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Monthly video game sales statistics from the NPD Group show that the video game industry continues to grow in 2008, defying any concerns about the recession and a cyclical slowdown. On top of that, the Sony PlayStation 3’s resurgence is becoming evident as it beat out Microsoft’s Xbox 360 for the second month in a row in unit sales.

The Nintendo Wii is still on top with sales of 432,000 consoles in February in the U.S., while the PS 3 sold 280,800 units and the Xbox 360 came in third with 254,600 units sold. The Nintendo DS sold 587,600 units, widening its lead over the PlayStation Portable which sold 243,100 units. Year over year, Sony’s PS 3 numbers are up 120 percent.

Total video game industry sales were up 34 percent to $1.3 billion, year over year. Hardware was up 19 percent, a strong showing in spite of recent price cuts. Software was up 47 percent and accessories were up 36 percent. Year to date, the industry was up 26 percent.

Anita Frazier, an analyst at NPD, predicts another year of record-breaking sales in spite of the tough economy. That’s surprisingly strong, considering this year will be the fourth year in the next-generation product cycle (at least for Microsoft). The year will likely get a big boost starting April 29 with the launch of Take-Two Interactive’s Grand Theft Auto IV, which analyst Michael Pachter of Wedbush Morgan believes will sell nine million copies. Read the rest of this entry »

Web 2.0 Summit, co-hosted by O’Reilly Media and CMP, kicks off this Wednesday at San Francisco’s Palace Hotel. A who’s who list of Web 2.0 digerati will converge for three days of deal making, partying and more deal making.

If you didn’t have the budget to nab one of the $3,595 tickets for the event, fret not - VentureBeat reporters will be on hand to bring you frontline dispatches.

In preparation for the event, here’s a quick preview of what’s expected during the week, which includes some product launches by MadeIt, Userplane, Radar and Nokia.

Facebook’s Mark Zuckerberg, Google’s Marissa Mayer and Microsoft’s Steve Ballmer will all be speaking — and ears will be perked for the latest on reported acquisition talks between Microsoft and Facebook, and Google’s response to this.

EBay’s Meg Whitman will be speaking Thursday, right before her company’s Q3 earnings announcement the same day. Friday’s Wall Street Journal had an article about eBay’s struggle to juice its slowing growth rates. We also hope the moderator asks her questions about the departure of Skype founder Niklas Zennstrom, and about eBay’s associated $900 million write down. Speaking of Mr. Zennstrom, the Skype founder curiously disappeared from Web 2.0 Summit’s list of speakers sometime over the last few days. As recently as last Wednesday according to the Google cache, Zennstrom was listed as a speaker at the conference, where he was to participate in a session entitled, “Show Me.” Oops. Today, all references to Zennstrom are removed from O’Reilly’s conference agenda.

Wednesday evening, MySpace will host a dinner with News Corporation CEO Rupert Murdock and MySpace CEO Chris DeWolfe. We hope he speaks about his pending acquisition of the Wall Street Journal, and how he sees his new media properties meshing with his old media properties.

Several companies are expected to show off their latest Web 2.0 wares.

Thursday night, at a party promoted here, MadeIt.com, a new Web 2.0 online invitations site, will make its public beta debut. MadeIt.com plans to take on market leader Evite.com by adding social networking features to “keep the party going” after the party’s over, such as online photo sharing, video sharing, slideshows, story sharing, message boards and widgets. The company was founded by CEO Stephen Weir and his advisor, Jonny Hendriksen. Weir tells VentureBeat the company has been self-funded to date with about $80,000 in capital. The company is looking to do a seed round of up to $300,000 in the next three months to get to proof of concept stage, at which point it may seek a Series A. However, it enters a very crowded sector, filled with the likes of Socializr, Renkoo, Skobee, MingleNow and the related events sites such as Going.com.

On Wednesday morning at an invitation-only breakfast, cell phone maker Nokia says it will introduce a new N series handheld computer that promises to marry the mobility of a multimedia device with the Internet (yes, this is frustratingly vague, but we don’t know anything else). Other handheld computers in N Series family combine many of the features of an Apple iPhone - such as Internet browsing, photos, videos, games and maps, without the phone part.

Userplane, which provides hosted communications applications such as chat, messaging and voice recording for online communities, plans to announce Userplane Feeds, a collection of free APIs so that developers can build the applications into their own sites.

On Friday, Radar Networks’ CEO Nova Spivack, who in a previous life founded EarthWeb, will unveil and name the company’s first Semantic Web application, most likely an online personal data organizer, according to a July feature in the recently shuttered Business 2.0 magazine. The San Francisco company, which is backed by Paul Allen’s Vulcan Capital, Leapfrog Ventures and angel investors, has been in stealth for a few years, yet has been been aggressively promoting its business, technology and ideas for the Semantic Web for quite a while (this is one of those “pseudo stealth” companies, promoting itself in public relations pitches to media outlets, even as it feigns secrecy). Friday’s anticipated announcement will also mark the start of the private beta for the not-so-secret service. In addition to naming its first product, the company says it will announce a strategic partnership. Stay tuned for later this week when VentureBeat’s Chris Morrison reports on Radar Networks’ product launch and tells us if the company’s first Semantic Web application is ready for prime time.

We’ve noticed a couple passes listed for sale on Craigslist here and here, or you can always crash the conference and join the unofficial Web 2.0 Summit LobbyCon unconference in the lobby of the Palace hotel.

Mark Coker is a contributing writer for VentureBeat. He’s founder of Dovetail Public Relations, a Silicon Valley technology marketing firm. He has no clients among the companies mentioned in the story, nor among their competitors. More on Mark at http://www.linkedin.com/in/markcoker

updated

Google has previewed a prototype of Google Health, a consumer-oriented health service dedicated to helping people track their health information online. (See Google Blogoscoped for screenshots, and useful descriptions of the service.)

This is a big deal.

Online health is emerging to become one of the internet’s major industries, and health-related start-ups are popping up and getting funded left and right. It was probably only a matter of time before Google and Microsoft woke up and started pushing their weight around. At VentureBeat LifeSciences, David Hamilton looks at the rivalry between Google and Microsoft, and how the biggest opportunity is in letting people manage their health records online. [Update: David has more here, writing after the Google Health previews were released.]

While health information now pervades the internet, the internet has yet to pervade the practice of health care. Medical records are strewn across thick folders or proprietary systems in doctors’ offices. The use, storage and deployment of medical information is clearly running on outdated systems, and Microsoft and Google would love to provide change this.

Google recently previewed Google Health, a service that aims to enable people to control their medical information and give access to anyone they choose. Something like this fits perfectly with Google’s strategy of “organizing the world’s information and making it accessible to everyone.” Of course, this “everyone” can include insurance companies and the Department of Homeland Security, who would love to have an easily navigable database of the populations’ health records, which might not be something people want.

They’ll probably have to get over it. The NYT’s Steve Lohr notes in his article on this subject, that “health care is a field where policy, regulation, and entrenched interests tend to slow the pace of change.” This is certainly true. Lohr also points out that “technology companies have a history of losing patience,” but we’d be willing to bet our houses that the big players are in it for the long haul: By 2015, health care spending is expected to reach $4 trillion, or 20 percent of the U.S.’ GDP, or a twofold increase from 2005. Any company with the resources to do so will happily stick around to get a piece of that.

Google has just acquired Zenter, software that aimed to be a web-based Powerpoint-killer.

Zenter built the application in just a few months, and the company was one of the more dynamic Y Combinator-backed companies from this past winter: The founders also patented the software they built. It’s little surprise that the company has just been snapped up by Sam Schillace’s application division at Google.

The site itself offers features as a large library of web-based fonts as well as vector art (in this case, tools for stretching, coloring and otherwise altering images). It combined the desktop-quality interface of Microsoft’s Powerpoint with the power of the web. The company has also been developing ways for users to share artwork and the presentations themselves, and take audience polls during presentations using the software.

The two founders, Wayne Crosby and Robby Walker, have geek cred: PhD’s in computer science, years of experience building systems for companies like Go Daddy, and a Sudoku site that gets millions of views per month. Google employees told VentureBeat they are more worried about entrepreneurs in their garages than larger rivals up and down Silicon Valley’s Hwy 101. In fact, Google also bought another small powerpoint startup, Tonic Systems, in April.

The ending is auspicious for Wayne Crosby. One of the older Y Combinator founders, Crosby had chosen to move out to Mountain View, Calif., for the YC session this winter, while his pregnant wife stayed home in Arizona. Milo was born on May 7th. A quick flip of a company is a nice way to start a family.

Also worth noting that Evan Williams was an early investor, as he blogs here — another company from him to Google.

[Full disclosure: Author Eric Eldon's company participated in the Y Combinator program with Zenter. He is personally happy for them. His company is called Writewith.]

Everyone seems to be chapping Yahoo’s hide these days, including even Yahoo itself — or at least one very audible Jerry Maguire over there. However while many large companies could benefit from more focus and cost-cutting, neither issue is really at the core of the company’s problems. Yahoo is still #1 in both users and page views, and will remain a leading internet property for the foreseeable future. And though some critics contend Yahoo is spread too thin, most businesses would kill to have Yahoo’s broad diversity of content and commerce properties and worldwide brand recognition.

There’s really just one big thing Yahoo needs to fix: monetization.

While Yahoo substantially outpaces Google in page views, Google does a much better job of converting traffic into dollars than Yahoo and is kicking their butt in revenue per search and revenue per page. As long as Google keeps monetizing traffic at a far better rate than Yahoo, they can always afford to pay more for acquisition or partnership deals — or at least jack up the price on anything Yahoo might want (note: possibly why a rumored deal to acquire Facebook still hasn’t happened).

So what’s the solution? Well I don’t know how to solve all Yahoo’s problems, but I don’t believe it’s about ‘too much peanut butter’. If monetization was working better, they could buy any content property under the sun and make the deal work. Rather than eliminating people or product groups, here are 3 things I’d suggest Yahoo do to right the ship:

1. Ship the new Panama advertising engine platform asap
2. Figure out a way to implement CPA-based (Cost Per Action) advertising
3. As monetization improves, accelerate acquisition activity (both large & small)

I’ll elaborate on each of these three points further below.

A Man, a Plan, a Canal: Panama!

Panama is the code name for a long-overdue upgrade to the Yahoo search engine advertising platform, and its delay last quarter contributed to the dramatic fall in Yahoo’s stock price. If Yahoo can get it out the door quickly • and if it works as promised to improve monetization • they may be in better shape to compete more effectively, both in quarterly reports and at the negotiating table. However if Panama doesn’t make a significant impact or is further delayed, look for Terry Semel to have more time to relax on a Santa Monica beach in 2007, and for private equity firms and hedge funds to stalk Yahoo and try to take it private, perhaps even sell to Microsoft.

CPA beats CPC beats CPM

Long-term, Yahoo has one significant advantage over Google it has yet to leverage: it controls point of transaction for a large collection of online commerce sites: Yahoo Stores. Furthermore via the Yahoo-eBay partnership earlier this year, Yahoo also has access to transaction info from the eBay marketplace, eBay stores, and all of PayPal’s small business websites and merchants. Why is this important? Because Yahoo might be able to use all that transaction data to implement a new, more efficient method of advertising known as CPA or Cost-Per-Action. CPA has the potential to leapfrog current CPC-based (Cost Per Click) advertising, just as Google has used CPC to leapfrog CPM-based (Cost Per iMpression) advertising. But if Yahoo and eBay take too long, Google will use its own growing pool of transaction data gathered from Google Analytics and Google Checkout to implement CPA-based advertising itself and get there first.

Attention K-Mart Shoppers: Web 2.0 Blue Light Specials on Sale

Finally, improved monetization is critical for Yahoo to better leverage partnerships and acquisitions to fuel its growth. This last point should be obvious — not just to Yahoo, but also to Google, Microsoft, eBay, Amazon, AOL, NewsCorp, and every other aspiring internet gorilla and media mogul. Here’s the basic playbook: you have millions of users, billions in cash… go find web properties with new products and features, buy them, and use your advertising platform to monetize their traffic! For Yahoo, it might make sense to look at acquisitions complementary to demographics they are lacking, or those with features that exploit popular Yahoo properties such as Yahoo Groups, Yahoo Finance, and Yahoo Answers. And if Panama doesn’t fix monetization, maybe they should go buy a startup developing CPA-based advertising.

If Yahoo can improve monetization, they should be doing small acquisitions ($25-50M) every month, larger deals ($100-500M) every quarter, and betting big ($1-2B+) once a year on a deal like Facebook or YouTube. So far, Yahoo has only done a good job on the small stuff — they’ve whiffed on most other big deals since Overture. In summary: buy LOTS of stuff, do it FASTER, then distribute it across your worldwide audience and monetize using your advertising engine.

Fortunately for Yahoo there’s no shortage of innovation available. Thanks to capitalism, entrepreneurship, Web 2.0, and lots of geeks in Silicon Valley and around the world, there are plenty of cool startups to go around.

But first, fix the monetization. Then eat more peanut butter.

It used to be de rigueur in Silicon Valley to stay out of the way of Microsoft’s product road map • even areas Microsoft hinted they might pursue. Nowadays, venture folks more commonly ask, “What are you going to do about Google?”

The reality of the marketplace is that unless a startup builds a huge community, Google pays only around $50 million for a company (if you’re lucky) and then only if they want to jumpstart a feature by buying a startup.

At this point, Google has trounced Yahoo with consumers. Google expanded its offerings by acquiring several YAW2 (Yet Another Web 2.0) companies with no viable business models, such as wiki software producer JotSpot, Upstartle (maker of the online word-processing program Writely) and of course YouTube. As a result, almost no gaps are left in Google’s consumer portfolio… and no $50+ million opportunities remain for startups other than in “Social Networking,” where Google might buy an existing community such as Facebook (estimates vary between $1 billion and $2 billion).

Google has clearly figured out that the advertising market is not big enough to justify its stock market valuation. The entire U.S. advertising market is $140 billion a year • that’s less than Google’s current market cap of $151 billion.

Which takes us to the Small-to-Medium Business (SMB) market. To grow, Google clearly is going after Microsoft’s SMB business. The chart below describes Google’s current product offerings, many of which have been filled by small acquisitions, with an educated guess as to where they are going in both the consumer and SMB markets.

Why is Microsoft vulnerable in SMB? Late to the Internet, Microsoft never really caught up. Its proprietary technology is archaic in a Web 2.0 world where systems can be easily “mashed up,” or tied together with lightweight integration techniques, using open technologies. Microsoft’s Windows Live is a nonstarter.

Within a year or two, companies with fewer than 100 employees will have no need to buy anything from Redmond other than perhaps Windows XP Home; within five years, the same will go for firms with under 1,000 employees.

The critical play for Google, in my opinion, is to acquire Intuit (current market cap of $12 billion). That would give Google a channel to a hosted accounting and inventory system and a majority of small businesses. In particular, the inventory functionality can tie directly into the local business search and mapping engine, Google Local. Also affordable to Google would be Salesforce.com (current market cap of $5 billion), though that’s more of a stretch due to the personalities involved.

Web 2.0 consumer and SMB startups that do not have large communities will be valued at a build vs. buy (i.e. an acquisition that doesn’t cost much) and have a maximum upside of $50 million. After Google’s failed Enterprise Search product, the consumer search giant will leave the enterprise alone for quite a while as it target its guns on the SMB market.

The clearest short-term opportunity for startups to avoid the steamroller is in the enterprise space, which commands relatively high valuations (e.g., 25 times annual revenues for open source companies like JBoss).

Although some may be happy with $50 million paydays after a seed and A round, if you want a shot at making some real money, best to stay out of Google’s way.

Microsoft’s new music player, Zune, has been unveiled and here are significant points. More than just a music player, it has a social networking component too, with a Marketplace to share music with friends. This could create some excitement in Silicon Valley, creating a cottage industry of suppliers like the one around the iPod.

Here are the basics, as being reported by Engaget and other places:
–Three-inch screen, which is larger than the largest iPod screen of 2.5 inches.
–30 GB Zune will have a built-in FM tuner and wireless 802.11 technology for sharing songs with your friends on their Zune devices, something lacking in the iPod. The shared songs will last three days or three plays, which ever comes first.
–The sharing will take place via Microsoft’s Zune Marketplace store (picture from Engaget) will have a library of “millions of songs” in undisclosed formats, and which you can interact with via your PC.
–The Marketplace will accept “Microsoft Points” so you can purchase without the use of a credit card.
–The Zune software will be able to import both iTunes and Windows Media Player files
–pricing will be “in coming weeks.”