Tarun Wadhwa is a writer, researcher, and entrepreneur working at the intersection of technology and public policy.

You would think that it would be a terrible idea for a company accused of helping teenagers send each other sexually explicit images to feature bikini-clad young girls in their marketing. Most would avoid such direct associations, for good reason – it’s immature, and edgy when it doesn’t need to be.

But not the makers of the enormously popular app, Snapchat, which allows people to send images and videos that “self-destruct” after a few seconds.

The company claims messages are deleted once they are opened, but there have been a series of recent scandals showing that this may not be completely accurate.  Their product is far from perfect, and there are several ways to compromise the protection they offer.  It is never a good idea to send something over the internet that would damage you or your reputation if it became public.  While this may be common sense, it has little to do with how we actually act online.

The makers of Snapchat are right to reject the “sexting app” label — it’s not clear that this is what it is even being used for, and everyone deserves the option to communicate privately when they want, without automatically being branded as a pervert.

Within a few months of launching, the company has made an enormous and lasting impact on the culture of communication on the Internet, and we should all be grateful.

They have simplified a security process enough to the point that anybody can use it, while validating the market of the next generation of privacy-preserving ephemeral communication.  Most importantly, we may finally get a break from the forced permanence of the Facebook and Google world, where everything you do and share is a data point to be monetized and re-sold to the highest bidder.

And Snapchat isn’t even the best product out there — there’s a whole slew of communication tools that are more secure and functional making their way into the public eye.

One of those is Wickr, created by RSA veteran Nico Sell, a more serious security-focused app that uses “military-grade” encryption to send text, video, voice, and document files that can self-destruct after a given period of time.  Hospitals and law enforcement have expressed interest in a similarly functioning Android app, Gryphn.  Although it’s not “self-destructing,” keep an eye on the exciting and powerful suite of communication apps developed by encryption legend Phil Zimmermann’s Silent Circle company – they are not for “average” users, but they could provide enterprise and more serious clients a massive improvement in security.

What apps like these do is allow us a little bit more freedom to be ourselves, for better or worse.

In the copycat world of Silicon Valley startups and funding, expect to see a lot more “Snapchat for _____” type companies.  Finally, the lack of app creativity may work in the favor of consumers.  We have accepted the notion that what you do on the internet is permanent – a statement that is partially a truthful observation, and partially a threatening promise from the companies and entrepreneurs who are making it a reality – but it doesn’t have to be that way for everything.

Perhaps the greatest impact of this rising industry will be when the giants try to co-opt them, as Facebook attempted with Poke.  The issue of trust in these companies aside, it would be a winning situation for everyone for ephemeral features to be built into the services we already use.

We need more human-behavior-friendly default settings.

Privacy is complicated, and nothing is ever completely secure.  Nobody is immune from this, as Nicholas Weaver wrote in Wired, “even the head of the CIA can’t email his mistress without being identified by the FBI.”  But in the billions of messages already sent through Snapchat are a few people who didn’t have their lives ruined because of something they shouldn’t have shared.

The media can continue to ridicule the “sexting app” that so many young people are using, but they are entirely missing the point.  The same generation being blamed for the supposed “death of privacy” has become wiser than those who are criticizing them.

In a candid admission at the Milken Conference this year, former UK Prime Minister Tony Blair, when recalling his college days playing in a band, told the audience, “thank God social media didn’t exist then, because if it did, I wouldn’t be here.”  The Internet wasn’t built with security in mind, and we’re still dealing with the consequences of that.  The next generations are going to be the ones who pay the true cost of the design decisions we make today.

Tarun Wadhwa is a writer, researcher, and entrepreneur working at the intersection of technology and public policy. You can follow him on Twitter – @twadhwa – or contact him directly at VB@tarunwadhwa.com. Also, check out his upcoming book, Identified, which will be out later this year. 

Image credit: Shutterstock/Shocked man

Apparently the financial analysts and institutional buyers who have driven Apple stock down hundreds of billions of dollars over the last half year have not taken the value of the iconic company’s stock into account. According to the latest BrandZ ratings, Apple is once again the most valuable brand in the world, with a calculated value of over $185 billion.

Tech companies did well in general. Counting telecoms, technology companies made up 29 of the top 100 brands in the world.

Those multicolored letters in Google’s logo are not cheap, coming in at number two with a value of $113.7 billion. And though much older, another tech company with letters for a logo ranked number three: IBM’s brand was valued at $112.5 billion. The only other technology company in the top 10 was Microsoft, with an overall brand value of $69.8 billion.

“Despite a more competitive marketplace and other challengers nipping at its heels, Apple’s ability to maintain its no.1 position demonstrates the value that having a strong brand brings to business,” Nick Cooper, a director for the company behind the BrandZ rankings, Millward Brown Optimor, said in a statement. “People still love the brand regardless of its stock price.”

Apple should watch out, though. Its brand value grew just one percent, compared to mobile rival Samsung’s massive 51 percent growth to number 30 in the global rankings at $21 billion.

How did it grow so quickly?

“Samsung fueled its huge increase in brand value by balancing a remarkable period of innovation with growing market share – it spent $1.6 billion more on advertising in the last year,” Cooper said.

The top 100 brands in the world are now worth $2.6 trillion, according to Millward Brown Optimor. The ranking and awards, of course, were created by a brand research company, which might give it some incentive to be generous with the valuations.

The top 10 brands globally:

1. Apple
2. Google
3. IBM
4. McDonald’s
5. Coca-Cola
6. AT&T
7. Microsoft
8. Marlboro
9. Visa
10. China Mobile

See all the data in visual form in this infographic. Open the image in a new window to see more detail.

photo credit: albyantoniazzi via photopin cc

Apparently no one, not even those who are building complex web applications. And new startup Orchestrate.io just took a massive $3 million seed round to prove it. Orchestrate takes the queries that developers would typically write in order to build an application, such as geolocation, time-series, social graph, full-text search, and more, and unifies everything a developer would need in a single API.

In other words, all the time and resources that would typically go towards designing your data solution can now be redirected to building your application, as Orchestrate outsources the need for you to own and manage your own databases.

“Complex apps require highly optimized queries, so much so that major companies such as Facebook and Google wrote custom big data databases like BigTable to manage them,” founder and CEO Antony Falco told me yesterday. “Typically you would devote 20-25 percent of your resources to data management, so there’s lots of savings. But when creating new apps, you can also reduce the time barrier to building services, getting multiple weeks of savings.”

Antony Falco, CEO and founder

One of those savings: Often companies have had to run or access multiple databases to enable their applications. All of them have to be monitored and maintained, scaled as your app grows, and distributed geographically and across multiple service providers to ensure high availability and low latency.

With Orchestrate, that’s all built in, Falco told me, including geographical distribution. Simply use the Orchestrate API to insert, read, and update data, and pay no attention to whatever is happening behind the curtain.

Falco used to be a VP at Akamai, the content delivery network, so he knows a few things about scalability and access. And talking about scalability, Orchestrate is looking to fill a pretty big niche.

“Database and operating system licensing, servers, storage, power, labor, outsourcing, and professional services represents a market that exceeds $100B annually,” Falco said in a statement. “We believe our service will save our customers significant time and money, allowing them to instead focus on what matters most — the end-user.  With Orchestrate.io, our customers can build better apps, faster.”

The $3 million is for getting Orchestrate’s existing solution into production and hiring more engineers.

It’s a largish seed round — you typically see $750,000, $500,000, or less for seed rounds, but Falco, who acknowledged that it had some aspects of an A round, says that it will help the company expand further. And, for a company with global aspirations, some expensive requirements are just table stakes.

“With $3 million we will be globally distributed,” he says.

Falco is a serial entrepreneur, also founding Basho Technologies, maker of open-source distributed database Riak. Orchestrate was founded just three months ago, in March 2013, and is based in Portland, Oregon.

The investment was led by True Ventures with Frontline Ventures and Resonant Venture Partners joining in.

photo credit: adesigna via photopin cc

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That lasted a few months, at least.

Nokia and Intel had decided in 2010 that they needed an answer to Apple’s iPhone juggernaut which was taking high-end smartphone sales away from Helsinki and making it completely obvious that the king of chips had no chips in the mobile processor poker game. Meego was the answer, and Meego would be the operating system that would lead the then-still-powerful Nokia back to the forefront of the mobile market, and would make Intel relevant in small, low-powered, and battery-life-efficient phone CPUs.

Unfortunately, one loser plus another loser often just equals two losers. And, unfortunately for Nokia and Intel, Google and Samsung took their lunch and ate it, too, as Android began to reign uber alles. So Nokia turned to Microsoft for salvation — and a very painful process it has been — and Meego lost its way.

But not entirely.

Jolla, a new and independent smartphone vendor which almost no-one but mobile wonks has ever heard of, took the core of Meego and built Sailfish, a new mobile operating system that is built on an open-source project named Mer that is the new incarnation of Meego, and is just now teasing the coming-soon release of its very first device, the oddly named and oddly designed but also oddly attractive “The Other Half.”

Surprise, surprise, Jolla is based in Helsinki, Finland, where there just happens to be a surplus of top-notch mobile talent available lately (shocking, isn’t it). And surprise, surprise, all of the top Jolla leaders are ex-Nokia employees. Almost two years ago, Jolla announced its intentions of bringing a new smartphone to market. The biggest surprise is that they seem to be succeeding.

We are Jolla. We are Unlike

Jolla appears to be a two-part device, consisting of a 4.5-inch screen, a buttonless main phone handset, and various colorful plastic cases, or “other halves.”

Snap one on, and your phone OS changes.

Source: Jolla

The Sailfish OS almost reminds you of Windows Phone tiles.

Changes color, changes battery life, perhaps, changes content such as apps and media, and changes in other ways yet to be invented, based on the creativity of Jolla and partners.

Actual devices have yet to be released, and the details are fewer than might be desired, but the key point is that the Jolla is Android app compatible. Which, frankly, is probably essential for any new smartphone platform entering the market today. The smartphone market is an ecosystem battle, not a device battle primarily, and any new entrants with any real aspirations for success have to plug into what is already available and — largely — a global standard.

Interestingly, the main Sailfish operating system screen appears to draw from Windows Phone design elements, with titles on the home screen that aggregate information that you might be interested in.

According to Engadget, the phone will have a dual-core processor (type unknown), LTE, an 8MP rear camera and a front-facing camera, and have 16GB onboard storage plus micro-SD expansion.

At the very least, it’s an interesting take on mobile that enables users to participate in some — if not all — of the benefits of the world’s leading smartphone operating system, while still having some unique and differentiating factors. Jolla says it will offer the world’s best multitasking experience, and will be so intuitive that you can operate your favorite features “without even looking at the device.”

Main navigation on the phone is buttonless, with the four main icons appearing to be Phone, Messages, Browser, and Apps. The Sailfish operating system will also support gesture control, the company said.

I’m assuming that full Google integration and access to Google services such as music would not be included, and syncing contacts and other core data would not be as simple as on a straight Android phone.

However, Jolla seems to be competing on differentiation. And while the jury will be out on how successfully they’ve achieved it until we have actual devices in our hands, at first glance, they’ve succeeded.

Image credits: Jolla

A full 7.5 million years later, it arrives at the answer: 42.

Google appears to be referencing that bit of geek cult humor in a new device, the H2G2-42, that it is currently submitting to the FCC for regulatory testing. H2G2 is a Wikipedia-ish guide to “life, the universe, and everything” inspired by Adams’ books.

There’s little data available about the device, but Google does say it is a “media player,” and a “fixed base station” with 802.11b/g/n Wi-Fi, which would make it almost certainly a replacement for Google’s failed Nexus Q. The Q was Google’s ”first social streaming media player” that met with almost universally negative reviews, underwhelmed users, and is no longer for sale.

Source: FCC

Google device H2G2-42 is in FCC testing

One change that seems likely: It appears that the H2G2-42 will allow users to plug in external monitors via provided USB ports:

Source: FCC

Google’s H2G2-42 may be connectable to external monitors

As The Verge notes, Google’s new streaming music app broke compatibility with the Nexus Q. The Google Play Music All Access product is impressive, enabling personalized “radio stations” and inexpensive streaming music. Google calls it “radio without rules,” and it seems reasonable that Google would want a shiny new device to go with this major new music push.

Photos are not yet available and more details will have to wait until 45 days after certification. And it’s unlikely that a music streaming device will be the ultimate answer to the ultimate question.

But meanwhile, enjoy:

Image credits: Google, FCC

Sept. 9 - 10, 2013
San Francisco, CA

Early Bird Tickets on Sale

More than 20 million students currently use Google Apps, and another 10 million are soon to join, thanks to a deal with Malaysia.

As students and schools are increasingly storing more of their data and documents in clouds of Google’s servers, Backupify recently announced that it has tripled its education user base, with more than 40,000 new education users since January of this year. Schools are using the cloud-based backup service to ensure critical data is archived and safe, even if it would be accidentally deleted or lost on Google’s servers.

Education is a notoriously slow adopter of technology, but Google Apps is growing quickly, if not virally, doubling over the last two years. And the current 20 million users include seven million inside the U.S. alone — led by Oregon that adopted Google Apps in all K-12 classrooms in 2010.

And sometimes, they’re using Backupify because they have to:

“Millions of students and educators around the world are currently using Google Apps to enhance collaborative learning,”  Backupify CEO Rob May said in a statement. “The education sector is ahead of other industries in this regard, but faces unique compliance requirements for data privacy and retention that demand an effective backup strategy.”

To celebrate the recent growth of Google Apps for Education — and their own growth — Backupify put this infographic together:

Image credit: John Koetsier/Venturebeat

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Twenty-four hours after Google released three location tools for its app developers, startups are already integrating the APIs into their products.

The founders of Valet stayed up all night to get the new API into their app as quickly as possible. Valet launched in April in the Google Play store to help people remember where they parked. It tags your parking location with a pin and reminds you when to pay the parking meter. You can set a timer for your meter and share the location on social media. There is, of course, no guaranteeing you will avoid fines, but it does cut down on the “human error” often responsible for the tickets.

Founder Will Roman recently relocated to San Francisco from Austin, Texas, to work at another startup. After “losing” his car a few times in the unfamiliar city and getting slapped with multiple parking fines, he recruited cofounder Josh Deffibaug, and the two set out to build Valet.

The app received mention on Gizmodo and a couple of Android blogs for its “simplicity and beauty” and was attracting a good number of users through word-of-mouth. But when Roman and Deffibaugh heard the news about Google’s new location APIs, they saw an exciting opportunity.

“Everyone who drives can appreciate this,” Roman said in an interview. “Parking tickets suck, and so does forgetting where you parked on a busy day, when visiting a new city, or after a night of drinking. With integration of the new Google Play Services location API’s, all features can be automated on over 95 percent of Android devices thereby preventing you from ever loosing your vehicle or getting a parking ticket again. We’re the only parking app in the world to integrate the Google Play Services location API’s.”

The location application programming interfaces (API) are part of Google Play Services, a tool kit for Android developers. Integrating location-sensing features to your app can be challenging and Google’s fused location provider “intelligently manages the underlying location technology” to make building location-aware app easier and less energy-intensive.  The technology combines GPS with on-phone sensors like the gyroscope, accelerometer, and barometer to collect your movement data and deliver a more accurate, immediate, and power-efficient application.

Using “Activity Recognition,” your phone can figure out whether you are walking, cycling, or driving which has clear applications for fitness apps. The Valet founders realized that the same technology could be used to tell when a car goes from driving to park mode, and can automatically drop a pin in your parking spot without you having to push a button.

“The new location APIs are more accurate, simpler to integrate, and back ported,” Roman said. “They solve a lot of the fragmentation issues of Android and enabled us to cater to the broadest market possible with even better reliability than previously possible.”

Competitors include iCarPark, Car Finder AR, Find My Car Smarter, Car Locator, Where Did I Park. Valet is based in San Francisco, where parking does in fact suck.

That means that yes, at some point you’ll be able to run your little WordPress-powered blog on the biggest server farms on the planet. But it also means that major companies will be able to use Google’s famously reliable services to run their enterprise-scale “big data,” backend, and, yes, consumer web projects, all in the PHP language that that is increasingly penetrating corporations.

I talked to one of the three founding fathers of PHP and current Zend CEO, Andi Gutmans, about the implications for PHP.

It’s a busy time for the Gutmans, the open-source programming language, and Zend, the company Gutmans formed to offer commercial support and tools for PHP. Engine Yard just recently added PHP to their Platform-as-a-Service as well. And Zend is expanding quickly in the enterprise as it has recently released integrated development tools for cloud-enabled mobile applications.

But Gutmans, though busy, is thoroughly upbeat.

And for good reason: The biggest web company on the planet just added support for the most widely used programming language on the planet. And in that support is a massive implied compliment to PHP — the first non-Google programming language to be supported by Google App Engine — and a potentially major boost to Zend’s business.

VentureBeat: Did Google talk to you before adding PHP to Google App Engine?

Source: John Koetsier

Andi Gutmans at ZendCon 2012.

Andi Gutmans: I don’t know how to answer that. I was aware that they were going to make that announcement … I’ve worked with the product manager on the project before.

VentureBeat: Google didn’t formally brief you?

Gutmans: Let’s put it this way: It’s not a surprise that a platform-as-a-service (PaaS) player that’s serious about gaining market share added PHP support. Google App Engine was almost a science project for the first few years, only supporting languages that Google used internally.

But in the past few months, there’s been a real attitude from Google that we’re going to go and compete with Amazon and with Microsoft, and we’re going to do it all fronts. They’ve become very aggressive on differentiating on performance and billing.

VentureBeat: What does this announcement say about PHP?

Gutmans: We have internal jokes about PHP’s web penetration and have used the stat that PHP runs 39 percent of the web because it was the only number we could get from Netcraft.

But I love Google’s stat, that 75 percent of the web runs PHP. No one knows the web better than Google.

If they’re trying to gain market share and gain it quickly, there’s no other language to do it with. And this is the first non-Google language they’re supporting.

VentureBeat: How’s that feel? And how are your customers reacting?

Gutmans: I’m definitely excited about it.

When any player does something like this — especially Google — it’s a huge validation. We got emails from some of our largest customers, saying this is great … it gives our enterprise customers a higher sense of confidence. And that stat that 75 percent of the web runs PHP is great for Zend – anything that is good for PHP, by proxy is good for Zend.

In addition, they said that PHP was their top-requested feature, which means the developer community was very supportive of us.

VentureBeat: Will you offer Google App Engine Support within Zend Studio, so developers can publish to Google right from within their Zend development environment?

Gutmans: We don’t know yet … it’s early and we’re exploring what kind of relationship we can have with Google.

We do support Google Compute Engine — that’s a full integration and some of the larger companies who run PHP already use it — but Google App Engine is just launched, it’s still in experimentation mode.

VentureBeat: What took Google so long to add PHP support?

Gutmans: I can’t speak for Google, but my assumption is that I felt that Google App Engine in the first few years was something they knew they wanted to do really well but … they kinda went down the simple easy route.

But we’ve seen a significant acceleration in the past 12 months. This will be a $20 billion market by 2016, and they moved from testing the waters to being very very aggressive right now.

We recently surveyed 5,000 PHP developers, asking them where in the cloud do you think you’ll deploy. Fifty-one percent said Amazon Web Services, but Google was 21 percent … and we just support Compute Engine right now.

It wasn’t even on the list last year, so that’s a big jump.

VentureBeat: What does this mean for the little guy building in PHP or hosting a WordPress blog?

Gutmans: I think it gives another option for the guys who do the small stuff, who are using shared hosting for $20/month.

What’s really great for the small developer is that it’s a nice value proposition — you can start at a lower cost. And, it’s a modern platform versus shared hosting, which is quite constrained.”

VentureBeat: So what does this mean for PHP overall?

 Gutmans: The number of requests that Google got from developers was very very significant. It exemplifies what we’ve been talking about … that PHP is very broadly adopted, but also by enterprise.

And that is driven by web, mobile, and cloud, which is where PHP’s sweet spot is. We’re seeing a strong tailwind behind us.

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Big Data and Predictive/Real-time Analytics startups: Are you looking to jumpstart development & accelerate market traction? Sign up for the SAP Startup Focus program to receive technology, support, resources and community to help you develop new applications on SAP HANA, a cutting edge database platform. Get started here, and enter promo code “VB2013″ on the form.

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The advertising industry’s top kudos show, the Clio Awards, gave Google the advertiser of the year award for 2013 for creativity and excellence in advertising this week.

Here are some of the best examples:

Google Fiber — and toy cars:

Build with Chrome — and Lego Sydney Harbor Bridges:

100,000 stars (go forth and explore):

And, of course, no gallery of great Google ads would be complete without Dear Sophie:

Image credit: Google; Hat tip: Mashable

Today, not that much has changed.

After debuting close to $40 and cratering to just under $18 in August, the stock has somewhat stabilized in the $25 region, down 30 percent from its opening-day high. And along the way, the story emerged of how Facebook tried to hide some of the mobile risk inherent in its business and how the company panicked and botched its IPO by using vague positive language in its public prospectus and, apparently, specific negative information about slowing revenue growth to institutional investors privately.

Not to mention the $100 million paid to banks to stabilize the stock — on top of $176 million in IPO fees — for efforts that ultimately failed. And technical glitches that cost the NASDAQ $62 million in compensatory fees.

All of which negatively affected the overall IPO market.

That all said, however, Facebook has seemingly nicely recovered from the disaster — at least from a business fundamentals perspective. Revenue growth was strong in its latest quarterly earnings release, with the company booking $1.46 billion in revenue for Q1 2013, compared to about $1 billion a year ago. More importantly, mobile was significantly up, accounting for 30 percent of ad revenues, and Facebook singlehandedly accounted for 6.5 percent of all online ad dollars spent in the U.S.

Not exactly Google numbers, but pretty good nevertheless.

And the company has massively beefed up its advertising options. It’s now posting retargeted ads right in the news feed, once sacrosanct territory. And in a move aimed directly at advertising giant Google, Facebook has launched a self-serve tool that allows advertisers to target its users based on what they actually buy and want to buy offline … which is a significant move to targeting the intent graph that Google hits so well by virtue of being a search engine, but Facebook has often missed since its visitors are on the site to meet and greet people. In addition, as soon as July, Facebook will be rolling out 15-second video ads in the news feed, a product that it will be charging major brands millions of dollars for.

All of which is having an effect.

The consensus recommendation for Facebook is currently a buy, with a price target of $34. Most analysts are in the Strong Buy category, with few or none in the dreaded Underperform or Sell slots. And in the past four weeks, analysts have revised their earnings estimates upward by a factor of 6 to 1.

So there’s a lot of positive in Facebook’s future, and there’s a ton of potential. But it’s still challenging when analysts compare Facebook stock with other internet high-fliers like LinkedIn or Yelp, which rose 148 percent and 48 percent in their first years, respectively.

But at least it’s better than Groupon and Zynga, both down around 75-80 percent.

And, I would argue, while there are a ton of challenges and many very significant competitors — primarily Google — the future for Facebook is bright.

Even if the public start was a stubbed toe.

Voiding your warranty, apparently, is as simple as running five short commands. To run those, however, you need a higher-resolution way of communicating with your Google Glass device than the touch-sensitive screen on your specs.

“Fortunately, this is an Android device, and like most Android devices, it has a Bluetooth chip,” Google engineer P.Y. Laligand said today at the chat on hacking Glass.

Source: Google

Glass is just Android, underneath.

So he simply turned on Bluetooth, paired an external keyboard, opened up a terminal window, and typed five commands in ADB, or Android Debug Bridge:

1. $ adb reboot bootloader: (Allows you to access the bootloader)
2. $ fastboot oem unlock: (Removes security precautions, erases user data, and … voids your warranty.)
3. $ fastboot flash boot boot.img: (Replaces the boot image)
4. $ fastboot reboot: (Reboots back into a normal state)
5. $ adb root: (Finally, you have root access and access to all the data partitions)

These are not steps to be taken lightly, according to Google engineer Hyunyoung Song.

“Even though there are recovery methods, there is a chance that you could get stuck in a state from which it’s not easy for your device to be recovered,” she said. “And Google will not support you.”

Google Glass owners who have taken the lives of their $1,500 Google Glass Explorer Edition devices in their hands and bravely gone where few dare, however, have done some exceptionally cool things. One has installed standard Ubuntu Linux on Glass and now programs on Glass using Emacs, a text editor. Another has created an avatar that mimics your head motion, bobbing around just as you do while talking and gesturing.

Source: Google

Danger, Will Robinson! Voiding warranty now!

And Google — while not supporting you if you brick your device — encourages developers to play around in root mode, hacking new apps and experiences which can be then brought into the Google Glass ecosystem.

“Now you’re in root mode,” Song said. “Play around and go nuts with whatever you want to do.”

For the faint of heart, there will be a safety net at some point. Google will be releasing the standard Glass system images, which can be used to recover bricked devices.

Probably.

Image credit: Jolie O’Dell/VentureBeat

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Big Data and Predictive/Real-time Analytics startups: Are you looking to jumpstart development & accelerate market traction? Sign up for the SAP Startup Focus program to receive technology, support, resources and community to help you develop new applications on SAP HANA, a cutting edge database platform. Get started here, and enter promo code “VB2013″ on the form.

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And Windows Phone could jump into second place quicker than you think.

While they’re not Android or iOS-style numbers, Windows Phone sold 7 million units in the first quarter of 2013 for 3.2 percent market share, according to the latest IDC report. Meanwhile, BlackBerry sold 6.3 million units, down a third from the previous year, for 2.9 percent market share — less than half of its share just a year ago. Market leader Android took its customary massive 75 percent of the market, and Apple’s iPhone slipped from 23 percent global market share in 2012 to 17.3 percent share.

“Windows Phone claiming the third spot is a first and helps validate the direction taken by Microsoft and key partner Nokia,” the IDC’s Kevin Restivo said in a statement. “Given the relatively low volume generated, the Windows Phone camp will need to show further gains to solidify its status as an alterative to Android or iOS.”

Those further gains are possible over the next year or two as Microsoft’s primary phone parter, Nokia, transitions to an all-smartphone lineup.

Part of Apple’s quarterly weakness was the company’s lack of any new hardware or significant new announcements. That made Apple slip to its lowest global smartphone market share in years, now less than a quarter of Android’s size, with only 37.4 million iPhones sold to Android’s 162.1 million. But systemically, Apple is falling out of the race for smartphone supremacy. And that puts Apple at risk of being in Microsoft’s sights for the number two position in the global smartphone market share battle.

How?

Nokia is going all in on Windows Phone — mostly by necessity — and now accounts for 79 percent of all Windows Phone sales. The Finnish company has sold over 20 million Windows Phones to date, which is not bad, considering the challenges of Android, iOS, and Microsoft’s stutter-stepping from Windows Phone 7 to Windows Phone 8.

Source: IDC

Global smartphone market share, Q1 2013

But the real opportunity for both Microsoft and Nokia will come as Nokia continues its transition from feature phone sales over to Windows Phone. The company still sold something like 55 million feature phones in the first quarter of 2013, and while those cheap phones are going largely to developing nations, they will transition at some point to Windows Phone.

Those feature phones sales are decreasing, and the transition from cheap feature phone to somewhat more expensive Windows-based smartphones will decrease them still more, but they will be higher-value sales.

And, they might just be high enough, depending on what Apple does in the region of a cheaper iPhone, to catapult Microsoft to number two.

Image credit: Microsoft

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Google has asked Microsoft to remove its homebrew YouTube app from the Windows Store immediately, and the search giant requested that it delete the app from Windows Phone users who have already downloaded it.

Essentially, Microsoft built a YouTube app for Windows Phone because Google refused to permit Windows Phone users to connect to YouTube. As Microsoft’s Dave Heiner posted, “Google blocked Microsoft’s new Windows Phones from operating properly with YouTube … Google has refused to allow Microsoft’s new Windows Phones to access this YouTube metadata in the same way that Android phones and iPhones do.”

In response, Microsoft created its own YouTube app.

The problems with that, according to Google, are three: the app enables users to download YouTube videos, prevents ads from being shown, and plays videos whose owners have set to only play on certain platforms. Microsoft’s app, Google says, violates the YouTube terms of service, and uses the YouTube logo in a way that contravenes the company’s branding guidelines.

Source: Microsoft

The YouTube app, by Microsoft

This is an ongoing battle that has been slowly heating up since well before January of this year.

The solution would seem to be fairly clear: Google should make a compelling YouTube app for Windows Phone, just as it already does for another smartphone competitor, Apple’s iOS mobile operating system. Why it chooses not to is not exactly clear, although it may just have something to do with the fact that, via patent licensing agreements with Samsung, LG, Acer, and others, Microsoft makes perhaps $5 per Android device sold. And it can’t help that Microsoft has hit Google where it hurts on Android and privacy, which, up until a couple of weeks ago, truly sucked.

Microsoft has since released an official statement, basically saying they’d be happy to work with Google to resolve any issues, as long as Google will reciprocate.

“YouTube is consistently one of the top apps downloaded by smartphone users on all platforms, but Google has refused to work with us to develop an app on par with other platforms. Since we updated the YouTube app to ensure our mutual customers a similar YouTube experience, ratings and feedback have been overwhelmingly positive.  We’d be more than happy to include advertising but need Google to provide us access to the necessary APIs. In light of Larry Page’s comments today calling for more interoperability and less negativity, we look forward to solving this matter together for our mutual customers.”

Surely, we can all get along here?

Google is in no danger of losing its mobile operating system hegemony … as the company announced today, it recently hit 900 million Android device activations.

I don’t use Google + and chances are you don’t, either. Google, however, really, really wants to change that.

Google is rolling out a major overhaul to the design of Google+, which now looks like a freakish three-column lovechild between Pinterest and Facebook.

The updates, which are among the 42 new features that are headed to Google+, adds a lot of polish to a social network that has so very been awfully bereft of it. I can only applaud Google’s decision to change things up.

In addition, Google+ will now automatically tag your photos, which is either horrifying or awesome, depending on how you look at it. During the presentation, Google senior VP Vic Gundotra used the example of a photo of the Effiel Tower, which, after being analyzed, was tagged with, um, #effieltower.

“We are incredibly grateful to the millions of you who’ve joined Google+, and we can think of no better thank you than to keep innovating,” Gundotra said.

Hangouts, the free multiperson video chat and messaging service inside Google+, has been broken out into its own standalone applications for iOS, Android, and Chrome.

“Technology can just go away and people can focus on what makes them happiest, just hanging out.” Google SVP Vic Gundotra said today at Google I/O.

The new Hangouts service unifies all communication across Google’s platforms. It’s replacing all prior apps like Google Talk, Google+ Messenger, and Hangout video chats with Hangouts. This new app handles texts, shares photos, video chats, and more.

No matter which app you use to access Hangouts, you’ll have access to a list of conversations that it backs up in the cloud. You’ll be able to message people even if they aren’t online.

Importantly, Hangouts will challenge WhatsApp, Facebook Messenger, and other popular messaging services that are supplanting traditional text messaging.

The Hangout apps for iOS, Android, and Chrome will be available today.

Google Glass will likely be immensely useful for doctors, field workers, and other service providers. But for ordinary people, it’s disorienting and nerdy. 

But that hasn’t stopped developers from responding to Google’s request to build applications for Glass. Owners of the device now have a nifty news aggregation app dubbed “Thirst Droplet,” released today by Thirst Labs.

Thirst believes the investment in Glass was worthwhile and will help it reach “Generation C” (the “C” stands for “connected.”) Either way, it reportedly only spent around three days developing features for the app.

Thirst has already unveiled its Android and iPhone apps for personalizing and curating the news. Follow topics on a mobile device and the web, and Glass will send a push notification when it’s trending on social media. Hundreds of thousands of topics — such as “Oprah Winfrey,” “49ers,” or “Google” — are currently available for you to follow.

The Glass app takes the news experience step further, giving you the opportunity to listen to an entire article. You can also flag an article for future reading and email it to yourself straight from Glass. You can also “like” or “dislike” a story.

Thirst has differentiated itself from other news readers with its language processing tools. Rather than asking readers to discover news, the it automatically finds and presents the most relevant content in what Thirst says is an engaging way. The company tracks millions of data sources — blogs, social media, and so on — to determine whether news is trending.

Don’t miss the explanatory video below to see how the app works.

The Thirst news app for iPad

“Under the hood, you don’t read the same feeds as Google Reader. We find the topics relevant to you,” CEO Anuj Verma said in a recent interview with VentureBeat (pictured above), hitting on how Thirst differs from competing news apps like Flipboard and Pulse. “You don’t really have to hunt for the content.”

Similarly to news aggregation app Pulse, which LinkedIn recently acquired, Thirst Labs was formed by college friends. The founders are a pair of University of Berkeley, California grads who share a passion for UI, UX, and developing algorithms.

San Francisco-based Thirst Labs has raised $950,000 in seed funding from BlueRun Ventures, Steve Newcomb, and Jason Krikorian.

Top image // Google Glass

Where’s Steve Ballmer doing the monkey dance when you need him? OK, wrong company. But instead of doing a creepy developer dance, Google’s showing its developer appreciation with five major new features to make more money.

Cold hard cash — now, that’s love!

Google Play product manager Ellie Powers — no relation to Austin — shared the new features of Google Play Developer Console at Google I/O in San Francisco today.

1. Optimization tips: Google automatically generates optimization tips based on what your app does and what users are doing with your app. For example, if your app is selling well in Russia but it’s not localized in Russian, Google will suggest you localize your app.

2. App translation service: Getting translations can be tough, so Google has introduced a new app translation service right in the Developer Console. Simply pick the app, select the language, and pick a translation vendor. Your translations will arrive in about a week.
   

   Source: John Koetsier

   Ellie Powers

3. Usage metrics with referral tracking: “We want to give you all your metrics in the same place,” Powers said, so Google will now show you all your user metrics right in the Developer Console as well as in Google Analytics. This will roll out later this summer. And if you’re using campaigns to promote your app, referral tracking helps you understand which ads are most effective — and integrates with Google Analytics, showing you your google Play referral flow.

4. Revenue graphs: A new tab in the developer console supplies a summary of your app’s revenue, globally or per-country.

5. Beta testing and staged rollouts: If you want to test new features, Google Play now supports beta testing and staged rollouts. Developers can start with a small group of alpha testers, and then roll it out to a larger group of beta testers — using Google Groups, of course. Feedback from these groups only goes to the developers.

Image credit: Google

“Google is very fortunate to have two large open platforms … two fast-growing platforms,” Pichai said, referring to both Android and Chrome, the world’s most popular browser.

Two years ago Android had just 100 million activations, and just a year ago, Android reached 400 million. Today, at 900 million, it is still more than doubling annually.

But there’s still a long ways to go, Pichai said.

“There are seven billion people on earth,” he said.

In other good news for its mobile operating system, Google’s Hugo Barra announced that Google Play has now passed 48 billion app installs. That’s massive — and it comes just as Apple is announcing its drive to 50 billion installs. But the growth on Android is massive and increasing, with a staggering 2.5 billion app installs just in the last month.

In addition, developers are making more money.

“This year we paid more money already to developers on Google Play than all of last year,” Barra said. “And revenue per user is 2.5x what it was a year ago.”

This isn’t even a race.

Second place is LG, with 2.5 percent of the device profits from Android smartphones, and third place is “Other,” with everyone else lumped in to a tiny 2.7 percent share.

“Samsung is, for now, the undisputed king of the global Android smartphone industry,” Neil Mawston, Strategy Analytics’ executive director said in a statement. “We believe Samsung generates more revenue and profit from the Android platform than Google does.”

Globally, Android smartphones accounted for 43 percent of the overall smartphone industry’s profits, the report says. Those profits reached $12.5 billion in just the first quarter of 2013. And due to an ultra-efficient supply chain, “sleek products,” and successful marketing strategies, Samsung has captured almost all of that 43 percent, or $5.1 billion.

Now the question in the Android ecosystem is this: Is Samsung more powerful than Google?

According to Strategy Analytics, perhaps.

“Samsung has strong market power and it may use this position to influence the future direction of the Android ecosystem,” Mawston says. “For example, Samsung could request first or exclusive updates of new software from Android before rival hardware vendors.”

Samsung, which shipped 400 million phones in 2012 and 82.2 million phones, tablets, and laptops in the first quarter of 2013, is clearly on a roll. Android has 75 percent global market share, and Samsung has a massively dominant position within the Android ecosystem.

But, he adds, Google co-founder Sergei Brin tells him he’s a better CEO because he says less.

Page lost his left vocal cord over a decade ago after a bad cold and a hoarse voice that never really recovered. Doctors couldn’t explain the problem, never identifying a cause, and assured him that losing the other vocal cord was a virtual impossibility. Fast forward to last year, and again after a cold and a hoarse voice, Page learned that his right vocal cord now had limited movement also.

Both injuries resulted in vocal issues — the first in a slightly weaker voice than normal, and the second with even more impact — but Page says he’s been able to recover, at least partially:

Thankfully, after some initial recovery I’m fully able to do all I need to at home and at work, though my voice is softer than before. And giving long monologues is more tedious for me and probably the audience.  But overall over the last year there has been some improvement with people telling me they think I sound better.

But Page, who says he’s actually feeling quite lucky overall, also says that having paralyzed vocal cords may have made him a better CEO. Why? As co-founder Brin told him, Page is forced to choose his words more carefully … which probably gives him the time to think through what he wants to say before saying it, and also reduces the number of occasions in which thoughtless words cause damage.

I’ve heard that personally on Google earnings calls — Page speaks a little slowly, a lot softly, and with carefully-selected, well-chosen words.

As a result of these challenges, Page came into contact with a Harvard doctor, Steven Zeitels, who is leading a research project on vocal cord paralysis. The problem is relatively rare, he says, and there’s not enough information currently to help doctors learn more about it, and to treat it.

The project is starting with a patient survey to “gather information about the prevalence and extent of vocal paralysis and paresis” from people who have similar problems.

Page’s journey surfaces the question: would every CEO be better by saying less?

Image credit: Google Zeitgeist video

Still there?

Sorry for the big shocker. Almost a year after reports that Amazon was testing smartphones in Asia, half a year after rumors Amazon was buying a smartphone chip processor, a year after more reports that Amazon was building its own smartphone, five months after unveiling a notifications system that would look really nice on a smartphone, and six months after probably wild speculation that Amazon was going to unveil a smartphone for the pre-Christmas shopping spree in 2012, there’s yet another report that Amazon is building a smartphone.

But this one has a 3D screen.

The Wall Street Journal says that Amazon is building at least two smartphones, including a high-end model with 3D graphics and retina-tracking technology so that users can navigate content by “using just their eyes.” Plus an audio-only “streaming content device.”

Harrumph.

Amazon is almost certainly working on a smartphone and almost certainly planning to release it in 2013. There’s just too much smoke for there not to be fire. And having made its bet on digital content being the growth engine of the company’s future success — 12 of the 15 highlights in Amazon’s recent earnings release were about digital content — a smartphone that makes use of Amazon’s recently expanded app store and burgeoning virtual shelves of ebooks, TV shows, movies, and all other forms of digital content makes way too much sense.

But a couple grains of salt.

Amazon hasn’t made its bones in the tablet market by offering the absolutely latest and greatest technology but by presenting a solid product at a rock-bottom price. So I’m a little skeptical about all the wild 3D speculation — especially because that could be a sweet datapoint plant for the company to identify leak sources. And, in reality, a company the size of Amazon, like Apple, is working on many different projects at any given time. Some of them will come to market, and some of them won’t.

One company that can’t be happy about Amazon impending smartphone plans, however, has to be Google. Amazon has essentially hijacked Android for its Kindle offerings, taking the open-source mobile operating system that Google has developed, stripping out the Google app store, Google apps, and Google branding, and replacing them with its own offerings. Amazon will doubtless adopt the exact same strategy with any smartphone play — as Samsung might as well.

And, given the fact that Kindle is probably the leading Android-based tablet, it has the potential to do well in smartphones as well.

Of course, incumbent leader in Android sales Samsung might have a thing or two to say about that.

Image credit: Brian Sawyer/Flickr

Once again, Android accounted for 75.6 percent of all smartphone shipments, and once again, Samsung is killing it.

The Korean smartphone king grew smartphone shipments by 64.3 percent year-over-year while shipping 82.2 million tablets, smartphones, and notebooks combined. Meanwhile, mobile rival Apple grew its iPhone shipments by a shockingly low 6.7 percent, hitting single digit growth in a market which has overall growth of 37.4 percent.

Let me say that again: Apple is at single digit growth in a market growing at almost 40 percent.

Source: John Koetsier

Android meets Wall-E.

If there’s any doubt why Apple’s stock in moldering in the mid-400′s after hitting highs last year of over $700, that’s why. And with Tim Cook basically telling Wall Street that Apple won’t ship any significant new products until this fall, or even 2014, the situation is not likely to change.

‘Despite its slowing growth, Apple still shipped over 37 million iPhones,’ Canalys analyst Pete Cunningham said in a statement. ‘But HTC and Samsung have raised the bar with their latest handsets and Apple needs to respond with its next iPhone. The iPhone user interface is now six years old and badly in need of a refresh.”

Tablets are one area of slight comfort for Cupertino.

Apple retains 46.4 percent of the tablet market, Canalys says, shipping 19.4 million tablets. That’s down from 58 percent market share in the first quarter of 2012, and once again, in a market growing at over 106 percent year-over year, Apple grew less than others — about 60 percent growth year-over-year.

‘Spearheaded by Google and Amazon, the commoditization of the tablet market has happened far quicker than that of the wider PC market,’ Canalys analyst Tim Coulling said.

The upshot?

Without significant new Apple products, major new product categories, and a much more intense Apple effort to produce a wider range of phones and tablets that the market is looking for right now, Apple share will continue to drop.

And one other interesting tidbit in the Canalys data:

Calculating operating system share over all “smart devices,” lumping in smartphones, tablets, and laptops does provide interesting insights. With that view of the industry, Microsoft ends up with an 18.1 percent OS market share — a very different proposition than high-90-percent share in the laptop/desktop world.

Image credit: Louish Pixel/Flickr

But what if you’re not one of the 6,000?

No worries, you can participate too. Google is “going live” from I/O, and pretty much anyone who wants to participate can join in. Here’s how:

1. Keynotes
   Google will stream the major presentations from 9AM to 7PM PST for both May 15 and 16.
2. Interviews with Googlers
   Google Developers Live will feature interviews with Google developers and managers throughout Google I/O.
3. News updates
   The Google Developers Google+ page will have updates (as will we — see below)
4. Full sessions
   And full sessions will be broadcast on the Google Developers YouTube channel. No word from Google on when exactly they’ll go live, but Google says they will be recorded an made “rapidly available.” Hopefully, that will be same-day.

And, of course, we’ll be at Google I/O. Our own intrepid Jolie O’Dell and Devindra Hardawar will be at the event, seeking out the best news and reporting almost-live here on VentureBeat.

Oh, and by the way, if you haven’t been to Google’s I/O home page, give it a click. Then click the “I” and the “O,” and build some binary code at the bottom of the page.

Source: John Koetsier

The actual, real, live fire pole.

Like a full regulation fire pole that people can actually use to drop down a floor. Or an officially certified slide to get down to the lobby after a long day. Perhaps a cushioned and enclosed chill room.

Or even, believe it or not, a cattle walkway.

On a recent trip through Ontario, I toured Google’s first office in Canada — and talked to the engineer who leads Google Canada, a former startup guy in Silicon Valley and native Canuck, Steve Woods. If you use mobile Gmail, a Chromebook, Google Maps, Google Calendar, or Google Fiber, there’s a good chance you’ve touched something built at Google’s offices in Waterloo, Ontario.

And if you ever get the opportunity, those offices are definitely something to touch as well.

“Startups are great, because you start from scratch,” Woods says. “Startups are awful, because you start from scratch. At Google, you can literally launch a project that affects a billion people.”

That’s one reason he decided to accept Google’s offer to leave the Valley, return home, and “figure out what we should do in Canada and do it.”

In 2008, when Google opened the office, Waterloo and London were the company’s two centers of mobile excellence — likely due to Waterloo’s proximity to then-leading smartphone manufacturer BlackBerry. So Waterloo and London pioneered the mobile version of virtually every service Google offers: Maps, Gmail, Calendar, mobile search, and more. Waterloo, which now boasts about 200 engineers, also hosts the team that built Google Fiber’s user interface and critical software for the Chrome Pixel, Google’s answer to Apple’s retina display, with full touch integration.

The office is located in a formerly industrial building that once housed a tannery, believe it or not (hence the cattle walkway). Google shares it with a number of accelerators, startups, and coworking spaces that together make up Communitech, a startup mecca with strong connections to Waterloo University, angel investors, and venture capitalists.

Source: John Koetsier

The Googlers who work here. After a year, their drawing gets colored in.

Woods, whose recruiting strategy is to get ex-patriate Canadians to move back as well as to draw new talent from the nearby Waterloo University, says that it’s an attractive place for Googlers for a variety of reasons — not just the fire pole or massage room.

“There’s fewer bosses here, or at least they can’t find you,” he jokes. “At least a third of the people here have moved back from California.”

Source: John Koetsier

The actual cattle walkway

Woods says that Google’s most internally unpopular and controversial product ever was built in Waterloo as well: Conversion Optimizer. That’s a piece of software for advertising buyers that Google calls the “just trust us and push the button button,” which essentially hands your advertising campaign over to Google to optimize for the cheapest and most effective ads.

“It was extremely unpopular in Google,” Woods told me. “People were wondering: How much money will we lose? They were worried that advertisers would optimize their ad spend early in the month, hit their caps, and stop buying.”

Google’s known for taking risks, however, and the company ultimately decided to go ahead despite the chance it might actually lose money. Now, the product is one of Google’s most popular for advertisers, and it manages “many, many billions of dollars.”

“It took a Nobel prize-winning economist to prove that was untrue,” Woods said. “It’s great for Google, great for advertisers, and great for surfers.”

And another product Waterloo build that Woods is particularly proud of is what he calls “the largest project Google has ever done.”

It’s the first mobile search transcoder, which was an infrastructure that rendered web pages on Google’s own internal servers, decided which bits were most important for mobile phone web users, and sent only those bits. It sounds like something for the presmartphone days of historical antiquity, but not so.

“It’s still a very fast-growing project,” Woods told me. “The volume is staggering … billions of pages per day in countries in the third world, and even in the U.S., it’s still growing.”

So … why in Waterloo, Ontario?

Source: John Koetsier

Communitech, the community in the building that includes Google.

“Something interesting is happening here,” Woods says. “The university produces an amazing kind of talent … and people that come into Google from the University of Waterloo do disproportionately well.”

Worldwide, he says, Waterloo has been one of Google’ top three or four recruiting centers for some years now. And, he adds, not everyone who wants to work for Google wants to live in California.

“This area has a very high proportion of startups to population,” he adds. “Google loves startups, and we love to hire entrepreneurial people.”

Oh, and the slide?

The office has a plastic red slide down from the second-floor Google reception area to the first-floor entrance. It has a prominent sign, “For Googlers Only,” which a PR rep told me was placed there because Ontario’s provincial slide inspector (yes, they have one, apparently) raised some concerns about safety.

I was bad, however, as I frequently am, and went down the slide anyways. The PR rep forgave me, as you can see in the video below:

Image credits: John Koetsier

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Google Fiber, as you probably know, offers Gigabit internet speeds — up to 100x faster than the average broadband connection. It’s currently available or announced in only a few limited locations, such as Austin, Texas, Provo, Utah, and of course Kansas City itself.

Interestingly, none of the locations are in California, where Google is headquartered, and none except Austin are in locations typically thought of as major digital or technology centers.

Source: Sean Ludwig

Typical Google Fiber speeds

Google Fiber is so fast, with speeds like 923.35 megabytes/second uploads and 841.94 megabytes per second downloads, that businesses want to get in on the party as well. However, since Google Fiber is designated solely for residential, the only way some startups have been able to use Fiber is to set up shop in a home.

If you happen to live in Grandview, Missouri, however, don’t hold your breath.

Previously-announced neighborhoods in the area won’t be fully built out until this fall, and Google’s community manager for Fiber, Rachel Hack, says that “it will still be awhile before we can build Fiber in Grandview.” In fact, the project is still in the planning phases.

If only Fiber could be installed as quickly as it operates!

Image credits: Sean Ludwig/VentureBeat

Except, of course, at a hockey game. And, increasingly, in Ontario, where startups, government, industry, universities, angels, and venture capitalists are working aggressively to try to create the world’s leading technology hub.

Source: John Koetsier

Inside Waterloo, Ontario’s new $160M center for quantum computing.

“We want the world’s next biggest tech company to be built in Ontario,” the most populous Canadian province’s minister of research and innovation, Reza Moridi, told a small group of journalists recently in Toronto.

That’s aggression — even if spoken in a kinder, gentler way by an urbane, mild-mannered politician.

It also might strike some as hubris, given that Ontario’s biggest technology story to date is that of a dying smartphone manufacturer, BlackBerry (formerly known as Research In Motion).

But it’s not just words, and it’s not just the government that’s behind this effort.

Ontario’s reverse brain drain

Ontario is home to about 40 percent of Canada’s population and accounts for 48 percent of Canada’s gross domestic product. It’s the fourth-largest population center in North America, after Mexico City, New York, and Los Angeles, and it produces more cars than any other region in North America, including Michigan. Ontario also has the Americas’ second-biggest financial services sector, after New York.

More to the point, it’s North America’s second-leading cluster for technology companies, after California, and has the third-largest concentration of life sciences companies on the continent.

Source: John Koetsier

Google bought local startup BufferBox in late 2012

The government has invested $3.6 billion in those sectors, primarily, over the last decade, with two-thirds going to research and development, and one-third focused on building the entrepreneurship ecosystem.

That money has had an impact.

For years, countries like Canada and the U.K. have complained about a brain drain, with the best talent heading stateside for more options and better pay. Not anymore. In fact, quite the reverse.

“My co-founder left Silicon Valley to come here,” Cream.hr CEO Kateline McGregor told me.

She’s starting her company at Communitech, a thriving, almost frenetic community of startups, accelerators, massive technology companies, students, and coworkers in Waterloo, Ontario. An hour’s drive up the 401 from Toronto, Waterloo is a city of 98,000 that saw more than 500 startups take root in 2012. And the massive burst of innovation has not gone unnoticed.

“Something very interesting is happening here,” Google’s top Canadian employee, Steve Woods, told me. “This area has a very high proportion of startups to population. Google loves startups … and we love to hire entrepreneurial people.”

Woods himself is a Silicon Valley refugee, returning home to Canada after building several companies in the Valley. Google recruited him over the course of several years to lead its Canadian operations.

He points directly to U.S. immigration policies that pose a critical problem for both startups and large, wealthy corporations such as Google. Getting into the U.S. to build a company or join a startup is notoriously difficult and expensive.

Where Woods works: This Google office has a real fireman’s pole, slide, cattle walkway, and more (gallery)

Meanwhile, Canada has just recently taken even more steps — such as the Startup Visa — to make it simpler, quicker, and cheaper to come to Canada.

“Because of visa situations, Canada has received a disproportionate amount of the talent that is coming into North America,” Woods said.

All of that translates into a significant competitive advantage for Canadian startups and tech companies.

More education, more startups

Another competitive advantage, particularly in the Waterloo region, is the constant stream of high-quality students coming out of engineering, math, and computer science schools. I heard this ad nauseam from government representatives I met with, and credible sources in the industry confirmed it.

Source: John Koetsier

University of Waterloo students build startups at Velocity Garage, a for-credit accelerator-like program.

“Waterloo University produces an amazing kind of talent,” Woods told me. “It gives students a great grounding in computer science, but also by the time they graduate they’ve passed through four summers of co-op programs, so they’ve worked at Facebook, at Google, Microsoft, BlackBerry, or other companies.”

Ontario’s 44 universities produce about 30,000 computer science and engineering graduates each year, a steady flow of new talent for the province’s startups as well as established IT, life sciences, and aerospace companies.

By contrast, California — a state with about three times the population of Ontario — produces only 21,000 STEM graduates per year. The results are clear, at least for Woods.

“People that come into Google from the University of Waterloo do disproportionately well,” Woods says.

Source: John Koetsier

One of the meeting rooms at Communitech, a startup mecca in Waterloo, Ontario. Google also has an office here.

Rob Crowe, executive-in-residence for Waterloo-based Institute for Quantum Computing, the second-largest quantum computing research center in the world, agrees.  And he points out another advantage that translates to more startups coming out of key Canadian universities.

According to Crowe, a key difference between the U.S. and Canada is that many Canadian universities have followed the European model of education-funded research and development. Essentially, professors and researchers at the University of Waterloo own any intellectual property they develop, not the institution they work and teach for. That’s an incentive for academics to put their best foot forward while on faculty, and to kickstart companies when their ideas result in a viable product or company.

“This is the university that throws off more startups than any other university in the country,” Crowe told me.

Less tax, more benefits, more investment

All of the above regional traits are excellent for students, researchers, and startups, but there’s also good news for investors. Moridi’s ministry of research and innovation has helped reduce corporate tax, while also providing significant tax credits for companies doing innovative work.

“Ontario has one of the lowest corporate tax rates in North America, at 22 percent,” says John Marshall, president and CEO of the Ontario Capital Growth Corp., Ontario’s voice in two venture funds totaling about $500 million. The funds were raised partially by government, which recently announced intentions to pump in another $50 million, but mostly by venture capitalists and institutional investors.

Source: John Koetsier

Google has invested significantly in Waterloo, Ontario, hiring 200 engineers for its Canadian engineering headquarters.

The goal is simple: Invest in potential high-growth venture-stage startups in Ontario via a fund-of-funds approach that ensures industry participation and leadership in every specific investment. In other words, Marshall puts money into funds assembled by local VCs such as Omers, Northleaf Capital Partners, and Rho Canada. Those VCs in turn drive the actual investments into companies like Shopify, Desire2Learn (which recently closed an $80 million round), Polar Mobile, and BlueCat Networks.

“Our overall aim is to build the ecosystem for innovation,” Marshall says. “That includes the demand side, with accelerators and startups, and the supply side: seed funding, angel investors, and venture capitalists.”

The fund-of-funds strategy appears to be working. Two years ago the average fund size in Canada was $60 million, compared to $180 million in the U.S., but now the average Canadian VC fund is $90 million. Other venture entities, such as Intel Capital and Samsung Venture Investment, are following the money and making their own investments.

When that money gets into the hands of actual startups, it goes further, according to the companies I talked to. The reason is Canada’s federal and provincial research and development credits, which the Ontario government says are “among the most generous of the OECD countries.”

Source: John Koetsier

Ontario had 500 startups in 2012 in Waterloo alone.

Taken as a whole, those credits can reduce the after-tax cost of $100 worth of R&D to just $57 for corporations and just $39 for startups.

Fixmo CEO Rick Segal, an ex-patriate American, says those tax credits are one of the key reasons he chose Toronto as the location for his latest mobile security startup. The CEO of online advertising startup Chango, Chris Sukornyk, told me the same thing.

Marshall says that the credits simply add on to a startup environment that has long stretched every single dollar as far as it can go.

“Our entrepreneurs have already been so capital efficient by necessity,” he says, adding that now that Ontario’s entrepreneurs have access to more money, they’re still using it wisely.

That capital is starting to flow more freely lately, with VC investment up in Ontario in the past few years. But startups, who benefit most from the R&D tax credits, also have additional benefits. Almost every startup that graduates from a major Canadian accelerator such as Hyperdrive and Extreme Startups in Ontario, FounderFuel in Montréal, and GrowLabs in Vancouver, gets offered a $500,000 convertible note by the Business Development Bank of Canada.

That’s cheap and none-dilutive money, and provides more runway for startups. Most of which, realistically, need more than a three-month stint in an accelerator program to become real companies.

Ambition, meet reality

There’s no doubt that Ontario is taking smart steps with the ultimate goal of dominating the business of technology. But can it really out-innovate the innovation capital of the world, Silicon Valley?

Toronto currently ranks eighth on the Startup Genome’s list of global startup ecosystems, just above another Canadian technology hub, Vancouver. Tiny Waterloo ranks 16th with its population of just under 100,000, bringing to mind Tel Aviv, the super-fertile startup ecosystem of 400,000 people that currently holds third place.

Source: John Koetsier

Toronto’s CN Tower

In addition, Ontario officials quietly let me know that they believe Ottawa would have won a spot in the top 20 as well, if Startup Genome had analyzed the data just a bit differently. That would, of course, have given Ontario three cities in the global top 20.

But even considering the province’s leading contender, there’s still a long way between eighth and first. And every country in the world, seemingly, wants to follow the Silicon Valley model to the yellow brick road of employment and riches.

Few succeed.

VC investment in Canada overall is still just a fraction of that in the U.S., with about $1.5 billion invested in the entire country over all sectors in 2012, compared to $8.3 billion invested in the U.S.  in software alone, and another $6.7 billion just in web-based startups. In Ontario specifically, VC investment was just $603 million, compared to California’s U.S.-leading $14.1 billion.

And RIM, with revenues of $18 billion in fiscal 2012 dropping to $11.1 billion in fiscal 2013, is still probably the province’s biggest tech company.

That’s not a good sign.

Turning to BlackBerry for inspiration

Despite the small numbers, startups are increasingly choosing Ontario as home. Taxation and immigration policies as well as investments from blue-chip funds like Union Square and Kleiner Perkins are having a massive cumulative effect.

Even BlackBerry is feeding the culture of innovation in Ontario, despite being in what are perhaps its death throes.

Fixmo CEO Segal says BlackBerry has been an amazing influence in Ontario, and continues to be influential. “There are lots of alumni from RIM, both voluntary and involuntary,” he says with a wry grin.

Marshall says the growth of BlackBerry from nothing to its heights as the first key innovator of the smartphone revolution has had its own impact, regardless of the company’s current situation.

“Now you’ve got kids coming up who saw their parents do it,” he says. “So they believe they can do it too.”

500 new startups in Waterloo in 2012 alone attest to that fact.

In the against-all-odds world of the startup, belief is the key ingredient of success.

Image credits: John Koetsier

Disclosure: Ontario’s ministry of economic development invited VentureBeat to visit the province, and paid my expenses. My reporting, however, remains my own.

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This weekend Amazon launched its Appstore in China, beating Google itself to the punch. Amazon’s AppStore is based on Android, but Google’s own app store only provides free apps to China, not paid apps.

This is the latest move in Amazon’s worldwide expansion. In April the Amazon Appstore hit more than 200 new countries, including Canada, Mexico, and Brazil. It also arrived in India, China’s parallel in population growth. China has more than 1.3 billion people.

Amazon is eager to expand its audience, but the growing Chinese market is now too large to ignore. According to Flurry, China just became the world’s largest smartphone market, having an estimated 246 million smartphone devices compared to the U.S.’s 230 million. In comparison, India has only 19 million active smartphone devices.

Amazon’s Appstore expansion also gives it a bigger platform for its Kindle Fire Amazon Coins currency, its rumored Kindle TV set-top box, and future Kindle Fire HD devices.

The Amazon Appstore launched two years ago with about 4,000 apps including a free version of Angry Birds Rio. It now has only about 75,000 apps, which, according to some developers, is one of its advantages.

Photo credit: Steve Jurvetson/Flickr

Notable this year is Apple, with its whopping $156 billion in 2012 sales, jumping into the top 10 for the first time in its 37-year history. And Google, with its big $50 billion year, bulled its way up almost 20 spots to hit No. 55. Perhaps most impressive, however, is Facebook, which with the youngest CEO in the Fortune 500 made the list for the very first time at 487.

Ranking companies by income is a fairly arbitrary measure, since it reveals little about how much companies actually earn, but it does show scope and scale. A grain of salt is definitely indicated, however, as Google’s profits, for instance, are many multiples of Dell’s despite that Dell is ranked No. 51 and Google is No. 55.

Here are the 41 technology companies that Fortune included on its list.

• 6: Apple
• 15: HP
• 20: IBM
• 35: Microsoft
• 49: Amazon
• 51: Dell
• 54: Intel
• 55: Google
• 60: Cisco Systems
• 80: Oracle
• 131: Xerox
• 133: EMC
• 176: Computer Sciences
• 163: Jabil Circuit
• 194: Qualcomm
• 196: eBay
• 218: Texas Instruments
• 222: Western Digital
• 240: SAIC
• 267: CDW
• 270: Liberty Interactive
• 302: Applied Materials
• 304: Motorola Solutions
• 318: Micron Technology
• 326: Corning
• 327: Broadcom
• 352: Congnizant Technology Solutions
• 379: Symantec
• 408: NetApp
• 420: Sanmina
• 429: Harris
• 436: Booz Allen Hamilton Holding
• 441: NCR
• 473: Priceline.com
• 464: AMD
• 477: Avaya
• 482: Facebook
• 487: SanDisk
• 489: Pitney Bowes
• 494: Yahoo
• 499: CA Technologies

A couple of caveats:

I have not included telecommunications companies such as AT&T and Verizon, although a good argument can be made that they are now, primarily, technology companies, simply because Fortune did not classify them in any recognizable technology category. And I have included retailers like CDW and companies like Pitney Bowes, which Fortune classifies in categories like Computers, Office Equipment, and Information Technology Services.

One interesting note: While Facebook has the Fortune 500′s youngest CEO, Dole Food’s David Murdock, at 90 years old, is the Fortune 500′s oldest CEO.

photo credit: mikesolita via photopin cc

Apple’s saving $9.2 billion in potential taxes by financing a chunk of its recently-announced $50 billion stock buyback via debt, Bloomberg says.

With the $10 billion share repurchase announcement made last year, the entire $60 billion stock buyback is the largest share repurchase plan in history, and will take until 2015. The problem is that most of Apple’s cash — some $100 billion U.S. — is overseas. And bringing that loot home would result in taxation at a 35 percent rate.

$35 billion extra in government coffers probably gives Washington hot flashes and sweaty palms, but it keeps Apple accountants awake at night. So the company is borrowing the cash it needs by issuing a record $17 billion bond offering with interest yields slightly higher than U.S. treasuries.

Borrowing money, paradoxically, is saving Apple money.

In addition, Bloomberg notes, interest Apple pays on the $17 billion debt financing will be tax-deductible, saving an additional $100 million a year.

This raises all kinds of issues about the ethics and morality of not repatriating cash and thereby avoiding taxes. Apple is not the only tech company that uses creative methods to reduce income tax payments — Google has a surprising $10 billion worth of revenue in tiny Bermuda, thanks to shell companies and wily sales of intellectual property. As a result, the search giant’s effective tax rate on overseas income is a ridiculous 3.2 percent.

And 50 other tech companies, including Microsoft, have collectively dodged $225 billion in U.S. taxes by sheltering their assets overseas.

The bigger question, at least for Apple investors, is whether propping up its own share price is a good use of Apple’s massive $150 billion in cash reserves. Other options, of course, include accelerating innovation — the company won’t release a significant new product in two quarters — or acquiring companies that could help it grow faster.

Share buybacks are typically done by companies who feel undervalued by the market. Perhaps Apple should be making moves to address that problem, rather than treating the symptom.

photo credit: TheeErin via photopin cc

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Android may have wrestled massive smartphone market share away from Apple the past couple of years, but until now Apple’s managed to hold onto its dominance in tablet sales. That’s now changing, says IDC analyst Sameer Singh. Not only will Apple’s market share shrink, it will also start to see its iPad unit shipments drop, he says.

That would be a disaster for Apple, which pioneered the modern tablet revolution.

According to the IDC, Apple’s global tablet market share has dropped from over 60 percent in Q2 2012 to around 40 percent in each of the third and fourth quarters of 2012 and the first quarter of 2013. And while in Q1 2012 Apple outsold Android in the tablet market by 11.8 million to 8 million, in Q1 2013 Android outsold Apple by 27.8 million to 19.5 million.

That 19.5 million iPad shipment number should drop this quarter, says Singh.

“iPad shipments normally see strong growth in calendar Q2,” Singh wrote. “However, this is always driven by a new product launch.”

The problem is that during April’s earnings call, CEO Tim Cook said Apple was hard at work on amazing new hardware and software, but that it was not coming until the fall and “throughout 2014.” Which means, Singh says, trouble:

“This means that iPad shipments should see another sequential decline in Q2 (to ~17-18 million).”

And that will push iPad market share below the 40 percent mark, making Android not only the majority tablet operating system but also the market leader by a wide margin. That’s bad news for Apple, but Apple can survive without sales leadership.

What would be tougher for Apple to survive is declining shipment volumes.