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China’s Internet cafes are still critical to the growth of the online video game industry in that country, according to a report by market researcher Niko Partners.

Internet cafes will account for about 40 percent of the $2.5 billion in revenue generated by online game operators in 2008 in China. There are an estimated 21.9 million computers installed in 185,000 Internet cafes in the country. Overall, Internet cafes generate $20 billion in revenue a year.

While gamers in big cities such as Shanghai and Beijing often have their own home computers, many of them still visit the cafes to socialize and compete with friends. In smaller cities and rural areas, the cafes serve as the only place where gamers can play.

The firm looked at 507 Internet cafes in 18 cities throughout China and it surveyed more than 500 gamers. About 71,000 of the cafes are unlicensed.

The July U.S. video game sales numbers show that Nintendo is way out ahead but Sony has beaten Microsoft yet again in the battle for second place.

Nintendo sold 555,000 Wii consoles during the month, down from 666,700 consoles a month earlier. But that was far ahead of Sony, which sold 224,900 PlayStation 3s and Microsoft, which sold 204,800 Xbox 360s.

Industry sales slowed considerably in July, with total growth at 28 percent to $1.19 billion compared to 53 percent growth in June. Video game software sales were up 41 percent to $591 million in July, but accessory sales were up 19 percent to $149.1 million and hardware sales were up only 17 percent to $446.9 million. Overall, the industry is still growing 35 percent a year. But the July slowdown may be a concern to those who worry about the impact of the recession on game sales.

The Nintendo DS sold 608,400 units while the Sony PlayStation Portable sold 221,700 units. The PS 2 sold 155,510 units. Sony noted that its sales are up 99 percent year to date. But it has to be concerned about how the DS is pulling away; Nintendo happily noted the Wii had 49 percent of the console market in July while the DS had 73 percent of the handheld market.

Microsoft said in a statement that it is still selling more games per console than its rivals at 7.9 games sold per console. It also said it has sold $10.4 billion worth of Xbox 360 hardware, games and accessories since the Xbox 360 launched in November 2005. But it’s clear that Microsoft has to start thinking seriously about how to pull back ahead of Sony in the console hardware business.

The top game of the month was NCAA Football 09 (pictured above) from Electronic Arts. The top ten games list had four Wii titles, one Nintendo DS title, three Xbox 360 games and two Sony PS 3 games. My takeaway: July is a slow month. But the game industry isn’t defying gravity anymore. Look for price moves coming soon to keep the robust growth going.

Today, Republican presidential candidate John McCain is introducing a tech agenda that differs from Democrat Barack Obama’s on “net neutrality” laws but has similar viewpoints on tax breaks, high-tech labor laws and other hot tech policy issues.

Obama made his sweep through Silicon Valley last year, connecting with top entrepreneurs like Marc Andreessen, and telling us about his technology policy proposal, that was impressive in its depth. McCain, who has given some interviews this year where he’s outlined his policies, has up until now not presented any formal proposal, and has been criticized because of that.

The McCain proposal is relatively pro-business, and pro-free trade, the Wall Street Journal notes in its early look at it. The plan includes a ten percent employee tax credit, to be paid to the company for employees who work in research and development — intended to convince companies to hire locally rather than look for help overseas. At the same time, it calls for expansion of the H1-B visa program, to help more skilled foreign workers come to the U.S. It would also provide tax breaks to telecommunications companies that bring high-speed internet access to rural and low-income areas (meanwhile, as the economy has worsened, more people have been cutting back on this expense).

This proposal sounds pretty good for libertarian-minded Silicon Valley, so far. More controversially, McCain is siding with telecommunications companies over the issue of “net neutrality.” His policy, shaped by telco-friendly ex-Federal Communications Commission Michael Powell, would oppose laws that seek to regulate which users can use how much Internet bandwidth at what price. Obama has come down on the other side of the net neutrality issue, siding with those who believe the telcos’ ability to regulate Internet availability is monopolistic and hinders innovation.

Broadly speaking, though, the plans differ more by what they emphasize and less by where they outright disagree. Obama also wants to give tax breaks to incentivize broadband access, improve how the visa work permit works, but wants to spend more on high-tech education initiatives.

Silicon Valley, home to many who are both Democrat and libertarian, seems to favor Obama. He has raised more than McCain here, he presented his plan at the Googleplex in Mountain View, and he’s especially popular in the northern part of the valley (San Francisco). But McCain has his own high-profile supporters. He has signed on former eBay chief executive Meg Whitman to be his campaign’s national co-chairwoman, and has endorsements from former Hewlett-Packard chief executive Carly Fiorina and Cisco Systems’ chief executive John Chambers.

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Today, SeedFund, an Indian VC firm backed with Google cash, announced a $1 million investment in Lifeblob, a Bangalore-based lifecasting company whose awkward name just about says it all.

Lifeblob is a kind of digital diary that maps the media you share and thoughts you write onto a timeline. You can adjust the scale of this timeline to reflect the history of your online life in increments ranging from every day to a somewhat ambitious 100 years. Each entry appears as a “blob” that you can click on to expand. Sound a bit confusing? Take a look for yourself:

Lifeblob joins an increasing number of start-ups doing variations on this theme. These include Dandelife, Dipity, AllofMe and, in some ways, Plurk. Of the batch, Dipity and AllofMe are the most similar.

The key difference is that Lifeblob allows you to tag each entry with friends and events and inserts overlapping entries from other people’s timelines into your own. In concept, this means that if the VentureBeat team goes to dinner and everyone shares photos and comments about it, we get to memorialize the points in time and space where our lives intersect. In practice, it means an overwhelming degree of visual clutter that is difficult to understand.

Both Dipity and AllofMe have designed cleaner, more navigable interfaces and Dipity has implemented a number of applications for the concept that are arguably more compelling than lifecasting. For example, Dipity allows users to create historical timelines that other users can then edit and expand, which can result in awesome visualizations of the history of internet memes or virtual worlds. It’s easy to see how this could evolve into a great tool for visual search.

Considering how fast Dipity continues to add appealing features and the overall superiority of its execution, it’s hard to see Lifeblob as anything but an also-ran, despite a few extra “social” bells and whistles. That being said, $1 million goes a long way in Bangalore, and the company will have time to change the game plan.

The company, which has been in beta for months, opened up to the public today.

[Update: Mint broke the news about the Lifeblob announcement. Also Pluggdin mentions several other investments by SeedFund, including Printo, RedBus, Agencyfaqs, Carwale, and notes that SeedFund is looking to raise another $30M fund.]

Expanding its push into high-quality game talent, Electronic Arts has signed up two new game development firms to produce future titles.

The partners include Epic Games, the creator of Microsoft’s bestseller, “Gears of War.” Epic Games is going to make a new game that EA will publish, said Epic president Mike Capps. Capps didn’t say what the game would be. The title is likely to be a big one, since Epic’s games sell in the millions. It will also be bloody, as Gears of War features “chainsaw bayonets.”

“You guys are really going to dig it,” Capps said, speaking to a group of journalists at EA’s headquarters in Redwood City, Calif.

The other partner is Grasshopper Manufacture of Japan, a studio run by some well known game developers: Suda51 and Shinji Mikami. The latter is the creator of the “Resident Evil” series that has sold millions of copies and is the subject of a few decent zombie horror movies. The alliance with the Japanese game developers is very unusual, considering EA has very little presence in the Japanese market. The title isn’t being described yet, but Mikami said it will be “dark, scary and exciting.” This is coming from the guy who is behind the zombie shooting franchise.

“It’s just like Ichiro and the Seattle Mariners,” Suda51 said on stage at EA’s headquarters. Mikami said, “I want to earn as much as Ichiro.”

EA hasn’t had the reputation of incubating the best talent inside its own studios. EA has some talented studios for sure, but some of the developers want to be on their own. The EA Partners program is a way to reach more of the independent developers who can create huge blockbusters. In the past year, it signed up partners that produced big hits such as “Rock Band,” “Crysis,” and “The Orange Box.” It also signed up id Software, creator of “Doom” and the upcoming “Rage” games, at E3.

With these two deals, EA is tapping key talent that has been monopolized in the past by rivals such as Capcom and Microsoft. EA Partners is a program where the company works with independent developers to publish their games across a wide range of platforms and get them into as many stores as possible. EA has the global infrastructure to get big games off the ground and that’s what attracts the developers.

Less than one month until DEMOfall08 and while the names of the 72 presenting companies will be kept secret until opening day, Chris Shipley, DEMO’s product analyst and executive producer, just released the 12 product theme areas that will be discussed. In her blog post, here, she describes the problems the technologies launching at DEMOfall08 are poised to solve. Themes are ranging from “Your Mobile, Your Life” to “It’s Easy Being Green” and even “Web 2.0 Gets to Work,” for a full list click here.

DEMO is the premier launch venue for new products, technologies, and companies. The nation’s top technology executives and IT professionals, venture capitalists, business development executives, journalists and analysts attend DEMO to get the first look at the emerging products and services that will ignite the technology landscape and challenge the status quo.

In just the past four years, DEMO companies have raised well over $2.5 billion dollars in the months/years following their debut at DEMO. More than 40 of these companies have been acquired by tech giants, such as Adobe, Cisco, Google, Microsoft, Motorola, Nokia, Symantec, Viacom, Yahoo!, and more. Past participants such as WebEx, VMware, iRobot, Linden Labs, Six Apart, and Roku have single-handedly redefined their industry’s market.

DEMO has offered a generous discount for our VentureBeat readers - $600 off the price of admission, so click here to get your ticket, or use the discount code ‘F8VB.’ DEMOfall08 is to be held September 7-9, in San Diego, CA.

Media6Degrees is the latest company to try to target ads for major brands using the “social graph” of your friend relationships on social networks and other sites. The New York company is in private beta judging by the lack of information on its site about the product itself. The company says it has “patent-pending algorithms and methods” that use demographic and “psychographic” data to target online ads for each individual advertiser.

So far, though, the beta says it is getting much higher response rates from audiences versus competitors. Those competitors, as far as I can tell, would include MySpace’s hyper-targeted ads, whatever Facebook is working on that it hasn’t disclosed too much about, and a range of other social networks and ad startup efforts. Among the startups, there’s Social Media, Lookery and others on Facebook alone. More generally, the majority of ad networks in the online ad industry at large seem to say they can target based on demographic factors, although not the “social graph.”

While I’m checking in to find out more, here’s a press release’s description:

Media6° audiences, sharing powerful demographic and psychographic traits, have been proven to respond to advertising messages at rates dramatically higher than other targeting alternatives. The firm’s offering has appeal for brand marketers seeking large audiences displaying the highest levels of response, engagement, word of mouth and collective behavior.

The company is careful about the ad-targeting issue, saying that it doesn’t use personal data. Instead, it says it relies on the “underlying data used by Media6° in the execution of its strategy has long been present in ad serving logs and has always been used by advertisers to monitor and audit their campaigns.” Cookies?

It has also just raised $9 million from U.S. Venture Partners, Contour Venture Partners, Coriolis Ventures (we covered the Coriolis funding in April) and angel investors, and boasts a long list of advisers from media and technology. The startup hired Joe Doran away from his job as general manager at Microsoft Ad Center in April, to become chief executive. At Microsoft, Doran had been responsible for strategy, product and mergers and acquisitions for all of Microsoft’s ad-related businesses.

A few years ago, it was still a subject of regular outrage. Jobs were headed to Mexico. Factories moving to China. Everybody hated globalization, without quite understanding it. But with a flood of news coverage — the slightly nauseating peak being an all-too-popular book about the world being flat — people finally figured it out: The manufacturing jobs were gone. Get a job banking, or flipping burgers, but don’t expect to be building cars or making clothes.

The idea is that we should switch to a knowledge-based, service-oriented economy. And Silicon Valley, for one, long ago pinned its hopes on brains over brawn. Just take a look at the companies that get funding. But now that everyone’s getting used to the knowledge economy, manufacturing may make its comeback.

Here are the primary factors driving a manufacturing renaissance: The rapid growth of middle class consumers in countries like Brazil, China and India; a shrunken dollar and the loss of economic pre-eminence by the United States; less easy credit for overseas goods for consumers in the US; and, potentially, rising transportation costs that cut into cheap goods sent from overseas.

Those details are outlined by the CEO of the Manufacturers Alliance, Thomas Duesterberg, in this Industry Week article. There are a few more that could be added to the mix, though.

The first is our bid at shifting energy usage at home off foreign oil. Companies like Ausra, Nanosolar and Tesla are basing not only their research, but their plants in the United States. They have plenty of reasons to do so. States, eager to win back jobs lost long ago, are offering hefty incentives. Materials like solar mirrors and wind turbines are expensive to ship, and solar panels often break during long voyages. And for Tesla, there’s an additional prestige to having a car manufactured in the U.S., even if some parts are made overseas.

Another good example is Infinia, a solar company that is reducing its own startup costs by using existing manufacturing capacity in the country, much of which has been idle for years, to builds its solar dishes. And finally there are the many biofuel startups, many of which have no choice but to place their plants near the sources for their fuel. As the market for renewables grows, more will certainly be built here.

The need for specialized work will also become more prominent with the rise of next-generation materials, especially nanomaterials. Although fabless manufacturing in the semiconductor industry proved that high-tech work can be done overseas, the first generation of manufacturing will be at home. And with costs for overseas labor rising, the new nano industry may choose not to move elsewhere.

There are also opportunities for less commercial production. As the online marketplace Etsy has shown, there’s a nascent industry of crafters who are are eager to sell their goods. Ponoko, for one, wants to help those people create their goods, with online tools and a relatively inexpensive production process based on laser cutters.

And for the professionals, the small design firms and build shops of the world, cheap rapid prototyping and rapid manufacturing technology are on the rise, a subject that I wrote about a year ago.

Whether physical production can ever dominate the American landscape again is doubtful. But the conventional view into the future, which suggests that we’ll make our way as a pure knowledge economy, is likely also off the mark. The future is never quite what you expect.

Benjamin Ling, who we learned earlier this week is leaving the top marketing spot at Facebook’s developer platform, will reportedly return to his old company, Google. Valleywag first reported the rumor, and Kara Swisher’s sources confirmed with the exact job: Ling will be taking over monetization efforts at YouTube.

The musical chairs within Facebook, between Facebook and Google and between Facebook and other startups grows ever more complicated. The YouTube monetization job was recently vacated by Shashi Seth, who left to head revenue efforts at startup Cooliris. Google’s difficulties in making money from YouTube are well known, although chief executive Eric Schmidt said yesterday that it “doesn’t hurt our bottom line,” and that he’s pleased with YouTube’s continuing growth.

Ling left Google’s e-commerce team last fall.

A class-action lawsuit has been filed against Facebook and other sites for their participation in Facebook’s Beacon program.

The controversial program, which turned into a publicity disaster that Facebook founder Mark Zuckerberg apologized for, alerted a user’s friends about their activity on other sites, for example buying movie tickets on Fandago. Beacon sparked an outcry from Facebook users, who saw it as a violation of privacy and complained that it was difficult to opt out.

In addition to apologizing, Facebook revamped the program so users weren’t automatically signed up, and instead could choose to opt-in. The backlash was also a bit of a turning point for social networks, since it illustrated that it’s a delicate balancing act to make money from the “social graph” without angering users. But that seemed to be the end of the matter, and users moved on to complaining about new things like Facebook’s revamped design.

Now a group of users is demanding that Facebook delete any data collected from the program, award restitution and return any money earned in violation of privacy laws. The suit alleges that tens of thousands of users are affected, and also names Blockbuster, Fandango, Overstock, Hotwire, STA Travel, Zappos and Gamefly as defendants.

Earlier this year, a Texas woman filed suit against Blockbuster for its participation.

I can’t really say how strong this case is from a legal perspective. But even if, as I suspect, it won’t have a leg to stand on, these continuing lawsuits can’t be good news for Facebook or any social network thinking about trying something similar.

After the press slammed Intel in June for its hard-line stance on the USB 3.0 standards battle, the world’s biggest chip maker has apparently changed its position. Faced with an unpleasant spotlight, Intel chose to compromise. In doing so, it has probably headed off an antitrust fight.

Rivals in the chip set business said that Intel didn’t play fair when it took control of the standard, dubbed Universal Serial Bus 3.0 (or SuperSpeed USB), for transferring data in and out of PCs at high speeds. Intel said it shared details about the standard with everyone. But rivals accused it of withholding details of its design for implementing USB 3.0 in the form of a host controller for a chip set. By withholding details, Intel could selfishly give its own chip set designers a head start, but such a move was risky. It could either slow adoption or fracture the standard.

The technology is important to consumers because it will allow data transfer between computers and gadgets at a rate of 4.8 gigabits a second. That’s blazing fast compared to data transfer in the megabits a second today. For iPod users, that means you could move a high-definition movie from a computer to an iPod at much higher speeds.

Now Intel has released its host controller specification, dubbed the Extensible Host Controller Interface draft 0.9. Now the company’s rivals can also get started on making their own chip sets that are compatible with the USB 3.0 specification. In a press release, Intel said that “interoperability among devices from multiple manufacturers is important for consumer adoption of ‘SuperSpeed USB’ products.” The specification is available royalty free to any companies that sign a “contributors” legal release with Intel.

“Given the industry trend toward one specification, we resolved it was best to sign,” said one source.

Chip set makers — Nvidia, Advanced Micro Devices, Via Technologies and SiS — threatened to rebel and pull out of the standard, setting the stage for a fight with Intel that resembled the revolt of PC clone makers against IBM in the 1980s. In a blog post where it defended its actions, Intel said that the design wasn’t done and it couldn’t yet share it. Intel had previously said it would share the design in the second half of 2008.

Intel compromised because it came under pressure from the chip set makers as well as Microsoft. The Redmond giant has a lot of clout itself and it didn’t want to write two types of software to support an Intel standard and the rivals’ standard. Microsoft offered its blessing on the latest deal, as did AMD, NEC, and Dell.

Nick Knupfler, a spokesman for Intel, said, “The industry is well on its way to high-speed USB nirvana.” Translation: all the chip set makers are expected to sign. Update: Knupfler also said that Intel has always planned on delivering the specification as soon as the silicon design was robust enough to be shared without fear that it will have to be redone in some way.

Clearly, Intel didn’t need this kind of bad publicity over alleged anti-competitive failure looming over it as the Federal Trade Commission kicked off a formal antitrust investigation against Intel. What is interesting is that Intel came around. The company had said that its work wasn’t done on the host controller and that it was under no obligation to share work that it had put “gazillions” of hours into.

But Intel changed its tune, invited the chip set rivals to come to talks, and said it would share that data to head off a fracturing of the standard. As we all learned in kindergarten, sharing is nice.

Over the past few days, we’ve gotten multiple confirmations from reliable sources that the first phone built on Google’s Android platform will launch in the next several weeks. It will be an HTC phone, likely the HTC Dream, and will be launched internationally on the T-Mobile network. A window of between Oct 15 and Nov 30 is most likely, according to these sources.

Around mid-July we received some information that T-Mobile had started its preparations for the Android launch. A few weeks later, there were signs from the Android team that development was wrapping up and that the final software development kit (SDK) for the device was nearing completion. A few days later we began hearing that not only was the first Android phone already in existence, it was in the midst of its “first series” phase. This means it is being distributed now among selected employees/managers at HTC, T-Mobile and informed third parties. Various organizational activities, including marketing and training of employees have already started as well.

In the past weeks, amidst reports indicating Android phones may be delayed and frustrations amongst Open Handset Alliance Members, we continually heard from both Google and HTC that the first Android phones would launch before the end of the year. Now we have solid first-hand information that the launch is just weeks away.

Let’s look at some of the problems which Google Android/the Open Handset Alliance (OHA) is supposed to have had in the last months:

* Developers supposedly have been staying away from Android and focusing on the systems already out there: BlackBerry, Symbian, Windows Mobile and the iPhone;
* Open Handset Alliance Member Sprint was arguing that Google Android is not addressing “industry fundamentals more pragmatically”;
* Google was rumored to build its own “Gphone”;
* Most recently HTC is supposed to be “having structural problems to incorporate Google’s demanded feature set” and not being able to make it this year.

So what do we know ?
We quickly learned to distrust most of the speculation. We repeatedly asked Google to confirm launch dates. Answers included “phones based on the Android platform will be available in Q4 of this year” and “we remain on schedule to deliver the first Android-based handset this year.” We also learned that Google was keeping the latest version of the Android SDK from the majority of Android-focused developers as Zdnet reported.

Around mid-July, we had some information that T-Mobile started its preparations for the Android launch. At the beginning of August, there where signs from inside the Android team that they reached an important point in development. They released the final SDK for the Android Developer Challenge participants — suggesting the release to handset manufactures was near. Some days later we heard a confirmation from another, reliable source that T-Mobile is preparing the launch and this person was willing to share some actual information. After we learned this, we took it to others, and they were willing to talk. This is what we consider as confirmed information:

The first “Android phone” exists. It’s a HTC phone and it appears to already be in the “first series” phase as it is being distributed now among selected employees/managers at HTC, T-Mobile and 3rd parties. Various organizational activities, including marketing and training of employees, have started.

How will the phone look like and what are the phone’s characteristics? I can not confirm any of this, but I assume leaks wil start to happen now and in my experience Tmonews is quite well-informed, reliable and seems to have some insiders at various positions. This image from Tmonews (left), however, seems not to show the final version of the phone.

Also, I am certain that the circulating videos are false, as the devices are still kept in the closet. Also, I can comment on the release date. Tmonews, which I’ve linked to above, is speculating about Sept. 17th. From comments from our sources, and calculations about things like approval times, however, we assume a launch window of Oct. 15 to Nov. 30. The launch will be international, and held in stages.

Let’s break down some of our calculations:

We expect the final public Android SDK to be released in the next 4-6 weeks. We hear this time period from various sources and this view seems already to be pre-eminent on newsgroups. The developer release earier this month suggested that at the time the manufacturing of the “first series” was probably near. Information/troubleshooting from the “first series” will be included into the release. This final public release of the Android SDK will make more exact predictions possible.

From submitting the phone to the FCC until launch can take as little as four to five weeks. Take the iPhone, for example. It was submitted on June 1st, it was approved on June 9th and the relevant information was confidential until the July 11.

In the six weeks before the release, we will see a lot of leaks, news and occasional marketing. It seems that for the US, in terms of marketing, October 1st will be a significant day as that’s when T-Mobile USA wants to launch its 3G network.

We’ve already reported on the coming T-Mobile app store. There’s been much speculation on the nature of how the applications should be distributed. From the Google Android team, there are only general statements. Android’s Andy Rubin said at the Google I/O on May 28th that “I have nothing to announce today, but we thought of it. We wouldn’t have done our job if we didn’t provide something that helps developers to get distribution.” From what we hear, Google is apparently putting the applications stores into mobile operator hands. Can we expect other mobile operators from the Open Handset Alliance to switch to app store models?

Cooliris, the startup that allows users to explore sites like YouTube and Google Images through a “fullscreen 3D” wall of media, continues to add features to its browser plugin, making it less a cool novelty and more a genuinely useful way to surf the web. The most important of the just-released additions is a “quick and easy” tool for enabling Cooliris on your website.

I’m already a fan, because the plugin (now also called Cooliris — it was previously dubbed PicLens, which was a little confusing) makes it easy and fun to fly around a large collection of images or videos. But until now, it only worked on a relatively limited number of sites, mostly big media-sharing and media-searching sites like Facebook and Flickr. There are plenty of other sites with galleries of images or other media that were basically left out of the picture — technically, Cooliris could already be enabled on any site with media RSS, but the company says the process took “hours” and required some heavy-lifting from Cooliris’ tech support.

Now that time has shrunk to minutes, and the process is ridiculously easy. You just give Cooliris the URL of your site’s galleries, then after a few tests you get some XML and links to add to your site, and that’s it — with just a click, visitors can explore your galleries in Cooliris. This could potentially take Cooliris well beyond the “hundreds” of sites that have already become Cooliris-enabled. Brett Gardner, who just joined Cooliris to oversee its user growth, says the company only recently developed a real strategy for site outreach, and that should push things forward, too.

Another limitation was the fact that when you found something interesting in Cooliris, it could be a pain to share it with your friends — you’d have to jump out of the Cooliris browser to the site where the media originated, then open your email and send the link to your friend. Now Cooliris has created a “share” feature that allows you to just drag media into a box, then send it off (see screenshot above). Right now, the feature is limited to email, but it would also be useful to share on social sites like Facebook and FriendFeed — in fact, Gardner says Cooliris has a Facebook-related announcement coming soon.

The last new feature is the addition of several international sources to Cooliris Discover, its tool for “channel-surfing” different news sources on the web. The added sources include French newspaper Le Monde, British newspapers the Guardian, Telegraph and Independent, plus several others.

I’m hoping to see a big increase in Cooliris-supported websites in the next few months. I’m also waiting for more detail on how the Palo Alto, Calif. company plans to make money. When YouTube’s head of monetization Shashi Seth joined Cooliris as its chief revenue officer in June, he outlined some possible business strategies, but it doesn’t look like any of them have been put into action yet. Sure, it’s still relatively early days, but that Kleiner Perkins money can’t last forever.

There seems to be some grassroots support for the idea of an emergency broadcast system on the micro-messaging service Twitter, at least from people who have emergencies to broadcast. The latest cry for help: A Chinese journalist nabbed by security forces during the Olympics and forced to go to a village far from the event.

You can see Zhou “Zuola” Shuguang’s Twitter stream here, but it won’t do you much good if you can’t read Chinese. A translation of his Tweets is on Global Voices Online. According to the article, Zuola — a childless 27 year old — was ordered to meet with police over accusations of having two children, one more than the local limit. On meeting the police, he was placed in a car, driven to a mining town, and placed under house arrest.

Two months ago a similar case in Egypt got the attention of Twitter users, when an American, James Buck, sent out a terse message reading, simply, “ARRESTED”. Buck proposed the emergency system, in order to help bring awareness to people in desperate straits. Twitter has also proved useful for sending out some alerts, like the one of a 5.4 magnitude earthquake in Southern California.

Just one problem: None of the above situations appeared to have been major emergencies. Buck was released; Zuola appears to have been sent home (with a warning to stay there). The earthquake was small. Twitter is a new service, and the noise ratio is still relatively low. As it grows, how many people will tap into it to Tweet about their predicament? Who will keep reading? And how will they know when to take action?

Still, it’s interesting that Zuola, a citizen reporter, knew all about Twitter and even had a Blackberry in order to send messages. Twitter is gaining users, but it’s hard to tell how many come from outside the United States. A Chinese man crying out for help in his own language indicates that sizable populations are growing elsewhere — whether they’re good in an emergency or not. Meanwhile, Twitter is also proving useful in less life-threatening situations, like the recent Gmail outage.

When I was a kid in rural Virginia, losing electricity was a yearly event around Christmas. Situated on the outskirts of a large utility’s territory, my family was among the last to have its power restored when, inevitably, a big winter storm knocked trees onto lines around the county. So for a day or two, or even a week, the daily entree was grilled cheese from the fireplace, and we all went to bed early.

Was it a serious problem? More of a minor irritation; remote farmhouses are well suited to losing power. The story is different elsewhere. Millions of dollars are lost during even brief power lapses in metropolitan areas. That’s more true every year, as more of our economic output shifts to knowledge workers who are tied to computers and, by extension, electricity.

Policymakers got an inkling of that when, five years ago this morning, a domino-effect blackout took out the power of some 50 million people in northeastern North America. Multiple culprits were responsible, but the main two were aging infrastructure — from lines and transformers to outdated computer systems — and an inability by the utilities to intelligently react to rapidly shifting conditions. Once an initial failure occurred in Ohio, the grid tried to compensate, but ended up overloading several plants. The outage lasted almost three days, causing enormous economic losses.

It’s one of the stories that a new generation of “smart grid” startups is fond of telling, along with the argument that they can prevent another massive blackout by teaching the electrical grid to cope in case of local problems like the one in Ohio.

There are several ways to approach the problem. Some companies — Silver Spring Networks, SmartSynch and Trilliant place communication devices in meters at homes and businesses, so utilities can see real-time demand and shift resources as needed. EMeter and Optimal Technologies make demand-response software for utilities. Tendril Networks and Control4 aim to give energy users power over their consumption. Several of the aforementioned, and others unnamed, handle more than one aspect of the business.

This year alone, smart grid startups have taken over $100 million in funding, and the number is still rising. But the story is a bit more complex than just sending technology to the rescue. While venture capitalists are happy to throw cash at startups, there still isn’t enough movement from utilities and government to fund updates, with many just “dipping their toes in the water,” according to Bill Vogel, Trilliant’s CEO.

That means infrastructure, in part. It’s easier to wait until things break than replace them, even if transformers, substations and other equipment are well past their expiration dates. But another aspect of the problem is a lack of will to build new generating capacity. Utilities are afraid to build new coal plants, in the face of possible carbon regulations, but not enough funding has gone into other sources — natural gas, nuclear, renewables — to make up for old coal plants going offline.

At the same time, power demand is expected to rise 29 percent by 2030, as this Associated Press article points out. The problem with the grid is that you can’t just provide enough power to handle everyday needs; excess generation capacity is needed for “surprise” moments like the one in Ohio, not to mention sources like wind power, which come and go with their source.

The AP article suggests that we’re on the road to another major blowout. That’s not at all an unlikely scenario. But in the long-term, an energy crunch could by good. Disasters drive action; following the 2003 blackout, infrastructure funding almost doubled, according to Vogel. The next time around, there may be enough of a backlash to benefit projects like rooftop solar or biomass plants, which can provide steady energy from trash streams.

In the meantime, the smart grid startups are trying to give utilities the ability to operate with less breathing room, although that may mean cutting or reducing power to low-priority customers in case of an emergency. And there are some bright-eyed visionaries like Optimal, which says its software can virtually rebuild a utility’s response abilities by relying on specialized algorithms. Its CEO, Roland Schoettle, accuses the power industry of still relying on “the old paradigm of more heavy iron”, rather than changing their operating practices.