Powermat, the company that last year allied with Procter & Gamble’s Duracell brand and which is the main technology behind the PowerMatters Alliance, will today announce that it has acquired PowerKiss, a Finnish company.

The move brings PowerKiss fully into the Powermat camp; it had previously been allied with Qi (pronounced chee), the wireless power standard embraced by Nokia and LG.

I talked yesterday with Ran Poliakine, CEO of Powermat. He said the deal will go a long way toward expanding the Powermat footprint. The key, he says, is to get Powermat technology available in public places like coffee shops, restaurants and airports. The company has recently been doing a trial with Starbucks in the Boston area. PowerKiss has a relationship with McDonald’s restaurants in Europe; the point being that when you take a break for coffee or lunch, you can also set your phone down on your table and charge it.

Before this, Powermat cut deals with Madison Square Garden and Brooklyn’s Barclay Center, as well as General Motors. It also got its technology built into fixtures at the Jay-Z owned 40/40 nightclub. In all, Powermat has about 1,500 locations in the U.S. enabled with its technology. PowerKiss brings with it 1,000 more in Europe.

This ecosystem approach, where surfaces including walls and tables are connected to the power grid, has been part of the vision for Powermat from its founding. However, it’s best known for its retail products that involve a wrap-around case for smartphones that when placed on a small tabletop platform — a mat — charges the phone. (Its Duracell Powermat system for iPhone 4 is pictured.)

Poliakine compared the situation to the early days of Wi-Fi. While it’s common to have Wi-Fi available pretty much everywhere you happen to go in public these days — airports, coffee shops and so on — it wasn’t always so. “We think in a year’s time you’ll expect to have power available wherever you go. It will be an expectation, just like Wi-Fi is today,” he said.

But it’s not as though the Qi camp is standing still. Just last week, it picked up PowerbyProxi as a new member of its Wireless Power Consortium.

Financial terms of the deal aren’t being disclosed. PowerKiss had been backed primarily by angel investors and a Finnish government VC fund.

In case you missed anything, here’s a quick weekend roundup of the news that powered AllThingsD this week:

1. Wondering just how much your new S4 costs? Market research firm IHS pegs the cost of Samsung’s new flagship smartphone at just above $237 per unit.
2. It planned to do so originally, but Google will not roll out a physical credit card later this month to bolster its “Google Wallet” commerce project.
3. Everyone who works in Web advertising seems to be talking about the same video ad lately, and here it is: A three-minute-28-second mini-documentary from McDonald’s Canada.
4. The Onion is best known for its prowess at disseminating false information. But it performed an “awesome” public service this week when it explained in detail just how it got hacked by the Syrian Electronic Army.
5. Brace yourselves: Windows Blue is coming. Yes, Microsoft confirmed this week that an update to the “no compromise” PC-mobile hybrid OS Windows 8 is on the way.
6. In other Microsoft-related news, BlueStacks’ software that lets you emulate Android apps inside of Windows has been downloaded more than 10 million times. And it’s still in beta.
7. Mobile videogames currently cater to easily distracted players, but is there room for more thoughtful strategy games? Firaxis Games’ Sid Meier (a.k.a. the Civilization guy) says yes.
8. Two new iPad apps claim that they can teach children programming skills directly on the tablet. But can they? Lauren Goode puts Hopscotch and Kodable to the test.
9. It hasn’t made a formal bid, but Yahoo has joined the gang of companies meeting with wanna-sell execs at Hulu.
10. Social video startup Viddy is returning most of its Series B round to investors and moving people in and out of its board.

To stay on top of the latest, follow AllThingsD on Twitter and Facebook, and subscribe to our daily email newsletter.

Right? Maybe!

But right now that’s not true: Just about every ad you see on YouTube or Hulu, or any other video site, is either an ad that ran on TV, a shorter version of an ad that ran on TV, or an ad that could run on TV.

But there’s a school of thinking that says Web video ads should be their own special thing that takes advantage of the freedom and flexibility that the Internet offers.

And, weirdly enough, lots of people keep pointing to the same clip as an example: A three-minute-28-second mini-documentary from McDonald’s Canada, which explains why the chain’s burgers look better in ads than in real life. (Spoiler: They cheat.)

Last week, before YouTube’s big “brandcast” pitch for advertisers, I met with a bunch of people who are betting big on Web video, and they cited this ad as an example of Web advertising’s future. Then, at YouTube’s event a couple hours later, content boss Robert Kyncl said the same thing onstage. And this morning, BTIG analyst Rich Greenfield makes the same assertion in a research note (registration required).

So here you go:

Scintillating? Nope! And you can certainly think of other Web ads that were a lot glitizer, and got a lot more press. But it takes a lot of money and resources to get Jeff Gordon in costume and behind the wheel, or to drop a dude out of a spaceship. And there’s no way advertisers can treat each Web spot like a summer blockbuster.

Meanwhile, McDonald’s modest ad tells a story, flatters viewers by telling them they’re smart enough to go backstage, and still ends up pushing pretty images of hamburgers in front of them. That’s pretty clever advertising sort-of masquerading as something else but not really.

And people seem to like it: Since last June, it has racked up nearly 8.5 million views.

Ad tech firm Resonate has a simple pitch along those lines: It says it can figure out what different groups of Internet users care about, and where to find them on the Web.

The Reston, Va.-based start-up has been at it for four years, and just raised a big series B round led by Revolution Growth, the new fund led by former AOLers Steve Case, Ted Leonsis and Donn Davis. Resonate won’t announce the total amount of the raise, but a person familiar with the company says it’s $22 million. Earlier investors like Greycroft Partners, LLC and iNovia Capital put another $7 million into the company, and some of them have reupped, as well.

Lots of ad tech companies promise to target Web surfers based on their online behavior, and some are now saying they can tie in offline behavior, like voting records (!), as well.

For now, at least, Resonate is avoiding that kind of targeting. Instead, it recruits panels of Internet users, asks them to complete comprehensive surveys on their likes, values, etc., and tracks their surfing patterns. Then it uses that data to figure out where to find people who will be most receptive to particular pitches.

The idea: While marketers might want to advertise a new light salad dressing on a food site that caters to women, Resonate might figure out that a sports site with a big male audience would be a better bet.

Resonate started out selling itself to political advertisers, and CEO Bryan Gernert says he’ll be doing a bunch of that this year. But he says the company is primarily focused on brand advertising, and counts McDonald’s, Verizon and Toyota as clients. Last year, Resonate did “north of $10 million” in revenue, he says.

The Mountain View, Calif.-based company tries to boost online companies’ revenue by placing targeted promotions and offering incentives at the point of checkout.

It’s a bit similar to how grocery stores try to boost sales by strategically placing tabloid magazines, gum and candy bars at the register to spur last-minute impulse buys.

Instead, TrialPay makes last-minute offers to give people incentive to make a purchase when they are on the fence.

As an example, TrialPay’s CEO Alex Rampell said that when people visit Fandango’s site, they may get an offer for a free movie ticket if they sign up for Netflix. Or, in a Zynga game, you might be offered a virtual bouquet for free, in return for purchasing real flowers on Valentine’s Day.

Visa’s participation in the investment, which is being announced later this morning, is rare. Over the years, the payments company has made a few acquisitions, including PlaySpan, CyberSource and Fundamo, but Visa’s only investment in recent memory was in payments darling Square, which allows anyone to accept payments using a cellphone.

Rampell said that with Visa’s help, TrialPay will be able to expand to offline merchants from working exclusively with online retailers, by giving it a way to track if a person visited a store and made a purchase.

“The question is, how do we send traffic to Starbucks or McDonald’s or any other offline merchant?” Rampell said. “We already have access to people online who are buying or thinking about buying something. It would be great if we could could give you 20 virtual coins if you shopped at McDonald’s. But how do we close that redemption loop?”

Today, TrialPay, which has 130 employees, reaches more than 70 million monthly active users worldwide. In 2011, Rampell said, revenues more than doubled; he declined to offer specifics.

Rampell also declined to provide details about potential partnerships with Visa. Visa also declined to comment.

Investors in the company’s fourth round included new investors Greylock Partners, Visa Inc., T. Rowe Price, DAG Ventures, DFJ Growth and QuestMark Partners. Existing investors also participated. To date, it has raised roughly $70 million.

For more of Rampell’s opinions on how the payments space will evolve, check out his Web 2.0 speech from October:

In an interview, Doug Bergeron explained to AllThingsD the reasoning behind the spending spree, saying that the company is undertaking a major transformation that requires selling software and services — not just hardware.

Only two weeks ago, VeriFone agreed to acquire Point, a major retail payment provider in Europe, for $817 million (not including $230 million in debt). Two weeks before that, it picked up Global Bay, a smaller company that helps retailers connect their e-commerce assets to physical stores through the use of iPads. Terms of the deal were not disclosed.

Additionally, a year ago, it agreed to buy payment security provider Hypercom in an all-stock transaction valued at about $485 million, including debt.

The three acquisitions easily push the company’s investment above $1 billion. A bet of this kind represents a substantial risk, but Bergeron believes the decision to turn into a services company was a no-brainer, even calling it “obvious.”

The San Jose company, which has about 3,000 employees globally, has a history of growing through acquisitions stretching back to 2005, so maybe it can pull it off. In its fiscal 2012, the publicly-held company is projecting it will make a profit of up to $2.50 a share on revenues of up to $1.72 billion before the Point merger is taken into account.

Earlier this year, VeriFone appeared on the defensive, after Bergeron attacked San Francisco-based Square for not providing encryption in its mobile card readers. Since then, Square has promised to add another layer of protection, although the rollout is still pending.

VeriFone now seems to be on the offensive, having figured out what role it will inhabit as mobile payments come increasingly into play. And despite Bergeron’s earlier outcry about Square, he says the company will play “the role of Switzerland,” and will be neutral about which technology will win.

In particular, VeriFone wants to be the software developer that makes all the new innovations — including Google Wallet, PayPal, ISIS, the carrier-led initiative and others – work with a retailer’s existing systems. Since retailers have limited resources for technology, he believes this will be an important role.

Here are excerpts from my interview with Bergeron, who is not modest in calculating the opportunity in front of VeriFone.

What was the thought process behind the acquisitions?

Broadly speaking, VeriFone has a very impressive market share at the point of sale, and now worldwide with Point. We see the most signficant dynamic shift taking place is the new complexity that’s hitting the point of sale as a result of all the innovation that’s taking place.

It means transforming VeriFone from a focus on the best in products to both products and services. We will be delivering payments as a service. Retailers want to take advantage of Google Wallet and the iPad, and brick-and-mortar stores want to connect with online stores through multichannel integration. But these retailers don’t have 100 people on staff capable of integrating. They can either be left behind and not participate, or they can reach out to a partner to co-manage the increasing complexity at the point of sale.

Global Bay is providing software for tablets that basically allows for integration with inventory systems and e-commerce solutions and other types of services that the market is going to demand. At the end of the day, the retailers don’t want to lose a sale, and if they have someone ready to buy something, like women’s apparel or jewelry or apparel of any type or home repairs, where there’s a dialogue in the store with the customer, they want to upsell or make sure they leave with more than they would otherwise.

Otherwise, it’s hard to compete with Amazon, which has massive distribution centers across the country. But if small or large retailers can leverage their corporate distribution centers, then they have an advantage over Amazon. They have the touch factor with the person [in the store]. It’s a new age that has arrived for multichannel retail, where brick-and-mortar meets e-commerce. That’s what Global Bay is doing so well.

So you are evolving from a hardware company to a services company?

I’m going to edit your question.

We don’t produce hardware. It’s manufactured by third partners, and our product comes out of a $130 million R&D budget, of which $110 million is software.

For VeriFone, 90 to 95 percent of revenue has been product, but over the past two years, we’ve stepped up our services business with encryption and content at the point of sale.

In the fourth quarter, the quarter we are about to report on, we are projecting that services will be 22 percent of our business, and that’s on top of the total business growing dramatically. By the end of 2015, we think we can get it to 50 percent.

With the Point acquisition, which is all services — or close to it, at 88 percent — we’ll now be in the low-30s percentage.

I’m pretty sure, but for the most simple requirements, we’ll say [to the retailer], here’s the products, here’s all the boxes, and then check all the boxes for things you want, like Google Wallet, encryption; or do you want to support gift cards, or multichannel sales through the Global Bay capability?

You have a good perspective on the wide range of mobile payments that are rolling out. How many of these technologies will make it?

What I don’t know is what are the next types of innovations coming out of the Valley or other places.

Everything looks good on YouTube, or in a standalone trial, but if you have to roll it out to thousands of stores — and 50 lanes in each store — whatever new that’s out there has to coexist with the old stuff.

Who’s going to do that and the integration, and who’s going to manage the software updates? It certainly can’t be the two guys in IT, because they don’t have the resources.

How slowly will these rollouts occur? When you put it that way, it seems impossible for retailers to adopt it very quickly.

I think things move deliberately, not slowly.

That’s a bit of a wake-up call to those who come out of the online world and think they can put some code up in the cloud and it works. But when you talk to Costco, Macy’s or McDonald’s, which are all our accounts, they are innovative. They’ve rolled out pin debit or cash back, but it goes through a process of quality assurance, and they have labs where they test all this stuff, and then methodically move it out.

National retailers will have to get on board. They are the ones that move mindshare. They want the same experience in every store in every city in every state, and to mass deploy that, it takes a fair amount of planning.

How many new providers will make it?

There’s no question there will be a few, but it’s not limitless.

There’s a limit to the amount of change and chaos that the important retailers are willing to deal with at any given time. I’m describing a situation why VeriFone is so important. They [the retailers] love the meetings with PayPal and Google and ISIS, but all of this stuff has to coexist together.

In a lot of ways, we are playing the role of Switzerland. We are supportive and encouraging of all the innovation. We are the systems-agnostic guys that are operating on behalf of the retailers.

But all of these things would require software. The things that Google is trying to accomplish integrates with back-office systems at the SKU level. If it was just throwing hardware at the problem, it’s one thing, but it’s software.

You’ve talked about the importance of Global Bay, but now let’s talk a little more about the Point. Why was that acquisition important?

The data is out there. It’s a company that has grown fivefold over the last eight years, and is precisely located in the geographies in Europe that are A) healthy, and B) prone to be the first movers of mobile payments.

That’s where the Point lives and breathes. They have massive market share using VeriFone solutions, and more than half a million merchants in Northern Europe and the U.K. are using them to manage services that are largely around keeping EMV, which stands for Europay, MasterCard and Visa, up to date. EMV uses chip technology instead of swipe technology like we do here in the U.S.

They took out all the complexity of managing EMV and provided them [retailers] a monthly managed service. It’s precisely that framework and model that will allow us to turn the lights on for PayPal and Google Wallet and other services. The Point has been very much ahead of the pack, rolling out NFC capabilities before retailers have asked for it. This can be very exciting for Google and others, because it can enable a rapid deployment capability for any of them.

Are you going to make any more acquisitions? 

We are busy integrating right now. I don’t think you’ll see anything sizable for quite some time. For the most part, we are done with Hypercom, and waiting to do integration in January for the Point. For the most part, it will be independent. I think we have a lot of tools in the shed to help to find a new VeriFone.

That legacy — and his influence on the lives of people around the world — is inestimable, and we will be talking about him and his amazing, interesting life a great deal in the coming days and weeks.

But as the sun comes up here in New York this morning, still mourning the departed, we are forced to confront more immediate and material concerns. Insensitive though it may seem to consider at this moment, Apple is not simply a great company — it has also proven over the last decade to be a great investment, and as such is one of the most widely held stocks in the world. Its largest shareholders are the big mutual fund companies like Fidelity, the Vanguard Group, State Street Corp. and T. Rowe Price, who among them own more than 15 percent of Apple’s shares.

And as Apple’s value, as measured by market capitalization, has ballooned from less than $10 billion a decade ago to north of $350 billion as of yesterday, the anxiety about the mortality of its founder has regularly caused its value to swoon. Over the seven-year course of Jobs’s illness, Apple shareholders have had to come to terms with the so-called “Jobs premium,” the extra value attached to the company’s shares that existed as long as he was directly involved in mapping company strategy and applying his unique touch to its products.

The conventional wisdom among Apple analysts now is that Apple investors, once known for their hair-trigger reflex to sell on any whiff of rumor, have gained a more complex and reasonable understanding of the situation. Apple, without Jobs, will still be Apple, and for the immediate and medium-term future, there is no reason to believe that its strategy and execution will falter in his absence.

But as I wrote in August, when Jobs resigned his position as CEO, it’s important to understand that Apple’s long-term vision has been deposited deeply within the DNA of the company. There is a script for the next several years. Products are mapped out, schedules are set, components have been purchased, manufacturing deals have been inked. In short, everyone at Apple knows what their job is and will continue to do it without missing a beat. The path ahead is no less clear today than it was yesterday.

No doubt the shares will be volatile as the markets open today. But that volatility will be much less than might have been expected years ago. It wasn’t so long ago that analysts predicted that, upon the death or departure of Steve Jobs, the company would lose as much as a third of its value. That’s no longer likely.

Today, investors seem to understand intuitively that the fundamental reasons to invest in Apple remain unchanged. The growth trajectory and profitability in the sales of its products remain the envy of the industry. There are predictions that Apple will sell more than 100 million iPhones next year, and nearly 30 million iPads in the second half of this year. Mac sales continue to set records quarter after quarter.

For all its strength in North America and Europe, Apple still has significant room to grow overseas. There are already signs of progress. In its most recent quarter, Apple reported revenue in the Asia-Pacific region of $6.3 billion, amounting to 22 percent of sales, and more than triple the sales seen in that region a year ago. One key market — China — remains a strategic priority for CEO Tim Cook and his team. Apple is still something new to the people of China, and introducing them to the brand on an ever-widening scale will be an interesting journey.

If history is any judge, it will be a fruitful introduction. Wherever it goes, Apple’s brand seems to succeed. Ask anyone familiar with it — it is easily one of the best-loved and most recognized brands. And yet when branding experts measure its brand equity, it ranks high but surprisingly also shows room to improve.

Just this week, Interbrand, a consultancy that focuses on corporate brands, released its annual survey of the world’s Top 100 brands. Apple is ranked No. 8, one notch above the Walt Disney Company (of which, ironically, Jobs was the largest shareholder), and two notches above Hewlett-Packard; the company had seen the largest year-over-year improvement in the value of its brand. It’s informative to consider some other names that appeared in the Top 10: Stalwart consumer brands like Coca-Cola (No. 1), General Electric (No. 5) and McDonald’s (No. 6).

Yet it’s also interesting to note that among the technology names that appeared in the Top 10 of the Interbrand survey, Apple wasn’t at the top: That distinction goes to IBM (No. 2), Microsoft (No. 3), Google (No. 4) and Intel (No. 7). Rather than a weakness, I think this fact speaks to Apple’s potential.

The story of Apple has never been one of narrow horizons. It has always been about looking ahead. Not just to the next quarter or to the next year, but of seeing how the march of technological progress can be harnessed to make life better in ways we can hardly grasp now. And yet when things like the iPhone materialize, they become part of us and quickly embed themselves into the very fabric of day-to-day existence. They’re not tools so much as extensions of our minds and identities. And that vision, so carefully articulated by Steve Jobs yet revealed only one product at a time, is still incomplete.

And so I find myself writing something that at once seems absurd and yet completely obvious: It may very well be, on this deeply sad day following the death of its founder, that Apple’s best days are still ahead.

Image via Jonathan Mak’s Tumblr.

RELATED POSTS:

• Samsung, Google Cancel Launch Event Out of Respect for Steve Jobs
• Jon Stewart, Stephen Colbert Say Goodbye to Steve Jobs
• An Accountant’s Soul Presides Over the P&L at Apple
• New York Times Crossword Honors Steve Jobs With Puzzle Written by Quora Engineer
• For Steve (Comic)
• Walt Mossberg Reflects on Life and Career of Steve Jobs for Fox Business (Video)
• Apple Shares Rise
• Steve Jobs Biography Arrives in October, a Month Early
• Now What? The Post-Jobs Era in Tech.
• Thoughts on the First Day of Apple’s Post-Jobs Era
• How Will Apple Shares Fare Today?
• Tributes to Steve Jobs, in Pictures
• The Three Irreplaceable Qualities of Steve Jobs
• Walt Mossberg: The Steve Jobs I Knew
• Remembering the Life of Steve Jobs
• Steve Jobs in His Own Words
• Barack Obama On Steve Jobs
• Tech and Media Titans Pay Tribute to Steve Jobs
• Steve Jobs’s Appearances at D, the Full Video Sessions
• Bill Gates: “I Will Miss Steve Immensely”
• Steve Jobs Through the Years: Highlights and Clips From the D Conference
• Steve Jobs Has Died

Steve Jobs Full Coverage »

Facing a barrage of negative press about its upcoming IPO, Groupon CEO and co-founder Andrew Mason took up a pen to counter critics of the social buying service.

Especially under scrutiny has been the Chicago-based Groupon’s accounting of its finances — along with worries that its torrid growth is slowing — both of which Mason addressed in detail in a pugnacious email memo to his thousands of employees.

Specifically referencing a recent article speculating that the daily deals site was running out of money, Mason said, in part:

“While we’ve bitten our tongues and allowed insane accusations (like in the article above) to go unchallenged publicly, it’s important to me that you have the context necessary to brush this stuff off.”

Mason also took on the controversial ACSOI — or adjusted consolidated segment operating income — metric that Groupon used in its initial filing and later stepped back from.

“The reason we didn’t realize everyone in the world would hate ACSOI (no, it’s not the same reason we didn’t realize everyone in the world would hate our Superbowl ad), is that we think it actually does a pretty good job at describing our marketing expenses in a steady state — we just didn’t realize there would be so many skeptics,” wrote Mason.

Mason also took some aim at competitors, such as LivingSocial and Yelp, in the email.

As for the public offering, which is expected next month:

“If there’s a silver lining, it’s that we’re almost on the other side, and the negativity leaves us well-positioned to exceed expectations with an IPO baby that, having seen the ultrasound, I can promise you is not one of those uglies.”

Then again, that is exactly what a dad-to-be would say about his baby, whatever it looked like.

Mason, when asked about the memo, declined to comment.

There is a lot more than that, so here’s Mason’s full email for all you pencil pushers to peruse:

Dear Groupon,

This weekend, I did a Google News search on our company — my first in awhile. The first story that popped up was called The Fall of Groupon: Is the Daily Deals Site Running Out of Cash? I laughed when I read the headline (in the car by myself, weirdly). First — with this article, the degree to which we’re getting the shit kicked out of us in the press had finally crossed the threshold from “annoying” to “hilarious.” Second, I was struck by the irony — I had just finished a board meeting last Wednesday saying this to myself: I’ve never been more confident and excited about the future of our business.

I realize that this sounds like the kind of thing that CEOs say when they’re trying to pep people up. First of all — I’m all about not pepping people up. If you don’t believe me, just ask my fiancée, Jenny “why don’t you ever say anything nice about me” Gillespie. Want another example? Look at the magazine covers in our lobby, which are there to make you sad by reminding you of the impermanence of success.

I’m going to spend the rest of this email explaining why I’m so excited. You need some ammo to argue back against your blog-reading “friends” (silently argue in your mind, that is — you can’t actually say any of this yet), and I’ve been told that the “what have you ever done with your life that’s so great?” rebuttal isn’t working as well for you guys as it has for me.

While we’ve bitten our tongues and allowed insane accusations (like in the article above) to go unchallenged publicly, it’s important to me that you have the context necessary to brush this stuff off.

I’ll summarize my excitement with four points: 1) Growth in our core business is strong 2) Our investments in the future — businesses like Getaways & NOW — look great, 3) We are pulling away from competition, and 4) We’ve built a great team that I would pit against anyone. In other words, all the stuff that one would want to look good? It looks good.

Many of the long-term unknowns of our business are becoming known, and we like the answers. I will now elaborate in a level of financial detail that will give Jason Child a stomach ulcer.

1. GROWTH IN THE CORE BUSINESS

Thanks to a tremendous effort by our sales team, August in the U.S. is shaping up to be a pivotal month. It appears that will revenues grow by about 12% over last month (which is a lot), while we cut our marketing expenses by 20% in the same period.

Beyond their obvious goodness, these numbers are important because they answer one of the main criticisms thrown at us in the past few months, relating to a metric we put in the S-1 called ACSOI (adjusted consolidated segment operating income) to help people understand how we think about marketing expenses. The reason everyone in the world seems to hate ACSOI is that it makes us look magically profitable by subtracting a bunch of our customer acquisition marketing costs from our expenses. The reason we didn’t realize everyone in the world would hate ACSOI (no, it’s not the same reason we didn’t realize everyone in the world would hate our Superbowl ad), is that we think it actually does a pretty good job at describing our marketing expenses in a steady state –we just didn’t realize there would be so many skeptics. I think it’s worth going deep on this one more time — brace yourself.

Our internal forecast shows two different types of marketing: what I’ll call “normal marketing” — which is NOT excluded from ACSOI — and “customer acquisition marketing,” which is. The way Groupon spends on marketing is unique in three ways:

1. We are currently spending more than just about any company ever on marketing — in Q2, we spent nearly 20% of our net revenue on marketing, while a typical company spends less than 5%. Why do we spend so much? The simple answer is “because it works.” But thats only part of what makes our situation special.

2. Our marketing — at least the customer acquisition marketing that we remove from ACSOI — is designed to add people to our own long-term marketing channel — our daily email list. Once we have a customer’s email, we can continually market to them at no additional cost. Compare this to Johnson and Johnson, McDonald’s, or most other companies. If I’m a Johnson, and I’m trying to sell you a box of Band Aids, I have to keep spending money on commercials and magazine ads and stuff to remind you about how sweet Band Aids are, even after you’ve bought your first box. With Groupon, we just spend money one time to get you on our email list, and then every day we email you a reminder of the sweetness of our metaphorical Band Aid. There is no cost of reacquisition — that’s unusual (and we created ACSOI to point that out). If Johnson wanted to follow the Groupon strategy, he would have to start a free daily newspaper about bandages and then run Band Aid ads in it every day.

3. Eventually, we’ll ramp down marketing just as fast as we ramped it up, reducing the customer acquisition part of our marketing expenses (the piece that we remove in ACSOI) to nominal levels. We are spending a ton now because we’re acquiring as many subscribers as we can as quickly as we can. We aren’t paying attention to marketing budget (just marketing ROI) in the way a normal company would, because we know that even if we wanted to continue to spend at these levels, we would eventually run out of new subscribers to acquire. So our customer acquisition spend drops severely to reflect the fact that eventually we’ll run out of people we can add to our email list. We view this internally as a very large one-time expense and then our job forever after will be to continually convert these subscribers into customers and to make sure our customers keep buying from us. Ongoing, the normal marketing dollars we spend are not something we would remove from our internal calculation of ACSOI.

I tried my best to explain this simply, but it’s not lost on me that if you actually understood this, you probably had to read it three times. It’s not easy stuff. It’s much easier to assume that we’re goons. So people can be forgiven for being suspicious. In fact, feel a little bad about how downhearted the critics will be when we don’t turn out to be a Ponzi scheme — those are good impulses for journalists to have, and I hope our non-evil ways don’t destroy their spirits.

Anyway, there’s a reason that I just went on about ACSOI. One of the questions that skeptics ask is, “when you ramp down marketing, won’t revenues stop growing as well? Aren’t you just buying growth?” Over the past several months we’ve been consistently reducing our marketing spend and yet revenues are still increasing at a significant pace. In Q1 of this year, marketing represented 32.3% of our net revenues. By the end of Q2 it had fallen to 19.4%. And it has continued to fall over the past several months all because we’ve been investing in our own long-term marketing channel — our email list.

Internationally we see the same trends — marketing is down, but revenues are up — every country is either losing less or making more. Even in young markets like Korea, where we’re still making massive investments, we’re seeing unprecedented growth. We started building our Korean team this January, despite the presence of two competitors that were larger than any we’d previously battled from behind. Thanks to the brilliant execution of the Korean team, we are set to be the market leader within months. We’ve never had a country grow as fast as Korea!

What about our joint-venture with Tencent in China? Did you read the article that Gaopeng’s CEO has kidnapped the first born children of all our employees and is putting them to work building a laser beam he’ll use to slice the moon in half? It turns out that that one isn’t true either. China is definitely a different market, but every month we inch closer to profitability. As has been our strategy in launching other countries — Germany, France, and the UK, included — our China growth strategy was to hire quickly and manage out the bottom performers. So far, that strategy has improved our competitive position in China from #3,000 to #8. Will we one day reach the dominant status we enjoy in most (come on, Switzerland!) other countries? It’s too soon to tell, but there’s no question in my mind that we’re building a business that will be around for the long haul.

2. NEW BUSINESS LINES ARE BOOMING

Travel and Product are enormous opportunities. After only a few months, they’re already making up 20% of revenue in some countries. We sold $2M worth of mattresses in the UK — in one day! Groupon Getaways will do $10M in its first calendar month — which you might think is awesome, but we’re actually disappointed with those results because we know how much better we’ll be doing soon.

While there’s still a ton of work to do, Groupon Now! continues to see weekly double digit growth. The model works and I believe it will play a major part in the future of our global business as more merchants and customers join the marketplace.

3. WE ARE PULLING AWAY FROM COMPETITION

If there’s a question I’ve received from Groupon skeptics more than any other, it’s, “how will you fend off the competition — especially massive companies like Google and Facebook?” I could give a dozen reasons to bet on Groupon, but it’s impossible to predict the future or the actions of others. Well, now the sleeping giants have woken up — and the numbers are showing that what was proven true with literally thousands of other competitors is just as true with the incumbents of the Internet: it’s kind of hard to build a Groupon. And since anyone with an Internet connection can track the performance of our competitors, I can be more specific:

Google Offers is small and not growing. In the three markets where we compete, we are 450% of their size.

Yelp is small and not growing. In the 15 markets where we compete, our daily deals are 500% of their size.

Living Social’s U.S. local business is about 1/3rd our size in revenue (and smaller in GP) and has shrunk relative to us in the last several months. This, in part, appears to be driving them toward short-sighted tactics to buy revenue, like buying gift certificates from national retailers at full price and then paying out of their own pocket to give the appearance of a 50% off deal. Our marketing team has tested this tactic enough to know that it’s generally a bad idea, and not a profitable form of customer acquisition.

Facebook sales are harder to track, but are even less significant at present.

My point is not that our competitors will fail — some may actually develop sustainable businesses, or even grow — after all, local commerce is an enormous market. The real point is that our business is a lot harder to build than people realize and our scale creates competitive advantages that even the largest technology companies are having trouble penetrating. And with the launch of NOW, I suspect our competition will have an even harder time in light of the natural barriers to entry that are needed to build a real-time local deals marketplace.

4. OUR TEAM

This is the fluffiest of the four points, but maybe the most important — we’ve built a global team of hungry entrepreneurial operators and seasoned executives that rivals any team I know of. Almost every day, I find myself in a scenario where I silently think, “I can’t believe I got this person to work for me — that failure of judgement is perhaps their single flaw.”

I point out the team because while today the business is strong and it appears we must endure success for awhile longer (despite its impermanence), we will inevitably be challenged with issues we didn’t predict — and when that happens, the quality of our team will be a deciding factor in our ultimate long-term success.

FINAL THOUGHTS

I wrote this email because when I read some of the press this weekend, I realized a rational person could read this stuff and wrongly conclude that we’re in trouble. The irony is hopefully clear: We’ve never been stronger.

And while we’ve refrained from defending ourselves publicly, you’ve continued to create our best defense, with every department innovating new practices that are taking our business to the next level. Thanks for staying tough, determined, and agile throughout this process. For now we must patiently and silently endure a bit more public criticism as we prepare to birth this IPO baby — a breed for which there are no epidurals. If there’s a silver lining, it’s that we’re almost on the other side, and the negativity leaves us well-positioned to exceed expectations with an IPO baby that, having seen the ultrasound, I can promise you is not one of those uglies.

I’ve been as candid as possible — hope this sheds some light on things. Reply with your questions if anything remains unclear. Amidst all this, I hope you remember what we’re doing here — we are making history together. I guess you don’t get to build something that reshapes the local commerce ecosytem without getting a few bruises. I’m so proud of the work we’re doing, and I feel extraordinarily lucky to work on what I think is the best thing that’s happened to small businesses since the telephone We’ve invented something that is catalyzing millions of dollars of local commerce every single day in 45 countries and fills the lives of millions of customers with unforgettable experiences — it’s pretty remarkable.

Looking forward to getting this behind us!

Andrew

P.S.: I almost forgot to address the nonsense about us running out of money in the article above. If you apply the same logic used in the article, you’d have concluded long ago that companies like Amazon and Wal-Mart were running out of cash too. Both have often had payables far in excess of their cash. Finance geeks call this a working capital deficit. It’s normal, manageable and a lot of folks actually believe it’s good thing and would kill to get paid from their customers long before they have to pay their suppliers. We are generating cash, not losing it — we generated $25M in cash last quarter alone, adding to the $200M we had before. In other words, we’re doing the opposite of running out of money.

Speaking of “it looks good,” here is Conan O’Brien with a Tourette’s version of Mason’s new catchphrase:

Mike Murphy–Facebook’s first head of advertising sales, who left the social networking giant in October to take some personal time off–seems done with relaxing.

He is now taking a part-time, but significant, role at online gaming phenom Zynga to help formulate its advertising strategy.

In addition, Murphy is also close to formalizing a consulting relationship with Facebook.

Given there has been strong interest from more obvious Facebook competitors in retaining Murphy–including Google and Twitter–his move to Zynga is probably the best outcome for it.

Although the relationship has been tense at times, Zynga remains one of Facebook’s major strategic partners.

Facebook has reportedly been close to filling Murphy’s job, talking to several major online ad execs recently, but has not yet replaced him.

While it is not clear what Murphy will be doing for Facebook, where former Google exec David Fischer runs the ad business, Murphy’s role at Zynga will be quite deep and could expand over time even more.

It will include overseeing the development of Zynga’s advertising strategy, team growth and advertising products, and creating new relationships with top brands.

After being contacted by BoomTown about the new job, Murphy confirmed it and said in a statement:

“Social games are becoming a core way for marketers to engage with their customers. Zynga’s network of games have created an incredible opportunity for advertisers to create passionate relationships and emotional connections with their customers.”

Indeed, as it moves toward an inevitable IPO later this year, Zynga is upping its focus on building its advertising business, aiming at selling its fast-growing audience and the frequency and engagement they use its casual gaming products.

At Zynga, Murphy will lead and build the team, scaling its relationships with big-name partners.

The company has already dipped its toe in this arena, integrating some major brands into its games in recent campaigns.

Such online-offline customer efforts, although early, have had strong adoption, such as a recent one to plant branded blueberry crops–organic!–in its flagship FarmVille game for General Mills cereals.

There has also been a McDonald’s-branded farm in FarmVille. (McReally.)

Interestingly, in an inside-Silicon-Valley-baseball way, the move to Zynga will reunite Murphy, the former Yahoo exec who ran global advertising strategy for Facebook for five years, with Owen Van Natta.

Van Natta was once COO of Facebook and hired Murphy there. He is now EVP of Business at Zynga.

Along with Murphy, Van Natta has also brought in Dani Dudeck as communications head from Myspace, where he had a rocky tenure as CEO of the News Corp. unit.

And Katie Geminder, who was a design and user interface exec at both Facebook and Myspace, is also now at Zynga in a similar full-time role.

At the time he announced his departure from Facebook in the fall, Murphy said he had decided to step down in order to take some personal time off, noting that hundreds of nights on the road over the years had been enough.

“For the last five years of hyper-growth here, I have been focused on Facebook,” said Murphy. “Now, I felt it was time to shift that focus to my family.”

And now, apparently, to Zynga.

Today, by far and away, most of Zynga’s revenues are generated from game players who elect to pay for items within games, ranging from new clothes for their avatar to seeds for their FarmVille farm.

But that’s likely to change this year as the San Francisco-based social gaming company ramps up conversations with advertising agencies and slips more campaigns into its game titles, including its latest hit, CityVille, which has attracted an audience of more than 100 million people in a little over a month.

So far, Zynga has executed a number of successful campaigns on behalf of big brands, like American Express, Nestle, McDonald’s, Farmers Insurance and Coke, among others.

In an interview, Manny Anekal, who was hired about a year ago to head up Zynga’s brand advertising, explained that because it’s the early days of advertising within social games, companies have to be a lot more creative, because they don’t have banner ads or room for commercials.

Recent campaigns include giving out free virtual goods, such as Cokes in Cafe World; Green Hornet-branded loot in Mafia Wars; and a Farmer’s Insurance airship in FarmVille.

The brands typically create incentives to make the integrations more valuable (and presumably less annoying). For instance, the insurance blimp kept a farmer’s crops from withering, and if you collected all of the Green Hornet loot within Mafia Wars, you received a Black Beauty car, as seen in the movie.

Anekal said there’s a learning curve with social media buys, because a successful campaign can’t be measured in click-through rates. Instead, he says, it’s measured by engagement, which is the amount of time people interacted with the brand, and the amount of social activity, or the number of times users sent friends within a game a message about the brand, or posted it to their wall.

Next up may include integrating advertising campaigns in games played on mobile devices, where monetization has been more difficult than on Facebook.

For example, you could earn additional energy in Mafia Wars for checking in to a particular store or location, or scan a product for a free virtual good. “We are looking at options to add to game play, and having those conversations right now,” he said.

What Zynga won’t likely do is create a name-brand game, like “Starbucks World” (instead of Cafe World). So far, the idea of branded games has been relatively controversial. Game developers don’t want to have to pay for the required licensing, and so far they’ve been able to get by without it since most games have generic titles.

For Zynga, it’s building a brand of its own, and it wouldn’t want to share the spotlight with others. “Half of the requests I get from agencies is for branded games,” Anekal said. “We may be moving forward, but it’s not in our plans….We want to focus on the Zynga brand.”

In the video below, Anekal discusses Zynga’s in-game advertising aspirations and how Megamind’s campaign on FarmVille was able to prompt 10 million people within FarmVille to interact with the brand in one day.

]]> http://allthingsd.com/20110121/more-blimps-and-sponsored-loot-coming-as-zynga-ramps-in-game-advertising-in-2011/feed/ 0 http://allthingsd.com/20101229/millions-of-honda-owners-victims-of-yet-another-data-breach/ http://allthingsd.com/20101229/millions-of-honda-owners-victims-of-yet-another-data-breach/#comments Wed, 29 Dec 2010 18:25:38 +0000 Arik Hesseldahl http://newenterprise.allthingsd.com/?p=1150 Carmaker Honda is warning more than two million of its customers in the U.S. that an email database containing some of their personal information has been stolen.

It’s not yet 100 percent clear if this breach is connected to the recent breach of the email marketing firm Silverpop Systems, but it sure looks that way. Honda was an enthusiastic Silverpop customer as recently as 2009, according to this press release. It’s the same company whose data was breached in thefts of customer data from McDonald’s and deviantArt. A similar incident was reported concerning the drugstore chain Walgreen’s, but it hasn’t been tied specifically to Silverpop.

The list contained the names, login names, email addresses and–get this–vehicle identification numbers of more than two million Honda owners. Another list, this one containing only the email addresses of nearly three million Acura owners, was also taken.

Honda has contacted all the customers via email. The worry is that affected owners, especially those on the list with the VINs, may be targeted for some kind of phishing attack. Imagine getting an email from someone pretending to be your local Honda dealer who correctly identifies the car you just bought and asks you to give up more personal information so that you can get “special offers.”

]]> http://allthingsd.com/20101229/millions-of-honda-owners-victims-of-yet-another-data-breach/feed/ 1 http://allthingsd.com/20101215/still-changing-passwords-today-silverpop-attack-may-be-why/ http://allthingsd.com/20101215/still-changing-passwords-today-silverpop-attack-may-be-why/#comments Wed, 15 Dec 2010 15:40:33 +0000 Arik Hesseldahl http://newenterprise.allthingsd.com/?p=578 It still remains unclear whether the password-jacking of McDonald’s Web site that was revealed Monday was in fact related to what we here at All Things D are now calling Gawkergate. Though as I noted yesterday, the timing was certainly suspicious.

However, we’re starting to get more information about how the McDonald’s incident appears connected to hacking incidents at other sites. Chicago Business is reporting that the company responsible for McDonald’s email marketing is Silverpop Systems, and that it had been operating under a subcontract from Chicago-based Arc Worldwide.

So who else is a customer of Silverpop? Yesterday I received an email from someone who’s a customer of deviantArt, a social network where artists share their creations. DeviantArt has a base of 13 million users. Got an account there? You’d better change any passwords that overlap with other sites. The site advised customers that their accounts were compromised, and blamed Silverpop.

It could extend much further yet. Silverpop has more than 100 clients, and not all of them are publicly disclosed, though here are a few, found on its client quotes page and its case studies page: Stamps.com, Pitney Bowes/Mapinfo, Encyclopedia Britannica, Santander Consumer Finance and watchmaker Fossil. There’s no word how any of those other companies are affected, if at all.

Silverpop CEO Bill Nussey said in a blog message to customers that the FBI is investigating the incident, and that only a small percentage of Silverpop customers have been affected. He also said that Silverpop was “among several technology providers targeted as part of a broader cyber attack.” Stacy Kirk, a Silverpop spokeswoman, wouldn’t say anything beyond what’s in Nussey’s message.

I’m beginning to wonder if there’s some indirect connection between what happened to Silverpop and what happened to Gawker. I’m speculating here, but it’s no stretch of the imagination that numbering among deviantArt’s 13 million users are some of the 1.5 million people whose accounts were compromised in the Gawkergate affair. And the FBI is investigating both. Thomas Plunkett, Gawker’s technology chief, told me by email that there’s no evidence of a connection. Then again, as Business Insider tells it, he hasn’t yet had his meeting with the FBI.

Maybe I’m looking for connections that aren’t really there, but it’s really not hard to see how the breach at Gawker could turn out be the start of a domino effect that’s much larger than anyone has yet realized. There certainly is a lot of grumbling about changing passwords today.

If you know more more about any of this, get in touch!

Below is the email to deviantArt users.

From: deviantART.com (address deleted)
Date: Mon, Dec 13, 2010 at 5:54 AM
Subject: RE: Email Notice

Silverpop Systems, Inc., a leading marketing company that sends email messages for its clients, told us that information was taken from its servers. This was probably part of a sweep by spammers. As a result, email addresses belonging to deviantART members were copied. Corresponding usernames and birth date may also have been removed.

We can assure you that nothing occurred on our systems with respect to this incident and no access was gained to private information on deviantART’s servers.

As a member of deviantART, you certainly have a right to know when an incident of this kind occurs. Unfortunately spammers are an unavoidable part of living on the Web.

The likely result of this event might be an increase in spam to your email. Experts have told us that there is an increase in email scams out there on the Internet and you should be cautious. Only click links or download attachments from people you know, particularly if they ask for personal information, and be sure that your email service provider has adequate spam filters.

Because we value the information that members give us, we have decided not to rely on the services of Silverpop in the future and their servers will no longer hold any data from us.

]]> http://allthingsd.com/20101215/still-changing-passwords-today-silverpop-attack-may-be-why/feed/ 0 http://allthingsd.com/20101214/gawker-password-mess-spreads-to-world-or-warcraft-apparently-yaho/ http://allthingsd.com/20101214/gawker-password-mess-spreads-to-world-or-warcraft-apparently-yaho/#comments Tue, 14 Dec 2010 20:43:53 +0000 Arik Hesseldahl http://newenterprise.allthingsd.com/?p=552 The residual effects of the weekend hacking attack on Gawker have now spread to Yahoo and World of Warcraft players.

Yahoo spokeswoman Dana Lengkeek just emailed a statement saying that some Yahoo users were required to reset their passwords. “As part of our ongoing security measures we issued a password reset to some users. Yahoo! does this periodically to ensure the security of users.” She didn’t specify whether or not this was in direct response to the Gawker incident, but it’s not hard to conclude that it was, given the timing. I’ll update if Yahoo says anything further.

I have a Yahoo account and was required to change my password today, and yes, I also had a Gawker commenting account, so at this point it’s safe to say they certainly seem connected.

Meanwhile, Blizzard Entertainment (developer of World of Warcraft and provider of the Battle.net gaming service) was abundantly clear about the connection in an email to its customers. “We’ve recently been informed that several Gawker Media websites have been compromised…To help minimize the effects of this compromise and help keep your Battle.net account safe and secure, we’ve reset your account password,” it said.

Other Web incidents–perhaps connected to Gawkergate, perhaps not–have occurred during the past few days as well. For instance, McDonald’s disclosed that a database containing email address and birthdates of people who had signed up to receive promotions was compromised. It notified those customers on Monday. Again, it’s not clear what connection, if any, there may be to the Gawker incident, but the timing certainly makes it seem possible. I’ve asked McDonald’s for a comment and will update if I get one.

In another incident, drugstore chain Walgreens disclosed on Friday that a database of email address belonging to its customers had been breached. Given the timing–the Gawker incident happened over the weekend–it’s probably not connected, though it’s hard to be sure, as the folks at Anonymous Gnosis, the group that attacked the Gawker sites, say they’ve had access to the database for about a month. I’ve asked a Walgreens spokesman for a comment, and as with all the other cases above will update if I hear back.

This comes on top of other related forced password changes at Twitter and LinkedIn, as my colleague Peter Kafka reported earlier today.

Meanwhile, our friends at Digits have a fascinating graphic on the Top 50 passwords used on Gawker. Topping the list: “123456,” “password” and “12345678.” The two lessons in all this? Make your passwords complex, and don’t use the same password for multiple sites.

]]> http://allthingsd.com/20101214/gawker-password-mess-spreads-to-world-or-warcraft-apparently-yaho/feed/ 12 http://allthingsd.com/20100921/want-my-attention-on-facebook-post-a-picture-on-friday-morning/ http://allthingsd.com/20100921/want-my-attention-on-facebook-post-a-picture-on-friday-morning/#comments Tue, 21 Sep 2010 11:04:20 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=23667 Brands are flocking to Facebook because their users are flocking to Facebook. But the more crowded it gets, the harder it is to get people’s attention. Some tips on how to stand out: Use a picture, not a video. And put it up on Friday morning.

That’s the conclusion from a new study from Vitrue, a social media marketing shop. Vitrue looked at engagement rates–”likes,” comments, etc.–for posts published via consumer brands’ “fan pages” and found that:

• Posts with images get clicked on 22 percent more often than video posts, and 54 percent more often than text-only posts.
• Posts published before noon get clicked on 65 percent more often than those published later.
• Posts published on Friday do best; weekends are the worst.

You can do some dot-connecting using Vitrue’s data if you feel like it. Perhaps the reason that images do better than video is that clicking on a clip takes more commitment from a Facebooker than simply looking at a picture. Or perhaps it’s because lots of Facebook activity happens on mobile devices like Apple’s iPhone (AAPL), and Facebook video has all sorts of issues on phones.

But note that a lot of this data varies depending on who is doing the posting: Consumer-packaged-goods guys like P&G, for instance, are least effective when they publish stuff on Wednesdays.

But McDonalds (MCD), Subway, Starbucks (SBUX) and other “quick serve” restaurants do best on Wednesdays. Vitrue figures this is because Facebookers are most interested in rewarding themselves with a meal out on “hump day.”

And if you don’t like this data, you can always find another set of numbers that may suit you a bit better. Like social marketing consultant Dan Zarrella’s work, which contends that Facebookers are more likely to share stories and stuff on the weekends.

And speaking of video, here I am chatting about this very story on WSJ.com’s Digits from Tuesday afternoon:

]]> http://allthingsd.com/20100921/want-my-attention-on-facebook-post-a-picture-on-friday-morning/feed/ 6 http://allthingsd.com/20100809/brands-friending-social-gaming-amid-new-web-craze/ http://allthingsd.com/20100809/brands-friending-social-gaming-amid-new-web-craze/#comments Mon, 09 Aug 2010 12:00:35 +0000 Suzanne Vranica http://voices.allthingsd.com/?p=28064 Honda Motors Co. (HMC) and McDonald’s Corp. (MCD) are making a push into social gaming to promote their brands, as Madison Avenue begins to take notice of the latest Web craze that is drawing growing numbers of people to games on social networks.

Honda is kicking off a campaign Aug. 23 for its new sporty hybrid CR-Z on “Car Town,” a recently launched social game on Facebook aimed at car enthusiasts. The game is from Cie Games, a company that is backed in part by Rick Thompson, the co-founder of Playdom Inc.

McDonald’s, meanwhile, has signed an ad deal with “Farmville,” the hit farming game on Facebook from Zynga Game Network Inc., according to people familiar with the matter. A spokeswoman for the fast-food company says it is in discussions with Zynga but declined to provide details.

Read the rest of this post on the original site

]]> http://allthingsd.com/20100809/brands-friending-social-gaming-amid-new-web-craze/feed/ 0 http://allthingsd.com/20100508/weekend-update-05-08-10-boys-of-summer-edition/ http://allthingsd.com/20100508/weekend-update-05-08-10-boys-of-summer-edition/#comments Sat, 08 May 2010 22:46:04 +0000 Drake Martinet http://digitaldaily.allthingsd.com/?p=40105 The flowers are blooming in Silicon Valley and the scoreboard shout-outs at AT&T Park, where the San Francisco Giants play, are stacked up, as all the fashionable little start-ups treat their staffs to a dog, beers and some baseball. AllThingsD continues to watch the seasons change from inside our dimly lit HQ, crumpled over computers, smartphones and tablets to keep the news flowing. We’re going to be as pale in August as we were in February, all in the service of our readers. We’re glad to have you, so read on and catch up on anything you might have missed from this warm and wonderful week.

BoomTown started off at what has become a magically bottomless trough of posts. Kara reported on yet another exec, this time Angela Courtin, SVP of Marketing, Entertainment and Content, scurrying down the gangway of the SS MySpace. Kara mused that while posts on executive departures from My Space and Yahoo have been plentiful lately, they can’t keep coming forever. Midweek, she got on a plane to Beantown and caught up with Walt Mossberg at MIT’s new Media Lab facility. The video she came back with features foldable cars, cities of the future, awesome electro-opera gloves and the weirdest glowing-eyed owl-thing Weekend Update has ever laid eyes on. Seriously: Worth a watch. Toward the end of the week, Kara got deep in a piece she wrote for the Washington Post, where she worked back when newspapers were king. She wrote about what she thought the world would benefit from being rid of, namely physical keyboards and computer mice. Full disclosure: She wrote the post on her Apple (AAPL) iPad.

Digital Daily was a posting machine this week, starting early with some bad news for Steve Ballmer and the Internet Explorer fanboys out there (theoretically there should be some right?). It looks like IE’s dominating market share dropped seven percent, down to 59 percent since this time last year, under pressure from other browsers, according to a Net Applications study. Midweek, John moved on to a post about recent speculation that low AT&T (T) data plan prices for the iPad 3G may indicate an extension of the exclusive deal between AT&T and Apple. John finished things off with a nice post that brings some perspective to all the Apple ogling by the press. The comScore (SCOR) report names Samsung as the top mobile device maker in the U.S. market, even if an analysis of media coverage volume might suggest otherwise.

Over at MediaMemo, Peter brought us a post early in the week on Google’s investment in Invidi, a start-up working on “addressable ads” in the TV space. We aren’t sure if Google (GOOG) is looking more Appley or if Apple is looking more Googley these days. From the light-at-the-end-of-the-tunnel files, Peter posted that Time Inc. saw gains in both ad and subscription dollars last quarter. The question remains: Will it be a V- or a W-shaped recovery? At least it’s not just a backslash. Delivering a much anticipated piece of news, Peter posted that it appears Facebook will finally start rolling out location services sometime in the next several weeks. Advertising Age reported that McDonald’s (MCD), the international corporate face of individualized services, will be a partner for the launch. It makes a lot of sense if you think about it. At Mickey D’s, you can have it any way you want, as long as it’s the McDonalds way.

Personal Technology this week was a little more of a conceptual piece than a gadget review, but Walt always mixes it up at the right time. He devoted his entire column to demystifying some of the concepts around cloud computing and explains what it may mean for Joe and Jane user. Walt seems keen on the change with allows flexibility and interoperation among devices, and his explanation brings it down to ground level. Katie rounded us out with a hands-on review of Microsoft’s new Kin One, a roundish little smartphone designed to be a social platform as much as a phone. She liked the design and execution in most areas, though felt that the polish on this first Microsoft smartphone reincarnation was a little lacking. Best of all? Seems like Kin’s constant wireless upload of all content to the cloud might be the feature to beat.

Thanks for tuning in, logging on and tweeting out with our new Meebo bar. We’re in the final countdown to the D8 conference now, and we’re ready to level up to full-tilt awesome. Stay tuned!

]]> http://allthingsd.com/20100508/weekend-update-05-08-10-boys-of-summer-edition/feed/ 0 http://allthingsd.com/20100506/are-you-ready-foursquare-here-comes-facebook/ http://allthingsd.com/20100506/are-you-ready-foursquare-here-comes-facebook/#comments Thu, 06 May 2010 22:17:17 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=19168 Okay, Dennis Crowley: Hope you’ve figured out the whole take-Yahoo’s-money-or-not thing. Because here comes Facebook.

The social network is finally ready to start rolling out its location service this month and has linked up with McDonalds (MCD) for the launch, Advertising Age reports.

As early as this month, the social-networking site will give users the ability to post their location within a status update. McDonald’s, through digital agency Tribal DDB, Chicago, is building an app with Facebook would allow users to check in at one of its restaurants and have a featured product appear in the post, such as an Angus Quarter Pounder, say executives close to the deal.

It’s easy enough to make fun of this one, because really, who wants to admit to eating an Angus? (Had one in September 2007. Awful.) But then comes everyone else:

Executives with knowledge say it was negotiated as part of a bigger media buy on Facebook, and McDonald’s will be the first marketer to take advantage of the service.

The fast feeder won’t be alone for long. While McDonald’s is expected to be involved in the rollout in the next few weeks, execs at other digital shops have begun to spec out location-based campaigns in anticipation of Facebook’s impending functionality, which will allow users to include their location in a status update.

Internet scribes get accused, with justification, of slapping the “-killer” suffix on anything and everything. But this one really is a threat to Foursquare.

Not only can Facebook replicate every feature on the much-hyped service, but it has something Foursquare won’t be able to boast of for a very long time: A sales team to match the location service up with big brands and a self-service ad platform that local businesses can plug into.

Add all of this to a user base of 450 million (!) people and it really is a problem for Foursquare, if Facebook wants it to be.

And that’s pretty much the defense I’ve heard when I bring up Facebook’s competitive threat to Foursquare boosters: “People always worry about giant Web company X stomping on zippy startup Y, but that almost never happens. Because giant Web companies are lumbering beasts that can’t move fast enough to take on zippy start-ups, and they don’t really care to, anyway.”

And maybe that will turn out to be true, here, too. If not, it may make all the talk of $100 million offers seem awfully hopeful.

]]> http://allthingsd.com/20100506/are-you-ready-foursquare-here-comes-facebook/feed/ 0 http://allthingsd.com/20091207/liveblogging-the-google-search-event-twitter-myspace-and-more/ http://allthingsd.com/20091207/liveblogging-the-google-search-event-twitter-myspace-and-more/#comments Mon, 07 Dec 2009 18:08:53 +0000 Kara Swisher http://kara.allthingsd.com/?p=21592

Please see this disclosure related to me and Google.

Right now, BoomTown is sitting right behind the very affable Jason Hirschhorn, chief product officer of MySpace, who is here to make one of the many partner announcements with Google at its “search event” in Silicon Valley today.

I also ran right into Twitter’s Biz Stone at the coffee stand. He is also here to talk about the new features Google (GOOG) is adding to its search repertoire, although he is remaining mum until the program starts in five minutes.

It’s about real-time search, of course, given that the partners visiting today are all real-time search folks.

The confab–being held at the Computer History Museum near the Googleplex HQ–is essentially Google’s rejoinder to last week’s event by Microsoft (MSFT), which announced a bunch of new features for its Bing search service, including mapping updates.

Of course, because it is Google, the sound system rocks, the food is better and it is more overproduced than “Dancing With the Stars.”

10:13 am PT: The event is opened by Marissa Mayer, who runs search products and user experience for Google.

And it takes exactly 13 seconds for there to be a classic Silicon Valley buzzword. Modes! Translation: It is how we use the Web.

Mayer is outlining Google’s key components in the future of search. Along with modes, they are media, language and personalization.

“We are a company that likes to launch early and often,” she said, adding that Google has launched 33 search innovations in 67 days.

In other words, take that, Bing. Oh, dear, giant Google just boasted about its innovation cred and is apparently a little worried about weensie Bing.

10:18 am: Mayer welcomes Vic Gundotra, VP of engineering, who will talk about mobile search.

He begins by noting that no one knows where all the new innovations in computing will lead, much as no one got the Gutenberg press way back in the olden days.

Professor Gundotra then launches into a computing history lesson, with stops at Moore’s Law (better, faster, cheaper) and how one understood all the zillions of computing connections that would occur.

The “missing ingredient,” noted Gundotra, is the cloud.

Next, he moves to a demo to show where Google is headed. Gundotra nails a voice query on an Android phone about President Obama at the G8 Summit with the French president. Everyone cheers.

Gundotra now tries to top himself with a Mandarin query for McDonald’s in Beijing. He sticks it.

He then announces support for the voice search on mobile devices for Japan, bringing up a Japanese speaker.

One voice query is a very long one for a favorite restaurant in Tokyo near the Google office there. Does Google find it? Of course Google does.

“Our dreams at Google go way beyond what you just saw,” says Gundotra, who opines on a real-time interpreter on the phone. Of course, he demos the interpreter, which he said will show up sometime in 2010.

It works, again. Natch! These are big-brained dudes here at Google, so don’t mess with them.

10:30 am: Gundotra moves to locations, which he says will be a key element of future versions of Google search. You know, Red Sox comes up in Boston, data appear for nearby stores for digital cameras.

He shows off the “Near Me Now” feature, which is kind of like those many Apple (AAPL) iPhone apps, like Yelp. It explores stuff nearby. It will be available on Google mobile maps for Android right away.

Next, he announces a Google Labs project called Google Goggles, which takes pictures of something and then identifies it. I have seen this kind of thing in a lot of labs at various tech companies.

Gundotra, who is a slick dude at presentations, uses the example of being a wine expert without being one. He scans a wine bottle and then Google quickly shows info on it.

Oooooh, aaaaaah.

Gundotra uses the service to identify a Japanese landmark successfully.

Someday, he predicts, your phone will be a “mouse pointer” to the world.

10:42 am: Back to Mayer, who talks about media relevancy in search. Google Fellow Amit Singhal is the man on deck.

“What we’re going to announce today is one of the most exciting things in my career,” said Singhal, who first launches into a short history of information flow.

Campfires, more Gutenberg! Also some pictures of old Google servers. I feel so educated; plus, Singhal is pretty funny for a supergeek.

Now, he gets to the news: “We are here today to announce Google real-time search.”

The demo is launched and it shows news scrolling as it is produced. “This is the first time ever,” enthuses Singhal.

It looks cool, but reminds me a lot of old tickers that used to be in the newsroom at the Washington Post. You know, the kind of newspaper that Google is often accused of killing off.

Irony alert! I wonder if that will scroll up soon.

The scrolling also includes Twitter updates. One tweet by Googler Matt Cutts about the Google real-time search launch showed up immediately.

The latest results will be available on the search options and in preferences and will also be hyperlocal and mobile on the iPhone and Android.

“Real-time search becomes incredibly powerful, since it shows you exactly what you need in your geography,” said Singhal.

Singhal is a font of news. He also announces that Google Trends is moving out of the labs and will also show real-time results.

He launches into the “how” of how Google did all this. Well, it was really, really hard, said Singhal, because there are a badillion real-time pieces of data out there to analyze and render.

And which company, with its massive computing power, can make this relevant and hand over the info quickly? Three guesses, and the first two don’t count.

Recap: Real-time search, latest search option, update option, mobile real-time search and Google Trends in the real-time world.

“At Google we will not be satisfied,” said Singhal, until Google can get you info at the speed of light.

11:07 am: Just to stick a true fork into anything Microsoft could come up with, Mayer comes back up and announces Google’s Facebook, MySpace and Twitter partnerships as part of the launch of real-time search.

Facebook will be sending in public feeds and MySpace is providing all of them, as is Twitter.

Google now has eyes and ears, says Mayer. When it gets a whole body, get ready to run for your life.

Q&A time!

The first question is about whether Goggles could have facial recognition. Gundotra says Google could do that, but will not until the privacy issues are worked out. Operative thought here: Google is capable of doing this. Eek!

The next question is about advertising opportunities in these new features. Singhal does not really answer, but says businesses will develop.

The next question is about how much content Google is crawling. Answer: About a billion pages a day.

Gundotra adds that the first launch is only available on English-speaking locales. But it will move into other languages next year.

What about spammers taking advantage of real-time search? Oh, says Singhal, they will get a beat-down from Matt Cutts, who is in charge of spam-killing at Google.

Wouldn’t that make a good reality show? “The Spam Hunters!”

About questions on real-time partnerships, Mayer said Google wanted to be comprehensive.

Mayer will not disclose the details of any financial payments for these real-time feeds. Of course, Google is paying up.

And now a question about whether Google will limit development on non-Android phones. “Absolutely not,” says Gundrotra.

At last, a zinger question: Do you feel that Google will be responsible for the death of journalism and doesn’t that make Google a scary black hole of, presumably, evil?

Awkward!

Singhal casts about for an answer, which is mostly about bringing info to users, which is not an answer.

“It’s really about user empowerment,” he says. Uh-oh, we’re doomed!

Mayer jumps in nervously to shoot this meme down and says Google is about facilitation and not decimation.

The PR dude onstage also throws in the boilerplate about Google sending gazillions of clicks all over.

But the point is made: Today Google–which owns universal search–just made its big move in real-time search.

The next question is about the difference between Google’s practice of wanting people off the page and onto the Web and Microsoft Bing’s focus on topic pages of rich information.

Mayer is sticking with quick on and off for Google.

And what about junk information on the silly side that comes with more real-time search, like dead celebs who are not dead, or really untrue information on important issues?

It’s a hard problem, says Singhal, who says Google is working on it.

What about disabling the real-time updates rather than just being able to turn them on and off. Nope, says Singhal. Mayer notes that this may change.

But the truth is: With the big search giant jumping in, real-time search is most definitely here to stay.

]]> http://allthingsd.com/20091207/liveblogging-the-google-search-event-twitter-myspace-and-more/feed/ 8 http://allthingsd.com/20091109/twitter-start-up-cotweet-launches-paid-service/ http://allthingsd.com/20091109/twitter-start-up-cotweet-launches-paid-service/#comments Mon, 09 Nov 2009 16:26:48 +0000 Andrew LaVallee http://voices.allthingsd.com/?p=17597 CoTweet, a start-up that helps businesses manage their Twitter accounts, is rolling out its first fee-based services, with McDonald’s (MCD), Ford (F) and SunTrust (STI) among its paying customers.

The San Francisco company said over the summer, when it announced $1.1 million in funding, that it would eventually charge for some offerings. Its new enterprise program starts at $1,500 a month, said Jesse Engle, CoTweet’s chief executive.

In exchange, customers get the ability to store data about their interactions with other Twitter users, including tweets, retweets, replies and direct messages, for as long as they’re an active client. The free version of CoTweet, in contrast, stores conversational data for 14 days, he said.

Read the rest of this post on the original site

]]> http://allthingsd.com/20091109/twitter-start-up-cotweet-launches-paid-service/feed/ 0 http://allthingsd.com/20091015/goog-earns/ http://allthingsd.com/20091015/goog-earns/#comments Thu, 15 Oct 2009 20:00:30 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=26695 The broader advertising recovery may take time, but search advertising is clearly beating a hasty path back toward normalcy. Or it is in Google’s case anyway.

Reporting third-quarter results after market close Thursday, Google (GOOG) topped estimates, posting net income that rose to $1.64 billion, or $5.13 a share, from $1.29 billion, or $4.06 a share in the same period last year. Net revenue for the period ended in September rose nearly one percent to $4.38 billion. Excluding items, earnings for the quarter were $5.89 a share. Consensus estimates had been calling for $5.42 a share and $4.24 billion in net revenue. The chart below shows revenue sources within Google (click to enlarge).

Impressive. Seems paid clicks grew 14 percent compared to the same period last year, and four percent compared to the prior period. Cost per click was down six percent year over year, but up five percent sequentially.

“Google had a strong quarter–we saw seven percent year-over-year revenue growth despite the tough economic conditions,” said CEO Eric Schmidt. “While there is a lot of uncertainty about the pace of economic recovery, we believe the worst of the recession is behind us and now feel confident about investing heavily in our future.”

Good to hear. Google’s shares, which have already risen more than 50 percent in the past six months, are on another upward tear. They rose 1.82 percent to $539.27 on the news in after-hours trading.

Earnings call highlights via The Wall Street Journal’s Andrew LaVallee:

4:32: Call starts. The cast is the same as last quarter: Mr. Schmidt, CEO; Patrick Pichette, CFO; Jonathan Rosenberg, SVP of product management; and for the first time, Nikesh Arora, president of global sales operations and business development. But there’s a twist–they’ll be using Google’s moderator to vet questions with voters. They vote on “the most relevant questions,” which go to the Google execs, the operator says.

4:35: “While there’s obviously a lot of uncertainty about the pace of the economic recovery, we believe the worst of the recession is behind us,” Schmidt says.

He adds that Google now has the confidence to invest “heavily” in its future. “It’s all good news from our perspective, at least in looking at the quarter.”

4:37: Says “we want to really get to the perfect search engine” and that many advertisers would like to spend more with Google if the company’s product allow them to do that.

4:38: Schmidt says “we’re open for business in making strategic acquisitions, both large and small.”

4:39: It’s Pichette’s turn. “At a high level, we’re very pleased with our Q3 results,” he says. The quarter benefited from growth in AdSense for content and display initiatives.

4:41: U.S. revenue up 4% to $2.8 billion. U.K. revenue decline affected by foreign exchange as well as ongoing macroeconomic weakness, Pichette says.

4:42: Operating expenses rose from the prior quarter, mostly due to payroll, equipment and facilities-related expenses.

“We believe the worst of the recession is behind us,” he says.

4:44: Brazil was a standout in Latin America, Arora says. We’re beginning to see signs of recovery in Europe and Africa, particularly Spain. In Asia, China performed strongly as an emerging market.

4:46: Looking at the display-advertising business, those have also shown strong results, he says.

On YouTube, new advertisers and partners are helping with monetization efforts. Ninety percent of the top 50 advertisers have run YouTube campaigns with successful results–recent examples include McDonald’s and Hewlett-Packard.

4:47: YouTube has signed deals with all four major record labels and several independent labels. Earlier today, Google announced a partnership with Channel 4 in the U.K., which will bring full-length programming to the video-sharing site.

4:48: Arora adds a personal shout-out to the sales team.

4:50: Rosenberg calls the new AdWords front-end one of the company’s biggest investments of the year. Advertisers have new reports, can run more efficient campaigns and can get new features faster thanks to the platform, he says.

]]> http://allthingsd.com/20091015/goog-earns/feed/ 0 http://allthingsd.com/20091001/fox-slaps-back-legally-at-redbox/ http://allthingsd.com/20091001/fox-slaps-back-legally-at-redbox/#comments Thu, 01 Oct 2009 23:03:13 +0000 Kara Swisher http://kara.allthingsd.com/?p=19038

In the ongoing fight between Redbox–which rents DVDs from kiosks for $1–and major Hollywood studios, 20th Century Fox Home Entertainment just filed a brief to dismiss Redbox’s lawsuit against it.

Said Fox in a statement:

“Redbox’s legal claims are fatally flawed. Fox’s filing today makes clear that, in the end, the case is all about Redbox’s refusal to make a business deal on general terms similar to those paid by others in this industry. Instead, Redbox has insisted that Fox sell DVDs to them through distributors, on the date they demand, at the price they want to pay. Unable to get the terms it wanted at the bargaining table, Redbox instead decided to file this meritless lawsuit.”

In a statement, Redbox president Mitch Lowe responded to the filing by stating that Fox was anti-consumer.

“Twentieth Century Fox continues its pursuit to prohibit consumer access to new release DVDs at affordable prices…Redbox remains steadfast in our commitment to protecting consumers’ rights and to providing our customers the DVDs they want, where they want and at the low price they want.”

In two briefs filed this afternoon, refuting Redbox’s allegations, Fox is asserting that it has not refused to provide DVDs to the outfit and has tried to negotiate a deal.

Under contention between the two are the price and terms of when DVDs of hit movies can be released to Redbox.

Redbox has asserted that Fox is violating antitrust laws and copyright misuse in not selling DVDs to the company.

Fox denied that claim in the brief, noting that Redbox simply did not want to pay up in order to get certain DVDs on the “street date,” as do other retailers.

Fox is one of three studios that have become embroiled in lawsuits with Redbox.

Located in Oakbrook Terrace, Ill., and is wholly owned by Bellevue, Wash.-based Coinstar (CSTR), Redbox is seeing strong rental growth due to its $1-a-night price for first-run movies, which the company distributes via its 15,000 freestanding machines in supermarkets and convenience stores, as well as in big chains like McDonald’s (MCD), Wal-Mart (WMT) and Walgreens (WAG).

Its fascinating legal battle with the studios centers around the issues of steep discounting, release windowing and the price for premium content.

Redbox recently sued Warner Home Video, owned by Time Warner (TWX), for denying it the opportunity to buy DVDs without being required to wait a month or more to rent them out.

It has previously gone after NBC Universal’s Universal Studios Home Entertainment, owned by GE (GE) and Fox, a unit of News Corp. (NWS), for similar release restrictions.

The trio’s movies make up 40 percent of the DVD rental market.

In its brief today, Fox noted that it was willing to sell to Redbox directly, rather than via wholesalers, but that talks collapsed over pricing issues.

And while some studios are holding fast to fighting price declines represented by consumer-friendly, idiot-proof tech solutions like Redbox, others are not.

Redbox has inked deals with Sony (SNE); Lions Gate (LGF); Paramount, a unit of Viacom (VIA); and also gets movies from Walt Disney (DIS).

Here are two briefs filed by Fox in U.S. District Court in Delaware, the first, a motion to dismiss the lawsuit by Redbox, and the second to transfer venue to California:

FINAL Opening Brief in Support of Fox’s Motion to Dismiss

Redacted Transfer Venue Brief

(Full disclosure: Fox is owned by News Corp., which also owns Dow Jones, owner of this site.)

]]> http://allthingsd.com/20091001/fox-slaps-back-legally-at-redbox/feed/ 1 http://allthingsd.com/20090831/louie-swisher-hearts-redbox-but-hollywood-not-so-much/ http://allthingsd.com/20090831/louie-swisher-hearts-redbox-but-hollywood-not-so-much/#comments Mon, 31 Aug 2009 22:10:02 +0000 Kara Swisher http://kara.allthingsd.com/?p=17783

If you want to get Hollywood movie studio types irked, mention Google (GOOG). And if you want them steamed, bringing up Netflix (NFLX) will usually work.

But if you want to see the tops of their heads blow off, Redbox is just the ticket.

Except not to their movies, it seems, if the major movie studio execs have their way in an ever-growing legal battle with the DVD-rental kiosk company.

Three of them have become embroiled in lawsuits with Redbox, even as the DVD market contracts.

Well, not for Redbox–which is located in Oakbrook Terrace, Ill., and is wholly owned by Bellevue, Wash.-based Coinstar (CSTR).

It is seeing strong rental growth due to its $1-a-night price for first-run movies, which the company distributes via its 15,000 freestanding machines in supermarkets and convenience stores, as well as in big chains like McDonald’s (MCD), Wal-Mart (WMT) and Walgreens (WAG).

Redbox is arguing that once it buys DVDs from the studios through wholesalers, it can charge any price it wants.

Studios beg to differ, claiming that bargain-basement pricing is hurting the market and that Redbox should not get the goods until after the first month of release of movies into the DVD market.

“These guys are simply grossly undervaluing our content,” said one studio source, in what is a typical sentiment. “We get the windowing model is changing, but we can’t just give these guys our stuff at a low, low price to essentially enable them to give it away…and that’s exactly what they wanted us to do.”

Thus, it’s a perfect set-up for legal high jinks about the issues of steep discounting, windowing and the price for premium content.

Redbox recently sued Warner Home Video, owned by Time Warner (TWX), for denying it the opportunity to buy DVDs without being required to wait a month or more to rent them out.

It has previously gone after NBC Universal’s Universal Studios Home Entertainment, owned by GE (GE) and 20th Century Fox, a unit of News Corp. (NWS), for similar release restrictions.

And while some studios are holding fast to fighting price declines represented by consumer-friendly, idiot-proof tech solutions like Redbox, others are not.

Redbox has inked deals with Sony (SNE), Lions Gate (LGF), Paramount, a unit of Viacom (VIA), and also gets movies from Disney (DIS).

It’s a fascinating case to watch–yet another wrinkle in the what-is-content-really-worth question that has been plaguing all traditional media.

Unfortunately for those companies, the kids seem to love it, as you will see from this video I did while renting movies at our local Safeway (SWY) with my seven-year-old son, Louie, at a small competitor to Redbox with about 1,400 outlets called DVDPlay.

We use both, but Louie–like a lot of consumers–is most definitely a fan of the Redbox method.

Here’s the video:

[Full disclosure: News Corp. owns Dow Jones, which owns this site.]

]]> http://allthingsd.com/20090831/louie-swisher-hearts-redbox-but-hollywood-not-so-much/feed/ 4 http://allthingsd.com/20090716/pink-slip-thursday-at-cisco/ http://allthingsd.com/20090716/pink-slip-thursday-at-cisco/#comments Thu, 16 Jul 2009 18:00:55 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=21593

]]> http://allthingsd.com/20090716/pink-slip-thursday-at-cisco/feed/ 0 http://allthingsd.com/20090715/microsoft-apple-stores/ http://allthingsd.com/20090715/microsoft-apple-stores/#comments Wed, 15 Jul 2009 22:08:34 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=21459 Apple (AAPL) and Microsoft (MSFT) have long competed for market space. And soon they’ll be competing for retail space as well.

In remarks at Microsoft’s Worldwide Partner Conference today, COO Kevin Turner said Microsoft has settled on a location for the retail stores it announced earlier this year: Within spitting distance of Apple stores. “We will have some retail stores that are opened up right next door to Apple stores this fall,” he said.

There goes the neighborhood, right? Anyway…

So Microsoft is going to play McDonald’s (MCD) to Apple’s Burger King (BKC). Makes sense. Apple’s retail locations are very well chosen. Microsoft, if it’s going to go this route, would be wise to have stores there as well. As economic theorists Charles ReVelle and Harold Hotelling once observed, “The best position for a new vendor is back-to-back with the well-positioned first vendor, allowing an even split of the market. Any other position of the new vendor would have given that new entrant a smaller market share.”

And one could argue that Redmond might benefit from a retail presence that brings all its wares together in a single “shopping experience”–Windows, Xbox, Zune. All that partner hardware. Surface. Put a Project Natal booth at the back of the store to draw foot traffic and who knows what might happen?

]]> http://allthingsd.com/20090715/microsoft-apple-stores/feed/ 2