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Resurrection of the Living Deads

Posted on Tuesday, Aug 2nd 2005

There have been a few deals this year that make a lot of sense for the shareholders, but make very little sense for the acquiring private equity firm, despite the discounts: Broadvision’s acquisition by Vector Capital is one such. The second one is Golden Gate Capital’s acquisition of Blue Martini, presumably to merge with Ecometry, one of their other portfolio companies.

Both Broadvision and Blue Martini, as independent companies, belong in the ranks of the living dead. Blue Martini’s chance was to merge with Retek, which did not happen, and instead, Retek got bought by Oracle. Broadvision’s chance doesn’t exist, unless I am missing something big!

Make no mistake, both companies needed to go private. Sustaining the costs of being a public company for many of these sub-$100 Million concerns are rather unappetizing.

Nonetheless, it makes me wonder what Golden Gate Capital or Vector Capital have been thinking, or is it that skill-gap I wrote about earlier in display here? To make these two deals turn into anything that produces reasonable return, a very serious surgery will be required. I have a hard time believing that the two investment firms under discussion have the capacity for that sophisticated surgical procedures!

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Memory: The Next Frontier

Posted on Tuesday, Aug 2nd 2005

I recently read an article on the market opportunity of Universal Memory: ‘Universal’ memory market to hit $75 billion in 2019, says iSuppli

$75 Billion sounds like a very large number, of the scale that we don’t see often any more in the venture circles …

“There is no single semiconductor memory technology today that has all the desired attributes, which on top of speed, density and non-volatility include: low-cost of manufacture, low switching energy and scalability to nanometer-scale dimension.

Products in various stages of commercialization that include at least some of the attributes include: Ovonic Unified Memory (OUM), Magneto-Resistive RAM (MRAM), Ferroelectric RAM (FRAM) and Nanotube RAM (NRAM), iSuppli said. But the rewards for a winning technology are likely to be immense with the memory market set to double from $46.8 billion posted in 2004 to $95.4 billion by 2019, iSuppli said.”

The assumption is, whoever will crack this code will pretty much pick up 80% of the memory market.

Cypress, Freescale, IBM and Infineon have MRAM initiatives at various stages on maturity. A smaller company called NVE (NVEC) develops and sells devices using “spintronics,” a nanotechnology which utilizes electron spin rather than electron charge to acquire, store and transmit information. NVE is a licensor of spintronic MRAM, and lists Motorola, Cypress and Agilent as licensees.

Another small company Micromem has focused the last 5 years on the development of an MRAM memory. The memory will be suitable for various applications including Radio Frequency Identification (RFID) tags. The company’s first market objective will be the RFID sector.

Nantero, which focuses on NRAM describes its vision: NRAM will be considerably faster and denser than DRAM, have substantially lower power consumption than DRAM or flash, be as portable as flash memory, and be highly resistant to environmental forces (heat, cold, magnetism). And as a nonvolatile chip, it will provide permanent data storage even without power. Possible uses include the enabling of instant-on computers, which boot and reboot instantly, as well as high-density portable memory – MP3 players with 1000s of songs, PDAs with 10 gigabytes of memory, high-speed network servers and much more.

By the way, were talking of times long after Bill Gates made his famous pronouncement, that nobody would ever need more than 640 KB of RAM. It seems, there is no end to the ever-increasing memory needs of our generation!

Microsoft offers Home Work Help

Posted on Thursday, Jul 28th 2005

Okay, so it is encouraging that Microsoft has decided to “make some money off students”, because if they have, then some interesting and useful products and services, which are otherwise unfundable in the traditional venture capital model, will now get attention.

Here is an article from today’s WSJ:

In many American households, homework is a big problem. Teachers often load up students with far more of it than I recall from my own prehistoric school career. And parents, squeezed for time by dual careers and rusty because of rapidly changing curricula, find it is hard to help.

Also, today’s students often have so many after-school activities that even with the best work ethic, it is a struggle to get through hours of homework and still get enough sleep before the absurdly early start time at many high schools.

Taking note of this daily homework battle, Microsoft has decided to help — or at least to see whether it can make some money by addressing the problem. The software colossus has just introduced Microsoft Student 2006, designed to make it easier for middle-school and high-school students to attack homework efficiently by gathering homework resources in one place on the computer.

According to Walt Mossberg’s review, the software is poorly done, not user friendly, … blah blah blah …

That’s okay. Microsoft just needs to hire IDEO to clean the usability up, and do a few other attentive and creative things to enhance the product quality … For now, I am simply pleased to see the Microsoft thinks that this is a worthwhile segment to invest a tiny portion of its truckloads of sitting cash!

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Yahoo! starts beefing up

Posted on Thursday, Jul 28th 2005

Yahoo is wooing IBM technical talent, reports the New York Times.

Beginning in the mid-1990’s, the researchers at I.B.M. spent several years developing an Internet search engine, called Clever, employing a series of algorithms to improve the quality of the retrieval results. While that project has concluded, the I.B.M. researchers have continued other work in the field.

Prabhakar Raghavan joined Yahoo last week as head of research. Prabhakar Raghavan, a computer scientist who once led the Clever effort, joined Yahoo last week as head of research. He left I.B.M. in 2000 to become a vice president and chief scientist at Verity, a maker of search and retrieval software for corporations; he was later named chief technical officer.

Yahoo said that another search-technology researcher, Andrew Tomkins, had recently been landed from I.B.M., and that negotiations were under way with several others there. Yahoo executives said they expected more hiring.

In an effort to compete with the hype-prone Google and it myth about extraordinary innovation absorption capacity, Yahoo is now doing its own army building in the technology realm.

The other area, however, where Yahoo stands to gain a great deal of mileage by cleaning up, is Usability. It looks like that opportunity is not going unnoticed, either:

So far, Google has received much of the attention for its ability to consume impressive numbers of new Ph.D.’s to fuel its research projects. But Yahoo has recently joined in the arms race and is hiring high-profile researchers, including Larry Tesler, an Apple Computer veteran who recently went to work at Yahoo’s headquarters here. Mr. Tesler, a pioneer in user-interface design, is focusing on the usability of Yahoo software.

Between Yahoo and Google, I still like the former, despite the latter’s sky-high stock prices and current halo-effect. Long time back, Microsoft won against IBM and Apple (and many others) with a Fast-Second strategy. Yahoo may not be at the fore-front of innovation anymore, but some of the properties they have – especially My Yahoo! , Yahoo! Groups, and HotJobs – could be interesting leverages, IF they spend the cycles to figure out how to take those to their true potential.

Now, with the focus on better technology and usability, they can, if they augment Product Marketing next.

Perspective on Time

Posted on Wednesday, Jul 27th 2005

Last week, I was in Jerusalem for a day. My guide, Mishi, was a knowledgeable man with a Masters degree in comparative religion. As we walked through the streets of the old city, he walked me through 10,000 years of history – religious and political – and led me through the sites and monuments that stand as testimony to that colorful past.

Judaesm, Christianity, Islam – three monotheistic religions hold Jerusalem as their source, hence the place is full of pilgrims. A Christian mother holds her new born against the stone on which Jesus was laid after the crucification, and weeps. Facing the Western Wall, numerous solemn Jewish faces pray earnestly, waiting for the arrival of the Messiah. At the Mosque of Omar, Mishi points out the spot where Mohammed stopped and disembarked from his horse on the way to his conference with God.

I had to stop and think for a moment, and put in perspective our frustrations – we the children of the Internet generation – our search for The Next Big Thing! The Internet is really only a 10-year old phenomenon. It has touched lives in massive ways. And yet, it will take a long time yet, before the full impact of the Internet gets woven into the fabric of society and business. Remember, the Telephone was invented in 1875-1876 by Alexander Graham Bell, and yet, even today, remote villages in developing nations have only just started reaping its benefits.

Perhaps a sacrilegious analogy (not my intent), but the way we pray and search for the Next Big Thing, is a bit like waiting for the arrival of the Messiah! The Christian Messiah, Jesus, came 2005 years back. The Jews do not even accept Jesus as the Messiah. They have had a much longer wait.

Should our horizon be expanded somewhat, beyond the 10-15 years, that we have recently become accustomed to?

The Personalization Potential of Konfabulator

Posted on Monday, Jul 25th 2005

Yahoo acquires Konfabulator.

“Hoping to pave a new path to its popular Web site, Yahoo Inc. has acquired Konfabulator, a tiny software maker that provides a computer platform for monitoring the weather, stock prices and a wealth of other customized information without opening a Web browser.

The acquisition, for an undisclosed price, gives Yahoo access to a toolbox of mini-applications – known as widgets – that have built a cult following since Palo Alto, Calif.-based Konfabulator first introduced them for Apple Computer Inc.’s Macintosh in 2002.”

Good move by Yahoo.

Om and I were talking this weekend about the next set of trends. Om wrote Did Silicon Valley build its own 747? and I commented: To derive the next big thing, Silicon Valley would need to change its traditional “solution in search of a problem” mode of innovation, and switch to understanding the applications that people are interested in … in response.

Yahoo! Konfabulator should pay a lot of attention to what widgets people want, because mosquito conditions in a certain area, I am afraid, is not exactly a killer app. However, finding the right clothes from the private desktop of big, fat women may well be one!

Twenty-First Century’s Best Venture

Posted on Tuesday, Jul 19th 2005

Twenty-First Century’s best venture is the Harry Potter franchise. Starting with a great set of thrilling stories, J.K. Rowling’s marvelous boy-hero has started off a whole generation of youngsters on paths of reading, courage, friendship, adventure, and Rowling herself, on a path of great riches.

Traditionally, Venture Capitalists did not finance content plays. But if you look at the numbers, one begins to wonder whether or not they should start … books, music, films, toys, games …

Projections: (BBC News)

“The global popularity of the books, films and games is estimated to have made the Harry Potter brand worth $1bn. More than 265 million copies of the books have been sold in 200 countries. Author J.K. Rowling, whose rise to fame in itself is a marketing executive’s dream, is reputedly now Britain’s wealthiest woman [not Queen Elizabeth]. Waterstone’s booksellers estimates that on the first day of its release, the Half-Blood Prince will sell at least two million copies in the UK and more than 10 million worldwide. Meanwhile, supermarket giant Tesco estimates that it will sell 300 copies a minute when the book finally goes on sale in the early hours of Saturday morning. ”

Actuals: (BBC News)

“The new Harry Potter book has beaten sales records on both sides of the Atlantic, selling almost nine million copies in its first 24 hours. Harry Potter and the Half-Blood Prince sold 6.9 million copies in the US and more than two million copies in the UK, beating all previous Potter records. Estimates from Nielsen BookScan revealed 2,009,574 copies of Half-Blood Prince had been sold within 24 hours of release. US sales of the sixth Harry Potter book have generated more than $100m (£57m) in revenue across the weekend – more than the combined box office sales of hit films, Charlie and the Chocolate Factory and The Wedding Crashers. ”

The first weekend’s sales numbers came out ahead of forecasts. Wonder how many ventures claim such performance?!

ps. Half Blood Prince, the new Harry Potter book is the best yet of this series!

Starbucks and the Music Business

Posted on Tuesday, Jul 19th 2005

I wrote an earlier piece called What’s After Starbucks? in which I speculated about entertainment business opportunities modeled after Starbucks.

Today’s Wall Street Journal article At Starbucks, a Blend of Coffee And Music Creates a Potent Mix talks about how Starbucks is impacting the sale of carefully selected music CDs and reviving careers of musicians who had faded into oblivion.

“After receiving a commitment that Starbucks would help Concord license the album, “Zucchero & Co.,” from its Italian distributor, Mr. Barros signed the artist. The 14-song album, which pairs the singer with a lineup of stars including Eric Clapton and Luciano Pavarotti, went on sale at thousands of Starbucks locations and other retail outlets this month.

Mr. Barros knows how powerful a boost from the coffee chain can be. Last summer, his independent jazz label joined with Starbucks to produce and distribute “Genius Loves Company,” a collection of duets between the late Ray Charles and performers such as Norah Jones. Helped by the biographical film, “Ray,” and attention about his death, the record sold nearly three million copies — about a quarter at Starbucks stores — and in February won eight Grammys. No new Ray Charles release in decades had come close to that sales level.”

Perhaps, a natural extension would be to start having live-music and dancing at Starbucks cafes as well, with carefully selected musicians, in carefully selected musical genres!