Thoughts from the Shelf

In even more social networking news, it was announced today that internet portal AOL has bought social networking site Bebo for £425 million.

Bebo was launched three years ago and has a membership of over 40 million worldwide users, combining “community, self-expression and entertainment to enable its users to consume, create, discover and share content.”

Bebo is one of the leading social networking sites in the UK and the US trailing rivals Myspace and Facebook. Bebo also leads the market in New Zealand and Ireland, and is run by only 100 employees spread across three global office locations.

At first this seems a lot of money for a company with such few resources, but when you consider News Corp bought MySpace for $580m in 2005 which is now estimated to be worth more than $15bn, and Microsoft bought only 1.6% of Facebook last year for $240m, the price doesn’t seem so high.

A quote from AOL chairman Randy Falco says: “Bebo is the perfect complement to AOL’s personal communication network and puts us in a leading position in social media. This positions us to offer advertisers even greater reach and marketers significant insights into the desires and needs of consumers.”

With its acquisition of Bebo it is clear that AOL see the social networking site as an advertising goldmine which will allow them to offer advertisers access to user targeted adverts based on comprehensive user profiles and trends.

The average Bebo user views on average 78 pages a day with a daily average of 33 minutes a day being spent on the site.

“Bebo has an incredibly strong brand identity, particularly with the teenage and young adult market, so it will be very interesting to see how AOL makes best use of their new youthful Trojan horse.” - Alex Burmaster, European Internet Analyst

Research outfit eMarketer recently released a report stating that by 2011 $4.1 billion will be spent worldwide on social network advertising, up from $480 million in 2006. It is clear the struggling internet portal is looking for a significant chunk of this to turn its fortunes around.

In relation to The Shelf’s popular social networking themed posts, news broke last week that Facebook has raided Google in order to fulfil the position of chief operating officer. The position was filled in order to provide Facebook, who last month saw their first ever dip in visitors, with a more experienced management and advertising figure as the company tries to make more money out of targeted advertising without alienating users.

The defection by Sheryl Sandberg from internet search giant Google was first announced last Tuesday marks a period of adjustment for Facebook who only three months ago suffered huge setbacks in efforts to inject more commercialism into is social site.

In her time at Google Sandberg has helped the search giant build up one of the most rivalled advertising models in the world in the position of vice president of global online sales and operations.

No doubt 23 year old founder Mark Zuckerberg will use the opportunity as somewhat of a mentoring scheme in how to future direct Facebook’s expansion, who Sandberg will report directly to.

Of the capture of Sandberg Mark Zuckerberg stated that she is “a great manager who will help scale Facebook’s operations globally,”

In the past eleven months Facebook has seen its user base triple to 66 million users, becoming the second largest social networking site behind Myspce. But Facebook remains dwarfed even further by Sandberg’s former employers who make more than $16 billion to Facebook’s $100 million in annual revenue.

There have also been recent mistakes by the Facebook owner that have led to questions about Zuckerberg’s judgement after marketing tool Beacon was allowed to track users’ purchasing patterns across dozens of sites and display the information on pages of listed friends within the Facebook network.

But although mistakes have been made and the social networking site has plateaued of late, many still expect great things in the future. Planning to go public in 2009/10 Facebook could still turn out to be the biggest internet success story since Google went public in 2004.

In the latest step to curb music piracy in the UK, the government is considering plans to cut internet access to users who continually download copyrighted music and films illegally.

A Green Paper, part of a draft consultation due for release next week, has suggested that should the plans go ahead, internet service providers would be required to take action against customers who accessed pirated material.

Within the proposed plans it has been suggested that users who regularly break copyright laws will face a ‘three strike’ policy, which after prior warning would result in the termination of their broadband contract with the internet service provider.

Having previously been explored on The Shelf, music piracy has been of growing concern for music and film companies that claim illegal downloads cost them millions of pounds in lost revenues. In previous attempts to combat the problem file sharing legislation was proposed back in October 07 to up the pressure on internet service providers. This it seem is a step to clamp down on the individual users infringing on copyright laws too.

It has been suggested that with such legislation, internet service providers that did not enforce the proposed rules would face prosecution, and customer details made available to courts to ensure civil proceedings could take place.

It seems that this draft, although targeting end users who illegally download, does add further pressure on ISP to come to an agreement with the entertainment industry on ways to control illegal file sharing.

Although talks are ongoing so far they have failed to secure any commitments on the policing illegal activity. With a voluntary scheme only in its early stages it seems the government is growing impatient and is once again willing to increase the pressure on both parties with the threat of legislation.

It seems though for now a voluntary policy scheme is the preferred option for both parties at the table, and whether any legislation proposals make it further than draft stages will no doubt depend on whether there are any developments here in the near future.

Last week news broke that Microsoft had made a bid to buy rival search marketing company Yahoo for a figure of $44.6bn in a deal that would be made up of both cash and shares. When made, the offer was 62% above Yahoo’s closing market share price on Thursday.

The offer was made to Yahoo in the form of a letter to the board days after revenue forecasts had been cut and the company had committed $300m to try and revive its core business in 2008.

The offer to buy Yahoo came at a time when there is increasing belief that Microsoft’s existing business model is becoming more unfeasible in the internet age. The take over offer could therefore indicate a radical shift in how Microsoft perceives the internet and its own future within it.

With Google releasing a range of free online software alternatives for much of Microsoft’s offerings over the last year, the search market leader is certainly challenging the enterprise business model that software giant Microsoft in built upon.

Currently Microsoft makes the majority of its money by selling license fees to its impressive software packages installed on PCs and servers. With Google’s services available freely over the internet this immediately threatens the foundations the business is built upon.

Although there was much talk of counter bids and legal challenges from Google should the deal be accepted, many will rest easier in the Google camp with news that Yahoo has rejected at least the initial offer for its holdings.

With this take over bid Microsoft is undoubtedly after what it sees as the gems in Yahoo’s online advertising empire, a sector that Microsoft has thus far struggled to move into with any great success. Yahoo also has a range of online applications that could bolster Microsoft’s existing Windows Live online services for both businesses and consumers. It seems now Microsoft will have to come up with a better offer to in order to acquire those assets, meaning a steady re-evaluation of how valuable those assets are, and how important they actually are in Microsoft’s changing business model.

Yahoo said of the original offer that it “substantially undervalues” the company and was not in shareholders’ interests.

Originally worth $31 a share, the Wall Street Journal was quoted as saying that Yahoo’s board would be unwilling to accept any offer shy of $40 a share. That price is a 109% premium on the share price on the day of the original offer, and a price Yahoo has not traded at for over two years.

Although the original has now been rejected - worth $41.8b at time of rejection– the table was left open for further negotiations so watch this space as Microsoft could well sweeten its offer.
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According to an article published on the BBC this week the first steps are being taking in an effort to overhaul the internets core addressing system. These initial steps include update to the master address books for the internet, where they are now prepared in a new format known as IP version 6. The intention is that this will end the shortage of addresses that sites can be given with the pool of unallocated addresses predicted to expire in 2011.

The problem lies with the numerical addressing system the internet currently uses. If a user uses word to find what they are looking for online and therefore types in ‘The Shelf ‘ to the address bar, computers will use a numerical equivalent that is stored in the nets master address books load the requested site

Currently the majority of internet addresses are written in a format specified by version 4 of the internet protocol called IPv4. From the 4/02/08 root servers of the internet will have a small number of records added to them that are written in IPv6.

The result will mean that any computers using IPv6 will be able to find each other without involving any IPv4 technology.

Ipv4 was the fourth version of internet protocol but was the first one to be widely used. With 4,294,967,296 possible addresses available it is which is 20 years old and is now down to the last 14% capacity of unallocated addresses. IPv6 relieves this problem presenting potentially unlimited number of addresses.

Technical Comparison
Ipv4 uses a 32 bit addressing system and has four different class types, the class types are A, B, C, and D. An example of Ipv4 is 207. 142. 131. 235.

One of the main upgrades in IPv6 is in the number of addresses available for networked devices. For example, each mobile phone or other kind of electronic device can have its own IPv6 address. IPv6 allows 3.4×10^38 addresses. This is mainly due to the number of bits in each protocol.

Mobile phone operator T-Mobile has recently announced plans with internet search provider Yahoo to place adverts onto its Web’n’walk mobile internet service, with the first adverts expected to be served before the third quarter of the year.

Mobile internet advertising has grown rapidly in recent years and Yahoo has been taking aggressive steps to sell and manage adverts, possibly making amends for the setbacks seen in its core web search and advertising business against competitors such as Google.

Yahoo also secured a similar deal with Vodafone in November 2006, and this deal with T-Mobile secure two of the big four networks in the UK.

The Web’n’walk service from T-Mobile allows users to have unlimited browsing and email facilities on their mobile handsets, with a contracted minutes and text allowance.

What Yahoo intends to do as part of the agreement is implement banner advertising through the internet onto Web’n’walk mobile handsets. The adverts served as part of the agreement will be exclusively sold and served by Yahoo.

The agreement is part of Yahoos plans to bring the ‘rich web experience’ it provides online, to the mobile handset. Other initiatives for enhancing web content on wireless devices include a mobile widget program aimed at bringing in more content and Web applications from third parties.

Yahoo is hoping by adding mobile adverts to its offerings it will be able to secure a larger stake of the whole internet based advertising market.

“Advertisers are fast recognising the value of mobile advertising as a core part of their digital campaigns.” - Yahoo’s Geraldine Wilson

Mobile deals are not restricted to advertising either for Yahoo, and dubbed the ‘portal king’ Yahoo has also signed agreements with wireless carriers in Europe, South America and Asia to make its OneSearch the default home page for subscribers who surf using a handset.

Yahoo does not currently have exclusive advertising or content partnerships with any wireless carrier in the United States, but the company has been working actively with all major providers to stake a claim in the US market.

Concluding The Shelf’s five part series featuring technology that could make it big it 2008 The Shelf examines mobile VOIP.

VoIP is a Voice Over Internet Protocol service that enables users to make voice calls across the internet. VoIP involves sending voice information in digital form in discrete packets rather than by using the traditional circuit-committed protocols of the public switched telephone network (PSTN). The major advantage of VoIP is that by using the internet telephony users can avoid the charges existing telephone networks already have in place.

In addition to IP, VoIP uses the real-time protocol (RTP) to help ensure that packets get delivered in a timely way.

VoIP has already taken of in a huge way with the help of increasing numbers of domestic broadband connections, and users are already seeing the savings VoIP can provide, especially with international calling. Big names like BT are now even incorporating VoIP calling into their broadband and call packages.

With savings already being made in the home through VoIP, challenging existing domestic telephone networks, it is only a matter of time until VoIP services trickle into mobile phone networks too. Thanks to the increasing number of handsets fitted with 3G this look a certain development in 2008.

All that is technically required for mobile VoIP is a 3G speed mobile data service, a technology is readily available in handsets currently on the market. The next stumbling block is preventing mobile networks from prohibiting VoIP mobile communication, after all they want to protect their revenue stream. The only additional hold up for mobile VoIP after this is the requirement for a soft client on the mobile handset that a customer wishes to use. Skype is one example, and recently teamed up with 3 to release the first VoIP handset.

The catch here is the VoIP calls still have to travel over a mobile network, (unless made through wireless hot-spots or the like) so whether this remains true VoIP is a question the pessimists among us may like to ask. Truephone is a good example here.

Our penultimate technology in The Shelf’s predictions list, tipped to make it big in 2008, is a wireless technology that is aimed at providing high speed broadband over vast distances.

Already big in the US with Spirit and with the backing of Intel, WIMAX is also being trialled in countries including Nigeria, but is yet to take off in Europe and 2008 could be the year that situation changes.

Standing for Worldwide Interoperability for Microwave Access, the WIMAX name was created from the WIMAX Forum which was created in 2001.

In Milton Keynes the first commercial WIMAX service has just been launched with the aim of making the city the first WIMAX -powered wireless internet city.

The WIMAX project was first trialled in the city in 2006, and unlike wi-fi technology, WIMAX offers multi-megabit speeds over areas many kilometres in size instead of a few meters.

The two driving forces of internet modems are broadband, and wireless. WIMAX aims to combine the two by delivering high speed broadband internet access over a wireless connection. Because of its ability to be used over long distances, it is an effective “last mile” solution for delivering broadband to the home, and for creating wireless “hot spots” in places like airports, college campuses, and small communities.

WIMAX is based on the IEEE 802.16 Air Interface Standard, delivering point-to-multipoint architecture, making it an ideal technology to deliver broadband to locations that would traditionally be to difficult or costly to provide for with cables or wi-fi.

‘The so-called “last mile” of broadband is the most expensive and most difficult for broadband providers, and WiMax provides an easy solution.’ - wisegeek

The technology requires a tower much like cell phones and instead of delivering a tr4aditional ISP connection dividing the bandwidth between customers, WIMAX uses microwaves to establish each individual connection.

WIMAX provides a greater range and more bandwidth than wi-fi and so will become an increasingly big player in providing end user broadband connection as investment is finally being made in the infrastructure of the technology in the UK.

The next product featured on The Shelf as part of a five part series for technologies that will make it big in 2008 is internet TV.

In the past home internet speeds have hampered internet TV, as connections have not been fast enough to deliver a reliable service.

This trend is however beginning to change, with half of all UK homes now having a broadband with an average speed of 4 megabits a second. These internet speeds are also increasing, and in 2008 ADSL2+ comes online, offering internet connection speeds of up to 24 megabits a second.

Because of the developments in broadband speed we are also seeing more and more internet protocol television services, and it is not just the big players like BT vision and Virgin Media who are gunning for this market, plenty of smaller operators are also offering a range of services.

Mobile phone operator O2 has launched a successful service in the Czech Republic, and plans to launch in the UK in 2008. Orange is also tipped to enter the market soon too.

iplayer was launched in Beta in 2007 as part of the BBC’s offering, a service that allows people to catch up on the corporation’s output over the web. In November a partnership was also drawn up with ITV and Channel 4 to launch a joint on-demand service.

In terms of domestic broadband sign ups Tiscali recently stated it is signing up broadband customers at a rate of 250 a day, showing the desire UK customers have to get broadband connections in the home.

Throughout 2007 The Shelf has extensively featured some of the most popular bits of technology released. From Facebook to the iPhone to the PS3 we have featured articles on all three, but as we move into the New Year The Shelf looks at some technologies that could have a bright twelve months ahead of them over the next five days.

The first technology sees us look at the mobile internet. Currently restricted to where there is an internet connection, web applications have there restrictions, and although mobile internet access is becoming increasingly popular unlimited connectivity regardless of location is a long way off.

Last year we saw three technologies launched by Google, Adobe and Microsoft that are aimed at blurring the boundaries between offline and online environments. Named Gears, Air and Silverlight respectively, each application aims to take endless achieves of web content and make them available offline.

Adobe’s has already demonstrated an Ebay type Desktop application using Air which allows users to do all the work of setting auctions up offline, with the auction going live the next time the user connects to the internet.

“Adobe AIR lets developers use their existing web development skills in HTML, AJAX, Flash and Flex to build and deploy rich Internet applications to the desktop”

Silverlight offers and reversal of this service in that it allows desktop applications to be built and run within a web browser.

“Silverlight enables developers and designers to easily use existing skills and tools to deliver media experiences and rich interactive applications for the Web.”

Gears does not allow the creation of new applications but does allow users to take web applications offline. Google Gears would therefore allow developers of online office package Zoho to use Gears to allow users to use their applications in a similar way to that of a normal desktop program.

“Google Gears Beta is an open source browser extension that enables web applications to provide offline functionality using JavaScript APIs”

As part of The Shelf’s first technology of 2008 we tip more examples of applications built with or using these three tools to further merge the online and offline user experience.