is Capcom’s Steel Battalion: Heavy Armor, which makes use of both Kinect gestures and controller commands. In the game, you serve with a crew in tank-like Mech in an alternate-history version of World War II.

Kenji Kataoka, who heads the team at Capcom, said that he knew Kinect could be used for his game when he first saw the demo of Project Natal (the code-name for Kinect) years ago. His team worked on integrating Kinect and the controller to command the big Mech for the past three years. They worked closely with Microsoft researchers and studied the behavior patterns of 200 people to get the gestures for the game right. The trick, Kataoka said, is detecting your “intentions and coordinates of your gestures.”

He added, “At first people didn't know how to react or grasp the concept itself. Then came the skeptics who were unsure about it or didn't believe it would work. Now we are seeing the enlightened and believers. What we mustn't forget in any immersive game, though, is that it requires some work from the player as well — be it imagination, adaptation, or certain role-play.”

Microsoft’s own major Kinect game, Fable: The Journey, has also been in the works for a long while at the company’s Lionhead Studios division. Tsunoda said that title uses a full range of Kinect capabilities, and it will have good fidelity upon launch. The popular reception of this game may determine whether Microsoft commissions further, similar projects.

Microsoft has still more unannounced Kinect games waiting in the wings. So far, we haven’t seen the spectacular, break-out success like we did with Wii Sports on the Nintendo Wii in 2006. That title introduced us all to motion-sensing games. Kinect has extended our interest. The Star Trek holodeck isn’t quite here yet, but Tsunoda thinks we’ll get there.

[Photo credit: Motioncapturedata]

Filed under: games

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Microsoft’s Kudo Tsunoda on broadening Kinect games to hardcore fans (interview)

Posted: 18 May 2012 08:00 AM PDT

Kudo Tsunoda is the creative director for Kinect games at Microsoft and chief cheerleader for the company’s motion-sensing system for the Xbox 360 video game console.

Kinect has been a hit with casual game players who otherwise might have been fascinated with the Nintendo Wii. But hardcore gamers are a big challenge for Tsunoda. After a year and a half on the market, Kinect is starting to appeal to hardcore game developers, who have taken a long time coming to terms with making Kinect titles.

Some recent hardcore games such as The Elder Scrolls V: Skyrim, Mass Effect 3, and the upcoming Steel Battalion: Heavy Armor are exploiting Kinect’s ability to recognize voice and motion. We talked to Tsunoda about the trend, recently. Here’s an edited transcript of our talk.

GamesBeat: It’s interesting to see Kinect evolve and pick up more hardcore games. How do you see this evolution?

Tsunoda: It’s always great to see Kinect showing up in all different types of entertainment and gaming genres. Those new technologies — the longer that developers are able to play around with it and develop on it, the better their understanding of how to use the tech in a way that best fits the experiences they want to build is going to be.

You see such a wider variety of Kinect content now. It’s great to see stuff showing up in more hardcore genres. And I think the way that people are using it in their experiences really shows the breadth of what Kinect can do. It enables, I think, creative people to use Kinect in a way that really enhances their experiences in a meaningful way for people who love their franchises.

GamesBeat: Developers have gone down a couple of roads here. You have the voice recognition as one part of it, and then the other is the actual motion sensing, too. Can you tell me about how each one of those has gone for you?

Tsunoda: I always think about the kind of Kinect features we shipped with at launch as enabling not only the motion technology and the voice stuff but also our identity system. That allows people to stand in front of the sensor and then have that integrate or automatically sign them into Xbox Live.

And then you’ve seen since launch a lot of innovation on the software side around Kinect, enabling stuff like finger tracking, our player-skinning technology where you can stand in front of it and it automatically creates an avatar that looks like you, our object capture. And then, you know, certainly stuff like you’ve seen in Play as well.

I think it’s great when you see the voice technology showing up in things like Mass Effect 3, obviously, Skyrim. And then you see the great seated play showing up in stuff like the Forza franchise — things you’re going to see with Fable: The Journey coming out this holiday. You will get a higher fidelity of tracking as well as these new features. I think the constant evolution and innovation that you see in Kinect as a platform — it’s also really helping it to spread out to all different kinds of genres and experiences.

GamesBeat: At some level, the technology still could be more accurate. How that has affected what developers are doing as well?

Tsunoda: In lots of ways you see Kinect, especially in the core areas, in some ways being put into franchises that already exist. I think about a game like Mass Effect 3, and I don’t think necessarily the motion technology of Kinect in any way really dictates what goes into the game and what doesn’t as much as that game is perfectly suited for the voice technology side of things.

Fable: The Journey, coming out this holiday, will be using the motion technology, and it has really good fidelity in the motion technology. It is improving over time to drive a more core gaming experience. I think we’re proving out things in Kinect all the time — building new things. Allowing creative people to use Kinect to bring a different type of functionality in a way that makes sense for their franchises.

GamesBeat: Yeah. Now, it sounded like some of the things that you’re seeing are reflecting some improvement in Kinect. Is that correct, or is it more like the developers are learning how to use what’s already there? Like the seated play, for example: Is that more a case of people learning how to use Kinect, or is that possible because Kinect has had firmware updates or something like that?

Tsunoda: Developers are just learning how to use the hardware and software platform better. I think that’s true. But then I think also it’s people developing new software that enables unique and different things. I think it’s both the evolution of existing Kinect functionality and just the fact that so much of what Kinect is able to do is bring innovations through software development versus having to replace your hardware. Developers are getting better at using it, and then also we’re able to invent new things and update what’s going on through the software updates that we can do over Xbox Live with the existing hardware.

GamesBeat: Is it a parallel to the evolution of graphics on the 360? Call of Duty: Modern Warfare looked decent on the system, but Modern Warfare 2 looked better, and Modern Warfare 3 looked even better. They’re squeezing better graphics out of each new version of the game. Is that the same kind of parallel you have with Kinect here?

Tsunoda: Yeah, I think that’s exactly right. People understand better how to develop on any kind of technology. You’re going to get better performance, better experiences, new inventions over time. I think that’s why you see Kinect branching off into all different genres of games now. It’s because developers are able to do more with the technology as they’ve become more experienced in working with it.

GamesBeat: What are some of the different ways that people have overcome the toughest challenges here? Having played Kinect Star Wars, you get really tired playing that game, right? Somehow, there must be some kind of workaround for people like me [laughter]. You need help finishing the game without completely getting exhausted. Have you seen some of this clever thinking here?

Tsunoda: I think we have a bigger concept now of how you do gameplay ramping through an experience. That isn’t just difficulty ramping, but it’s energy ramping — if that makes sense.

We are learning how to build a narrative and a story around a Kinect experience that allows for different types of interactions. One of the things that we’re super excited about is how you can use a combination of facial detection, motion detection, voice recognition, and tone of voice recognition to allow somebody to participate in a narrative like an actual character inside the scene. So much of how you communicate is through body language and tone of voice, and being able to incorporate those things into an interaction with a digital character is stuff that only Kinect can do.

When you think about those types of mechanics and experiences, they are ones that require a lot of full-body motion even if it’s just conversational, like you and I are talking now. I think that a lot of how we’ve started thinking now about games through how you do a mixture of experiences — full body experiences — with play mechanics that don’t require much motion as a way of allowing a more immersive and in-depth and lengthy play experience that I know a lot of gamers really love.

GamesBeat: What are you expecting to see this year? Do you have an expectation that many titles on the hardcore side will use Kinect? Are you expecting something like dozens of titles, or is it still an experimental thing that’s in a handful of titles?

Tsunoda: I don’t think I have exact numbers. Even just from a Kinect portfolio perspective, we had a lot of titles at launch. I think it’s something like four times the number of experiences today that we had at launch. We’ve seen a huge increase in the breadth of the portfolio.

I think more than anything, it’s really seeing how many different implementations of Kinect that are out there today. Whether that means using different features of Kinect, inventing new features of Kinect, controlling or combining Kinect with controllers, combining Kinect with other types of objects that you can have as far as object scanning, the avatar generation — so many of these different ways that Kinect is showing up in all kinds of experiences.

I think that you’re going to see a lot of variety in the types of experiences, a lot of new invention. And then of course, like you’ve seen even in the last year or so, four times as many Kinect titles out there as there were at launch and seeing a big increase of all types of titles as we go forward.

GamesBeat: Do you think we’ll see a lot of those features in one game, or do you think we’ll see a game like that original Milo [artificial intelligence] demo?

Tsunoda: You know, the exciting thing is seeing a lot of those things used in combinations inside single experiences. So not so much just one experience doing one thing as much as how people can start blending all the different capabilities of Kinect in an immersive experience.

Whether it’s exactly like the Milo demo we did or not, I do think that the next evolution of the experience will come as developers get better and better at working with Kinect. I think right now we’re in an area where you’re going to start seeing some amazing Kinect experiences based on things like using voice or using full body or using identity. And then I think going forward you’re going to see a lot more people really blending all of the different features of Kinect together to build some really rich and immersive new types of experiences.

GamesBeat: So Steel Battalion looks like it’s one of maybe the highest — the one that uses the most Kinect features?

Tsunoda: Yeah, I think Steel Battalion — it’s a great example of taking an experience that had already been done with controllers and completely reinventing it in a way that really uses Kinect as the center of the experience. I think you can see — when you’re really reenvisioning an experience built from the ground up for Kinect, the kinds of deep, rich, immersive experiences that core gamers love can totally be achieved. I think you see that both in the Steel Battalion game and in Fable: The Journey coming up this holiday as well.

GamesBeat: I assume there are some unannounced games here that are also interesting to you.

Tsunoda: [long pause] Yes. There are.

GamesBeat: That’s good to know.

Tsunoda: Because, obviously, I work here making games and experiences with the Kinect, and I get to see a lot of Kinect product. But in the same way, a lot of the stuff that really makes this job fun for me is that I love playing games, and I love seeing other people’s experiences and getting in and enjoying them myself.

Come [video game trade show] E3 time, there’ll be a lot of product for everybody to check out, myself included. That’s why I always look forward to getting out to E3, getting to see a bunch of new stuff, getting to try a bunch of stuff out. I think just as a gamer — the time between E3 and the holidays, you get exposed to so many different types of experiences and get to play so much new product, it’s just a super fun time.

GamesBeat: So gamers are always anticipating the next thing. What do you say to the people who want to have a Kinect 2 already?

Tsunoda: It’s funny. I tend to think in terms of hardware updates. As the lifecycle of consoles has occurred, the next big thing always tended to mean the next piece of hardware coming out.

But I think one of the things that’s been awesome about Xbox 360 — you look at things like Xbox Live and how much that service has evolved from when it first launched until now and how there’s always new features and new big things being added.

Like I said before with Kinect, we’ve gone from it meaning motion and voice and identity to meaning those things plus finger tracking, player scanning, object scanning, seated play — all these other great new features. I think that waiting for the next big thing isn’t about waiting for the Kinect 2. It’s more about all the great invention that can be done in software without having to go out and spend money on a new device.

GamesBeat: I was playing the Skyrim demo. If you had your speakers on a little high and there was rain going on in the demo, then it was hard for Kinect to hear the commands accurately. It sounds like, in some sense, there’s still some work to be done — some quality to be improved upon. I think I had trouble with Kinect on my old 360 because the fan makes so much noise.

Tsunoda: It’s always interesting because I think part of the stuff that we’re really trying to push with Kinect is allowing the machine learning, based on real world data, to improve the quality of the experience for everybody.

I think that’s why, just like we talked about — it’s not where you have to wait for Kinect 2 for something to be different as much as the more that we’re able to play with Kinect and update Kinect over time, all of the capabilities in all different types of scenarios, we’re going to keep pushing. I think that, again, it means both the evolution of existing features as well as the invention of new ones.

I think that’s a huge feature of Xbox 360 — is that we’re always looking to improve the experience and always looking to update our work based on how people are playing and how people are having fun and to make that a core part of our company’s DNA. It’s being able to improve the experience consumers have based on what they’re doing. I think that’s stuff we push on in all areas.

GamesBeat: I think both BioWare and the Bethesda folks mentioned that Microsoft gave them some expertise or gave them some engineers to help with the voice recognition? Is that something you do with a lot of the games, where you have your own Kinect experts going out to help everybody create these games?

Tsunoda: We help not only with Kinect, but with Xbox all around. Obviously, we want consumers and people to have fun and have the best experiences possible on Xbox 360, and so we have teams of developers that build the software platform that enables other companies and other developers to then bring to life the creative visions that they have in their heads that they want consumers to enjoy.

We share technology where it is helpful. If there’s ever technology or expertise that we can help share with people to best enable creative folks to build the real vision of what they want consumers to experience in the highest quality way possible, that is stuff that we’re always happy and motivated to do.

GamesBeat: Is that actually an incentive program you guys have, where you’ll throw marketing dollars to match whatever a developer is investing in Kinect? Is it as formal as that?

Tsunoda: The stuff I’m telling you about isn’t so much a marketing or incentive-based thing as just the stuff that we want to do to enable customers to have the best experiences. We make our platform and technology available to developers so they can help build the best things for consumers. I think out of everything, the incentive-based thing that we have is just wanting people to have super, high-quality, fun experiences on Xbox. I think that’s always our primary motivation.

GamesBeat: When you think about how strategic Kinect is, then, how do you look at it that way? Strategic in terms of the whole Xbox 360 initiative.

Tsunoda: I think just from a strategy standpoint, the stuff that we really want to provide both for developers and to consumers is that — no matter which way is the most fun way for you to experience your entertainment content or what type of entertainment content you want to build, you’re able to do that in the best way possible on Xbox.

I think this is what’s great. If you’re a consumer, you love entertainment, digital entertainment, you love playing games, and you want to do stuff with a controller — we can do that. If you want to do stuff controller free, we can do that as well. If you want to do a controller mixed with Kinect, you can do that also.

I think that means that, really, we give consumers the widest experience choice possible, so you can enjoy your entertainment in the way that is most natural for you. And then from the developer perspective, if you want to build games with controllers, if you want to build with Kinect, if you want to build a mix, you can do that also. It allows developers to really bring the stuff that they want — build the stuff that they want to build — in the easiest way possible.

I think that’s always a kind of overarching strategy of what we’re trying to do — to just allow people to do things in a way that’s the most fun and natural for them. Whether that’s how consumers enjoy their entertainment or how creators develop it.

GamesBeat: How much credit do you give Kinect for your success in the last year? The 360′s been the top-selling console platform for more than a year now.

Tsunoda: It’s great that Kinect has really given people a new way to experience their entertainment. I think that’s been awesome. I just think that the best thing that Xbox 360 has is that the experiences are super fun. And I think that’s always our main objective. It isn’t about a particular technology as much as having the most fun experiences and the best entertainment for consumers.

Kinect helps to enable a lot of that. The great work on Xbox Live helps to bring a lot of that to life. Our console and our controllers help do a lot of that. I think at the end of the day it’s a combination of all of these things that are unique to Xbox that allows people to have more fun on our console than on any others. I think people’s enjoyment and people being entertained is always the thing that drives sales. It was just nice to see that people are voting with their dollars for where they feel their entertainment is.

GamesBeat: The price has stayed the same [Microsoft has since started offering a $99 bundle with Kinect for those who sign up for a two-year subscription for Xbox Live Gold]. Could you explain the thinking on that as well? I suppose as long as you’re on top and demand is high, there’s no reason to change the price on a product.

Tsunoda: I work mostly on the creative side of all this, certainly. I think we don’t really have anything to talk about as far as the pricing side. Again, it’s been great to see the success of the console, and it’s great to see so many people having fun with our experiences. But we don’t really have anything to announce about the pricing or anything like that right now.

GamesBeat: Is the hardware also something that, like the Xbox 360 itself, you can constantly improve and lower the cost side of it at the same time?

Tsunoda: I think no matter what, we’re always looking to improve what people are able to do on Xbox. Whether that’s from a hardware perspective, a software perspective, or a services perspective.

I think at least with Kinect, you’re still seeing so much invention and creation through software versus hardware. I don’t think we’re anywhere close to realizing the full potential of what the existing Kinect sensor can do. And I think there’s still lots of room for invention through software. Right now, that’s really our main focus.

GamesBeat: Have you looked back at the usage, and is anything interesting to you there? Is anything surprising? Is it clear that you beat the other guys in terms of the way their motion-sensing devices have been used in the home?

Tsunoda: Some of the stuff that’s really been the most awesome data is not just how much Kinect is used for gaming but how much Kinect is used for the all-up entertainment that is available on Xbox Live. It’s been great. You start seeing stats out there now like how — over Xbox Live, people are spending more time with broader entertainment content than just multiplayer gaming.

I think you see a lot of Kinect usage in the entertainment space as well. Stuff that has been the most surprising for us — it’s not only how Kinect is being used in entertainment but the widespread use and creative expression being done with Kinect in all different types of industries. You see Kinect being used in the medical field, you see Kinect being used in education, you see Kinect showing up in all these different types of places.

It’s one of those things that I think is super exciting about Kinect for Windows. You’re starting now to see Microsoft really providing that same level of support — not just to people building games or entertainment. It’s how Kinect can unlock new kinds of experiences and invention in all different types of fields.

Out of everything, it’s great to see Kinect being used in entertainment, not even just gaming. But the most surprising thing has been how much it’s been used in other fields for purposes we never would have thought of even as one of the original people working on Kinect.

GamesBeat: What about the expectation that gestures are going to be a big part of the user interface for everything in the future? Do you still see Kinect as just the beginning of this kind of vision?

Tsunoda: I never really think of it just as gestures as much as like a really full, natural user interface capability. With full-body motion, not just gestures but full-body motion, voice, and the identity stuff. Because it’s important that we’re able to understand not just what you’re doing but who you are. I do think it isn’t just a question of gestures as much as this really being one of the first steps towards fully immersive, 3D input and being able to match that with the initial steps that you start seeing in 3D display technology. It’s totally a bit on the nerdy side, so I apologize, but it’s super interesting.

I watch a lot of science fiction shows and movies, and there’s always been the kind of like, you know, the Star Trek Holodeck experience that you see in a lot of sci-fi. It’s interesting because the holodeck is a fully realized match between immersive 3D visual display and completely natural humanistic input. And while I don’t think we’re going to be there any time soon, I do think that you can see with Kinect and with 3D display technology the very initial building blocks and first steps of something like a Star Trek Holodeck experience coming together. Because the things that you need for that, we’re just now starting to bring it to life.

I guess that’s the super exciting thing for me: Not just where this is going to be in a year or two but the understanding that the creative tools that we’re developing, both on the input and the output side, are so revolutionary that it really is leading us down a path to something that is cool. I think people feel like it’s so far in the future, and it’s such a kind of made-up science fiction, and yet the building blocks are falling into place to allow us to start getting there. I think for somebody like me who’s dreamed about that stuff as a little kid, seeing something like Kinect as a real fundamental building block to those types of experiences is super exciting.

GamesBeat: Very cool. Like Minority Report or Star Trek, as you say… It seems like we’ve still got to catch up with all the sci-fi movies here.

Tsunoda: Yeah, exactly. It’s always the fun part of working in this industry, to me. Hopefully we do good work and we’re able to start getting things to catch up a little bit faster than people would have expected.

GamesBeat: Is there an indie Kinect project that you’ve found to be interesting?

Tsunoda: Yeah, the stuff that we’re doing with Kinect, especially around Kinect for Windows and then also Kinect Fun Labs, is really fun. We’re sharing a lot of the Kinect community work and allowing people to experience it on our console.

This might not be the exact answer that you were looking for, but probably for me one of the coolest things I’ve seen was we had one or two people who developed a Kinect app that helps rehabilitate people who had traumatic brain injuries. They’re using the science of understanding brain functionality and brain injuries and using physical rehabilitation steps through Kinect as a way of helping people to overcome these types of injuries faster than in ways that people currently use.

Out of everything, it’s those kinds of things, to me, that are so amazing.  Seeing something that was built primarily for entertainment purposes being used in a way that is really helping people overcome enormous obstacles in their own lives. That’s been the most surprising and also the most rewarding.

GamesBeat: I didn’t even go down this road earlier, but one thing I thought was interesting is what you see as a casual use of Kinect and what you see as a hardcore use of Kinect. Is Kinect Star Wars one or the other?

Tsunoda: That’s a good question. Star Wars is such a massive intellectual property, and it has spanned 30-plus years of existence. It’s super funny because I have an eight-year-old and a 10-year-old nephew, and they’re super into Star Wars. And then when I talk to them about Star Wars, they’re super into Clone Wars, they’re super into the later movies, and then they aren’t as much into the first three Star Wars movies that came out. Whereas I’m all about the first three movies, and I like the other stuff as well. Depending on what age you are and what entry point you had into the Star Wars IP, your iconic memories and the things that are important to you about Star Wars are so different.

Really, with Kinect Star Wars, the awesome thing about that title is that it can be a Star Wars experience that appeals to all different types of Star Wars fans. It isn’t so much about “is it core, is it not core, is it casual, is it something else?” But really it’s a lot more about understanding what all different types of Star Wars fans are interested in and allowing people to really live out their iconic moments of the Star Wars IP within the title.

GamesBeat: Do you have any comment to wrap up everything we’ve been talking about: Kinect and the hardcore?

Tsunoda:I think the really great thing is just seeing so many more core experiences coming and how they’re using Kinect in really interesting ways. I just think that over time, you’re going to see so many different genres and experiences no matter what kind of gamer you are. But if you’re a core gamer especially, it’s just a super fun time. You’re going to be seeing a lot more stuff with Kinect.

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Annoying Kindle Fire welcome screen ads may be on the way

Posted: 18 May 2012 07:15 AM PDT

Kindle Fire

Amazon is pitching companies on the idea of advertising on the welcome screen of its Kindle Fire tablet — except that it will cost a minimum of $600,000 to do so, according an AdAge report.

Even though Amazon has frustratingly not said how many Kindle Fires it has sold, Amazon claims it is the best-selling, most gifted, and most wished for product since its November launch. That would indicate that there are at least a few million Fires out there in the hands on Americans and those welcome screens are ripe for ads to annoy Kindle owners.

The Fire ad campaigns will reportedly run for two months and get your ad included on regular Kindle’s “Special Offers” advertising. If advertisers are willing to pony up $1 million, your company would be included in Amazon’s public relations materials as well.

It’s unclear at this time out similar the Kindle Fire ads would be to the current Kindle’s “Special Offers,” which appear on Kindles as a screensaver when you shut down the device. There are no visible ads when you are reading a book itself on the Kindle. We could imagine the Kindle Fire ads working in a similar manner.

Amazon has not yet decided if the ads will appear on all Kindle Fires or if it will just be on new Kindle Fires that are sold. The lack of clear direction has caused advertisers to decline the offers thus far, but that could change.

Let us know in the comments if you would be upset if your Kindle Fire starting showing ads.

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No hard feelings bro: Eduardo Saverin congratulates Zuckerberg

Posted: 18 May 2012 07:07 AM PDT


Facebook co-founder Eduardo Saverin hasn’t seen the best publicity lately following the renouncement of his U.S. citizenship, but he took the time last night to congratulate Mark Zuckerberg on his impressive run.

“On the eve of the Facebook public float, 8 plus year in the making, I as co-founder wanted to look back and cherish Facebook’s early beginning,” Saverin wrote on his Facebook page. “Congrats to everyone involved in the project from day one till today, and I especially wanted to congratulate Mark Zukerberg [sic] on keeping tremendous stead-fast focus, however hard that was, on making the world a more open and connected place.”

Of course, Saverin is set to make a mint on Facebook’s public offering, so perhaps he’s just viewing his contentious relationship with Zuckberger with rose-colored glasses. Saverin owns 4 percent of the company, and after trading begins this morning his stake could be worth around $4 billion.

After co-founding The Facebook at Harvard and serving as the young company’s CFO, Saverin was eventually pushed out over conflicts with Zuckerberg. The rise and fall of their relationship served as the dramatic crux of Aaron Sorkin’s “The Social Network” script. Saverin called the film “more art than documentary” this week in an interview with the New York Times.

Via the LA Times; Photo via the National University of Singapore

Filed under: social, VentureBeat

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Who’s buying Facebook stock? Experts put their money where their mouths are

Posted: 18 May 2012 07:06 AM PDT

We’ve spent hours talking to and corresponding with analysts and VCs about the Facebook IPO over the past few days, and we couldn’t resist asking each of them a rather personal question: Expert commentary aside, would they, themselves, be buying Facebook stock today?

Each one gave us different answers, and for slightly different reasons, but most of the folks we talked to were extremely bullish on Facebook stock as an investment vehicle, either for the short-term or the long haul.

But most of our sources expressed at least some measure of ambivalence, too.

On the fence

“I'm really on the fence on this one,” said Lee Simmons, an industry expert at Dunn & Bradstreet. “Facebook has an opportunity to learn from Google's own IPO — which, by the way, had a rocky start — and subsequent business success. If it can leverage its user base to create value for advertisers while continuing to develop products that diversify its income stream, then I'd be a more willing investor.”

Simmon still hesitates to invest personally, however, saying, On the other hand, Facebook has slowing growth compared to Google in its IPO run-up. That alone gives me pause.”

Quite a few of our sources adopted a wait-and-see stance. “Facebook feels to me 'fundamentally strong, valuation wrong,'” said serial entrepreneur Scott Sellers. The Azul Systems co-founder continued, “Their stock will rise after the offering, and if they execute on their growth opportunities, then the valuation and the stock price will be justified. But there's very real risk that with 'just reasonable' business performance that their valuation will decline to more typical levels."

Bullish to the end

To Buy or Not to Buy?

If you buy, you’re part of a record-breaking IPO

Shares will start at $38 each

Facebook could exercise an over-allotment option

Here’s how much we would pay

Some will choose to buy a single token share

Others, however, have been more than enthusiastic.

One such cheerleader comes in an entirely surprising form, that of former MySpace CEO Mike Jones. “I'm super bullish on Facebook," said Jones in a recent phone call.

"I think it's a long-term play… I literally couldn't be more excited about it."

Jones continued to note that Facebook’s being a household name certainly wouldn’t hurt it on IPO day. “People will just want to own the stock," he said. "People will log into E-Trade and buy Facebook stock because they love it and use it everyday."

Serial entrepreneur Flip Filipowski, who currently runs cloud startup SilkRoad, was similarly positive. “I would absolutely take all the Facebook stock I could get at the IPO price,” Filipowski said.

“Facebook has a large user base hungry to participate in the phenomenon. These share prices are what the market is willing to pay at this time; my guess is that it will close way above where it is priced.”

"I'm buying,” said entrepreneur Dave Scott, co-founder at Marketfish. “Facebook is sitting on top of the one of the largest gold mines in the world in terms of data.”

Mark Siegel, managing partner at Silicon Valley firm Menlo Ventures, sees not only the potential for short-term gains, but also the likelihood of long-term profits.

“I am personally going to buy some as a long term investor, for the same reason that I hold Apple and Amazon and Google and Oracle and Microsoft,” he told us. “I think the long-term future is very bright.”

The ethical Michael Pachter, managing director for equity research at Wedbush Securities, said, “Fortunately, I am not permitted to invest in stocks that I cover.” Still, he admitted, “I would personally invest in all of my OUTPERFORM rated stocks, including Facebook, if I were permitted.”

Not gonna happen

Not everyone’s such a believer, though. “IPO often stands for 'it's probably overpriced,'” quips Quorum Labs CEO Larry Lang.

Noting that the company is already a household name and has enjoyed robust trading on secondary markets, Lang continued, “This unintended consequence impedes technological innovation from benefiting the economy. I'll be interested in the longer-term market response to Facebook's cloud approach."

Similarly bearish were these words from the older (and probably wiser) super-investor Warren Buffet during his annual Berkshire Hathaway shareholders meeting: “We never buy into an offering…The idea that something coming out…that’s being offered with significant commissions, all kinds of publicity, the seller electing the time to sell, is going to be the best single investment that I can make in the world among thousands of choices is mathematically impossible.”

Other Berkshire Hathaway executives in the octogenarian age range expressed concerns about Facebook’s entire raison d’etre, especially the phenomenon of oversharing youngsters.

And it’s not only the get-off-my-lawn crowd naysaying Facebook stock. The young and digitally savvy Reddit co-founder Alex Ohanian will not be buying Facebook shares, either. His objections are, in a way, not so dissimilar to those of his older counterparts.

"We've never seen a company like this before, ever. It knows things about our private lives that no one else does, and one of the big issues a lot of us in the tech community has had with Facebook of late, has been their support of bills like CISPA," Ohanian said. "So, that's why I'm going to be holding off."

Facebook stock will start trading at 8 am Pacific/11 am Eastern. Stay tuned for more Facebook IPO news throughout the day.

Top image courtesy of Luis Louro, Shutterstock

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The EA-Activision legal feud takes unexpected twists

Posted: 18 May 2012 07:00 AM PDT

The lawsuit over the breakup of Infinity Ward and Activision Blizzard has been a proxy war between two industry giants.

But this week, the legal case took some new turns. For a while, it looked like Activision would prevail, but now the outcome isn’t so clear. It started in 2010 when the founders of Infinity Ward — the Activision-owned game studio that turned Call of Duty into a billion-dollar franchise — resigned after a contractual dispute. The co-founders Vince Zampella and Jason West said Activision owed them royalties and Activision accused them of planning to defect to a new studio funded by its arch enemy, Electronic Arts. The founders fired off a lawsuit saying Activision conspired to get rid of them.

The legal action spiraled in a bigger battle for control of the first-person shooter market, which has turned into a multibillion-dollar business. Activision sued EA for interrupting its business by stealing away Zampella and West, who set up Respawn Entertainment and hired dozens of former Infinity Ward employees. Activsion recently claimed more than $1 billion in damages.

Activision said that it had to pull another studio, Sledgehammer Games, off of its Call of Duty game to help the decimated Infinity Ward studio finish Call of Duty: Modern Warfare 3. That game generated more than a billion dollars in revenue forActivision, but the company said it could have made more profits and also completed another game in the Call of Duty family. EA could have been stuck holding the bag for a very large legal bill.

But EA and Activision settled the lawsuit this week. They declined to disclose the details of the settlement, but Wedbush Securities analyst Michael Pachter said that no money changed hands. EA said it would not have to file an 8K financial disclosure related to the settlement, and EA never set aside a fund to insure against legal losses related to the case.

On top of that, the court in the founder-Activision lawsuit ordered Activision to pay the $42 million in royalties that it owed West and Zampella, but the trial will go forward in that case. In a joint statement, the companies said: “Activision and EA have agreed to put this matter behind them.”

Los Angeles County Superior Court Judge Elihu Berle denied Activision’s motion to postpone the case for an additional thirty days. The trial will begin as scheduled on May 29.

Even more stunning were court disclosures about Project Icebreaker. Activision executives’ email records showed that they had allegedly conspired to find dirt on West and Zampella because the Activision management was fed up with their arrogance and wanted a pretext to fire them. This project preceded the time when the founders began communicating with EA and Hollywood agent Seamus Blackley, who helped get the founders and EA together.

In other words, Activision was trying to get rid of the Call of Duty founders that it said were critical to the success of its Call of Duty business. In the legal filings, former chief legal officer George Rose at Activision asked Thomas Fenady, former director of information technology at Activision, to "dig up dirt on Jason and Vince" because "we just want to get rid of them." Rose allegedly told Fenady that Activision Blizzard chief executive Bobby Kotick had given the orders. Rose told Fenady not to get caught and said that “Bobby will take care of you” if things didn’t turn out well. Rose denied this in his deposition. Fenady reportedly tried to get access to West and Zampella’s hard drives and email records.

Activision said that it accepted the court judgment and looks forward to the trial. But this week has had a few big setbacks for its proxy war with EA, which is its biggest rival in the video game business.

Filed under: games, VentureBeat

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Status update: Mark Zuckerberg listed a company on NASDAQ

Posted: 18 May 2012 06:48 AM PDT

What were you doing at 9:30 a.m. Eastern? You certainly weren’t ringing the NASDAQ’s opening bell as Facebook CEO Mark Zuckerberg was doing. But what Zuck did simultaneously is perhaps even cooler.

click to enlarge

To celebrate the once-in-a-lifetime, historic moment, Zuckerberg posted a status update like no other to Facebook.

“Mark Zuckerberg listed a company on NASDAQ. — with Chris Cox and 4 others,” reads Zuckerberg’s Friday morning update (see screenshot to the right).

The unusual status update went live right as Zuckerberg rang the opening bell, which can only mean that the social network configured the update especially for today’s special occasion. To do so, engineers used Facebook’s Open Graph API, which lets developers create custom actions, like “read a book,” “listened to a song,” or, in this case, “listed a company.”

In fact, clever Facebook engineers actually “hacked” the NASDAQ button to post the update, goes the story told by David Garcia, a senior software engineer at Facebook, on TechCrunch.

“We hooked up our hack to run at exactly the same time as Mark pushed the button to turn on the light and ring the bell. Then we attached a wire that hooks to the hack and into the headset jack of a cell phone,” Garcia said. “When the button was pressed, it sent a signal through the hack, and the phone got the signal that triggered the custom action through our Open Graph API, posting a story onto Mark's Timeline. It worked.”

Facebook yesterday priced its shares at $38 apiece for a $104 billion valuation. The social network will raise $16 billion (up to $18.4 billion with its over-allotment option) in its long-awaited initial public offering on the NASDAQ later today. Shares are expected to begin trading around 11 a.m. Eastern today.

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Galaxy S III on fire: Samsung gets 9M pre-orders in two weeks

Posted: 18 May 2012 06:08 AM PDT

Pre-orders for Samsung’s next flagship Android smartphone, the Galaxy S III, have already reached 9 million just two weeks after it was announced. In comparison, the last Galaxy phone took several months to reach 3 million pre-orders.

The early orders come from the more than 100 global carriers who will be offering the phone, Reuters reports. The 9 million figure was divulged to the Korea Economic Times via an unidentified Samsung executive.

The company hasn’t officially acknowledged the figure yet, but I wouldn’t be surprised if it was true.

The Galaxy S III sports a massive 4.8-inch screen with a 720p resolution. Samsung unveiled the phone earlier this month and showed off a Siri competitor, dubbed S Voice, that will function as a digital assistant. It also has eye tracking features, to keep the screen active while you’re viewing it.

Spec-wise, the Galaxy S III features an 8-megapixel rear camera with burst and best-shot modes (similar to HTC's One series), a huge 2,1000 mAh battery (necessary for that massive screen), NFC, and Bluetooth 4.0. It weighs only 133 grams and is 8.6 millimeters thick. A 3G HSPA+ version of the phone will launch at the end of the month, while a 4G LTE version is coming later this summer. The launch will begin in Europe on May 29th, followed by North America in June, and then Asia, Africa, and Latin America.


Filed under: mobile, VentureBeat

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Why Facebook’s GM ad drama won’t impact this IPO

Posted: 18 May 2012 06:00 AM PDT

The timing couldn’t have been worse. On the week of its IPO, Facebook saw one of its largest advertisers, General Motors, get up and leave the table, likely taking millions of dollars with it.

The move prompted a swirl of marketing experts’ opinions and analyses of Facebook’s main source of revenue. All the numbers pointed to the same conclusion: Facebook ads were underperforming, and, as a result, ad revenue growth was slowing.

However, investment specialists say this news will likely have little or no impact on Facebook’s initial public offering and the day-one performance of its stock price.

“GM is a heavy loss for Facebook, but I doubt it will have a material effect on the company's IPO,” said Lee Simmons, industry specialist at Dunn & Bradstreet.

“Despite the recent drawback, its advertising and marketing connects nearly a billion global humans, and I believe it will have no impact on Facebook's opening day,” said serial entrepreneur Flip Filipowski.

“The advertising hiccups are a problem and will definitely scare off many investors,” said Michael Pachter, managing director for equity research at Wedbush Securities. “But it appears that demand for Facebook shares is so overwhelming, the stock will still price at the high end of the range or above and is likely to trade up.”

Serious doubts

Prepping for IPO Day

02/01: Zuck shows his cards with an S-1 power play

03/30: Zuck fast-tracks his FTC docs

05/14: Facebook gets a mobile overhaul

05/14: Shares price at $38

05/15: GM pulls out

Simmons brought up the more relevant question on long-term investors’ minds: Will Facebook ever figure out a sustainable revenue stream?

“The larger question is how the company plans to reverse its slowing ad revenue trend,” he said. “Facebook still offers tremendous value to advertisers, but the investor who sees three straight years of slowing revenue growth would rightly pause for a second look.”

Facebook’s reported revenues for 2012 to date have not lived up to industry expectations.

eMarketer, a well-known firm that tracks social media revenues for private and public companies, estimated toward the beginning of the year that Facebook would earn $6.1 billion in revenue in 2012, a significant increase from 2011′s $3.7 billion in revenue.

However, the firm also noted that these numbers did not meet their earlier forecasts and that growth rates have already peaked.

“The tip of the iceberg”

While some are shaking their heads at Facebook’s display ad strategy, others are seeing a fairly young company that is still in the experimental stages when it comes to advertising and other kinds of revenue.

“Those very dismissive arguments look at display advertising in isolation, and that’s not what this is about,” said Altimeter Group analyst Rebecca Lieb.

“Facebook has an opportunity to do a type of advertising that’s more contextual and more targeted based on the social graph, and they’ve really just started doing that,” she continued.

Part of the maturation process, she said, would rely on advertisers and marketers being willing to be flexible and work in a new medium. “Advertisers still have to figure out how to advertise in these environments,” she said. “It’s not just about a display ad … it’s a brand new form of advertising and marketing.”

“Much of the company’s growth over the next several years is expected to come from mobile advertising,” said an eMarketer rep. Lieb also brought up mobile marketing and advertising as well as social commerce as potential sources of revenue for the social network.

Ultimately, all the experts we talked to were clear on this one point: Facebook’s revenue strategy isn’t even out of diapers yet. Investors and analysts alike look at Facebook’s ad suite and see lots and lots of opportunity.

“Facebook ads perform about half as well as a regular display ad campaign. That’s quite well documented,” said Menlo Ventures managing partner Mark Siegel. “But I don’t think it’s going to have an effect. It’s not ‘new’ news, and Facebook has just scratched the surface of its revenue and advertising.”

Facebook stock will start trading at 8 am Pacific/11 am Eastern. Stay tuned for more Facebook IPO news throughout the day.

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PayPal handles 60% of web transactions, leaves Google in the dust

Posted: 18 May 2012 12:01 AM PDT

PayPal processes 60% of web transactions, Google is the fastest payment gateway, and some unlucky surfer had to wait over 92 seconds for his online purchase to complete.

Those are only a few of the findings in New Relic’s study of the web’s most popular payment gateways (infographic below). A payment gateway is the web equivalent of a modern cash register: It ensures that you are you, that you appropriately have access to your card, and that you can, in fact, be trusted to pay for the purchase you’re making.

New Relic, a web-app performance management company, monitors 38 billion transactions daily for clients such as Nike, Groupon, and Zynga. The study focused on transactions by 21,000 web applications and came up with some astonishing findings.

PayPal is by far the biggest payment processor on the web, at least according to this sample. During the test period, PayPal processed over 66,000 payments, more than three times as many as the nearest competitor, Authorize.net. Google Checkout came in fifth with just over 3400 payments.

Google does win, however, in the speed category. Google Checkout’s average payment processing time was a blistering .26 seconds. In less than a third of a second, New Relic spokesman John Essex said, Google has to “collect and transfer your payment information – name, address, card number, purchase details, etc. – to the financial institution”, and then, of course, query Visa or Mastercard to see if you are a good credit risk, get a response, and return it to the website’s e-commerce engine. PayPal’s performance was only mediocre, but hardly pokey, averaging just under one and a half seconds.

The longest transaction, by far, was via an Australian payment gateway, Eway.com.au. At least one payment took at least 92.44 seconds to complete. Datacash and USAepay.com were not far behind, at 89 and 56 seconds, respectively. Those are the extremes, however; average performance at these services was 3-4 seconds.

Speed is critical in any web application, according to Essex: “As with any step in the online shopping experience, it’s increasingly critical for the payment gateway functions to happen quickly and effortlessly for the consumer – any lag in transaction time can lead to loss of a return customer. No one likes to be kept waiting.”

Least of all the websites that are waiting for your money.

Image credit: Flick user Steve Snodgrass

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Facebook’s rocking, all-night hackathon kicks off with standing ovation for CEO

Posted: 17 May 2012 09:54 PM PDT

On the eve of the largest technology IPO in American history, the company at the center of all the hoopla is celebrating in a geeky-chic style emblematic of its eight-year history.

Friday morning at 6:30 a.m. Pacific, Facebook CEO Mark Zuckerberg will ring the opening bell in a remote ceremony held at the social network’s Menlo Park campus. Up until that moment, thousands of Facebookers will be participating in an all-night employee hackathon designing and coding away on what could be come the next Facebook Timeline. And from the looks of photos already trickling out on Facebook, this is one party not to be missed.

Facebook kicked off its hackathon, Hackathon 31 to be exact, at 7 p.m. Pacific Thursday evening. A crowd of several thousand employees gathered in an outdoor make-shift arena in the middle of the campus’ corridor (the same place where the bell-ringing will take place) to watch Zuckerberg and senior staffers rally the troops for one final night pre-IPO hacking. Zuckerberg, as pictured below, was greeted with a standing ovation from the crowd.

Thursday afternoon, Facebook priced its shares at $38 apiece for a $104 billion valuation. The company will debut on the NASDAQ tomorrow under the “FB” ticker symbol and raise $16 billion (up to $18.4 billion with its over-allotment option) through its offering.

Tonight, however, Facebook celebrates its “Hacker Way” culture and, in the process, sends a message to Wall Street and the world that its focus will always be on building and shipping products.

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6 reasons E3 might suck this year

Posted: 17 May 2012 07:42 PM PDT

Next month’s Electronic Entertainment Expo, taking place in Los Angeles from June 5-7, is starting to look a little sparse.

While the annual trade show is usually an opportunity for the games industry’s biggest companies to announce titles, unveil new hardware, and demonstrate their questionable choices in event hosts, this year’s event is looking more notable for what we won’t be seeing. Several high-profile projects and developers will not be present at the conference. That isn’t to say that we can’t still expect some surprises, but the list of stuff we won’t be hearing about continues to grow. Things like:

Respawn Entertainment’s unannounced game

Fans have been eagerly awaiting the first offering from Jason West and Vince Zampella’s Respawn Entertainment, which was founded after their unceremonious departure from Call of Duty developer Infinity Ward in 2010. Those fans will have to wait a little longer, though, because while representatives of Respawn will be attending the show, they will not be revealing anything about their secret project. I guess we’ll have to go back to squinting at that blurry screenshot they released last year (below).

Respawn Entertainment screenshot

The Nintendo Wii U’s pricing and launch date

Nintendo has announced that it will be revealing the final specifications and launch titles for its upcoming high-definition console at E3, but we’ll still have to wait to hear how much the new hardware will cost and when exactly it’s coming out this fall. This doesn’t really come as a surprise considering the company didn’t finalize launch information on the Wii until two months before it came out.

Anything about Sony or Microsoft’s next consoles

Both Sony and Microsoft have confirmed that they won’t be showing off their top-secret followups to the PlayStation 3 and Xbox 360 (respectively). Sony will likely be focusing more on upcoming software for its struggling PlayStation Vita, and Microsoft will likely spend a lot of time talking about console-exclusive titles like Halo 4 and … well, we can’t rule out any surprise announcements, but Halo 4 is probably the main one.

Any Valve game containing the number 3

Developer Valve Software is going to E3, but that’s as close as it’s getting to that number. The company has stated that it will not be announcing anything new, opting to focus on previously revealed titles like Defense of the Ancients 2 and Counterstrike: Global Offensive.

BioShock Infinite

Developer Irrational Games’ latest was one of the most anticipated releases of this year until it was delayed until 2013. Unfortunately, we won’t be hearing anything at E3 about the now most-anticipated release of 2013, because Irrational and publisher Take-Two Interactive would like to put as much time as possible into, you know, making it. “Preparing for these events takes time away from development, time we're going to use instead to get the best version of Infinite into your hands in February,” Irrational head Ken Levine said while announcing the delay last week.

Grand Theft Auto V

Grand Theft Auto V developer Rockstar Games won’t be at the Expo at all, which means we’re not going to see anything about its next big release. I have reason to believe that this game will have cars in it, but I suppose the speculation as to precisely what kinds of cars it’ll contain will have to continue. Rockstar’s absence is especially odd in light of the fact that rumors have it that GTAV will release this winter.

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Mobile startup Fun Machine believes games can do social good

Posted: 17 May 2012 07:23 PM PDT

Awesome Eats

Fun Machine, a new mobile entertainment software company based in Austin, Texas, was founded in early 2011. So why did it wait until today to let the world know it was officially open for business?

Fun Machine CEO Patrick Curry“We decided that launching our first game was more important than telling the world that we existed,” CEO Patrick Curry (pictured) told GamesBeat via email. “Anyone can say they’re switching gears and leaving consoles behind to make mobile games. It’s something else altogether to actually go do it. So we launched Awesome Eats and were totally blown away with the response!”

A free app for iOS devices, Awesome Eats has gained over 800,000 players and has been featured by Apple in over 100 countries. The company made the game for the Whole Kids Foundation, a non-profit organization that seeks to improve children's nutrition and wellness at home and in schools. “The Whole Kids Foundation and Whole Foods Market are both headquartered here in Austin and happen to be good friends of ours,” Curry explained. “We were starting up and looking for a pilot project, and they approached us about the idea of a game that encouraged healthy eating.  That was a perfect fit for us as Disney vets (and parents). We really like the idea of reinforcing positive messages back into the world with our games.”

Besides Curry, who was formerly vice president and creative director at Wideload Games, three other video game industry veterans are behind the startup: Michael Hadwin and Neill Glancy, former directors at Disney Interactive’s Junction Point Studios; and Stephen Palmer, former lead producer for Gearbox Software’s Borderlands.

“We believe that games can do social good, so we are always looking to put positive messages into our gameplay,” said Hadwin (pictured). “But that’s not to say that we’re going to shy away from other genres that we love. You don’t work on Stranglehold and Borderlands without a serious action-gamer streak!”

Curry said the team’s experience at Disney working on games like Epic Mickey, Avengers Alliance, and Guilty Party taught them how to create content for a broad audience, but they were still surprised at how much larger and broader the mobile gaming space was. “We had a lot to learn about making mobile games, and actually to unlearn about making console games,” he said. “For the last 10 years, we’ve been dealing with teams of hundreds of people, budgets in the tens of millions, and high-res graphics on computer monitors and HD televisions. In many ways, mobile gaming is a return to form, where the right five or six people can make something phenomenal, so long as they aren’t afraid to embrace this new audience and marketplace.”

Curry said smart phones, smart TVs, and tablets are changing the video game industry in fundamental ways, creating an ecosystem that lets you play across small, medium, and large screens. “The next generation of gaming isn't going to come on a disc or be bought in a store,” he said. “It's going to be downloaded and streamed to every screen in your household — and in your pocket — in the blink of an eye.”

Hadwin added that the team is building some “really cool technology” for this ecosystem that it can’t talk about just yet. “As we get closer to announcing our next game, people will completely understand where we’re going, our mission, and what we are looking to accomplish.”

GamesBeat 2012 is VentureBeat's fourth annual conference on disruption in the video game market. This year we’re calling on speakers from the hottest mobile, social, PC, and console companies to debate new ways to stay on pace with changing consumer tastes and platforms. Join 500+ execs, investors, analysts, entrepreneurs, and press as we explore the gaming industry's latest trends and newest monetization opportunities. The event takes place July 10-11 in San Francisco, and you can get your early-bird tickets here.

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Forget the iTV, Steve Jobs wanted to make an iCar

Posted: 17 May 2012 07:00 PM PDT

Apple Car

Steve Jobs evidently thought about disrupting everything. From computers, to phones, to televisions … to cars. Apple board member and J. Crew chief executive Mickey Drexler revealed the unfulfilled dream.

“Steve’s dream before he died was to design an iCar, and it would have been probably 50 percent of the market. He never did design it,” said Drexler at Fast Company‘s Innovation Uncensored conference.

Jobs seems to have dreamed of having his hands in every industry. An iCar undoubtedly would have been something to see. I imagine docks for your iPhone, Pod, and Pad, and a hot chocolate/cookie dispenser like the one from Tim Allen’s sleigh in The Santa Clause. It would also be a transformer. But, as Drexler notes, Jobs never designed the car. He may, however, have started designing a television, which is rumored to come out in 2013.

Drexler, whose company is known for great design in the fashion world, also said he wouldn’t want to be Tim Cook, Apple’s current CEO, and Steve Jobs’ successor.

“Never take over a company that’s doing great,” he said. “I love Tim Cook, but I wouldn’t want his job.”

Check out the video from Fast Company below:


via Fast Company; Apple Car image via blakespot/Flickr

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Kleiner Perkins closes its fifteenth venture fund with $525M

Posted: 17 May 2012 07:00 PM PDT

Kleiner Perkins is raising $525M for its 15th venture fund. That's a big piggy bank

Kleiner Perkins Caulfield & Byers, one of Silicon Valley’s most storied venture capital firms, has closed its fifteenth investment fund.

The company announced today that it has raised $525 million for KPCB 15, which will invest in “early-stage digital consumer and enterprise, green tech, and life sciences companies.” Kleiner Perkins notes that it has been investing in enterprise technologies for decades, but it’s emphasizing this sector even more with the latest fund.

The fund’s 10 managing partners will be Mike Abbott, Chi-Hua Chien, Amol Deshpande, John Doerr, Bing Gordon, Wen Hsieh, Randy Komisar, Matt Murphy, Beth Seidenberg, and Ted Schlein.

KPCB’s press release touted its recent successful investments, including Zynga, RPX, Flipboard, One Kings Lane, Path, and Nest. The fund is not KP’s only pool of cash, however, as it also has the $1 billion Digital Growth Fund (for later-stage investments), the $1 billion Green Growth Fund, the $250 million sFund (focused on social networking), and the $200 million iFund (focused on the iOS ecosystem and other mobile app platforms).

Kleiner Perkins was founded in 1972 and has invested in some of the tech industry’s biggest success stories, including Google, Amazon.com, Intuit, AOL, Genentech, and Netscape.

Photo credit: Ken Wilcox/Flickr

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Twitter uses millions of embedded Tweet buttons to customize your Who-to-Follow experience

Posted: 17 May 2012 06:31 PM PDT

Twitter is experimenting with personalized lists of Who to Follow accounts. Interestingly, the company is accomplishing this using data generated by millions of embedded Tweet buttons around the web.

Twitter thinks I need a coach

The Who To Follow functionality has been on Twitter for several years. It’s part of the effort to ensure that your experience of the service is engaging, but the list is currently extremely simplistic: almost all users see the same suggested accounts.

Now Twitter is starting to customize suggestions. Not simply, as you might initially imagine, by using an Amazon.com style “people who followed @JustinBieber also follow @philosophy.” That’s part of the data, but not the whole story.

Here’s how Twitter described it in a blog post today: ”We receive visit information when sites have integrated Twitter buttons or widgets, similar to what many other web companies — including LinkedIn, Facebook and YouTube — do when they're integrated into websites. By recognizing which accounts are frequently followed by people who visit popular sites, we can recommend those accounts to others who have visited those sites within the last ten days.”

In other words, Twitter is harnessing the wisdom of crowds to drive personalized, targeted who-to-follow suggestions that are highly likely to be interesting to you … because people who visit technology-centric sites are more likely to follow technology-centric Twitter accounts. Exactly how intelligent the algorithm is, Twitter is not revealing.

As with all online targeting, tracking, and analysis endeavors, privacy is clearly a concern here. Twitter does support the Do Not Track initiative, however, and will honor DNT browser settings. In addition, users can opt out on their Twitter settings page.

For existing users, the Who to Follow feature will look much the same as it currently does. But new users may see a new style of suggested accounts to follow when they sign up for Twitter.

Photo credits: Jez on Flickr, Twitter

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Funding daily: Pin a few millions to your Pinterest board

Posted: 17 May 2012 04:41 PM PDT

Happy Facebook IPO eve! Check out the companies getting funded today below. Click the links in each paragraph to learn more about the day's funding news.

If you're hankering for more funding news throughout the day, you can subscribe to our Deals Channel RSS feed by either clicking the red RSS icon at the top of this page or adding the Deals Channel feed link to your favorite reader. And as always, send funding news our way at tips@venturebeat.com.

Spotify said to be seeking $220M investment

Music streaming service Spotify is seeking a whopping $220 million in funding. Previous estimates had Spotify at a $1 billion valuation after closing a $100 million round in June 2011. The new funding round could end up bring its valuation to $4 billion. The social-focused music service uses a freemium model to earn its revenue. Read more on VentureBeat: Spotify is pressing play on a new $220M round at a $4B valuation.

Pinterest grabs $100M at $1.5 billion valuation

Uber-popular pinboard site Pinterest has raised $100 million at a reported $1.5 billion valuation. The photo-focused social bookmarking site has gained overwhelming popularity in the last year and sparked many sites to use its design. Japanese web retailer Rakuten announced a $50 million contribution to the round. Andreessen Horowitz, Bessemer Venture Partners, and FirstMark Capital, along with several angel investors made up the other $50 million. Read more on VentureBeat: Pinterest joins the billion dollar club: Gets $100M in round led by Rakuten.

Crowdtilt pulls in funds for money-pooling site

Crowdtilt, a site that helps groups of friends pool money for a common goal, has raised its first round of funding for $2.1 million. Crowdtilt helps smaller groups of people who want to raise money for a trip or buying a wedding gift collect cash through crowdfunding. SV Angel, Crunch Fund, Y-Combinator, Felicis Ventures, DCM and other angel investors contributed to the round.

No joke, Serious Parody grabs some cash

Scotland-based game development studio Serious Parody has raised £1 million (approx $1.6 million) in funding to develop more games for its portfolio. Private, unnamed investors were behind the funding round. Read more on VentureBeat: Scottish gaming studio Serious Parody raises funding for iOS games.

Fire up those data centers, NextIO just got funded

NextIO, builder of processors and virtualization software for data center servers, has raised $12.3 million in its fifth round of funding. The company builds software to create virtual servers, provide high-performance data storage, and connect servers to Ethernet and Fibre Channel networks. Adams Capital Management Inc., Crescendo Ventures LLP, and an unnamed investor participated in the round. Read more on VentureBeat: Server and data center software company NextIO grabs late-stage investment.

Gen110 nabs cash to put a power plant on your roof

Gen110, a company that provides distributed energy so people can cut the cord from a utility, has raised an undisclosed investment from Kleiner Perkins Caufield and Byers. Qualified homeowners get power-generating equipment for their rooftops and they only pay for the electricity they produce. Read more on VentureBeat: Gen110 grabs funding from Kleiner Perkins Caufield & Byers.

Tiger Pistol raises funding for social media marketing in Asia

Australian startup Tiger Pistol has raised $1.15 million in funding for its social media marketing platform. Tiger Pistol helps businesses beef up their Facebook pages with apps and tab pages with a focus on businesses in the Asia Pacific market. Australian investor David Solomon provided the angel round. Read more on VentureBeat: Social media marketing startup Tiger Pistol raises angel funding.

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Comcast rejiggers its 250GB monthly data cap policy

Posted: 17 May 2012 04:05 PM PDT


Cable TV and Internet service provider Comcast is revising its policy on data caps, the company announced in a very thorough blog post today.

Previously, Comcast limited its residential Internet service subscribers to a 250GB data cap per month, meaning a person could use only 250GB of data before getting penalized through throttling or accruing additional charges. But critics questioned the justification of this data threshold last month and accused the cable giant of disregarding Net Neutrality with its recently launched Xfinity TV Xbox Live app.

In Comcast’s defense, the majority of internet subscribers won’t come anywhere close to reaching the 250GB data cap. And Comcast has previously said that the data caps are there to prevent abuse from a small handful of subscribers who degrade the experience of other customers due to their excessive data usage. But since data is not a utility in the same way that water and electricity are, most people rejected this notion.

Fortunately, Comcast now seems willing to adjust its practices.

“As the market and technology have evolved, we’ve decided to change our approach and replace our static 250GB usage threshold with more flexible data usage management approaches that benefit consumers and support innovation,” Comcast wrote in the post.

Over the next few months, the cable giant said, it’ll be testing at least two new approaches to data capping in different markets (a.k.a. cities). In doing so, it’ll provide details about the trials and their intended effectiveness.

The first approach will start with a data cap of 300GB per month for subscribers of its Internet Essentials, Economy, and Performance Internet service tiers (listed in order of speed performance). That’s 50GB more than the current data cap for the three lower-end tiers of service. Comcast’s two higher-speed Internet service tiers — Blast and Extreme — would have a higher data cap, although the exact threshold isn’t stated. Anyone who exceeds these data caps has the option of purchasing an additional allotment of data. Comcast uses the example of “50GB for $10,” but it’s unclear from the post if this would be the official pricing.

The second approach is similar to the first. Subscribers of all Internet service tiers would have a raised data cap of 300GB per month, as well as the option to purchase an additional allotment of data.

Comcast said it’ll suspend enforcement of its current data capping policy in all non-test markets, while noting that the company will still contact a small number of customers with overly excessive data usage.

While the larger data limits are an incremental improvement for consumers, plenty of critics (and competitors) will likely continue pressing the Federal Communications Commission to force ISPs to justify imposing a data threshold on customers.

"Increasing the data cap is a small step in the right direction, but unfortunately Comcast continues to treat its own Internet-delivered video different under the cap than other Internet-delivered video," a Netflix spokesperson told StopTheCap. "We continue to stand by the principle that ISPs should treat all providers of video services equally."

We’re reaching out to Comcast for more specific details of its new data threshold testing and will update the post with any new information.

Comcastic photo via cmorran123 /Flickr

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Watch Facebook’s historic IPO live on the NASDAQ’s website

Posted: 17 May 2012 03:49 PM PDT

Facebook has priced its shares at $38 and will raise up to $18.4 billion in the largest technology IPO in U.S. history. Those who don’t want to miss a single moment of the watershed occasion are in luck, as the NASDAQ will be live streaming Facebook’s big debut.

Starting tomorrow morning at approximately at 9:15 a.m. Eastern, the NASDAQ will broadcast Facebook’s bell-ringing ceremony on its website. Visitors can watch live as CEO Mark Zuckerberg and the Facebook team ring the opening bell from the company’s Menlo Park campus. The remote ceremony isn’t out of the ordinary, but it is reserved for extra special events and typically occurs just two to three times per year, we’re told.

Tomorrow’s live broadcast is part of the standard program for the NASDAQ’s bell ceremonies, although we fully anticipate that Facebook’s ceremony will result in a bit more traffic than usual to the NASDAQ’s website. Facebook shares are expected to be released at approximately 11 a.m. Eastern Friday.

In the run-up to the bell-ringing, Facebook will be hosting an all-night employee hackathon. This will be Facebook’s 31st hackathon, but this one is of special significance as it’s meant to underscore the company’s commitment to its “Hacker Way.” So while its public listing is important, Facebook wants to reinforce to staff, and Wall Street, that its focus will always be on building and shipping products.

In case you’re wondering, the typical agenda for the 15-minute opening bell ceremony, according to the NASDAQ’s website, is as follows:

  • 9:15:00 NASDAQ Video Presentation
  • 9:22:00 Director, NASDAQ OMX, introduces Senior Executive, TBD, NASDAQ OMX
  • 9:22:30 Remarks from Senior Executive, TBD, NASDAQ OMX; invites Chairman, President and/or CEO, XYZ Company, to podium
  • 9:24:30 Remarks from Chairman, President and/or CEO, XYZ Company.
  • 9:26:30 Senior Executive, TBD, NASDAQ OMX, presents crystal commemorative gift
  • 9:27:00 Guests join Chairman, President and/or CEO, XYZ Company onstage.
  • 9:29:15 Prepare for Opening Bell, face cameras, applause
  • 9:29:50 Ten-second countdown
  • 9:30:00 XYZ Company “Rings NASDAQ Opening Bell”

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White House cyber security coordinator stepping down

Posted: 17 May 2012 03:01 PM PDT

Howard Schmidt

The White House is losing its cyber security coordinator Howard Schmidt to retirement this year after a tumultuous 2011, often referred to a the year of the hack.

Schmidt served the White House in this role for two and a half years, and has acted as a pivotal liaison between the National Security Agency and Homeland Security, as noted by the Washington Post. He was instrumental in passing the first cyber security legislative proposal, and watched as “hacktivist” groups such as Anonymous and Lulzsec grew to become the household names they are today. He leaves his office in a time where tensions on the Internet security front are high.

Security firm Symantec claims that it stopped 5.5 billion attacks from happening last year, and that due to new automated processes for creating malware, that number is only due to grow. And it’s not just the private sector that’s on red alert. State-sponsored attacks are also popping up much more frequently, and fear is growing around the idea of attacking “connected devices.” An example of this was the 2010 attack on Iranian nuclear power plants using the malware named Stuxnet.

Michael Daniel, who has served the Office of Management and Budget for 17 years, succeeds Schmidt. He too has had experience with cyber security matters, devoting 10 of those 17 years to the matter. He is the current Chief of the White House Budget Office’s Intelligence Branch.

via the Washington Post; Howard Schmidt photo via veni markovski

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Kayak likely to ride Facebook wave with IPO in coming weeks

Posted: 17 May 2012 02:26 PM PDT


Travel search site Kayak will likely time its IPO in the next few weeks to capitalize on the record-breaking Facebook IPO that will happen Friday, according to a CNBC report.

The eight-year-old flight-, hotel-, and car-reservation service originally filed for its IPO back in Nov. 2010, but shaky financial markets and earnings gave the company pause. But with Facebook’s IPO, which has just been priced at $38 a share, about to occur, this could be a good time for tech IPOs.

In January, Kayak thoughtfully redesigned its popular site. Kayak’s financial position recently got brighter as well, with the company reporting a first-quarter net income of $4.1 million versus a $6.9 million loss a year ago. The company’s revenue in the first quarter popped 39% to $73.3 million from the year-ago period.

One of Kayak’s biggest threats to its success is Google’s online travel search app, which debuted in September and added international destinations in March. Kayak also competes with Expedia and Priceline on travel bookings.

A representative for Kayak declined to comment about the IPO report. We’ll let you know when we hear more.

Photo illustration: Sean Ludwig/VentureBeat
Kayak: andrea crisante/Shutterstock
Sea of money: Nomad_Soul/Shutterstock

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Twitter continues to be the anti-Facebook with Do Not Track support

Posted: 17 May 2012 01:53 PM PDT

Twitter now supports Firefox Do Not Track

While privacy seems like a concept lost on Facebook, Twitter is showing that it understands its users’ need for security by supporting Mozilla Firefox’s “Do Not Track” feature, a day before Facebook is set to raise billions in its IPO.

Federal Trade Commission CTO Ed Felten announced Twitter’s adoption of the feature today during a panel at Internet Week New York, the New York Times reports. Naturally, Twitter confirmed the news via a tweet.

Firefox users will now be able to enable the “Do No Track” feature – which lets you opt out of cookies that track personal data and online movements — when viewing Twitter’s website. Most Twitter users interact with the service via its site, but it’s unclear if Twitter will be offering any additional privacy features for users of its mobile and desktop apps. We’ve dropped a line into the company for further clarification.

Ironically, the company also announced this afternoon that it will personalize suggestions on who to follow, even if you’ve never used Twitter before. To do so, Twitter will take advantage of cookies within your web browser, though it won’t work if you have Do Not Follow enabled. The company says it will also explain to users how their suggestions are being personalized, and there will be other ways to disable the feature.

The FTC has been pushing businesses to adopt a “Do Not Track” privacy option since it released a major report in March. Twitter’s support gives the FTC’s position even more weight, and it will likely lead to many other businesses making a point of privacy.  Anti-virus company AVG announced in March that it was adding a Do Not Track option to its software. (And I’m sure some businesses will adopt Do Not Track just to spite Facebook’s sure-to-be obscenely successful IPO.)

“We're excited that Twitter now supports Do Not Track and global user adoption rates continue to increase, which signifies a big step forward for Do Not Track and the Web,” wrote Alex Fowler, head of Mozilla’s privacy and public policy, in a blog post today. He pointed out that 8.6 percent of Firefox desktop users, and 19 percent of Firefox mobile users, are using the browser’s Do Not Track feature.

Given that so much of Facebook’s business is based on tracking user data — even if you’re logged out of the social network — I don’t suspect we’ll see it jump on board the Do Not Track movement. Twitter’s support of the feature also clearly shows the difference between the two companies — Facebook wants to know everything about you, while Twitter is focused on being a communication service.

Twitter has been on a role with kudos-worthy announcements lately. The company unveiled the Innovator’s Patent Agreement last month, which keeps control of patents in the hands of engineers and designers, and is a declaration that Twitter can’t use them for offensive patent lawsuits.

Filed under: security, social, VentureBeat

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Confirmed: Facebook sets $38 share price for largest tech IPO in U.S. history

Posted: 17 May 2012 01:10 PM PDT

Status update: Facebook has priced its shares at $38 apiece and will raise $16 billion (up to $18.4 billion with its over-allotment option) tomorrow in its long-awaited initial public offering on the NASDAQ, the company has confirmed.

At $38 per share, Facebook’s valuation is $104 billion — but expect its market cap to skyrocket Friday as shares exchange hands at breakneck pace and at increasingly inflated prices.

Facebook was initially targeting a range between $28 and $35 share, but later upped the range to $34 to $38 a share. Coming in at the top of the range is an indication of the extremely strong demand for the offering, which will be the largest tech IPO in American history in terms of the amount of money it raises.

Also in response to overwhelming demand, the social network, which had been planning to sell 337.4 million shares through its offering, added 84 million shares to its offering on Wednesday. The eleventh-hour maneuver — shares were pooled together from Facebook investors — means that Facebook will sell 421.2 million shares through its offering, and that Zuckerberg’s voting power has been reduced to 55.8 percent. Of that pool, 180,000,000 of the shares will be Facebook’s, so the company itself will get about $6.8 billion from the transaction. The rest of the shares are being sold by current Facebook shareholders.

Additionally, the IPO’s underwriters have the option of selling 63.18 million shares — up from 50 million shares — in an over-allotment option bankers call the “greenshoe,” which is designed to control price volatility and extract more value from the IPO.

Today’s pricing means that Facebook has ticked the final checkbox on its must-complete list before becoming a publicly traded company. Friday, CEO Mark Zuckerberg and team will ring the opening bell in a remote ceremony at its Menlo Park headquarters that will be simultaneously broadcasted at the NASDAQ.

Facebook confirmed the news to VentureBeat and posted a press release confirming the $38 price after the market closed today.

Facebook the public company

As a public company, Facebook will face more scrutiny than ever before. The company will not only have an obligation to shareholders to disclose business risks, as it has started to do with its S-1 filings and IPO prospectus, but will also need to report quarterly earnings and other business details. Those earnings must continually meet or exceed Wall Street’s expectations, should the company wish to keep its stock price from sliding backward.

“By going public, Facebook has to disclose all information that would allow investors, professional and retail, to be able to analyze that data and make a decision as to whether or not the growth projections … are likely going to be met or are under risk,” said Peter Adriaens, a professor of entrepreneurship at the University of Michigan's Zell Lurie Institute for Entrepreneurial Studies. “Not only do they have to disclose all these future business risks, but they have to disclose what they’re doing about them. Up until now, a lot of that could be kept under wraps.”

Facebook did outline a number of risks in its prospectus, and particularly highlighted mobile as its real Achilles’ heel. Of particular interest to investors will be how the company goes about monetizing the 488 million monthly active users accessing Facebook from their mobile devices. The social network admits that it currently shows this audience an “immaterial number” of advertisements, which means as more people opt for mobile devices over desktop- or laptop-based web browsers — and that appears to be a trend in the making — these users will become a problem of increasing financial significance to Facebook.

"We believe this increased usage of Facebook on mobile devices has contributed to the recent trend of our daily active users (DAUs) increasing more rapidly than the increase in the number of ads delivered," the company warned investors in a recent amendment to its S-1.

There’s even the possibility that Facebook’s “Hacker Way” culture will clash with the demands that go along with being a public company, Altimeter Group digital advertising and media analyst Rebecca Lieb said in an interview with VentureBeat.

Facebook, she said, has operated under the mentality that it’s better to build something and get it out than wait for the product to be perfect. “That might be difficult for Facebook as a public company,” Lieb said. “The Street might want to see more instantaneous, revenue-generating results.”

Facebook the media company

Risky or not, Facebook, Lieb said, is a media company like no other.

“This is a very new channel. It’s very hot because it is the largest media company in human history,” Lieb said. “It’s very important to underscore that no print or broadcast channel has ever had anything approaching 1 billion users.”

But the problem, as Lieb sees it, is that because Facebook offers such a unique form of advertising and marketing, its product offerings are similar to those available in the search market 10 years ago. “Businesses are not well versed in how to use it, and the advertising and marketing products and services are not yet fully developed by Facebook.”

Search, as we all know, has turned out to be quite lucrative for Google. “Clearly Facebook hopes to be as successful if not more successful than Google, which is one of its chief competitors,” Lieb said.

Specially as to whether Facebook can become the next Google, Lieb cautioned that the better question might be, “Will Google become the next AOL?”

“The business cycles in this industry are fantastically fast,” she said. “Companies that once dominated the landscape as giants in digital advertising, marketing, and media include AOL, Yahoo, and MySpace. So where it took close to a century for GM to almost fail, that happens in 10 years in the Internet industry.”

She added that, depending on how you define “long-term,” we’ve really yet to see a long-term Internet company on the public market. “Companies like Google are barely even 10 years old.”

Google, for what it’s worth, went public on the NASDAQ on August 25, 2004 and was priced at $85 a share — it opened at $100 — with a market capitalization of $23 billion. Today, Google shares are trading at $628 and the company has a $205 billion market cap.

Finding Facebook’s fair value

At $38 a share, Facebook is likely an excellent buy for the investor who can flip her shares as the stock initially pops on the public market. But does the $38 price and a $104 billion valuation accurately reflect Facebook’s fair value?

Not a chance, PrivCo chief executive Sam Hamadeh told VentureBeat earlier. He said the initial offering price may be a minimal risk for those who want to turn a quick profit, but long-term investors should be wary. A backslide is inevitable, he said.

PrivCo, which tracks the financial data of private companies, believes that Facebook’s fair value rests between $24 and $25 a share. The company arrived at these numbers with two different methods: using enterprise value to revenue multiples (based on comparable public companies) and a discounted cash flow calculation that modeled out the next four years of Facebook’s costs, revenues, and net incomes.

Hamadeh predicts that, following several events he expects in the coming year, Facebook’s stock price will fall closer to this $25 “fair value” by year’s end.

One such event: a missed earnings report. Facebook will disappoint investors when it reports its second-quarter and third-quarter 2012 earnings, Hamadeh predicted. “The projections that people have for this company are so inflated at this point, Facebook can’t help but miss,” he said.

“After it returns to fair value, then the stock will grow as the company grows,” Hamadeh said. “It could take two or three years to get back to its IPO price.”

Of course, much of this is speculative and depends on the market’s response to Facebook. For now, all we can do is wait and watch the clock in anticipation of tomorrow’s opening. Tick tock.

Photo credit: Matt Harnack/Facebook

Filed under: deals, social

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HP planning to slash at least 25,000 jobs, say reports

Posted: 17 May 2012 12:51 PM PDT


Hewlett-Packard plans to cut between 25,000 and 30,000 jobs next week in a move to restructure the company, according to reports by Bloomberg and AllThingsD.

CEO Meg Whitman will announce the layoffs next Wednesday on a conference call with analysts and press. The move coincides with Whitman’s decision in March to merge its PC and printer groups.

A reduction of at least 25,000 jobs amounts to cutting 8 percent of the company. The final number of jobs axed will likely fluctuate until the announcement Wednesday.

The largest cuts will happen to the HP’s enterprise services group, with 10,000 to 15,000 jobs targeted. That division of the company has seen recent declines in profitability, so it is a strong target for layoffs.

HP’s stock on the NYSE is nearly flat in late-day trading on the layoff news.

HP logo: Don DeBold/Flickr

Filed under: VentureBeat

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Everyme, the truly private social network, arrives on Android and the web

Posted: 17 May 2012 12:00 PM PDT

Sitting at the intersection of group messaging and social networking is Everyme, a startup so zeroed in on private communication that it prevents sharing beyond its walls. Today the company, which allows users to post updates and photos to groups, has released apps for Android and the web to make its growing service accessible everywhere.

Founded last year, Everyme is a Y Combinator graduate that started its life as a mobile address book assistant. It soon switched to a private social network, and began applying its technology to help people create automatic groups, called “magic circles,” using address book and social network data.

Everyme is the anti-Facebook, meant to satisfy the changing needs of web denizens who grow out of the desire to share their most intimate moments with a burgeoning list of people, accumulated over the years, they may or may not know.

“Our app is a realistic way for you to share things — and it’s working too,” Everyme co-founder and CTO Vibhu Norby told VentureBeat. “People really do want a private alternative.”

Launched on iPhone about one month ago, Everyme has 400,000 subscribers across 40,000 circles — and that’s without any help from Facebook or social distribution. Everyme’s subscribers are akin to service users, but they’re not all registered members as the company lets circle participants share in the experience through email and text without requiring them to sign up.

The Android application (seen below) is an almost perfect replica of the original iPhone version, and was built to be particularly speedy. The Everyme web application (pictured above) is intended for non-application users who’ve been roped into circles but opt to participate via email and text message instead. Everyme’s flagship iPhone application has also received an update and now features photo filters, mentions, and improvements in the circle creation process. All of these updates, save photo filters, have been baked into the Android and web apps as well.

All three applications share a similar design aesthetic and seem especially adept at bringing shared photos and moments to life.

Circles, private-sharing, group communication, and photos. This all sounds pretty darn familiar, you say. You’re right. Everyme borrows elements from today’s trendiest social constructs. It’s focused on groups, like Google+, but it creates its circles automatically. It’s meant to be a more private way to share things, so it overlaps with Path in purpose. It allows for cover photos, so it’s purloining from Facebook’s Timeline storybook style. But Everyme most resembles Twitter-owned, blogging-turned-group space Posterous — if Posterous had a more elegant look and had been originally built with mobile in mind.

But here’s the kicker: Everyme is private. Really private. And no, we’re not kidding. This isn’t a Path-like experience where you can share with a smaller group of social network friends but also simultaneously publish updates elsewhere. Instead, Everyme has gone to the extreme to prevent sharing outside its secluded circles. You can’t post to Facebook, tweet to Twitter, or check-in anywhere. And that’s its hook.

Though seemingly counterintuitive to growth, Norby said its this type of extreme seclusion that has helped Everyme win over new users. “It creates an atmosphere of trust. Each circle is kind of like a community,” Norby said. “And people share more. When you have privacy like we have … you share a lot more interesting things.”

Everyme has raised $1.5 million in seed funding from investors and Angels including Andreessen Horowitz, Greylock, SV Angel, and CrunchFund. The company is based in Menlo Park and has a small, five-person team.

Filed under: mobile, social

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