Yahoo Ads: Partnership With Havas Digital; Video And Display On Walmart.com

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No More Bubbles

Google Talk, Labs Edition

As some of you may know I have been building web games for different social networks with some friends for the past few months. I have noticed a downward trend in revenue with apps and wanted to highlight it here. To generate a discussion, ideas and possible solutions:

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Problems:

1- On social networks in general the audiences are low value. These are kids spending money on a certain set of things: clothes, cell phones, food, movies & gasoline. Clicking on ads for other things isn’t that appealing.
2- The older demos are not installing applications. They have the money and/or provide money for their kids who are using the applications.
3- Saturation. There are now 100 million+ new page views a day that cubics, google adsense, lookery, etc…can provide ads for. That drive eCPMS down to ~$.10 or lower.
4- Scale. Your page views aren’t significant enough. Let’s say you can create 100,000,000 page-views a month. At $.10 / 1,000 pvs (eCPM) you are now making $10,000. Considering that might be 1-2 full-time people + hosting costs means you won’t be a trillionaire anytime soon.

Solutions:

- Use your app as a marketing vehicle to your own destination site.
- Reach out to brands (try hard) for individual sponsorships. Great but not too scalable.
- Virtual Goods? It’s huge in Asia. Great read here. Thanks Dave.
- Fun. Do it as a hobby or lifestyle business. Nothing wrong but this will be well suited for college students or part-time hackers.

Any other thoughts?

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iTunes Store Top Music Retailer in the US

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Cisco, Dell and others have seen lumpy customer demand, but the folks that are producing those volatile sales patterns–CIOs–are moderately optimistic and expect solid technology spending in 2008, according to a survey by UBS.

In its survey, UBS noted that:

Our CIO survey–completed in February–points toward surprisingly solid IT spending growth in ‘08. While we remain cautious on IT spending, the survey suggests that the spending environment may not be as dire as many think, and supports the optimistic outlooks of HP, EMC, Sun & IBM.

In other words, technology spending may not be so doom or gloom after all.

Among the high-level takeaways:

• Among the 100 CIOs surveyed by UBS, 45 percent of respondents expected their IT spending to grow in the first half of 2008 with 14 percent seeing a decline. And 46 percent saw their IT spending increasing in 2008 with 12 percent spotting a decline.

• PCs are going to take the brunt of budget cuts. UBS found that notebook demand should be solid, but desktop purchase will be put off. The UBS survey found that Dell’s PCs were the “most sensitive to the economy.” That explains Dell’s fourth quarter results, which disappointed many analysts.

• Servers are the biggest spending priority for 2008 and HP is leading the field. Virtualization is driving blade server purchases and storage demand. Twenty seven percent of CIOs said their server budgets would increase.

• U.S. CIOs are more optimistic with 52 percent of respondents expecting a budget increase. CIOs in the UK are pessimistic with only 21 percent of respondents expecting budgets to increase.

• HP is becoming the vendor of choice for CIOs in servers, desktops, notebooks and printers. Purchase intentions for Dell weakened. CIOs also said Dell has resorted to cutting prices over the last six months and has been most aggressive in grabbing market share.

• Vista isn’t driving demand. Among the CIOs surveyed, 63 percent are not expecting Vista to boost purchases. UBS reckons that Vista SP1 may tilt that percentage more toward Microsoft’s favor. This chart tells the tale:

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A web application like Zoho may all be “in the cloud” as far as users are concerned, but in reality it sits on racks and racks of servers and switches and storage. They occupy space, consume power, and most importantly, they produce lots of heat, which requires even more power to cool them. One other product comes to mind that has the similar kind of power/space challenge - the ubiquitous mobile phone.

Given how mobile phones pack a whole lot of functionality in a tiny package, I have wondered if the ideal server farm is just tens of thousands of mobile phones packed together. It seems to me that the semiconductor technology behind mobile devices is far, far more power efficient than the stuff that goes in servers. Partly it is a backwards compatibility issue, with servers having to run code written all the way back to 1980s, while mobile phones simply didn’t exist that far back. Partly, it is also a function of how traditional client-server applications were architectural monoliths, compared to the deeply distributed “service-oriented architecture” that is common in web applications today.

With mobile phones approaching very respectable CPU & memory capacity, packaging them together as a server cluster makes a lot of sense. Linux can run on almost all of the modern CPUs common in cell-phones, and the mobile version of Java seems actually well-suited for server use, particularly for deeply partitioned, distributed applications. Lightweightness is actually an advantage in server software, just as it is in mobile software.

So the day may not be far off when you use in-the-cloud applications on your mobile device, the same kind of technology powers both your mobile device as well as the servers. It brings a different meaning to the word “convergence”, a different kind of marriage between the web and mobile devices.

On a related note, a company called Azul Systems provides a cluster of hardware-assisted-JVMs in a box. They have specialized semiconductor technology to power Java applications. Such ideas could completely alter the economics of running data centers.

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