A View on View

MySpace Co-Founder Moves into China

Mark Evans — Thu, 05 Jul 2007 10:59:00 -0400

Brad Greenspan, who co-founded MySpace, has moved into the Chinese video market by purchasing equity stakes in Mofile.com and Hubotv.com.

MetaCafe Snapped Up for $200M

Mark Evans — Thu, 07 Dec 2006 17:22:00 -0500

According to YNet, Metacafe - one of the more popular video sharing services not called YouTube - has been acquired for $200-million. So who's next? Who's going to be left without a seat when the music stops playing?

The Failure of Strategic/M&A Mash-Ups

Mark Evans — Sun, 19 Nov 2006 15:38:00 -0500

Rather than jump right into the Peanut Butter Manifesto comment-frenzy, I decided to let it simmer for a bit while doing some serious NFL channel-surfing. So what's the deal other than the shrouded motives of Yahoo senior V.P. Brad Garlinghouse, who thinks the company is spreading its resources too thin? If you go way up the strategic food chain, it may suggest the idea of trying to be all things to all people is fundamentally flawed. Yahoo, for example, has acquired everything from Flickr and del.ico.us to blo.gs and Musicmatch. The question is where there is a common theme behind Yahoo's M&A activity other than the need to buy cool technology/services and smart people? For that matter, does any of the major players' acquisition plan make complete sense? What many companies seem to be forgetting is their core purpose. In other words, what are they are offering and is that offering clear to potential and existing customers? What is Yahoo's meaning in life other than attracting as many people as possible and making money from them. If that's the strategic premise, the acquisition of Overture makes complete sense. As for anything else, that's open for debate. Perhaps the biggest concern from Garlinghouse's rant, P.R. exercise, power move, etc. is the M&A dreams may be coming to end an abrupt end for all those Internet start-ups who were banking on being acquired as a way to escape the reality a flawed or non-existent business plan, and/or a dwindling bank account. For an interesting look at acquisitions made by Yahoo, Google and Microsoft, check out this chart compiled by Shmula.com. Some other measured takes on the PBM come from Rob Hyndman, who believes it hints at senior management changes within Yahoo, and Mathew Ingram, who post titles - This peanut butter is del.ici.us - is among the most creative I've seen in a long time. Tags: Yahoo, Brad Garlinghouse, M&A, peanut butter

Yahoo Goes Shoppin'

Mark Evans — Fri, 17 Nov 2006 15:52:00 -0500

Interesting to see Yahoo snap up Bix and MyBlogLog. I've had MYB's visitor widget on my blog for many months, and consider it one of the best ways to get a handle on the links that resonate with visitors. That said, I have not participated much in MYB's community efforts, which seem to be at the root of Yahoo's estimated $10-million acquisition. It's not that I don't like the community tool, it's more than I just haven't had the time to explore it properly. Stepping up the food chain, it is interesting to see a new wave of mini-acquisitions taking place these days as the big online players look enhance their feature portfolio. In Toronto, we're still on pins and needles (well, not really that excited!) to see if the rumours about Bubbleshare being acquired by News Corp. for $5-million are accurate. Bubbleshare's Albert Lai has been invisible in recent days (he even failed to appear at the recent mesh meet-up) so something must be up. Tags: Yahoo, MyBlogLog, Bix, M&A, Bubbleshare

What's Happening with the "Q"?

Mark Evans — Mon, 13 Nov 2006 11:43:00 -0500

What does Motorola's purchase of Good Technology mean? Does it suggest the consolidation of the mobile e-mail market is picking up steam? Will HP make a play for Seven Networks now that Good and Intellisync (Nokia) have been snapped up? Does this finally mean Research in Motion will see some real competition after owning the mobile e-market for the past five or six years? And what about the much-vaunted Motorola "Q" that was supposed to sell millions of units this year but appears to have stalled? It would be interesting to see how much Motorola coughed up for Good, which has raised more than $200-million in private equity from investors such as Kleiner Perkins. Canaccord Capital analyst Peter Misek said Good had no choice but to sell because the 470-employee company was "running out of money". For more, check out Blogging Stocks. Tags: Motorola, RIM, mobile e-mail, Kleiner Perkins

Too Early to Grade eBay-Skype Deal

Mark Evans — Mon, 13 Nov 2006 09:34:00 -0500

Has it already been more than a year since eBay decided to cough up as much as $4.2-billion for Skype? The International Herald Tribune takes a look at the deal and how Skype has evolved within the eBay empire. So did eBay get suckered into making a pre-emptive bid ahead of rival suitors such as Google, or did eBay made a savvy move by acquiring the world's leading VoIP player? So far, there has been little indication eBay has been able to do anything with Skype strategically other than giving sellers the option of putting "Skype Me" buttons on their stores. On the other hand, Skype as a telecom service provider is showing promise as a standalone business. In the past year, the number of registered Skype users has more than doubled to 136 million, while Skype's revenue is expected to more than triple this year to $195-million from $60-million in 2005. But is that enough to justify spending $4.2-billion? The answer - and apologies for being so wishy-washy - is only time will tell. But let's conservatively assume Skype's sales see compound growth 25% over the next five years. This would result in sales of $675-million by 2011 with healthy profit margins. That's a pretty good business. Let's also assume eBay can use Skype to get into the pay-per-call market, which the Kelsey Group forecasts will become a $1.4-billion to $4-billion business by 2009. Assuming Skype captures 10% of the PPC market, that would be another $140-million to $400-million of sales - boosting Skype's total revenue to $810-million to $1.1-billion. Again, that's a pretty good business. Of course, the $4.2-billion price-tag will always be used as a benchmark on how the deal is "valued". But if Skype grows as expected, its acquisition may look like a pretty good move in five years. Tags: eBay, Skype, VOIP, M&A

Does Anyone Have a Clue About Online Advertising?

Mark Evans — Tue, 07 Nov 2006 12:12:00 -0500

At ad|tech there's a lot of talk about online advertising - it's real, it's coming, it's very exciting, advertisers have no choice but to spend more of their money on the Web - but few people actually know how to walk to walk. In other words, no one has a strong idea or, for that matter, a particularly strong view on how to embrace online advertising. Instead, you get a lot of strategic mumbo-jumbo. For example, advertisers are struggling with how to approach the video market. Do they sponsor videos, do they make pre-roll placements, and do they get involved with user-generated content? What about virtual worlds such as Second Life? "I'm not a Second Life person but I feel we all better experiment there because more and more people are embracing it," said Peter Naylor, senior vice-president, digital media sales with NBC Universal, during a panel this morning. And what about social networks? Sure, Google is prepared to spend $910-million on MySpace but how do advertisers, in general, capitalize the social networking phenomena? What role will consumers play in creating advertising - a trend evident by the number of companies running contests that involve consumers creating ads for the Super Bowl. New York Times advertising columnist Stuart Elliot quasi-suggeseted that "two Super Bowls from now or five Super Bowls from now, all the major commercials will be created by consumers".
Of course, the key player in the online advertising market's evolution are advertisers, which explains why everyone was so interested in listening to the views of Ted McConnell, Interactive Innovation Director with Procter & Gamble, which plans to allocate more of its multi-billion dollar advertising budget online. McConnell, whose decisions can make or break the online advertising dreams of many companies, joked that is has "100,000 people who want to help me do my job".
With everyone (advertisers, ad agencies, ad networks, Web sites) interested in doing more business online, education will be an important element so advertisers are comfortable spending more money on the Web and where exactly to run campaigns to build brand and sell more stuff. It's still early days so all the talk is good but it would be refreshing to see more people say "I don't know what's going to happen".
Update: Apparently, there are lots of people definitely interested in learning more about the online advertising market given more than 12,000 people pre-registered for ad|tech. The show's popularity stands in contrast to 2001/2002 when the conference was held in a single room.
Tags: advertising, P&G, social networking

Raging About Reddit

Mark Evans — Wed, 01 Nov 2006 07:42:00 -0500

A little Web 2.0 math: one acquisition (Wired Digital acquires Reddit) involving a company with four employees that received $100,000 of seed capital = frenzy within the blogosphere. Can anyone say "echo chamber"?

Google Jumps On Jot

Mark Evans — Tue, 31 Oct 2006 15:04:00 -0500

Google's shopping trip through the Web 2.0 start-up market continued with the purchase of Wiki maker Jot.com. In the scheme of things, it's chump change for Google but it does put the spotlight back on Google's online application suite, which will come as little surprise to anyone when it's eventually launched one day. Jot.com is a nice addition because it brings a collaboration tool into the mix. The purchase got me thinking about what people are currently doing to cobble together an online office suite. Since I started working from home (and I can't be too effusive about not having to commute anymore!), I've really got into Web-based tools. This includes Skype, Google Talk, Writely, Yahoo Mail, PBWiki, along with Flock and Firefox. I'd be curious to see what other tools are people are using. Tags: Google, M&A

The New Newspaper Business Model

Mark Evans — Sun, 29 Oct 2006 11:47:00 -0500

There is no doubt the newspaper industry needs to change its ways as the Web becomes more popular with readers and advertisers. There has been a lot of talk about how newsrooms need to evolve (for example, my "5 Ws Post") but little focus on the newspaper "business" so it was interesting to read a comment from a group interesting in buying Baltimore's The Sun newspaper from Tribune Co. In discussing how his group was approaching the potential puchase, Theodore Venetoulis told Reuters they understood it will "not be an investment that will provide the usual yield and return that some investors will be used to." That's a pretty telling and blunt concession, although you could argue it's also a savvy negotiating tactic. That said, Venetoulis put the spotlight on the new economic realities of the newspaper industry, which needs to reduce its operating costs amid the loss of advertising revenue. For newspaper owners, this means maintaining operating margins and profits by becoming lean and mean (e.g. smaller, less expensive newsrooms) or accepting lower profit margins and profits compared with historical levels. While this is happening, newspapers such as the Toronto Star, Los Angeles Times and newspaper chains such as Tribune Co. and Dow Jones Inc. are under growing pressure from investors unhappy about slumping stock prices. Unless there are more investors such as Venetoulis willing to accept lower ROIs, newspapers are going to be much different creatures. My advice for newspaper owners: aggressively embrace the Web, and reposition your newsrooms to cover less news (the Web is increasingly taking over the job of covering breaking news), and focus on providing analysis, perspective, context. For many newsrooms, it may be having a smaller, smarter, more flexible group of reporters.

Web M&A: Who's Next?

Mark Evans — Sun, 15 Oct 2006 09:09:00 -0400

In the name of speculation, rumination and guess-timation, I have unscientifically compiled a "who's next" list when it comes to M&A activity in the wake of Google's $1.65-billion bid for YouTube. My methodology is admittedly simplistic and possibly prone to mistakes but it is Sunday morning. The "sources" for this list are ComScore and HitWise rankings and anecdotal evidence. It's open to criticism as well as suggestions. In no particular order, here goes:

1. Photobucket: With more than 25 million members, it's a surprise Photobucket hasn't been picked off like Flickr was by Yahoo. Photobucket raised $10.5-million in a Series B round led by Trinity Ventures earlier this year.

2. Facebook.com: It is just a matter of time before Yahoo pulls the trigger on a $1-billion acquisition? With MySpace part of Rupert Murdoch's Web portfolio, Facebook is ripe for an acquisition but what's the price. Clearly, Yahoo CEO Terry Semel is agonizing over this issue as we speak.

3. Gorilla Nation: an online ad sales representation firm that handles media sales for more than 250 high-traffic Web sites. In August, it was the 22nd highest-ranked Web site in the U.S. with 25.9 million unique visitors.

4. Weatherbug: Another highly-ranked Web site (40th in unique visitors), Weatherbug has 8,000 tracking stations and 1,000 cameras throughout the U.S. It's also got a bad reputation as a purveyor of spyware.

5. CareerBuilder: A popular job site that was the 29th most popular site in the U.S. with 20.6 million unique visitors in August.

6. Digg.com: Another one of those Web 2.0 start-ups ripe with takeover potential, it seems to be only a matter of time before a deal materializes.

7. Technorati: Maybe Technorati's time has come and gone. If it was going to be acquired, it might have already happened. Then again, blogs are still in their relative infancy so a tool to track traffic could be pretty valuable. I still think Google is a potential suitor given how underwhelming Google Blog search has been since its launch.

8. FeedBurner: After establishing its as one of the leading RSS publishing services/tools, FeedBurner's appeal will only increase as RSS becomes less of an acronym and more of a mainstream tool embraced by people who want to easily personalize content.

9. Heavy.com: a popular video-sharing service that cheekily bills itself as the "#1 broadband destination for wasting time". According to HitWise, Heavy was the second most-popular video sharing service in the U.S. during the first week of October with 17% market share.

10. Zoho: If the Web 2.0 office suite and the Office 2.0 movement actually take root (propelled, in part, by Google's efforts), Zoho could become an appealing target.

11. WordPress/Typepad: Blogging is only going to get bigger so it makes sense that two of the most credible players could be snapped up.

This list, of course, is incomplete so if you have suggests, fire away. There are lots of other people thinking about the same topic such as Tech Trader Daily and Tolman Jeffs, managing director with the Jordan, Edmiston Group. For some perspective, Tristan Louis also put together a list of recent Web 2.0 acquisitions. CNet, meanwhile, has a list of some high-profile Internet deals that succeeded and failed. As well, the New York Times has a sad tale of how Friendster founder Jonathan Abrams turned down a $30-million takeover offer from Google in 2002. If Abrams had accepted the offer, he would have received pre-IPO Google shares that now might be worth $1-billion.

Talking Tech

Mark Evans — Sat, 14 Oct 2006 10:33:00 -0400

In this week's Talking Tech podcast, Kevin Restivo and I discuss the impending disappearance of BCE and the decision to convert Bell Canada, the country's largest carrier, into an income trust (the Globe & Mail has a huge feature series today on the rise of income trusts). We also touch upon Google's proposed $1.65-billion acquisition of YouTube, including the copyright issue that has everyone in a tizzy. Finally, we look at how legal digital music downloads doubled in the first half of the year. Of course, this doesn't mean illegal downloads have disappeared. One of the big questions in the music industry is whether Russia's AllofMP3.com, which sells CDs for between $1 to $2, is legal or illegal.

The Beginning of the End for BCE

Mark Evans — Fri, 13 Oct 2006 06:33:00 -0400

Here's a theory about the decision to blow up BCE and turn Bell Canada into an income trust. Perhaps the biggest strategic mistake made by BCE CEO Michael Sabia was not buying Microcell Telecommunications, the country's fourth-largest wireless carrier, when he had the chance a few years ago. Instead of acting aggressively and having to deal with the federal competition bureau, Sabia allowed Rogers to swoop in and acquire Microcell for $1.4-billion. Yes, Microcell used GSM while Bell Mobility was on CDMA but the other benefits (a larger exposure to the fast-growing wireless business, tax-loss carry-forwards, etc.) far outweighed any technology issues. Why BCE didn't move more quickly and/or aggressively is a huge mystery. After all, technology could not have been an issue given Telus, which also uses CDMA, had put Microcell in play by making the initial bid. Instead, BCE's failure to buy Microcell left it with just 20% of its revenue coming from wireless and that (along with a host of other issues) made BCE a low-growth entity. As a result, the move to an income trust became more of an option. Another spin on the Microcell story is Manitoba Telecom should have made a strong bid for the wireless carrier. Instead, Manitoba Tel decided to buy Allstream for $1.8-billion, which now shows all signs of being an expensive strategic mistake.

What's Facebook Worth? Whatever a Buyer Will Pay

Mark Evans — Thu, 12 Oct 2006 06:36:00 -0400

Robert Scoble asks whether Facebook is worth as much as YouTube. Well, it depends on how badly someone wants to buy it. Maybe the answer is "yes" as the major players such as Yahoo scramble for some of the big Web properties still in play now that MySpace (News Corp.) and YouTube (Google) have been taken off the table. If you're Facebook, what you do is hire some hot-shot investment bankers to start a bidding war? eBay massively over-paid for Skype because Tim Draper and Niklas Zennstrom did a wonderful job convincing Meg Whitman there were other parties (Google?) interested. Maybe Facebook will do the same.

An M&A Bubble 2.0?

Mark Evans — Wed, 11 Oct 2006 07:48:00 -0400

With Google gulping down YouTube for a mere $1.65-billion, how does this affect the competitive landscape? The New York Times takes a look at Yahoo, which apparently made a bid for YouTube and has an interest in acquiring Facebook to get a bigger foothold in the social networking market. The NYT articles suggests Yahoo has to do something because it has fallen out of favour with investors and "losing its initiative" in rolling out new services in areas such as video and social networking. To be honest, this "critique" is a bit of a reach and illustrates how Google has captured the imagination of the media and investors with every single little move it makes (see the buzz over the launch of Google Docs today). That said, with YouTube becoming part of Google's arsenal, it will be interesting to see how Yahoo, Microsoft, AOL and News Corp. respond. Maybe there will be an M&A frenzy as the major players scramble to make sure they have the properties they need to attract traffic and advertising. (Check out CNNMoney's story on the potential M&A activity) Part of the challenge making deals is the Web landscape is constantly shifting. A red-hot company today such as Facebook could be worth $1-billion today but $150-million tomorrow if new players enter the market and start to attract a following. Do not be surprised if there is growing pressure on online executives to do something aggressive. I would suggest any site/service with large amounts of traffic has become a takeover candidate. Of course, this means there will be mistakes made as panic-stricken executives massively over-pay for acquisitions - much like we saw during the dot-com boom.
Update: TechDirt has an intriguing post looking at whether the lack of the lack of an IPO market is hurting innovation. It also raises the point that IPOs during the dot-com boom did little to promote innovation but, instead, shifted the investment risk from VCs to the public. As well, Blogging Stocks has a post on whether Yahoo needs to buy something. Among those mentioned is Dabble (a TV guide for online video) and Heavy.com.

Cuban May Be Right about YouTube-Google

Mark Evans — Tue, 10 Oct 2006 07:19:00 -0400

Mark Cuban may have missed the mark when he refused to believe Google would buy YouTube but now that the deal's getting done, his unorthodox stance on the $1.65-billion marriage shouldn't be ignored. His post today - somewhat hard to find amid the blogosphere tsunami unleashed yesterday - raises an excellent point: with YouTube poised to become of the Google empire (and bidding a champagne-drenched farewell to its status as a scrappy, peoples' champion start-up) how long will it take before Google's major rivals (e.g. Fox, which owns MySpace, which also delivers a lot of video) unleash their legal hounds on YouTube? After all, Google will be a major player in the video business so why would content owners let it use unlicensed material to support the YouTube's growth. The other side of the coin is Google may be content to deal with any content issues if that's what it takes to own the world's biggest online video brand. Two other points before you go onto to read everything you ever wanted to know about YouTube: 1. YouTube was started in 20 months ago; it raised its first round of VC last November, and talked about an IPO a few months ago. It's been a wonderful, wild ride from Chad Hurley and Steven Chen; and 2. Sequoia Capital, which also had a major stake in Google, could see its $11.5-million investment in YouTube be worth as much as $500-million. Sweet.
Update: Nice to see the New York Times has finally caught up to me - :) - with a story about how Sequoia was the only VC to back YouTube. It is interesting that Sequoia was able to corner the deal, particularly when YouTube raised a second round after it had gained some serious traction.

Sequoia's YouTube Jackpot?

Mark Evans — Mon, 09 Oct 2006 08:37:00 -0400

Amid the speculation (and eventual reality) about Goolge buying YouTube, something that hasn't received much attention is how Sequoia Capital invested $3.5-million in November 2005, and $8-million in April, 2006. (Sequoia appears to be the only VC to make an investment in YouTube.) So how much of YouTube does Sequioa own and, more important, how much could its stake be worth? Last October, Om Malik suggested Sequoia's initial investment in YouTube was done at a pre-money valuation of $15-million. For the sake of argument, let's assume Sequoia own 25% of YouTube. If YouTube is worth anything near the $1.6-billlion being bandied about by the NYT and others, Sequoia is looking at $400-million, or a 40x return on its money. Now, that's a big-time home run - perhaps not a Skype-like monster blast home run but a home run nonetheless.
More: Mr. Wave Theory crunches his own numbers to come up with the booty split between YouTube's VCs, founders (Steven Chen and Chad Hurley) and employees. Here's a video interview featuring Hurley and Chen on how YouTube was started.
Update: DealBook reports Google's purchase of YouTube could happen as early as this afternoon. Google ended up making a $1.65-billion bid for YouTube.

Cuban's Latest YouTube-Google Rant

Mark Evans — Sun, 08 Oct 2006 08:16:00 -0400

Mark Cuban really doesn't like the idea of Google buying YouTube. His latest rant, which not surprisingly includes the word "moronic", hammers the point that YouTube's appeal is largely based on its ability to offer unlicensed content - a gig, he contends, that will eventually disappear when the lawsuits starting flying. Perhaps YouTube sees the writing on the wall, which would explains the potential deal with Google. But maybe YouTube's M&A appeal has more to do with its strong brand and the Web's ability to deliver content to anyone at anytime. As for whether YouTube is worth $1.6-billion, I would argue it's worth whatever someone is willing to pay for it. Was Cuban's Broadcast.com worth $5.7-billion when it was acquired by Yahoo in 1999? Were any of the $1-billion+ acquisitions made by Nortel during the telecom boom worth it? Is the bag of organic milk you bought yesterday worth $9? Where there's smoke, there's fire, which means YouTube is in play - and the investment bankers are already counting their commissions and placing their orders for new BMWs. Maybe YouTube's copyright issues will be a factor in the final price but I think many of Cuban's arguments - while passionate - won't be a consideration at all.

Talking Tech (Our Weekly Podcast)

Mark Evans — Sat, 07 Oct 2006 08:27:00 -0400

After a one-week hiatus, Talking Tech is back. Not surprisingly, I "hi-jacked" the show to talk about my decision to jump from the world of journalism to the blogosphere by becoming vice-president of operations with b5media, which operates a global new media network with more than 150 blogs that attract two million unique visitors a month. In response to a few inquiries, I'll continue to write my blogs and, hopefully, keep my hand in journalism a little bit. As for the rest of Talking Tech, Kevin and I spent quite a bit of time talking about Research in Motion co-CEO Jim Balsillie's purchase of the Pittsburgh Penguins for $175-million. It also gave us an excuse to talk about the Blackberry Pearl, which became available in Canada earlier this week. Finally, we touched up on the Google-YouTube rumours, which picked up steam after a Wall St. Journal story and a TechCrunch post. Notes: The show notes for Talking Tech can be found here, the podcast is here. Thanks again to Fleishman-Hillard's David Jones and Ed Lee for their production magic - and their decision to keep working with Kevin and I even though we're no longer daily technololgy newspaper reporters...:)

Let's Kill YouTube Mania

Mark Evans — Fri, 06 Oct 2006 08:22:00 -0400

Another day, more rumours ("totally unsubstantiated", mind you) that YouTube is going to be purchase for a kazillion dollars. Let's just auction the damn thing on eBay and auction it off so we can finally kill this weird YouTube obsession. There, I feel much better now. Update: Om Malik said dismissed the prospects of a YouTube-Google deal, suggesting "it has as much chance of happening as me dropping 40 pounds". In his typical pragmatic approach to rumours and speculation, Paul Kedrosky opines that "the blogosphere has predicted nine of the last three Google acquisitions, so skepticism is highly warranted".

Update: ComScore has some food for thought about the Google-YouTube speculation. For example, the number of unique U.S. visitors in August:

Yahoo! Video		21,141   
MySpace Videos		19,406   
YouTube			19,089   
MSN Video		15,414      
Google Video Search	11,891

And % of U.S. video streams in August:

Yahoo! Sites	   	11.3%   
MySpace		   	20.3%   
YouTube		   	9.0%   
Microsoft Sites	   	2.2%   
Google Sites	   	0.8%

Inside the Voodoo-HP Deal

Mark Evans — Sat, 30 Sep 2006 09:01:00 -0400

If you're a serious gamer, Voodoo Computers is the PC industry's Rolls-Royce with cool-looking and powerful systems (albeit at a premium price). Earlier this week, the Calgary-based company said it had agreed to be acquired by Hewlett-Packard for undisclosed amount. So why rush into the arms of HP rather than raising venture capital or doing an IPO? Well, this story goes back to January 2005 when Voodoo came to a strategic fork in the road. As it strived to stay on the bleeding-edge, it ran into size and scale issues because innovation is challenging when you have limited sales volume. Ravi Sood, who owns Voodoo with his brother, Rahul, said discussions with HP started to take place but things were moving at a snail's pace until Mark Hurd took over as CEO. Hurd recognized the value of Voodoo's brand and how it could fit into HP's gaming strategy and leverage its $3.5-billion of R&D. The deal, however, took on some complexity when Dell, which approached Voodoo about a potential acquisition. Ravi Sood said Dell's advances were rejected because Voodoo didn't see any synergy between the two companies. Meanwhile, HP started to look more attractive because it respected the Voodoo brand and it wanted to keep Voodoo in the high-end of the market. "This deal isn't about one plus one," Sood explains. "We weren't motivated to take a check and run the business at status quo. The difference here is HP has applied a veil of autonomy on the Voodoo brand and will integrate their technology." For more check out, CNet and Real Tech News.

Time to Eat Your (Web 2.0) Own

Mark Evans — Wed, 06 Sep 2006 13:16:00 -0400

GigaOm has the details on Six Apart acquiring RSS feed reader Rojo.com, as well some views on the RSS reader market. This is just a hunch but I think we're going to see lots of these kind of deals in the coming months as struggling/weak/under-financed Web 2.0 start-ups scramble into the arms of thriving/strong/well-financed Web 2.0 players. The Six Apart-Rojo deal (and the Tucows purchase of Kiko on eBay, or FeedBurner's acquisition of Blogbeat) are perhaps signs that the funding frenzy (FF) could be losing some of its steam as a growing number of start-ups run out of money and have nowhere to go. This Web 2.0 "consolidation" could be sold as a win-win scenario. The stronger players acquire cool technology at low prices, which could make them more viable and sustainable entities. Meanwhile, the weaker players find a way for their technology to live on, a place for some of their employees to keep working, and maybe some cash and/or shares for investors. These deals should be seen as a healthy development because it suggests investors aren't willing to pour good money after bad to sustain companies that would be better off gone. Maybe there's a job out there for a Web 2.0 middleman. Perhaps TechCrunch could morph itself into a wheeler-dealer? Update: Kevin Burton, who co-founded Rojo, has some personal views on Rojo as well as a re-cap of other blogosphere thoughts.

Well, Well: Tucows Bought Kiko

Mark Evans — Wed, 06 Sep 2006 07:27:00 -0400

It turns out the mystery eBay buyer for Kiko was Tucows Inc. and my friend, Elliot Noss. Noss explains the Toronto-based company's rational in a lengthy post. Essentially, it boils down to Tucows' need for a calendar application within its e-mail system, and buying Kiko for $258,100 on eBay provided Tucows with good technology much faster than developing it internally. "We all believe that a calendar is a very important function in the messaging suite for small businesses," Noss said. "Given that people don't want to maintain separate services for personal and business use, and because the line between personal and business services is getting blurrier, we felt this functionality was a big hole for us." For people unfamilar with Tucows, it provides more than 6,000 ISPs, hosting companies and service providers with wholesale tools such as blogging publishers (Blogware), software, e-mail and domain name registration. The company also operates a software download site with more than 40,000 titles.
Update: For more check, out Mathew Ingram and Don Dodge. TechCrunch has done a podcast with Noss about the Kiko deal.

Nortel Sells UMTS Unit

Mark Evans — Fri, 01 Sep 2006 06:33:00 -0400

Nortel has agreed to sell its UMTS unit to - surprise, surprise - Alcatel for $320-million. It was only a matter of time before Nortel sold the money-losing business, and Alcatel seemed to be the most logical buyer. While Nortel can certainly use the $320-million, it is below the expectations of analysts, who were looking for about $500-million. Nortel held a conference call today at 9 a.m. to provide an “update on advances to the execution of its business plan”. According to analysts, Nortel's UMTS access business was losing about $200-million a year on sales of $400-million to $500-million. No wonder Nortel wanted out so badly. With UMTS out of the way, Nortel CEO Mike Zafirovski can now focus on other parts of the business that don't meet his 20% market share benchmark. At the end of the day, Nortel will be a smaller player but, hopefully, profitable.
Update: For more views on Nortel, check out All Nortel, All the Time.

Cisco's VOD Play

Mark Evans — Tue, 22 Aug 2006 07:49:00 -0400

Now that Cisco is sexy again (stellar fourth-quarter results, strong growth projections for fiscal 2007, the savvy acquisition of Scientific-Atlanta), tech/TV watchers should pay attention to its latest acquisition: the $92-million purchase of Arroyo Video Solutions, which makes software to help cablecos and carriers deliver video-on-demand services. The acquisition is the latest in a string of video-related deals that Cisco has made in recent years (perhaps Linksys could be included given it expand video within the home) to reposition itself at a time when many of its rivals (Nortel, etc.) are scrambling to figure out where they want to be and what they will look like in the wake of fierce competition. Cisco, meanwhile, is far ahead of the pack with a strategy that may become CEO John Chamber's legacy. Watch this space, watch this company. For more, check out GigaOm.

YouTube's Potential Suitors?

Mark Evans — Tue, 01 Aug 2006 08:24:00 -0400

Forget about an IPO, let's just get YouTube sold right now. Fortunately, Russell Shaw has come up with a list of potential suitors. It includes (drumroll, please!): Adobe, Google, Sony, Time-Warner, News Corp. and Yahoo. I'm don't think Adobe or Sony should be on the list, while I'd be surprised if Time-Warner made such a bold move. As for Google, it's not one to make big, flashy deals. So that leaves Yahoo and Rupert Murdoch. If I was a betting man, I wouldn't be surprised for Rupert called YouTube CEO Chad Hurley for a chat soon. Before any kind of deal - or IPO - is consummated, YouTube will have to tackle is the sticky issue of copyright infringement given more content owners are asking for their content to be removed as YouTube gets more popular.
Update: The Guardian has a story that YouTube overtook MySpace as the most popular "new generation. According to Alexa, YouTube has 3.9% of global Internet visits each day compared with 3.35% for MySpace.

Convedia Snapped Up for $105M

Mark Evans — Thu, 27 Jul 2006 22:01:00 -0400

Boy, the folks south of the border sure like our tech companies. This time around it's Burnaby, B.C.-based Convedia Inc., which has been acquired by RadiSys Corp. for US$105-million. It's a sweet return for Convedia's investors, which includes Ventures West, Mayfield Ventures and Terry Matthews' Wesley Clover. Convedia makes media servers for telecom carriers and enterprise customers that want to offer VoIP and IMS services. Convedia, which had has won a ton of industry awards recently, was on a revenue run-rate of $20-million based on its second-quarter results. The RadiSys press release can be found here.

FeedBurner Snaps Up Blogbeat

Mark Evans — Mon, 17 Jul 2006 07:12:00 -0400

In a marriage that makes a lot of sense, FeedBurner has bought Blogbeat, which offers a user-friendly, statistics service for blogs. While many people are familiar with FeedBurner, Blogbeat has been a relatively low-profile player in the stats world behind MeasureMap (now part of Google), Mint, StatsCounter and, most recently, Performancing. I've been using Blogbeat for several months and, for the most part, it's a good service. That said, Blogbeat has been plagued recently by performance issues - perhaps caused by the growing pains of heavy traffic. As well, I'm not sure how successful Blogbeat's subscription service ($24 a year) has been faring. With FeedBurner's financial support, Blogbeat should have the financial resources it needs to improve. This deal is interesting from a big-picture strategic perspective because it offers insight into M&A activity within the blogosphere. Rather than mega-deals, you will probably see smaller transactions as players expand their service portfolios. A growing number of these deals will involve companies that have interesting technology but find themselves running out of cash.

Update: For more, check out the FeedBurner blog, TechCrunch and Likeitmatters.

What About a "LadyBag" for Men?

Mark Evans — Mon, 24 Apr 2006 10:25:00 -0400

The Discovery Channel has a story about a new purse - the Ladybag - developed by researchers at Vancouver's Simon Fraser University that uses RFID technology to alert the owner if they leave the house without their wallet or keys. "We came up with the bag because we thought that all of us would use it," said Ginny Mesina, one of six women who worked on the Ladybag's creation. What about morphing the technology for a men's wallet? It would be amazing if the same technology could be used to locate missing wallets and/or keys - solving an age-old problem that has put tremendous stress on relationships around the world. Can you imagine no longer having to say "Have you seen my wallet?" or "Where are my keys". Now that would be very cool!

Alcatel-Lucent Tie the Knot. Really!

Mark Evans — Sun, 02 Apr 2006 13:15:00 -0400

The speculation is over: Alcatel and Lucent have officially merged (unofficially Alcatel is buying Lucent given its shareholders will have 60% of the new entity) to create a $25-billion wireline, wireless and services behemoth. It is interesting that Alcatel is purchasing Lucent at a discount to Friday's closing price. Patricia Russo will become CEO while Serge Tchuruk will be non-executive chairman. AlcaCent also plans to eliminate 8,800 jobs, or 10% of the workforce, to reduce annual costs by $1.7-billion. So can we now launch the consolidation frenzy within the $336-billion equipment industry? How long before Siemens or Nokia pursue Nortel, or Huawei takes a run at Juniper or as Om Malik suggests will Juniper take a run at Huawei? For several years, the telecom equipment market has been waiting - desperately needing? - consoliation among the large players amid fierce competition, soft margins and a dwindling customer base. Perhaps fewer players is what's needed to restore some sense of fiscal health. That said, there is some healthy skepticism emerging. RBC World Markets' analyst Mark Sue said Lucent and Alcatel have distinctly different corporate cultures and any expected synergies will likely not emerge for a year. IP Democracy also has concerns about the French ownership of Lucent's Bell Labs operation, which does work for the U.S. government and security agencies.

Google's Insatiable Appetite for Cash

Mark Evans — Thu, 30 Mar 2006 10:28:00 -0500

So Google is raising another $2-billion to meet demand as it prepares to join the S&P 500. Why? The company already has a $8-billion war chest so it's not like it needs the money. And if index-focused investors have obligated to buy stock for their portfolios does it mean Google has to play nice and accommodate them? So what's Google thinking? The last time the company tapped the markets for cash, it used $1-billion to buy a ~~20%~~ 5% a stake in AOL. Susquehanna Financial Group analyst Marianne Wolk thinks Google could be looking to enhance its presence in Asia through a strategic investment or acquisition. Another possibility, she said, is a "massive investment" in storage for Web developers along the lines what Amazon is doing with its S3 Storage Service. Then, there's Wi-Fi and the rumours Google is looking to launch an advertising-support, nation-wide network. In any event, Google now has $10-billion of cash on the balance sheet so something has to be going on. Given how close Larry and Sergey hold their strategic cards to the vest, we'll likely only find out when the a deal is unveiled.

Update: BuyGoogle has an intriguing - and detailed post - on whether Google might use its cash hoard to acquire Amazon.com.

The Timing of the Deal

Mark Evans — Wed, 29 Mar 2006 07:25:00 -0500

Has Facebook missed the M&A boat? An executive with the social-networking service apparently told BusinessWeek the company is seeking a $2-billion takeover deal after turning down a $750 million offer earlier. Of course, you can ask for the stars and the moon but it's a mute point if no one makes the right offer. Facebook's apparent desire for the pot of gold at the end of the rainbow does put the spotlight on the fine art of timing a deal. Skype (Niklas Zennstrom and Tim Draper) played the market perfectly by putting out the message the was company was for sale, setting a quasi-public price ($1-billion) and waiting for the suckers...er, I mean...buyers to emerge. It was a masterpiece performance. Vonage, on the other hand, has probably blown it. In a ideal world, it would have done an IPO when VoIP was red-hot a year or so ago. Instead - large losses, soft capital markets, etc. - Vonage waited. As a result, a $600-million IPO has turned into a $250-million S-1 filing that has mysteriously been collecting dust at the SEC. Does this mean Facebook isn't going to get $2-billion? Probably, but it depends on various factors: is there a buyer willing to pay the price, how does Myspace.com's growing success influence Facebook's value, etc. At the very least, the fact Facebook has tipped its hand in BusinessWeek means it wants a large audience to deliver its message or, as rumoured, it's been on the block for awhile and needed a new way to incite interest. It looks like they should have given Tim Draper a call before they hatched their exit plan.
Facebook's plans are being picked apart in the blogosphere. Om Malik cites flat page views, reach and traffic trends while B2Day point holes at the $2-billion price-tag after doing some rough back of the napkin math. Michael Arrington, on the other hand, does not dismiss Facebook's desired valuation.

Web 2.0: Post-Newsweek Thoughts, Facebook

Mark Evans — Tue, 28 Mar 2006 08:02:00 -0500

In light of Newsweek's discovery of Web 2.0, I had an "enlightening" chat with one of Kijiji's Canadian managers yesterday. It went something like this:
Me: "So what's Kijiji's business model? How does it make money?"
Them: "We don't have a business model. Everything on the site is free."
Me: "Oh, then I guess Kijiji is a real Web 2.0 company."
For months, I've been ranting about how the lack of viable business models within all these cool Web 2.0 services/applications is a huge and troubling problem. How can you create a business if the service is given away free? - and I'm not talking about jumping on the AdSense bandwagon. If, like me, you have a thing about revenue and profits, the vast majority of Web 2.0 ventures make no sense other than being vanity/make-work projects or hobbies for smart developers.
But maybe I'm taking a totally wrong approach. Maybe Web 2.0 isn't about creating businesses but, instead, a tool to show off the true power of the Web as a communication, collaboration, entertainment and e-commerce engine. Perhaps the Web is going through an important, but necessary, stage focused on showing how easy it is create new services and start new companies. This contrasts with the dot-com boom where it looked expensive to start and establish a company online. Perhaps what happens next is all the lessons from the dot-com boom and all the lessons from the current "development boom" will be used to create a new formula that provides a path for the establishment of innovative, low-cost, money-making businesses. Maybe this is what I've been missing for the past six months. Then, I could be wrong.
Update: BusinessWeek has a story that Facebook.com - a classic Web 2.0 company - is looking to be acquired for as much as $2-billion. The social-networking company was started two years ago by Mark Zuckerman, now 22, at Harvard University. It raised $500,000 in an angel round from Peter Thiel in September 2004, and pull in another $12.7-million last May from Accel Partners. Mathew Ingram weighs in on Facebook's prospects.
Update: Fred Wilson has a new Web 2.0 business model description called Fremium whereby a company provides a service for free to attract as many users as possible. Then, it rolls out premium services to generate revenue. The challenge with this model is whether users balk at paying for something they've been getting for free.

Maybe Dan Gillmore Should Save the Merc

Mark Evans — Mon, 20 Mar 2006 15:14:00 -0500

The San Jose Mercury is on the block, and there are concerns the new owner could reduce the quality of the newspaper as part of a cost-cutting program. This tactic would not come as a surprise given it's the default solution to deal with competititon from rivals such as Craigslist. So how can the Merc be saved? Here's a crazy thought: what about Dan Gillmore heading up a new ownership group. He spent years working for the paper so he has good insight into how it operates and the people; he has a passion and belief in its mandate and importance to the community; and he's looking for his new gig after Bayosphere's stopped taking new investment. So perhaps Gillmor could go through his rolodex where I'm sure he'll find more than a few Silicon Valley executives with a few dollars collecting dust.
Tags: newspaper, dan gillmor

Rumour du Jour: Ericsson Buying Juniper

Mark Evans — Wed, 15 Mar 2006 15:57:00 -0500

Is Ericsson willing to spend $11-billion (not including a takeover premium) for Juniper Networks? Apparently, there is speculation the Swedish company is interesting in the IP router maker, even though it would an all-stock deal would be highly dulitive and complicated by Juniper's partnerships with Lucent and Siemens, which account for 20% of its sales. If the deal actually materialized, you wonder if it would trigger the long-awaited consolidating within the telecom equipment market among the major players. Perhaps a Cisco-Nortel or a Nortel-Siemens or an Alcatel-Lucent?

An IPO-Free Tech Boom?

Mark Evans — Wed, 15 Mar 2006 10:49:00 -0500

Fox Interactive's impending purchase of NewRoo for "something less than $10-million" got me thinking about the glaring absense of IPOs within the Web 2.0/technology sector. Why is this happening? I mean, NewsRoo hasn't even launched its news aggregation service yet, alone generate enough revenue to even consider an IPO yet Fox is willing to snap up the three-person start-up as part of News Corp.'s get big online fast strategy. My thesis about the total dearth of IPOs is there is an obsession with being acquired - and being acquired quickly - within the Web 2.0 world. With Microsoft, Google, Yahoo, eBay, News Corp., AOL, etc. flush with cash and hungry to expand their Web assets, the name of the game is building enough buzz and/or enough users to attract the attention of deal-hungry M&A teams. Another IPO issue is Sarbanes-Oxley, which has made it way too difficult for companies to consider going public unless they have a market capitalization of more than $500-million. Why do an IPO if you get saddled with compliance costs, quarterly results, financial transparency and the never-ending scrutiny of analysts and investors? Do you think Larry Page and Sergey Brin could have stayed private if it could have? Probably. Sarbanes-Oxley makes an IPO impossible for a Web start-up - unless they consider a listing on the London Stock Exchange's Alternative Investment Market, which is quickly supplanting Nasdaq as the market for fast-growing tech start-ups. Given this IPO-unfriendly landscape, you can expect M&A activity to continue to be the exit strategy of choice for entrepreneurs and VCs.
One more thought: Speaking of IPOs, what ever happened to Vonage's IPO? First it was raising $600-million; then $250-million, and now the IPO appears to have gone cold. Did Vonage miss its window of opportunity? Is a buy-out or an IPO at a bargain-basement price the only option left on the table?

Dell Gets Hit with a Little Voodoo?

Mark Evans — Wed, 15 Mar 2006 07:27:00 -0500

Has Dell acquired Calgary-based Voodoo PC? There seems to be rampant speculation after Voodoo CEO Rahul Sood put a post on his blog suggesting Dell + Alienware was "possible". He offered up a list of five reasons why it made sense, highlighted by the fact he's "pretty sure if offered a check...the guys at AW may jump at the chance to cash it". It seems like a pretty novel way to either put yourself on the block or announce an impending acquisition. You have to wonder why Dell would want to buy Voodoo, which makes high-end laptops and desktops adored by hard-core gamers. Isn't part of Voodoo's appeal that it's a small, rebellious player amid all these multi-national giants? Do you think a gamer is going to boast about owning a Dell? If Sood is really intent on selling out, there may be sexier options than Dell. Then again, money talks and maybe the middle-age Dell is anxious for a little "edge"?

Canadian Telecom Rockin' with News Today

Mark Evans — Tue, 07 Mar 2006 12:17:00 -0500

Where to begin, where to begin with Canadian telecom news....First, BCE is creating a super regional telephone business by combining Bell Nordiq, its new rural income-trust in Ontario and Quebec and Aliant Inc.'s wireline business. The question is whether it's just more financial re-engineering by BCE Inc. and/or a shuffling of the deck chairs on the Titanic. The transaction, which will create a business with 3.4 million phones lines, still doesn't change the fact Bell Canada is losing hundreds of thousands of local phone customers a year as the cablecos move into the market. Unless BCE wants to become a super income-trust, bolder strategic moves must be made.
Meanwhile, Vonage Canada has filed a complaint with the CRTC over Shaw Communications $10/month "VoIP tax". Shaw prefers to call it a QoS fee that ensure non-Shaw telephone services such as Vonage will work well. Vonage contends this is a net neutrality issue because Shaw is clearly looking at the traffic on its network and identifying voice packets that aren't it own. This $10 issue popped up last June when Primus Canada complained about it.
Finally, Toronto Hydro unveiled the details of its city-wide Wi-Fi plan. The initial plan is rolling out a six square mile hot zone in downtown Toronto that will encompass the financial services, university, tourism and entertainment communities. In three years, Toronto Hydro will extend it across the entire city. The utility, owned by the city of Toronto, said its network will deliver speeds as fast as 54MBps. While there is controversy about a public sector entity competing against the private sector, this Wi-Fi network could be the consumer-friendly broadband alternative the market has been demanding. If anything, it's going to force Bell, Telus and Rogers to examine their Wi-Fi service and pricing strategies if they want to remain competition. What could be really interesting is whether Toronto Hydro can make inroads in the lucrative residential broadband business. If that happens, it could spark a price war as the incumbents battle to maintain market share.
Tags: BCE, Aliant, Vonage, CRTC, Toronto Hydro, Wi-Fi

End of the Line For Small Music Sites?

Mark Evans — Wed, 01 Mar 2006 08:10:00 -0500

Based on pretty good authority, Bell Canada is close to buying Puretracks, a small Canadian music downloading service that has been around since late-2003. There are a number of ways to look at this deal. It suggests Puretracks is struggling financially amid tepid interest from local consumers and/or competition from iTunes, which has become the site to buy music given the success of the iPod. It may also be a harbinger of things to come in the online music industry as smaller players find themselves unable to compete, which may lead to consolidation. For Bell, it's an intriguing strategic move. At first blush, it gives Bell control of Canada's leading online music site. This means Puretrack's relationship with Telus will likely come to an end soon after the acquisition is consummated. In theory, it also gives Bell an efficient way to sell music to wireless users as more devices become MP3-enabled and MP3-friendly. I suspect Bell isn't paying much for Puretracks so the upside could be fairly significant.

Google's Five-Year Acquisition Spree

Mark Evans — Wed, 15 Feb 2006 08:43:00 -0500

According to Wikipedia, Google has made 21 acquisitions and two investments (Baidu, Current Communications) since 2001. The biggest was dMarc Broadcasting, which cost $102-million (and an additional $1.1-billion if certain performance targets are met over the next three years). While everyone keeps waiting for Google to make a big splash (eBay?, Walt Disney?), the company has focused on making small, strategic acquisitions to acquire people and technology to bolster existing services. If you look at little closer, many of these acquisitions are either layered on top of other ones or clustered to establish an asset base. A good example is the back-to-back-to-back purchases last year of Android, ReqWireless and Dodgeball, which enhanced Google's wireless technology portfolio. The acquisition of MeasureMap fits into this M&A approach as it builds on top of Urchin and the launch of Google Blog search. Look for Google to make another deal to round out the portfolio (Technorati). Kuro5Hin put together an extensive list last summer that may provide some clues as to future moves.

Surprise! Google Snaps Up MeasureMap

Mark Evans — Tue, 14 Feb 2006 22:23:00 -0500

You had to figure Google had what it wanted in the Web analytics market with the purchase of Urchin but it's now obvious it wasn't enough amid news the search engine giant has acquired MeasureMap, which has been offering a beta blog analytics service. MeasureMap said there will be no difference in its operations and it "couldn't be happier to find such an ideal home" (I'd be happy too if Sergey and Larry decided to spend some of their $7-billion cash booty to acquire me!). So, let's take a step back and look at what this deal means. Maybe it suggests Urchin (a.k.a. Google Analytics) is good as a Web site analytics tool but it isn't on the same level as MeasureMap, Mint, Blogbeat, etc. I've been using Google Analytics, MeasureMap and Blogbeat for several months - and been most impressed with Blogbeat because of its simple implementation, user-friendly interface and variety of analytical tools. Google Analytics does okay in measuring traffic but it's too sophisticated for most bloggers. I never got a good feel for MeasureMap because it doesn't support Blogware yet, although it appeared to be somewhat complicated to implement (at least it was more difficult than Blogbeat, which only requires one small piece of JavaScript). Google's acquisition of MeasureMap fits its acquisition style to a tee - it's a nice, focused beta service and, as far as I can tell, has received little or no VC, which means Google likely didn't pay a lot to make a small, but strategic, acquisition. What I'd like to know is how Google plans to generate revenue from MeasureMap. MeasureMap could become a premium service once it comes out of beta, or perhaps Google will use it as another way to drive more traffic to AdSense. So who's next to go? Will Yahoo buy Blogbeat or Mint to keep pace with Google? For a review of MeasureMap vs. Mint vs. Google Analytics, check out Mark Boulton's review.
Update: Another Google development overshadowed by the MeasureMap deal is a partnership with BearingPoint, which will work with Google's Search Appliance to customize it for corporate markets such as pharmaceuticals, banking, brokerage, technology and aerospace.

Finally, A Vonage IPO

Mark Evans — Wed, 08 Feb 2006 13:56:00 -0500

After much speculation, Vonage has finally filed to raise as much as $250-million through an initial public offering. The strange part of the announcement was that I initally saw the news about Tyco International executive Mike Snyder replacing Jeff Citron as CEO, which immediately caused to think it was a precursor for an IPO. The interesting part of the Vonage filing is it wants to use some of the proceeds to make acquisitions and make strategic investments. Does this mean Vonage will try to consolidate the market by going after 8x8, Sun Rocket, etc.? What's far more interesting is Vonage's finances and ownership information. For the nine months ended Sept. 30, 2005, the company posted a loss of $189.4-million on sales of $174-million. This includes $176.2-million of spending on marketing (that accounts for all those online banner ads) and $98-million SG&A. You have to wonder how much of an appetite there will be among investors for a company posting huge losses in a competitive marketplace? If Vonage manages to sell the IPO, Citron looks to make out like a bandit. He currently owns 41% of the common shares, which seems high given Vonage has raised $408-million of venture capital. One theory is he's been investing in each financing round. Other equity holders are Bain Capital (8%), Meritech (22%) and New Enterprise Associates (10%). Citron also owns 46.5% of the outstanding options - 1 million at $2.65 a share and 10 million at $3.15 a share.
Update: Russell Shaw warns that Vonage "better execute or else", which is putting it mildly, and provides a lengthy post on their strategy going forward. Meanwhile, Joseph Lazlo does a little number-crunching and talks about his bullishness about the VoIP market. I don't think he spends enough time looking at Vonage's huge losses and marketing expenses, which are far more important than churn and subscriber numbers.
Update: BusinessWeek's Olga Kharif has a story about Vonage's battle to stay competitive amid competition from cablecos, Google, Yahoo and Microsoft. It's just more evidence about how investors should be extremely cautious about investing in the IPO.

Avokia Raises $7.4M

Mark Evans — Mon, 23 Jan 2006 10:20:00 -0500

So what do you know, a VC deal in Canada. Avokia, which makes database middleware software, has raised $7.4-million from Globespan Capital, SAP Ventures, BDC Venture Capital and Ventures West. Avokia's CEO is Alan McMillan, who was Think Dynamics' CEO when it was acquired by IBM in 2003 for $50-million.

Yahoo's M&A Spree Has Legs

Mark Evans — Wed, 18 Jan 2006 10:52:00 -0500

While investors are focused on Yahoo's disappointing fourth-quarter results - the stock is down 10% so far today - it looks like the company's active M&A program (del.icio.us, Flickr, blo.gs, SearchFox, etc.) will continue. In a research note, Merrill Lynch said Yahoo made it clear its top priority is "building and expanding the suite of tools, services and solutions for Internet marketers and publishers". To me, this suggests Yahoo will use organic development and acquisitions to bolster its service portfolio, which is great news for entrepreneurs and wanna-be entrepreneurs doing Web 2.0 start-ups based on the prospects of being acquired by Yahoo (or Google, eBay, Microsoft, etc.). This focus on M&A continues to be fueled by VCs willing to pour millions of dollars into start-ups with interesting technology/services but little chance of creating a viable, revenue-generating business. Gather.com's $6-million financing is just the latest example of the troubling side of dot-com 2.0.

Curious Google M&A Move

Mark Evans — Tue, 17 Jan 2006 16:57:00 -0500

So what's Google doing buying a radio advertising company? It's an intriguing question in the wake of Google's $102-million to US$1.24-billion (depending on future performance) purchase of dMarc Broadcasting. There are a few ways to look at it. One, it will let Google's existing customers easily access the radio market. Two, it could give Google a way to launch audio advertising on the Web. Still, it seems like a curious move. I mean, if Google can buy a company that provides radio ad-buying and tracking services, what's stopping it from buy a traditional ad-buying agency or an advertising agency to handle creative? The more deals done by Google, the more I get the impression Larry and Sergey are back in the lab running experiments - albeit with the luxury of having a business behind them that kicks off billions of dollar a year in free cash flow, and a sky-high stock price. Given its financial clout, Google can dabble with Wi-Fi, make a major investment acquire a cool start-up and hire some of the biggest high-tech brains such as Vinton Cerf. What makes Google so fascinating is its uniqueness. There is no other company with its combination of financial resources, business momentum, talent pool and strategic creativity. Even though Microsoft has more than $35-billion of cash, the software giant doesn't have the corporate culture or flexibility to match Google. Look at how Microsoft has done nothing on the Web 2.0 deal front while rivals such as Google, Yahoo and eBay have been on a buying spree (Yahoo has apparently picked up SearchFox, according to TechCrunch). Maybe what makes Google so compelling is you don't know where its next strategic zig or zag will be. Will Google buy the rest of AOL? Will it launch nation-wide Wi-Fi network supported by a fiber backbone? Will it make a play to dominate Madison Ave.? Only Larry and Sergey know for sure - and they're holding their cards real close the vest.

Technorati-Microsoft? Not a Chance!

Mark Evans — Sat, 14 Jan 2006 14:07:00 -0500

Blogspotting' s Stephen Baker thinks Microsoft will buy Technorati - preventing Yaho from sweeping up the tagging triplets (Flickr and del.icio.us being the others). I'd be shocked if it happened - even if Robert Scobles screams from the treetops. Microsoft's acquisition track record within the 2.0 is non-existent because it has sat on the sidelines while Yahoo, Google, eBay and even Ask Jeeves has gorged themselves. For whatever reason, Microsoft doesn't have an appetite for Web 2.0 start-ups - even those as popular as Technorati. If anyone is going to buy Technorati, it's going to be Yahoo or Google. (TechCrunch is betting heavily on Yahoo.) That said, it would be deli.icio.us to actually see a high-profile Web 2.0 last long enough to do an IPO.

Rupert Murdoch Looms Over the Web

Mark Evans — Tue, 10 Jan 2006 10:01:00 -0500

My column this week in the National Post (securely locked behind our wonderful "walled garden") looks at how the obsession with GYM (Google, Yahoo, Microsoft) may cause many people to ignore Rupert Murdoch's online ambitions. With the purchase of IGN Entertainment and Intermix Media last year and another $1-billion of potential investments, Murdoch is poised to make News Corp. a major player on the Web in a very short period of time. News Corp.'s online potential is bolstered by its extensive and impressive media portfolio that includes Fox Television, 20th Century Fox, BSkyB satellite-TV and Harper Collins. Even though Murdoch is 74-years-old, he gets the Internet and how it's changing the news and entertainment industries. When asked about his Internet strategy yesterday at a CitiGroup media conference in Phoenix, Murdoch talked about myspace.com, which has 47 million registered members and adding another million a week. TheStreet.com reports that Murdoch wants to make myspace.com "more sticky" and it plans to free video downloads, instant messaging and voice services.
Update: Read/WriteWeb has a post looking at the players in the social networking market and their subscriber growth in the past year. Just out of curiosity, I wonder what Friendster founder Jonathan Abrams is doing now?

Waterloo Getting Googled

Mark Evans — Fri, 06 Jan 2006 08:33:00 -0500

Waterloo has become a hot bed for wireless technology development what with Research in Motion's growth. It shouldn't come as too big of a surprise to see Google establish a foothold by acquiring a wireless start-up called Reqwireless Inc. (purchased last summer but only disclosed yesterday) and, most recently, actively hiring software engineers and programmers. From what I can tell, Reqwireless makes wireless browser and e-mail software, although its Web site says they are no longer available for sale. As for what it means for Google's wireless plans, perhaps the company isn't content to just have its search engine ported to the wireless world - maybe it wants to take on browser makers such as AvantGo, and e-mail makers such as Nokia, Good and RIM. For more details on Google in Waterloo, check out my story in today's Financial Post. By the way, Google shares hit another record high yesterday. Can't wait for Larry Page's keynote at CES later today.

Crystal Ball Gazing Gone Goofy

Mark Evans — Tue, 03 Jan 2006 15:34:00 -0500

Does anyone read year-end predictions? Is there any value in them other than entertainment? In the past week, I've certainly been entertained by some of the radical crystal ball gazing being done. James Cramer, for example, expects Rupert Murdoch will acquire the Wall St. Journal as he (Murdoch) continues to build one of the world's most extensive content portfolios, while creating a significant online presence. Here's Cramer's take: "But for Dow Jones, in the last years of Peter Kann's stewardship (he's retiring), finally enough is enough in the stagnant share-price business, and the Dow board will decide to take Rupert Murdoch's offer of, say $50 -- some $20 less than he would hae offered five years ago. News Corp. will probably close all but the editorial board and merge the news staff with that of the New York Post (don't think Rupert doesn't have it in him.) Murdoch will also give joyful Roger Ailes the staff he needs to set up a full-blown business-network competitors to CNBC."

Meanwhile, Paul Kedrosky looks for Wal-Mart to beef up its middling Web operations by acquiring Amazon.com. Kedrosky believes there are four reasons Wal-Mart would be willing to spend $20-billion (plus a takeover premium, no doubt) on Amazon:

1. Wal-Mart lags badly in its own web presence (see the Alexa figure at right).

2. Amazon has built a more viable business than Wal-Mart thought it would.

3. This past year was a tipping point for more ubiquitous and growing presence for online shopping in retail.

4. Wal-Mart can currently afford it. With total cash of $4.5 billion against Amazon's cash of $1.4 billion, and comparative market caps of $199-billion and $20-billion, the time is right. Granted, it would almost certainly be dilutive, but the strategic value would trump its dilutiveness.

Does either scenario make sense? I think there will be plenty of competition for the WSJ, if it ever goes on the block because it's such a well-regarded property. I think there are plenty of people who would see owning the WSJ as a "trophy" as much as a business. As for Wal-Mart/Amazon, it could make sense but you would have to question whether the differences in culture - Bentonville vs. Seattle - would make such a deal work.

Google-Opera Deal...But Not "The" Deal

Mark Evans — Thu, 29 Dec 2005 12:06:00 -0500

In the wake of the speculation about Microsoft acquiring Opera, Google has done a one-year deal that will make it the default search engine for Opera Mobile and Opera Mini. The wireless space appears to be where Opera has a good chance of thriving as opposed to the desktop where it, at best, has 1% market share. To be honest, it's a bit of a mystery why Opera hasn't done better on the desktop. It has many of the same features as Firefox but hasn't captured anywhere near the buzz as Firefox. This may be a long shot but I'm thinking Google will acquire Opera in 2006 to create the much-anticipated GBrowser. A Google browser makes complete sense. If you're going to offer a huge menu of Web-based services, why wouldn't you want to own the way people access them? A Google browser could incorporate search, GMail, Blogger, Picasa, Google Analytics and Google Local, Google Base and Google Maps - making it a Flock-like, multi-purpose browser. Google buying Opera somehow makes a lot more sense than Microsoft acquiring Opera - for whatever reason.
Update: John Battelle (I think) believes mobile search will be big in 2006 based on a cryptic post he made today.