We had a major debate about the acquisition news this morning in the SiliconANGLE editorial chat room, but I threw out a few questions regarding the acquisition that no one had a ready answer for. I’ll use them as a launching point to discuss the topic today

1) Would it have cost Facebook $1b to devote an engineer or eight to replicate the functionality of Instagram?

Obviously not. Let’s say Facebook is paying twice or three times the average salary ask I see for iOS developers online, and it costs $375,000 to employ an engineer who can write for iOS. Instagram had an eight-person staff size. The salary requirements to replicate that staff would run about $3 million a year.

Let’s say that Facebook wants to accomplish what Instagram did in a 10th of the timeline, so they throw 80 over-paid engineers at the project; that’s still only $240,000,000 a year.

Would it really take 80 Facebook engineers to develop and deploy a well produced application that utilized Facebook’s photo app functionality, and added sepia filters? I think the obvious answer to that is no, and the evidence I have for that are the sheer number of knock-off competitors there are for Instagram on every mobile platform marketplace.

2) What would it have cost Facebook to promote the heck out of their alternative on the sidebar of their site to users of Instagram (FB knows who they are).

Since it costs nothing for Facebook to put ads for services they already own on their own site, the obvious answer to this question is $0. When I posed this question to the editorial chat room, John responded with the question: “What would it cost facebook in lost revenue to promote an alternative?”

So I did some math using Facebook’s “Sponsored Story” gimmick, the tool used to put ads in the right hand sidebar of Facebook. When you target just the users of a single app, the best I can tell, the cost is about $.69 per click-through. I ran that value through a formula based on the following constants: click-through to signup for a mobile install and new feature would be around 10% to 5% of all clicks, and that there are currently around 30 million registered users on Instagram.

($.69 / click) * (30,000,000 users) * (.1 – .05 CTR)

This formula yields a cost to acquire the entire userbase for Instagram of $136 million to $680 million. Again, this is likely the largest this number could possibly go, since what Facebook would realistically be advertising is an add-on feature very comparable to the added Skype functionality to pre-existing Facebook chat, and it also assumes that 100% of that ad inventory would have been sold, which is far from guaranteed.

3) Will FB ever recoup $1b out of the purchase of Instagram? Ever?

The clear answer here, at least in terms of direct monetization, is no. Facebook has yet to do any monetization on their own native applications yet, as Robert Scoble pointed out today, so the likelihood that they’ll get around to monetizing their new bauble before the main application is next to nil.

The blogosphere is just chock full of ways that Facebook to justify the price tag here; I’ll be honest, most of these justifications sound about as plausible as the average crackhead’s explanation why he just needs you to give him a dollar.

For instance, Om Malik claims that “Facebook was scared shitless and knew that for the first time in its life it arguably had a competitor that could not only eat its lunch, but also destroy its future prospects.”

As a brief aside, it’s worth mentioning that Tom Anderson (“MySpace Tom”) posted this theory to G+ an hour or two before Om, and it was as ridiculous then as it was when Om said it.

Instagram has 30 million registered users, which means that their active user base is much smaller. Granted that web traffic isn’t entirely indicative of mobile traffic, but all public quantifications show their website registering less than 650,000 unique visitors a month.

This means either one of the following two things are true: Instagram’s userbase has horrible engagement, or Instagram’s user retention is horrible.

Whichever is the case, Facebook has 845 million users. If it isn’t crackhead logic to think Facebook was threatened by this, I don’t know what is.

So what could possibly possess Facebook to waste $1b just prior to IPO?

One of the popular theories that keeps getting trotted out is that the cache and brand value associated with Instagram is worth its weight in gold.

This is a theory that doesn’t fly with me, either. The main attraction to Instagram is the same attraction to Apple products: they instill a feeling of elitism in their users. The difference between Instagram and Apple is that Apple has solid tech and innovation behind it to keep their users, where Instagram is a paper tiger that can be and has been been knocked off by dozens of tech teams.

As Esteban Contreras tried to explain to me on Facebook last Friday, the value of Instagram isn’t the app or the functionality, it’s the community.

If that’s the case, then Facebook has truly wasted money, since the community truly hates Facebook.

Others, like Dan Frommer, claimed that it wasn’t the community that made Instagram so valuable, it was the ease of sharing.

The biggest threat to Facebook is a mobile-only or mobile-first social network that captures the increasing amount of time spent on smartphones in a way Facebook can’t or doesn’t.

In my experience, that’s exactly what Instagram does. I’m still addicted to Facebook on the old desktop-browser web, but when I’m on my phone, I gravitate to Twitter and Instagram. Path is another example, but Instagram is more developed — that’s the deal I’d make, too.

Now, the last time I checked, whenever I take a photo in any smart phone, when it’s time to share the photo I have a number of options available to me – almost too many options (which is part of why I never installed any of these photo-sharing-specific apps; I want my share button list kept simple). What Frommer and other pundits are trying to say with this logic is that it’s easier to find Instagram on a list of sharing options than it is to find Facebook on that same list.

Facebook Didn’t Buy Instagram, They Bought VC Loyalty

As much as it pains me to say this, Robert Scoble is the only pundit that came up with a theory that didn’t insult my intelligence in a response to a question on Quora, where he threw some spitballs to peg why Facebook ponied up $1b.

Most of his answer mirrored some of the other garbage on the web today, but one part struck a chord:

Instagram will let Facebook develop a new kind of Open Graph advertising. One where Facebook will be able to offer mobile developers a lot of money in return for opening their apps up to Open Graph. Venture Capitalists in Silicon Valley are slobbering over this new potential revenue stream, so having lots of VC buyin (they just got a nice payday) will be very important. Imagine that Benchmark now “asks” all of its member companies to support such a new advertising scheme? This could result in billions of revenues for Facebook and member companies.

I’ve embarrassed myself over-estimating Facebook’s ingenuity before (see my predictions on Project Beacon prior to release in 2008 for evidence of such). Still, Instagram had nothing if not a pantheon of investors in the Valley. If you were to bribe nearly every investor in the Valley, $1b is a cheap pricetag for that.

Given that the mobile content consumption revolution shows no signs of slowing (last numbers I saw showed 29% of all content was consumed via a mobile device), Facebook needs a monetization strategy to compete with giants like Millennial Media, Google and Apple.

It doesn’t necessarily need to even be a mobile monetization strategy that Facebook is working on – just some sort of product that requires adoption by Valley startups where the value proposition isn’t obvious to entrepreneurs.

Think about it, though: what better way to gain instant wide-spread adoption than to have every Valley VC lean on their investments to adopt the Facebook monetization platform? Can you think of a quicker route?

[Editor’s Note: Cross-posted on rizzn.com. –mrh]

Instagram is Facebook’s $1b Bribe to Valley VCs is a post from: SiliconANGLE We're now available on the Kindle! Subscribe today.

In the same vein:

• HOW TO: Export Your Instagram, Glancee and Lightbox Data
• Lightbox Is the Latest Mobile Photo Acquisition for Facebook as IPO Nears
• How Facebook IPO Affects Its Ad Network: the Need for a Mobile Ecosystem
• Instagram: Rise of the Billion Dollar App [Report]
• Ben Horowitz and Dalton Caldwell Speak Out on NYT Instagram Post
• Facebook IPO Set For May 17

That changed last weekend, when over the Thanksgiving holiday, it seemed just about everyone suddenly became an expert on semantic analysis, artificial intelligence, and exactly what was going on in the virtual brain of one AI in particular: Apple’s Siri.

Even SiliconANGLE’s own Alex Williams posted a quick hit to his ServicesANGLE column, showing the widely viewed video comparison of Apple’s Siri versus Microsoft’s TellMe.

I spoke with many friends about the coverage, and one prominent pundit known for his Apple fandom told me privately that he found the comparison to be very inaccurate.

“Cartwright’s test was very one-sided (and I’m a Siri fan),” he told me. “For example he didn’t show that TellMe can launch any app on the phone, Siri cannot.”

The way TellMe structures it’s verbal menus is fundamentally different from Apple (and, frankly, serves a quite different purpose). Siri was meant to be a close approximation of a virtual assistant, and as such, has what’s called a “flat grammar” menu system.

TellMe, on the other hand, isn’t always a flat-grammar system (depending on the implementation, which is much different on, say, the TV than it is on the PC or the phone). It also more closely represents a desktop paradigm translated to an auditory realm than a voice-first driven system.

For instance, with TellMe, a query on TellMe sounds like “Bing: Dallas Italian Restaurants,” if you’re looking for a place to eat in town. In Siri, it would sound more like “I’m hungry for Italian.”

Nuances of interface aside, I had to wonder whether or not the general tech punditry hadn’t been the victim of an epic head fake.

Apple’s Siri versus Ford’s Sync

I started thinking about Ford Sync being a more valid comparison point to the Siri product than TellMe shortly after I viewed the video and started polling for the best person to talk to at Ford about the angle, but before I got very far with that, I learned that Ford Motor Company CTO Paul Mascarenas, serendipitous enough, would be dropping by the SiliconANGLE Dallas office to meet with Cali Lewis and the Livid Lobster team.

He was gracious enough to take some time out of his schedule to sit with me and discuss the angle I had come up with: that it was more of a comparable product to Siri than perhaps Microsoft’s TellMe product.

There are a number of surface similarities he and I discussed. Siri and Sync both use Nuance as for the voice recognition end of the product. Both Siri and Sync use natural language processing (otherwise known as semantic processing) techniques to derive the users’ intents. Both, as I mentioned before, use a “flat grammar” system, rather than a hierarchical system. Siri and Sync contain a comparable number of commands; the permutations and combinations can produce a nigh-infinite number of commands, and Sync boasts 10,000 commands after the “Gen 2″ release.

Beyond the surface similarities, the two systems diverge a bit. As with anything concerning artificial intelligence, context is everything, and while Siri may be used in a car (or at the office, or in the restroom, or anywhere else), Sync must be used in the car. This allows Sync’s developers to be more focused on the range of commands and utility of the product than Siri’s developers, and perhaps deliver a more polished user experience. In other words, since Sync is geared towards a driver-centric experience, limiting the range of utility to driver-focused queries rather than the limitless queries faced by TellMe and Siri allows them to excel at what they attempt.

Not sure you agree with that sentiment? For proof, you need to look no further than the hub-bub generated by last week’s discovery that Siri had a hard time finding abortion clinics (which, as it turned out, wasn’t because of inherent sexism built into the AI, but because most abortion clinics prefer to go by the more politically correct moniker “family planning clinics”).

BeyondAI: What the Connect Car Means for Mechanical Engineering

In the time we had to speak, Paul and I moved on from the topic of AI into the further reaching implications of what the Sync innovations mean for the future of automotive engineering.

“It’s an shift in thinking for us,” said Mascarenas. “Our customers are used to us shipping a vehicle that’s perfect as soon as it comes out, and will last for 100,000 miles and ten years.”

The shift now, of course, being that Ford is shifting to the mode of development more familiar to us in the tech industry of shipping and iterating. It’s a bit reminiscent of an anecdote (often falsely attributed as direct confrontation between the CEOs of GM and Microsoft) that first surfaced for me in the very early days of the web:

There’s word in business circles that the computer industry likes to measure itself against the Big Three auto-makers. The comparison goes this way: If automotive technology had kept pace with Silicon Valley, motorists could buy a V-32 engine that goes 10,000 m.p.h. or a 30-pound car that gets 1,000 miles to the gallon — either one at a sticker price of less than $ 50.Detroit’s response: “OK. But who would want a car that crashes twice a day?”

Obviously, Ford intends to avoid living up to the “crash early and often” issues that early versions of GUI operating systems saw, but it does open up a world of new possibilities.

Perhaps the most interesting illustration of what the future may bring came when I described to Mascarenas the type of technology coverage we engage in at SiliconANGLE, where I mentioned we attended trade shows like SAPphire and Oracle Open World as well as Hadoop World and Strata.

I knew those weren’t conferences exactly in their wheelhouses, but I encouraged him to drop by our broadcast booth should he be in attendance at one of those shows.

“Those aren’t in our wheelhouse yet, but they very soon will be,” Mascarenas told me. “One of the more interesting possibilities of having an always on connection in our vehicles is the prospect of opt-in data collection. Sure, there are diagnostic and early problem detection possibilities that happen when you look at the data in aggregate, but there’s also an opportunity for us to create a more personal connection between drivers and their vehicles.”

He envisioned a future where the technology in the vehicle helps to create an almost palpable relationship between the car and driver.

“The technology story on the Evos [Ford's concept car debuted at IFA this year] is really all about a car that’s connected to the cloud,” said Mascarenas. “By connecting the car to the cloud we can use all kinds of data that to make a car that really adapts to your personal lifestyle. This includes data ranging from where you like to drive to what your driving style is, all the way down to your musical preferences and situation awareness of traffic and environment.”

In essence, what Mascarenas described to me was the contextual equivalent to what Siri does, but the difference being the function that same data served. Siri serves as a personal assistant, whereas the data collected from many of the same data sources serves to create a more comfortable and personal driving experience, and communicating the information non-verbally.

Of course, most of this new-fangled technology is available only in the Evos concept car, but Cali Lewis reported from IFA this year that some of this technology will be implemented in production vehicles as soon as January 2012.

.

Does This Mean Ford’s Going After Apple?

I’d doubt it seriously, though if were cut of the same jib as some of my peers in the blogosphere, I might set this up as “Ford’s gunning for Apple” for the extra pageviews. The truth is that Ford seems to have some very prescient technologists in their employ who spotted the trend of “Cloud Convergence” far earlier than any of their competitors. Simply because Ford and Apple are the only two organizations trying to create consumer facing machine intelligence in their respective products.

Mascarenas did tell me though that competing feature for feature with Siri or any other smartphone entrant isn’t in the cards.

“It’s a safety issue,” he told me. “When you’re driving, often with other passengers and a myriad of other distractions, we must keep interactions with our software as safety oriented and transparent as possible.”

Will Ford be the last entrant in this market? I think not. Certainly Microsoft will evolve TellMe to the point where it may have an identifiable personality trait, but I don’t expect to see it on the phone. The place where TellMe is most used is on the XBox Kinect, a market that is certain to only solidify in the coming weeks and months as the new Metro interface rolls out with live TV built in; a market that Apple can’t begin to hope to put a dent in.

Siri’s Closest Competition May Come from Detroit, Not Redmond is a post from: SiliconANGLE We're now available on the Kindle! Subscribe today.

In the same vein:

• No Siri in Mac OS X Mountain Lion’s Mobile Updates
• Credit Suisse Upgrades Nokia/Windows Phone with Big Expectations for 2012
• Mobile OS “Also Rans” Turning Sights to Bigger Prizes
• A Voice Test: Microsoft TellMe v. Apple Siri
• Windows 8 Will Support both Portrait and Landscape Views
• Rumor: Mango to Roll Out on September 1

This is a break in tradition for Federated Media, since as an organization, they’ve never wanted to even open discussions with a blog unless they’ve been at a certain threshold of pageviews, usually in the hundreds of thousands. While WordPress.com has around 15 million pageviews a day, the average blog on the site receives just over 4 pageviews a day (yes, just four, as those 15 million pageviews are spread across 62 million individual blogs).

The advertising program will be completely opt-in, so no worries on whether or not it will be foisted upon unsuspecting bloggers.

Watch live video from SiliconANGLE.com on Justin.tv

FM Wins while Bloggers Lose

Still, this program and announcement has a ring of selling out, and for what?

When Blogger.com integrated AdSense all those years ago, folks like me were quickly excited by the prospect of financial reward for democratized media. As time wore on, it quickly became obvious to me and most of the rest of the world who tried that the only way to make serious money blogging was to gain “critical mass,” and mount up the pageviews.

Granted, this was with Google’s CPA model, which only pays when an action takes place (something advertisers love and publishers sometimes tolerate). Federated typically works on a CPM model (most of the time), and thus may give slightly higher payouts to publishing partners, but only when inventory is filled.

It’s also important to know that CPM means cost per 1000 pageviews – and that cost to the advertiser will in a perfect world go only as high as $40 on a great blog, and generally hovers between $4 and $7 CPM on your average blog. Federated Media’s standard contract takes at least 50% of the revenues, and we have to assume Automattic is taking a piece of the pie here, too (for the sake of argument, let’s say it’s only 25%, a conservative estimate).

Assuming (and this is highly unlikely) that FM sells 100% of the ad inventory, this puts the average WordPress.com publisher’s yearly salary between $2.26 and $3.09.

Meanwhile, Federated Media could potentially make between $10-19 million a year from the deal.

Automattic Sells Out Seven Years Late

After the announcement was made, John Battelle retook the stage and made a strange noise of excitement, apologized, and stated, “Sorry, it’s just good news. I’ve been working this for seven years so it just feels good.”

This would have been an attractive move for Automattic to make, if it were seven years ago. Unfortunately, the blogger math has been worked out for at least half that, and anyone with more than a month’s experience trying to monetize quickly realizes how insurmountable this is.

“Banner ads are not the future of the web, and is frankly the antithesis of what True Ventures should be investing in,” said SiliconANGLE Founding Editor John Furrier of the announcement. “The only people who make money from banner ads are blogs with volume. For everyone else, it’s a pyramid game.”

The overall theme from the Web 2.0 Summit up to this point had been one of deriving great value from big data. What Automattic has in it’s WordPress.com databases is a great deal of data with an immense amount of value – value they’re selling short by going with the second worst blog monetization strategy on the planet: CPM (what’s the first? Competitor Blogger.com’s CPA strategy).

“What would I love to see from Automattic? An innovative new ad model that rewards high quality content,” said Furrier. “Ad networks only work for the ‘big guys,’ and incentivize bad content models.”

Automattic Finally Monetizes (Seven Years Too Late) is a post from: SiliconANGLE We're now available on the Kindle! Subscribe today.

In the same vein:

• WordPress Deal with Federated Media Finally Pays Off
• Automattic Joins the Growing Market With its Own Wordpress App Store
• SimplePie Development Shuts Down
• 5 Minimalist Static Blog Generators to Check Out
• 30,000 Wordpress Installs Compromised In Newest Round of Malware
• Apple Defends iPad In Chinese Court, RIM Finally Launches Native Email App

I spent the evening with John Furrier and Kien Tran after closing out #theCube’s last broadcast day at Oracle OpenWorld this week and listened to the many stories about Jobs and Apple two avid fans had to tell. I came back to the hotel here in San Francisco here and poured through the hundreds of activity stream messages expressing their guttural reactions to the passing of Steve, and even read the reactions of my fellow co-workers here at SiliconANGLE from Kristen Nicole and Alex Williams.

As such, I’ve felt the inevitable pull at the heartstrings when such a large man passes from this world. Even a hardcore PC fanatic like myself can’t deny the impact this man has had on the industry I cover.

So, like many of you, I let the waves of Jobs nostalgia wash over me through the various feeds I consume. Just before I decided to turn in for the night, I found a speech from Steve Jobs to the attendees at WWDC in 1997.

If you recall, in 1997, this was a Jobs who had recently resumed control of Apple (an Apple in a bit of distress and disarray). At the onset of his time on stage, he simply said “let’s use this time to talk.”

He then proceeded to field a dozen or so comments and questions from the attendees.

To be honest, I’m still in the middle of watching this video myself. What made me stop to write this blog post was the question I’ve embedded below.

The attendee asks the question: You said in your opening that there were lots of holes that Apple couldn’t necessarily do by themselves. As a visionary, could you maybe spend a few minutes talking about those holes?

Steve puts his head in his hands for a few pregnant moments, and then launches into a colorful and prosaic story of the experience of working at NeXT and Pixar, living in a high speed computing and communications environment, and the value of having a personal cloud.

He describes the security and convenience of having a “home directory” that follows him from device to device. He talks about how his UI and preferences are the same from machine to machine. He brags about the number of crashes and personal data loss he’s had in seven years (the number was zero).

And then he talks about how Apple could achieve this for their customer. He describes a future with ultra-high-speed connectivity for the average user (not just the average geek). He talks about the beauty and “betterness” of a machine with no moving parts but a keyboard and mouse.

The longer I watched his answer, the further my jaw dropped, and I finally started to get the fascination with this guy.

Granted, there was already a bit of that reverence for the man that PC guys like myself find a bit grating evident in the crowd at that WWDC, but he was still facing a somewhat hostile environment, given the state of Apple at the time.

Here he was, though, fearlessly describing what could only at the time be called a utopian future (given the state of the ‘net at the time) to a group of Apple developers, some of whom had seen their pet projects receive “bullets to the head,” as Jobs had put it earlier.

Fast forward fourteen years, had anyone given the same speech, he’d be called pedestrian, because he’d be describing reality. Steve Jobs laid out a vision in 1997, and worked every day he could to execute and achieve that vision until just a matter of weeks ago.

And unlike most people with that degree of dedication and devotion to an ideal, he succeeded.

It’s inspiring.

One of the parting comments John left me with tonight as I marched back to the hotel was that he, like most other folks writing blog posts tonight, had stories to tell where he could brag of personal encounters with Steve Jobs.

“But,” he said, “rather than show off how close I was or wasn’t to Steve, I’d rather show the world my tribute to him by making what I do and toil away at amazing, in the same way he made Apple products amazing.”

It’s a vision that carried Steve through the front and back end of the internet boom, into the New Media revolution, up to the proliferation of personal and enterprise cloud and on to the golden age of smart mobile devices (all revolutions he had a strong hand in personally fomenting).

If you’re not inspired by that level of vision and prescience, regardless of your computational dogma, you’re simply not human.

Steve Jobs, the Cloud, and Amazing Dedication to Vision is a post from: SiliconANGLE We're now available on the Kindle! Subscribe today.

In the same vein:

• Cook Inherits Apple, What Happens to the Ensemble Now?
• Apple’s Consumer Impact on the Personal Cloud
• The Social Good of Facebook Reiterated with Organ Donor Status
• Google Drive Sparks Security Concerns but It’s Not that Different From Other Personal Cloud Offerings
• How To: Take Advantage of HTML5 Trends and Tools
• VMware Pulls the Private Cloud Back into the Enterprise, Plus Training

Last month, HP fired Leo Apotheker after 11 months as its chief executive and appointed former eBay Inc. (EBAY) chief Meg Whitman in his place. More than 10 executive vice presidents and senior vice presidents had left HP since Apotheker joined the company in November.

Mayer had been the division’s interim leader for the past few months, following the resignation of Marius Haas. Haas left in May to join private-equity firm Kohlberg Kravis Roberts.

Meyer will continue to oversee HP Networking’s worldwide operations, reporting to Dave Donatelli, executive vice president and general manager of Enterprise Servers, Storage, Networking and Technology Services at HP.

“During her interim leadership of HP Networking, Bethany exceeded performance goals resulting in our seventh straight quarter of double-digit growth. She is the right leader to accelerate this business,” said  Donatelli.

Bethany Meyer in #theCube at HP Discover 2011

Bethany Mayer Named SVP and GM of HP Networking Business is a post from: SiliconANGLE We're now available on the Kindle! Subscribe today.

In the same vein:

• Networking Evolves for Virtualization, Cloud Computing Demands
• HP Touts “Open” Approach to Converged Infrastructure Deployments
• Cisco’s Recovery: Management, Cloud, and e-Printing
• Cisco Overhauling Management In light of Skidding Market Share
• Already, HP Employees Getting Recruited on Twitter
• Hewlett-Packard Unveiles New Servers, Gets More Cloud Attention

Where to watch: LIVE broadcast on SiliconANGLE.tv (replays of all videos will be made available on this site – never any registration required).

Keep an eye on #thecube hashtag to stay abreast of the videos that we post and conversations around the event. Follow the Wikibon Twitter profile for updates on coverage, speakers, and breaking news from Oracle Openworld 2011.

Tune in for numerous informative spotlights, including:

• The HP Oracle War: Silicon Valley Inside Baseball
• With Friends Like Oracle Who Needs Enemies?
• Is Oracle your future or a boat anchor?
• Is NoSQL a threat to Oracle’s core franchise?
• Oracle performance: How far is Ellison stretching the truth?
• Does Oracle think Cloud is “snake oil?”
• Benioff says Oracle is faking the cloud – is he right?
• How far can VMware customers take Oracle?
• Is Oracle throwing open source under the bus?
• What is Oracle’s Mobile Strategy?
• The future of flash in Oracle database environments
• What’s Oracle’s answer to SAP HANA?
• What’s new in Oracle backup and recovery?
• The future of Intel in the Oracle enterprise

More Information:

Oracle kicked up its war of words with HP and Autonomy to a new level when it published the slide decks Autonomy presented to Oracle when it was selling itself.

Larry Ellison – What The Hell Is Cloud Computing?

In preparation for Larry Ellison’s talk on Sunday evening, focused solely on cloud computing, here is Ellison’s famous rant on cloud computing as being excessive “gibberish” improperly applied to existing technologies.

Additional Resources from #TheCube Team

• Message to Meg Whitman: How to Boost Public Confidence in HP in 3 Strategic Steps
• Oracle Negotiation Myths and Understanding Virtualization Adoption in Oracle Shops
• Oracle/Pillar: You may not love the technology, but you can’t hate the deal
• Oracle and VMware: Peas in a Pod or Oil and Water
• Big Data Update: Your Data Warehouse is Not a Dinosaur
• No Hadoop – Oracle Announces Appliance for Small Business Market

 What is #theCube?
Don’t forget that the entire Oracle OpenWorld 2011 Broadcast can be found here and here. Check out the video below to learn more about #TheCube Wikibon and SiliconANGLE’s collaborative effort to bring out the best in enterprise news, analysis and research.

#TheCUBE at Oracle OpenWorld 2011 is a post from: SiliconANGLE We're now available on the Kindle! Subscribe today.

In the same vein:

• VMware CTO Talks Node.js, Mobile Development [Video]
• This Week in the Cloud: Oracle-Salesforce Drama and More
• The Good and Bad of EMC-Oracle Relationship
• Openworld a Contrast by Name, says EMC: Oracle’s “Not Open”
• Juniper Networks’ Take on JavaOne, Mobile and More
• QLogic Appoints New VP of Marketing

Two respected tech entrepreneurs Josh Felser and Dave Samuel officially announced their early-stage VC firm Freestyle Capital. Although Dan Primack of Fortune Term Sheet blog reported that Freestyle’s fund been public for sometime, it appears the Freestyle team wanted to announce exclusively at the Techcrunch event.

Freestyle’s two founders are entrepreneurs and have been together for over 14 years. Their magic is their knack or nose for good deals plus they have experience to add value on startup execution.

READ MORE – LINK VIA SILICONANGLE.COM

John Furrier on Venture Capital: Freestyle Capital Closes Early Stage $27 million dollar venture fund is a post from: SiliconANGLE We're now available on the Kindle! Subscribe today.

You may also enjoy:

• Welcome to the Flat Universe – the Network Just Detached from the Mother Ship
• Pirates = Crazy
• The Death of $2k Navigation Systems
• Droid Hands-On Review: “I Like My iPhone Better”
• Photobucket Transition- 11 Laid Off and Promotion for Munro
• Zynga Girds for Sudden Death with IPO Coming One Week Before Thanksgiving

Shervin Pershevar announced on stage at the AOL TechCrunch Disrupt 2011 conference that he and Menlo Ventures has started a $20 million fund. The fund will be called the Menlo Talent Fund.

Shervin and his team at Menlo Ventures will invest $200,000 in early stage startups. According to the news Menlo will turn around a decision super fast – within two days.

READ MORE —- VIA SILICONANGLE.COM

John Furrier on Venture Capital: Menlo Ventures $20 million dollar fund is a post from: SiliconANGLE We're now available on the Kindle! Subscribe today.

You may also enjoy:

• Red Hat Takes on VMware with oVirt
• How Can Oprah Joining Twitter Help Me?
• Buffy the Facebook Phone Slays Rumors and Reputations
• Why the (My) Damn Channel Deal Matters
• Megaupload Founder Denied Bail via E-mail, Claims He’s Reformed
• Qualcomm Shuts Down FLO TV, Promotes Augmented Reality Apps with Android Contest

In a sense, I was right. Sean P. Aune (Editor-in-Chief of Techno Buffalo, former SiliconANGLE writer and fellow Mashable alum) and I have continually gone round-and-round over the years as to whether the iPad delivered on the promise of all its hype. He says that very clearly the iPad has gone mainstream and delivered the magical rainbows and unicorns that Steve Jobs promised.

I, on the other hand, insist that by all sales estimates, the iPad has failed to make a dent that’s significant enough to call it a truly mainstream mobile device. Certainly, it has failed to single-handedly end-of-line the PC.

In 2010, There Were Only 13.8 Million iPads Sold

Around the beginning of the year, when Quora was still the new hotness, I asked the community for the most accurate sales figures for the iPad (since most pundits and analysts seemed to be at odds with one another on the topic).

Several folks, including Fortune covers editor Philip Elmer-DeWitt, collaborated to come up with the number 13.8 million, which was backed by  sources including Fortune, CNN and Apple Insider.

To compare that to other things we call mainstream, that’s about 1/23rd the number of users Facebook had around that time, and about 2/3rds of the number of Twitter users at the time. Perhaps even more astonishingly, even MySpace had more active users than the iPad in 2010 – by a factor of four!

To be more apples-to-apples, though, the iPad defines itself as a mobile device (that may or may not be a PC-killer). Gartner says that 1.6 billion mobile devices were sold in 2010 (to say nothing of mobile devices still in use sold in prior years), and that the iPad only accounted for .86% of mobile device sales that year.

This coincides precisely with what I predicted in April of 2010, just prior to launch:

But even if they (generously estimated) end up selling two or three million of these things over the next several years, it still has to contend with billions of other smartphone sales and billions of other computers of differing platforms sold.  This isn’t going to be a mainstreamcomputing device for the majority of users.

I’m not sure about you, but in my reality, when a product only accounts for .86% of device sales in its category, that’s not mainstream.

The iPad is Still Important to Watch (there, I said it).

This is not all to diminish the impact that the iPad has had on the mobile, and this and the subhead above are about as close as you’ll get to a retraction of my infamous “Anti-iPad Manifesto.”

The impact of the iPad on the enterprise, which in my opinion has more to do with it’s popularity as a tradeshow give-away than anything else, is undeniable. The “Journey to the Private Cloud,” and the march towards virtualization we see in enterprise can trace its roots back to the birth of the iPad and the smartphone revolution.

Entire IT departments have dedicated themselves to making their workplace computing environments conducive to these types of advanced mobile devices. Most of the technologies we cover at SiliconANGLE (to say nothing of the new pub we launched a month or two ago, ServicesANGLE) are more or less a monument to impact of smartphones and tablets on the enterprise.

And that’s not to say that the impact of the iPad and other tablet PCs have been miniscule on the consumer markets – but one thing is for certain (thanks to what we know as economics 101): the pricepoint of the iPad and most other tablet PCs are a major stumbling block for massive consumer adoption.

In fact, while the iPad and the iPhone began as consumer devices and continue to be marketed as such, when you go to as many vendor trade shows as I do, it becomes plainly obvious that far more practitioners and executives carry iPads (everywhere!) than the rank and file of the rest of the world.

It can’t be because the product doesn’t work as advertised, or doesn’t entertain, or doesn’t offer productivity boosts. If that were the case, you wouldn’t see so many smart and powerful individuals carrying them.

Instead, we have to assume that most people either can’t afford it, or can’t justify spending what is basically an entire rent check on a mobile computing device.

The Sell-out of the TouchPad Further Proves My Point.

Mellisa Tolentino reported here this morning that HP (shockingly) lowered the price of their tablet, the TouchPad to $99:

Hewlett-Packard shook the computer world last week with their announcement to focus more on software–possibly dropping their hardware business, in talks to acquire the software company Autonomous and discontinuing their webOS. If you think they’re done turning your world upside down, be ready for another shake up.

Last Saturday, they lowered the price of their HP TouchPad.  The 16GB tablet now only costs $99 while the 32GB costs $149.  The marked down tablets are available at Best Buy, Office Depot, Sears, Staples, and Walmart; though some retailers are still offering them at regular price but are expected to follow suit in the following weeks for the second wave of the TouchPad markdown.  The marked down tablets flew off shelves, which greatly increased the sales of the TouchPad as it was previously not a popular choice for tablet buyers. But the sale is perceived as an act done to sell existing stocks just to get it off the market.

Several SiliconANGLE staffers can vouch for the fact that the TouchPad is flying off the shelves right now.

“I see we just posted about $99 TouchPads,” Art Lindsey told me this morning. “Good luck buying one, man. There just aren’t any; I’ve called every store that supposedly carries them.”

Others I’ve spoken to today say the same things, and according to some reports, TouchPad app developers have seen spikes in downloads of their software as high as 10x what they normally receive.

This is what you happens when you price a mobile device within the “impulse purchase” range, and HP is recognizing that, promising to restock the item, despite announcing it’s end-of-life only days ago, though no more are being manufactured.

One has to wonder if this real-world life-lesson for HP (and anyone else making a tablet) will recognize this and other lessons from the TouchPad.

Lessons like “the public loves an untethered device.” So many of the iPad competitors on the market come pre-tethered to an expensive mobile carrier with a corresponding expensive mobile data plan. Time and time again, the giant mobile carriers, by-and-large, have shown themselves to be concerned with juicing the customers for as much money as possible rather than providing an enjoyable mobile data experience.

The TouchPad was arguably the most successful tablet at exploiting this key differentiator. Just earlier this month, the news was out that the TouchPad brand was “number two in mindshare, behind the iPad.”

“Bottom-line is that the TouchPad has only been around for a month,” argued PreCentral’s Tim Stiffler-Dean. “If you think the game is over now, guess again. We’ve only just begun.”

Stiffler-Dean could still be right (though it would take a truly special miracle to revive the TouchPad). The second most important lesson from all this is that $829 is a life-changing amount of money to most people. I’ve been making this point since 2008. Only Apple can get away with this price-point because they’re the only company in tech with a working reality-distortion filter (and even they can only get it to work to a certain point, as I said earlier).

It’s Too Late for HP. Who’s Going to Get the Point?

The word on the street is that HP EVP Todd Bradley is on his way out. Speculation is that it’s because he’s miffed over the end-of-life of WebOS and his failure to be promoted to the CEO slot over Leo Apotheker, amongst other things.

Bradley was the executive generally credited as being responsible for the Palm acquisition in the first place, and he feels as if he’s not been recognized within the company for his achievements.

“He’s out interviewing for every CEO job he can,” a source familiar with Bradley’s plans told Boy Genius Reports today.

The Scuttlebutt on Bradley is wide and varied. Some circles call him “well-respected,” while others say he’s “a bit on the arrogant side.”

“..[W]e have been told that one of the reasons he hasn’t exited HP yet is due to his personal demands from potential new companies, which are said to be somewhat excessive.”

It’s all rumor and speculation at this point, but one commenter at the original post wondered why he’d be a hot CEO commodity:

Hmmm. This guy contributes to WebOS devices being one big fat failure despite the OSs uniqueness and technical excellence, and now he wants to be a CEO? And we should hire you because…? [sic]

Within a large organization like HP, certainly no one man can be singularly to blame for the failure of a product line as big as WebOS, but his failure to recognize what I view as the two key weaknesses of the iPad are what lead to his pet project’s downfall.

HP certainly isn’t alone in this. Many mobile devices have tried and failed to even hold a candle to the iPad, let alone topple it.

Until those that would dare to dream of their own tablet recognize these problems, Apple will continue to dominate their tiny little corner of the market.

The Lessons of the iPad and the TouchPad is a post from: SiliconANGLE We're now available on the Kindle! Subscribe today.

In the same vein:

• 5 Standout Features We Want for Android 5.0 Jelly Bean
• New Media Minute: One-third of U.S. Adults to Own a Tablet by 2016; What it Means for Online Video Ads
• 2011 Was the Year of the Smartphone and Wi-Fi
• BYOD, Mobile Workers and Virtual Offices Cause Headaches
• New Media Minute: How Consumers Use Tablets, Mobile Devices in the Home – Words from a TV Exec
• Tablet Adoption at Work: Infographic

For those who don’t know, an 18-month-old VCE is a joint venture primarily between Cisco, VMware and EMC centered around creating a “fully integrated IT offering” that maximizes the product lines of the three companies. Their central product, the Vblock platform, incorporates the best of EMC storage and software, Cisco converged networking, and VMware virtualization.

Mellor wrote in his post that: “we know that EMC’s 10-Q SEC filing says total EMC-contributed funding to VCE is $173.5m, plus $7.8m in stock-based compensation for VCE executives such as CEO Michael Capellas. EMC losses in VCE for the June quarter of this year were $46.6m, with $41.9m in the preceding March quarter.”

Mellor went on to pan VCE as a company, rating it as a startup:

“Viewing VCE as a startup it has not been very successful thus far. If it doesn’t make a profit by the end of this year then perhaps EMC, Cisco and VMware might reconsider things. Perhaps they should change from stock-based compensation to stick-based incentivisation [sic]?”

In other words, you can always trust the Register to be the Register. They come up with very sensational headlines around enterprise, occasionally prop up the theories with some facts; they’re not always the full set of facts, but there are some there to make the position sound plausible.

Mellor Misses the Part about it being a Joint Venture

As Stu Miniman and Dave Vellante pointed out in their posts on the Wikibon research blog, the upside for investment by the joint venture partners at VCE aren’t purely in owning a profitable company.

From Miniman’s post:

While different stacks may look similar at a component level, VCE’s mission is to accelerate change in the IT industry and has invested a significant amount of money and people to assist enterprises, service providers and partners down the “journey to the cloud”. While many early deployments of Vblock were looking for virtualized infrastructure to reduce costs (77% as of January compared to 23% deploying for Private Cloud according to VCE), traction in repeat-customers and service providers are good signs that the business model is attractive.

Changing customer habits is a long and difficult process, but it does appear that VCE is moving the needle. While VCE may be currently running a negative cash flow, the accelerated investment from EMC points towards positive momentum.

Today, Vellante went into further detail:

What Chris’ analysis misses is that when VCE sells Vblocks, EMC and Cisco take income into its mainstream P&L’s. The whole idea behind the joint venture is that the investors take the benefit into their main businesses.

This is critical to get buy in from all the lines of business managers.

Specifically, for example, Rich Napolitano and Brian Gallagher, who run EMC’s VNX and VMAX businesses respectively (and their Cisco counterparts). These executives are happy to support VCE because their divisions recognize income from the JV. If they didn’t, VCE would be viewed internally as competitive. But EMC and Cisco were smart in the way they structured this because internal politics can kill deals like this.

The point is Chris’ analysis ignores the broader picture and simply looks at the cost, not the cost/benefit. I’ve stated several times that in my estimate, EMC gets more than 50% of the revenue from Vblocks.

This analysis from the guys at Wikibon takes in a comprehensive understanding of the impact of a sale of a single unit from VCE to the bottom lines at the investing organizations.

What if we look directly at VCE as a standalone entity, and pretend as if EMC, Cisco and VMware are Sand Hill Road venture capitalists, eagerly eyeing the bottom lines for their investment?

Apples to Oranges: Is VCE Really a Startup?

One thing both I and SiliconANGLE can stake a reputation on is being plugged into the world of startups. Our primary offices are in the heart of Silicon Valley in Palo Alto, and both the Palo Alto and Dallas offices of SiliconANGLE co-office with other startups. We are both literally and metaphorically plugged in to the startup community.

When we talked to Michael Capellas at EMC World in 2010, he characterized the work they he was doing with Acadia, the predecessor to VCE, as very start-up-ish in nature. Later in 2011, when I was at SxSW in Austin this year, I met Jay Cuthrul in the blogger’s lounge, who without provocation extolled the virtues of the VCE startup culture.

Jay is the Lead Principal vArchitect at VCE, which in true startup style, is a title that’s about a week old. I followed up with him today, in light of the recent questioning of VCE, to see if what he told me then was still his sentiment after having been at the company a little over a year.

In short, it was.

“What makes VCE a startup? Aside from the age of the company, the wild-eyed hours, and tasks that you’re assigned?” Cuthrell fired back. “No one tells you what you can’t do. The expectation is that you’re going to attack a problem that’s never been attacked before, and there’s no ‘it can’t be done’ mindset.”

Startups are like that. SiliconANGLE is only the latest in a string of startups I’ve either founded or been party to. Most startups, in my experience, are borne of a big idea, an inkling of how to solve it, and craploads of man-hours devoted to solving the big idea.

That’s consistent with VCE’s problem-solving style.

“Our approach is akin to ‘I’m going to point you at these trees, now make toothpicks,” said Cuthrell. “Our mandate is similar: go look at a floor at of that datacenter; now go figure out the best way to fill it up [from various variable constraints].”

Cuthrell also described the management and task force style of VCE as very ad hoc and iterative.

The Register Doesn’t Understand the World of Startups

This is a world that the Register isn’t plugged into, nor are they usually responsible to their audience for understanding this. That combined with their tendency towards sensationalism, and it’s not surprising it wouldn’t even enter into their minds that this company indeed truly functions like a startup, nor would the thought to compare VCE’s progress at eighteen months to other startups at eighteen months.

For instance, at eighteen months old, where was Facebook? At eighteen months old, they were still taking venture funding, and hadn’t even bought their primary domain name yet. In fact, they weren’t estimated to be profitable until just this year at the ripe old age of eight years old.

What about Google, another Silicon Valley luminary? They were founded in a garage in 1996, and didn’t even incorporate until two years later. The mainstay of their current revenue engine, Adsense, wasn’t even launched until 2000, four years after the company was conceived.

And then there’s Twitter’s mythical revenue model; the company was founded in 2006, and five years later they’ve yet to present a viable model other than endless amounts of venture fundraising.

Still, if we’re going to discount the ancillary benefits that Cisco, EMC and VMware see from funding VCE and focus purely on the merits of VCE as a startup, comparing an enterprise focused organization to social and consumer tech startups isn’t exactly an apples-to-apples comparison.

Mellor May Not Even Understand Enterprise Startups

The last several years have been fantastic, as someone watching the space as a pundit and journalist. The startup and M&A season last year was particularly exciting, and was an great baptism by fire for me as I oversaw the SiliconANGLE editorial focus-shift from consumer to enterprise.

2010 saw the acquisition longstanding iconic tech brand of Novell for $2.2 billion, McAfee for $7.68 billion, Palm for $1.2 billion.

There were also, though, a great deal of startups that sold for quite a sums in the billion-dollar neighborhood. 3Par went for $2.35 billion, Isilon sold for $2.25 billion, Storwize went for an estimated $140 million, Ocarina also for an undisclosed but likely not insignificant sum, Compellent for around $960 million, and Zimbra for $100 million.

In fact, it was right around this time last year when the 3Par/HP news broke at VMworld last year. Most of the startups in question did not disclose the financial details of their acquisitions or their record-books, but the 3Par deal was analyzed in great detail by most of the punditry, and as a publicly traded company prior to the acquisition, had to reveal their accounting to the public.

3Par, was founded in 1999, and shipped their first product three years later in 2002, so at eighteen months, there was no possible way they could be considered profitable. Indeed, ten years after their founding, they were described by the pundits and analyst to be “questing for profitability,” and finally reached that territory in 2010.

So, even when you evaluate VCE (purely as a startup) and compare them to their enterprise startup peers, there’s absolutely no shame in not being profitable at eighteen months. In other words, even within Chris Mellor’s operating parameters, VCE still isn’t as bad off as he makes them sound.

Research is Fundamental to Online Journalism

This isn’t an entirely dissimilar incident to the one I reported on about a month ago, when Robin Wauters at Techcrunch incorrectly reported that InMobi was stealing top talent from Millennial Media. The problem with Robin was that he was, in the pursuit of quantity and sensationalism, didn’t do any research whatsoever to support his article.

The nature of Robin’s sin was that he didn’t call anyone for comment (not that he makes or takes phone calls anymore), nor did he do a basic Google search. Chris Mellor’s sin was that he pretended to be an expert in startups when he very clearly is not, and in so doing actually throws into question his expertise on the enterprise space at the same time.

The hallmark of a Register signature piece is a snarkily written headline and throwing the subject of the post under the bus towards the end, very similar to the Gawker style of blogging. The key purported difference between Gawker-style blogging and the style of the Reg is that it’s assumed that the author at the Register has deeper subject matter expertise, so that when throw-away snark is employed, there’s some weight behind it.

Sometimes, as was the case with the post in question, the authority is purely implied.

What are the consequences of bad analysis like this? The Register is listed with most news indexes, and as such post like these will show up in most financial analysis (like Google Finance, Yahoo Finance, and other investment filters). Bad analysis affects the market in measurable ways, to say nothing of the general perception of the companies involved.

Why go with snarky analysis? As I said in my analysis of the Techcrunch fail (and countless my prior posts), it all comes down to pageviews. In the CPM journalism model, the audience is not the customer, they’re the product. Conversely, at SiliconANGLE, our business model relies primarily on selling and exploiting data relevant to our audience’s market. Our loyalty is to the facts and providing value (read: analysis) from those facts.

The audience is better served when they’re not a commodity, and the piece from the Register is evidence of that.

[Editor’s Notes and Disclosure: Image of Jay Cuthrell at SxSWi 2008 by Andrewi709, used under Creative Commons license. Photo of Stu Miniman and Dave Vellante credit to SiliconANGLE/Ricky McGill. 3Par rack image courtesy of Wikipedia/Public Domain. VCE isn’t a sponsor or client of SiliconANGLE, but VMware (who has some stake in VCE) will be sponsoring some of our coverage from VMworld 2011 at the end of the month. Thanks to Dave Vellante and the analysts at Wikibon for research assistance. –mrh]

Is VCE a Flailing Startup? A Study of Snark in New Media is a post from: SiliconANGLE We're now available on the Kindle! Subscribe today.

In the same vein:

• EMC and VCE Integrate Management Suite with VMware
• EMC’s Stuck on Tape, Speeds Mainframe Performance
• VCE Vblock Solutions Now on VMWare View, SAP
• Louisville Gas & Electric Chooses Vblock Infrastructure, VMware for VDI System
• VCE Chairman Michael Capellas Cheers On Convergence in theCube at EMC World 2012
• VMware Gains OEM Deals with Cisco, Mitel