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Article from SFGate.

“The lofty language in Groupon’s initial public offering filing is prompting comparisons to Google’s highly anticipated premier seven years ago, as are the lofty valuations.

Various sources have pegged Groupon’s implied worth at $20 billion to $30 billion, dropping it squarely in the neighborhood of Google’s $27 billion at the time of its 2004 IPO.

Groupon is a fast-growing business, luring 83 million subscribers to its daily deal e-mails in 2 1/2 years. And it might end up a perfectly solid one. But for one simple reason and a lot of complicated ones, Groupon is no Google.

Here’s the simple one: Google reinvented an industry. Groupon tweaked one.

There are limits on how transformative a force the Chicago company can ever be, at least pursuing its current business model.

Why?

Strip away all the hope and hype surrounding Groupon and you’re left with this: It’s a coupon company. Its major innovation was to distribute them through e-mail instead of the Sunday paper.

Granted, Groupon does this very well, with a colorful corporate culture that has deservedly won it plenty of fans and attention. Andrew Mason is one of the most refreshing, entertaining and straightforward CEOs in the last decade. His letter in the IPO filing last week carried loud echoes of the “Don’t Be Evil” sentiment in Google’s S-1.

“We want the time people spend with Groupon to be memorable,” he wrote. “Life is too short to be a boring company.”

He added that the business is “better positioned than any company in history to reshape local commerce.”

But coupons have long had limited appeal among retailers and consumers for very specific reasons, and thus restricted sway over the larger retail market.

Small fraction used

In 2010, marketers distributed $485 billion worth of consumer packaged goods coupons, according to a report by NCH Marketing Services. But only about 1 percent of coupons are actually redeemed.

Everyone will occasionally take advantage of a deal that lands in their lap (or inbox), or wait for a sale on a high-priced item. But it’s a limited subset of people who routinely start their shopping by thinking, what can I buy, do or eat that’s on sale. Most people, most of the time know the brand, model or service they want and go from there. There’s no particularly compelling evidence that this is changing.

Here then is a key difference with Google: Thanks to the query you enter into its search engine, Google knows what you’re interested in at the precise point you’re ready to buy, and serves up ads to match.

Even its worst critics acknowledge this revolutionized advertising, bringing to the marketplace a level of scale and targeting never before seen. It unleashed a tectonic shift in how businesses spent their marketing dollars.

Since then, the Internet giant has plowed its huge profits into cutting edge research and development, pushing ahead the fields of information retrieval, language translation, image recognition, satellite imagery, self-driving cars and much, much more. There’s simply an order of magnitude difference in the respective levels of imagination and innovation on display at the two companies.

Reticent retailers

Groupon does remove some of the traditional friction surrounding discounts, by directly delivering deals that are increasingly personalized, while also – not incidentally – eliminating the stigma and hassle of clipping coupons. But the real sandpaper remains on the retail side.

Coupons are typically loss leaders, the discount a business is willing to swallow in order to get new customers in the door. By definition, such marketing tactics can only ever represent a sliver of the retail pie.”

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Article from TechCrunch.

It’s no secret that eBay has been heavily investing in a local commerce strategy.

The central core of this is trying to capitalize on the $917 million online-to-offline buying market, which Forrester estimates will eventually reach $1.3 trillion (although this number seems low) and account for nearly 50% of total retail sales by 2013. Virtually every acquisition in the past year (besides the company’s $2.4 billionpurchase of GSI Commerce) has been of a company that is dabbling in local payments or linking to merchants (Milo, RedLaser, Where, FigCard). If you look closely, a clear strategy is emerging that positions eBay at the center of mobile shopping, local commerce, and payments (through PayPal). Let’s connect the dots.

Online-To-Offline and Comparison Shopping

eBay’s first foray into the local commerce arena was though the acquisition of barcode scanning mobile app RedLaser last June. RedLaser’s barcode scanning technology allows users to comparison shop on the go. Anyone can scan a barcode on an item at a store and then automatically access any eBay listings of the product on the marketplace. Sellers can also use the scanning technology to scan an item and list the product in very little time. RedLaser’s technology was quickly integrated into eBay’s dedicated iPhone and Android apps.

The company then bought Milo for $75 million, which aggregates and lists real-time in-store product inventory for over 50,000 stores across the country; featuring over 3 million products from Target, Macy’s, Best Buy, Crate & Barrel and more.

Most recently eBay integrated Milo into a few of its core products, including RedLaser. So with a single scan of a product in a store, users can see which nearby retailers have a product in store, and at what price. eBay also integrated Milo’s results into its own marketplace, allowing users to include local shopping tab in search results to check a product’s local, or in-store, availability directly from the eBay search results page.

But surfacing local product results and integrating barcode scanning only scratches the surface of local and mobile commerce and its potential. There’s no doubt that eBay is reaping the benefits of mobile commerce (the company expects to do $4 billion in mobile gross merchandise volume in 2011).

Local Payments

And eBay realizes that in order to really capitalize on local and mobile in the ecommerce experience, the company also has to be a part of the point of sale for local merchants. And eBay has a player in this race—payments giant PayPal. PayPal has been making its own small forays into local commerce and late last year launched a new version of its popular iPhone app that allows users to find businesses near their immediate location that accept PayPal as a form of payment. The feature rolled out in San Francisco initially, but we haven’t heard much about the initiative since last November.

Why? Well, scaling this feature broadly to other cities is a challenge for even a large company like PayPal. Not only do they have to find the local businesses, but PayPal has to teach them how to use their mobile apps as a payment mechanism. Wouldn’t it be much easier to acquire a company that could help PayPal and eBay do this?

Enter Where, a geo-location service and mobile advertising company that already has millions of active users across many mobile platforms. The apps show local listings for restaurants, bars, merchants, and events, and also suggests places and deals for you based on your location and past behavior. Where also offers a location-based ad network, which allows advertisers to show their mobile ads only to people near their store, or perhaps near a competitor’s store (after the user opts in to see these types of ads). Currently, more than 120,000 retailers, brands and small merchants use Where’s network daily to reach new audiences and deliver real-time foot traffic to their doorstep.

eBay of course acquired Where a few weeks ago, and housed the company within PayPal. Not only does this give PayPal much more of a reach with its payments service, but it gives eBay a platform to to enter into the the local deals market. As Where’s CEO Walt Doyle told us after the acquisition, “eBay is about connecting buyers and sellers and Where is about connecting people with places.” Ebay can now tap into connecting consumers with local businesses and can be a part of the transaction with PayPal.

PayPal also just bought mobile payments startup FigCard, a Boston-based startup that allows merchants to accept mobile payments in stores by using a simple USB device that plugs into the cash register or point-of-sale terminal. All the consumer needs is the Fig app on his or her smart phone. The connection with PayPal is that when consumers setup their payment information, they could add PayPal as a payments option and pay for goods via their mobile phone.

Eliminating the need for an actual wallet has always been a goal for PayPal, and if the company can scale FigCard’s technology (perhaps to many of those merchants using Where?); PayPal could have a stake in the mobile wallet race.

The ‘Pivot’

In the past year, it’s fair to say that eBay and PayPal have spent over $200 million on the acquisitions I mentioned above. That’s a fair chunk of change even for a company that is making billions each year.

There’s no doubt that eBay is invested heavily in this strategy and believes that the future of the company is based on both online to offline purchases, local and mobile commerce. eBay VP of engineering Dane Glasgow recently told us that one of the challenges for eBay in this strategy is being on the pulse of technology, which is constantly evolving.

But as retail evolves, eBay is shifting its business as well, and it will undoubtedly be interesting to see if the company can connect the dots with all these acquisitions and technologies to create a powerhouse in mobile and local commerce. The challenge is that some of these initiatives aren’t really that complimentary to eBay’s core marketplace and auction business.

While eBay won’t be quitting the auction business anytimesoon, the marketplace business itself isn’t growing as fast as PayPal. PayPal now represents 39 percent of eBay’s total revenue, and nearly made $1 billion in revenue for the company in the first quarter of 2011, up 23 percent from the same quarter in the previous year. Marketplaces brought in $1.5 billion, up 12 percent from the same quarter in 2010.

Pivot is a word that tends to be over-used in the tech world, but in eBay’s case that is exactly what we are witnessing—a major pivot in the company’s business model to local commerce. It’s certainly not easy for any company to “pivot,” especially one as massive as eBay. If it manages to pull this off so late in the game, it could herald a whole new era of growth for the company.

As Glasgow tells us, “it’s a new retail environment, where the convergence of online and offline are coming to life through mobile and local experiences.” Can eBay position itself fast enough to flourish in that environment?”

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Article from GigaOm.

“Cisco is giving up on its barely two-year-old $590 million purchase of Pure Digital Technologies, announcing today that it is closing its Flip business unit and cutting 550 employees as part of a larger restructuring. The move comes after clear signs that the outsized deal was not paying off for the technology giant, which is in the midst of refocusing its business on its core networking business.

Cisco said it will close the Flip business, but will continue to support current Flipshare customers who upload and share media to the web. Cisco said it will also refocus its Home Networking business to make it more profitable and connected to the company’s networking infrastructure. It will also move Umi, its consumer Telepresence, into the business Telepresence line and sell it through an enterprise and service provider go-to-market model.

“We are making key, targeted moves as we align operations in support of our network-centric platform strategy,” CEO John Chambers said in a statement. “As we move forward, our consumer efforts will focus on how we help our enterprise and service provider customers optimize and expand their offerings for consumers, and help ensure the network’s ability to deliver on those offerings.”

The closure of the Flip unit comes a couple months after former Pure Digital CEO Jonathan Kaplan left Cisco, prompting questions about the direction of the Flip line of video cameras. Cisco bought Pure in March of 2009, saying the purchase was about extending its presence into the consumer electronics business. The company was also looking to use Pure’s smarts in simple consumer electronics design to rework its home networking business. While the deal has helped Cisco create a new line of more consumer friendly home routers, it didn’t really change the company much, a task that Om mentioned recently is incredibly hard for large companies. And it hasn’t resulted in a big revenue driver in video cam sales.

That’s because while Flip grew fast with its single purpose design, which managed to move millions of units, its continued growth was checked by the rise of smartphones that can increasingly shoot HD video while offering more wireless sharing options, something Flip’s camera’s never included, an irony for a networking company. Another new consumer business, Umi, a home video conferencing product, has also failed to capture a lot of buzz, in part because of its high price. With Kaplan headed toward the door, we speculated that the deal for Pure had turned into a flop.

Now it appears that Cisco is making that conclusion official. CEO John Chambers earlier this month laid out a major reorganization for the company in a memo to employees outlining how the company would refocus on five areas: core routing, switching and services; collaboration; architectures; and video. While Chambers said Cisco would still focus on video, it appears he was not referring to Flip. This deals a major blow to the idea of a single-purpose simple video cam, which may still have a niche place in the market. But while Cisco jettisons Flip, and admits defeat, the move shows the company is clearly serious about retrenching and getting back to basics.”

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Article from SFGate.

“Here’s how effortless it is to move your digital music collection from Apple’s iTunes software to Amazon’s new Cloud Drive music service:

1. Visit Amazon.com, enter your user name and password, and find the link that says “upload files.”

2. Agree to the terms of service and solve a Captcha, one of those tricky image-recognition puzzles that prove you’re an human being.

3. Download Amazon’s MP3 uploader software, which scans the music on your hard drive.

4. Select about 1,000 of the gazillion songs you own and mark them for upload.

5. Wait around six hours for the upload to finish.

6. Download Amazon’s separate Cloud Player app for Android to stream that music to your phone, or use a Web browser to listen to it from any PC.

Sounds easy, right?

Welcome to the awkward stage of the digital music revolution. Online song sales have stagnated, depriving the endangered music industry of one of its last remaining lifelines. Yet digital music continues to be a vital battleground for Google, Apple and Amazon to try to lure users to their other devices and online offerings.

Now, Jeff Bezos & Co. have boldly tried to leapfrog Google and Apple in the quest to liberate people from the decade-old practice of buying and downloading digital songs to a computer and then manually transferring them between devices.

The idea behind “cloud music” is to let people stream their music collections from the Web to any computer or device. Analysts believe such services are inevitable – even if Amazon stumbles.

“Having access to your music on all your devices has to be the starting point of any next-generation music service and product,” said Mark Mulligan, an analyst at Forrester Research.

That’s the vision, but right now, the convoluted uploading process is the result of key trade-offs Amazon made to get to the cloud music market before its rivals.

Licensing deals

First, major labels want new licensing arrangements for cloud services and a bigger cut of the online music pie. Their demands have slowed down the introduction of cloud music features, and Amazon designed its service without their permission, instigating a wave of complaints from Sony Music Entertainment and Warner Music Group.

“We’re disappointed by their decision to launch without a license,” said Brian Garrity, a spokesman for Sony.

Bill Carr, Amazon’s vice president for music and movies, claims Amazon “highly values” its relationship with the labels, but compares uploading songs to the legally harmless practice of attaching a hard drive to your PC and transferring music files to it.

Amazon primarily designed a service to comply with copyright laws – not to make shifting music to the cloud seamless. Amazon requires users to upload their own copies of songs that it could more easily supply from its digital store. Services like MyPlay and Mp3tunes have tried the same basic approach over the years. None attracted many users.

Amazon, which controls only about 13 percent of the digital music market despite four years of battling iTunes, apparently believes it has unique advantages in the coming cloud music battle.

Thanks to the massive server capacity backing its successful cloud computing business, in which it rents computing power to other companies, Amazon can offer its streaming music users 5 gigabytes of music storage for free, or 20 GB if they buy just one album from Amazon. The company is also prominently advertising the service on its home page.

“We observed from our other digital media businesses that buy-once, play-anywhere really resonates with consumers,” Carr said.

The service Amazon released last week has been criticized for being difficult to use and incompatible with Apple iPads and iPhones.

Not social

“There’s nothing social about it. How can you launch anything on the Web today that doesn’t integrate social?” said David Pakman, the former chief executive of eMusic and a partner at Palo Alto venture capital firm Venrock.

David Hyman, founder of Berkeley music subscription service Mog, says of Amazon’s cloud offering: “It’s a stepping-stone. This is Amazon putting its feet in and testing the waters.”

So what does the future of cloud music look like? Google, Apple or Amazon might finally get the major-label licenses that will allow them to make storing music collections in the cloud seamless for users. (Instead of uploading each song, the service could simply scan the names of songs in a collection and reproduce them in the cloud.) Or subscription music services such as Mog, Rdio and Rhapsody that offer unlimited access to a broad catalog of Web-based music for a monthly fee may find the mainstream success that has long eluded them.

Such an unlimited cloud music offering may be Amazon’s ultimate goal; Carr doesn’t rule out developing a music subscription service and offering it for free to members of Amazon Prime.

“This is an exciting Day One,” he said of Cloud Drive. “We always have an open mind.”

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Article from TechCrunch.

“$41 million. From Sequoia Capital, Bain Capital, and Silicon Valley Bank. Pre-launch.

That’s how much a brand new startup called Color has to work with. Your eyebrows should already be raised, and here’s something to keep them fixed there: this is the most money Sequoia has ever invested in a pre-launch startup. Or, as the Color team put it, “That’s more than they gave Google.”

But the founding team goes a long way toward explaining it. Headed by Bill Nguyen — who sold Lala to Apple in late 2009 — the company has attracted a wealth of talent. It has seven founders including Nguyen and company president Peter Pham, who previously founded BillShrink. And its chief of product is DJ Patil, who was previously LinkedIn’s chief scientist.

So what exactly is Color?

Update: The application is now available for the iPhone at Color.com. Android is coming.

At first glance, it looks like another mobile photo app, like Path, Instagram, or PicPlz. You take snapshots with your mobile phone (the app supports both Android and iOS at launch) and they appear in a stream of photos. And there aren’t even any of those trendy lenses to spruce up your images. Sounds pretty basic, right?

But the beauty of Color stems from what it’s doing differently. Unlike Instagram and Path, there isn’t an explicit friend or following system — you don’t browse through lists of contacts and start following their photo stream. Instead, all social connections in the application are dynamic and established on-the-fly depending on whom you’re hanging out with. And your photos are shared with everyone in the vicinity. In some senses this is the Twitter of photo apps — it’s all public, all the time (I’m ignoring Twitter’s protected tweets, since most people don’t use them). Another way to look at it: it’s almost the complete opposite of Path, which is built around sharing photos with an intimate group of friends.

It’s difficult to explain what Color does with a bullet list of features, so I’ll try painting an example that hopefully demonstrates how it works.

Say you walk into a restaurant with twenty people in it. You sit down at a table with four friends, and start chatting. Then one of your friends pulls out their phone, fires up Color, and takes a snapshot of you and your buddies.

That photo is now public to anyone within around 100 feet of the place it was taken. So if anyone else in the restaurant fires up Color, they’ll see the photograph listed in a stream alongside other photos that have recently been taken in the vicinity.

In a crowded area these streams of photos will get noisy, so Color also has some grouping features. Tell it which four people you’re eating with, and Color will create a temporal group with a stream of just the photos you and your buddies have taken. But here’s the twist: because everything on the service is public, you can also swipe to view other groups, to see what the tables next to you are snapping photos of. And you can always jump to the main stream, which shows a mishmash of photos taken by everyone.

It takes some time to wrap your head around, and my time with the app was limited, so I can’t really vouch for how well it works. But there’s some very interesting technology that’s working behind the scenes to make Color more than just a simple group photo app.

First are the social connections, called your Elastic Network. All of your contacts are presented in a list of thumbnails ordered by how strong your connection is to that user. Whenever Color detects that you’re physically near another user (in other words, that you’re hanging out), your bond on the app gets a little stronger. So when you fire up the app and jump to your list of contacts, you’ll probably see your close friends and family members listed first. But if you don’t see a friend for a long time, they’ll gradually flow down the list, and eventually their photos will fade from color to black-and-white.

These social connections are important because they’re the only way to view a stream of photos beyond those have been taken near you. If you fired up Color in that restaurant example from earlier, you’d only be able to see photos that had been taken by friends and strangers within 100 feet of that restaurant. That is, unless you jump to your social connections. Tap on your best friend’s profile photo, and you’ll then be able to see all of the photos that have recently been taken within 100 feet of them. In other words, Color is trying to give you a way to see everything that’s going on around you, and everything that’s going on around the people you care about.

The Groups feature also makes use of this elastic network. In the restaurant example above, the application would likely already know who your friends were based on your previous interactions and would automatically place them in the same group — you wouldn’t have to manually do it yourself.

Color is also making use of every phone sensor it can access. The application was demoed to me in the basement of Color’s office — where there was no cell signal or GPS reception. But the app still managed to work normally, automatically placing the people who were sitting around me in the same group. It does this using a variety of tricks: it uses the camera to check for lighting conditions, and even uses the phone’s microphone to ‘listen’ to the ambient surroundings. If two phones are capturing similar audio, then they’re probably close to each other.

So far I’ve described a compelling and unique photo app with some neat tricks. But how exactly is Color going to make “wheelbarrows of cash”, as Nguyen says?

At this point the company is still very early on, but it eventually plans to offer businesses a self-serve platform for running deals and ads as part of the Color experience (you fire up the app to see the photos being taken around you, and you also see the special of the day, for example).

But that’s just the start. Nguyen has visions of fundamentally changing some aspects of social interaction and local discovery with the app, which he considers part of the so-called Post-PC movement. Using all of the data being collected (remember, the app is taking advantage of all of your phone’s sensors), Color hopes to eventually start recommending nearby points of interest, and maybe even interesting people.

There are still plenty of questions, even about the existing service. This kind of voyeurism — you’re sharing photos with the world and looking at photos from strangers — could take a while to get used to. People may reject it entirely. Or it may be completely addictive. There’s really no way to tell until people start using the app in the wild.

The future is unclear, but promising. And with this much money in the bank and a staff of 27, Color has plenty of time to hone in on what works.”

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