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Group buying: Fad or future Facebook?

Posted by arnon_k On January - 7 - 2011 ADD COMMENTS

London, (CNN) — Group buying websites enjoyed massive growth in 2010 grabbing new customers and the headlines as the sector’s biggest player, Groupon turned down a reported $6 billion offer from Google in early December.

But how will Groupon and its rivals fare in 2011? Is this a recession-led fad, driven by cash-strapped consumers desperate for a bargain? Or will the sector spawn a Facebook of the future and revolutionize our buying habits the same way social media has transformed communications?

In their “Top 11 Crucial Consumer Trends for 2011,” says group buying sites are “springing up everywhere,” and are “here to stay.”

And Doug Aitken, managing director of Hong Kong-based ValuUp, thinks there’s nothing remotely faddy about group buying websites.

“It brings offline and online together in a very unique way, which banner ads simply don’t do. It’s definitely opening people’s eyes up to the way e-commerce can be transactive,” Aitken said.

Group buying websites like ValuUp, and the more familiar bigger brands like Groupon and LivingSocial offer discounts of up to 90% to subscribers depending on how many sign-ups they attract for a given product or service.
Aitken founded ValuUp in June 2010 and has around 10,000 subscribers.

Being in one of the world’s leading financial centers, getting good deals is “kind of in the nature of people here,” Aitken says of Hong Kong.

The challenge for ValuUp in 2011 will be to make the site more “social” Aitken says.

“We’re seeing a lot of consumer fatigue. People are used to seeing deals and they don’t really share anymore.”

Mobile applications could remedy the situation, he thinks, by integrating “local-based tools with real-time deals.”

Aitken says the existing group buying model clearly works, but challenges remain.

Daniel Latev, manager of non-store retail research at Euromonitor International expects the sector to grow in 2011 saying that even the market leaders like Groupon and LivingSocial are “barely scratching the surface of e-commerce” in some markets.

“Currently these (businesses) have very little penetration. For example, after Groupon’s international acquisitions, the site reported to have 13 million subscribers, which is well below the number of online consumers,” Latev said.

He also expects the scope of offers available to consumers to expand in the year ahead.

“Currently the majority of the offers are for services such as restaurants, or entertainment and as the scope of products expands the business generated through these will grow,” he said.

Another key to success in 2011 will be the “continuing convergence of retail and communication channels,” Latev says.

“Consumers do not necessary want to purchase goods through Facebook, but many smaller stores have found their traffic and sales increasing after integrating some social tools such as the Facebook “Like” button,” he said.

It’s a tactic that a very big store, Walmart put to good use in October last year, when they launched their CrowdSaver app in Facebook which triggered a deal offering 18% off a plasma TV if 5,000 people clicked on the “Like” icon.

According to Walmart it took less than 24 hours for the deal to be activated.

Latev is also predicting increasingly tailored services to subscribers.

“We expect that sites will also evolve to offer more targeted offers through more sophisticated technology which allows recipients to indicate types of offers they like or don’t like,” Latev said.

Chicago-based Groupon ended 2010 announcing that it had raised $500 million in financing and will surely be looking to expand its reach abroad in 2011 — 29 countries and counting.

For ValuUp, the ambitions are more modest for now, but no less challenging as they seek to build on their early success.

They’re understandably tight-lipped on the details of their 2011 strategy — given they already have around 20 competitors in the region — but Aitken is looking to take the existing model forward while accommodating different demographics and different clients.

“At the end of the day we have to separate ourselves from the larger players — we don’t have the largest database in Hong Kong. But we’ve got a good niche of quality subscribers that resonate with the type of people that we are trying to offer deals,” Aitken said.

Some Google employees defect, then rebel

Posted by arnon_k On December - 27 - 2010 ADD COMMENTS

(CNN) — Many computer engineers consider a job offer from Google as the golden ticket.

Outdoor volleyball courts, free gourmet food, on-site haircuts, massages and laundry are among the perks Google has offered its employees at its main campus in Mountain View, California.

But some of the people who do leave are challenging the company in the best way an engineer knows how: by developing programs that could detract from Google’s core business.

Brian Kennish worked at Google for seven years, managing teams of engineers on a variety of products such as the Chrome browser and the moribund Google Wave.

Near the end of his stint at Google, Kennish developed a browser extension for Chrome called Facebook Disconnect.

The software blocks websites that have Facebook widgets installed from automatically sending information about the user back to the social networking company. Facebook Disconnect has 75,000 users, Kennish said.

“No one at Google asked me to do it,” Kennish told CNN this week.

What sparked Kennish’s project, he said, was reading the recent scrutiny of online data-collection tactics chronicled by news organizations. The Wall Street Journal has been running a series called “What They Know,” and CNN had its own last week called “End of Privacy.”

While Facebook and the applications that run on its platform can be considered personal-data hoarders, Kennish eventually realized his then-employer was, itself, among the biggest collectors.

To name a few practices, Google can track search queries over time, target ads to its Gmail users based on the contents of e-mails, and use a person’s location data to determine which shops’ ads it will show. Google, like many Web advertising companies, uses small files called cookies to track internet surfing habits in order to better target ads.

“I never worked directly with user data,” Kennish said of his time at Google. “I didn’t have a good sense of what was being collected. Privacy wasn’t a passion of mine or something that I knew a lot about until basically two months ago, when I started reading about this stuff.”

Kennish left Google in November to focus more on programs that empower people to take control of their privacy online.

“I had this holy-cow moment when I realized what was going on,” Kennish said. “There’s just so much unknown about what’s being done with this data.”

“I think there is a good reason to be concerned with it all and, frankly, to be fearful of it,” he said.

Last week, he released a second browser extension, another tool for Google Chrome, called Disconnect. Once installed, the program blocks major internet companies, including Google, from installing cookies on — and thus tracking — a computer.

People using Disconnect can decide which cookies they’d like to allow onto their system. Cookies can be helpful when, for example, you’d like a website to remember your login credentials and not ask for them every time you visit.

“I would like to see us move to a point where all the data that’s collected about folks is intentional,” rather than without people’s knowledge, Kennish said. “So if I give you permission to collect my data, then go ahead and do it.”

In its first week, 25,000 people downloaded Disconnect. Kennish is releasing a new version Friday that lets users choose whether Google can personalize search queries based on the data it has about the person. By default, Disconnect blocks Google from doing this.

“Any data that’s collected has the potential to escape the collector,” Kennish said. “So I would like to see Google only collect data that I explicitly allow them to collect.”

Google hosts a dashboard for users to review a breakdown of the messages and information attached to their accounts. The Google Privacy Center provides information on how the company collects data and lets people, whether they’re registered with Google or not, opt out of ad and analytics tracking.

Michael Gundlach, another ex-Google engineer, developed an alternative to complicated opt-out systems that vary between ad networks. Like Disconnect, it’s a browser extension, and there are versions for Chrome and Apple’s Safari.

Called AdBlock, Gundlach’s program can prevent Web pages from loading and displaying ads. That includes Google’s ads, which account for the vast majority of the search giant’s revenue.

AdBlock offers a setting to easily enable ads from Gundlach’s former employer, though those ads are disabled by default. “Google didn’t ask me to put that in,” Gundlach wrote in an e-mail. “I find Google text ads to be useful.”

Still, Gundlach says he blocks most ads because “I don’t wish to be bombarded by consumerism.”

The real economic conundrum: If website visitors don’t pay figuratively — by watching ads or by having their personal information sent to advertisers — they may have to start paying real money for online services.

Kennish plans to devote six months to developing Disconnect and will reevaluate then whether it could be a sustainable business.

He’s “pretty close” to releasing an extension for Safari and recently began working on one for Firefox, he said. If he’s forced to abandon the project, the source code is freely available to any enterprising developers who want to take up the cause.

“The only business model I see,” Kennish said, is to eventually provide a more advanced version of the software that costs money.

“When I use something like Google, I’m paying for Google with my attention and my data,” he said. “There’s no such thing as free. These are companies that have to pay employees’ salaries.”

Parts of Google’s maturing business may clash with some of the wide-eyed engineers it hopes to attract, especially those passionate about taking risks to change the world, hopefully for the better.

But a Google spokesman, who declined to comment on most questions pertaining to this story, said the company’s attrition rate — that is, the percentage of employees that defect — hasn’t changed in more than seven years and is better than the industry standard.

In addition to all the on-campus amenities, a program called “20% Time” lets Google engineers devote a sizable chunk of their work weeks to projects of their choosing. (Kennish said he developed Facebook Disconnect after work hours.)

The perks haven’t stopped some high-profile people from leaving the company.

Product designer Douglas Bowman left in a huff last year for a job at Twitter after reportedly becoming fed up with nearly three years of what he publicly described as Google’s design-by-committee mentality.

Some notable Google alumni are spiting their former employer in a different way — by joining Facebook.

The social network is perceived by some as Google’s biggest rival. People are spending more of their time online using Facebook. They’re thumbing through photos and asking questions to friends, rather than searching the wider Web. Google is unable to crawl most of the data posted to Facebook.

As Google-to-Facebook defections grow, Google is reportedly offering some employees multimillion-dollar packages to convince them not to go to Facebook.

After wooing executives who worked on Google-owned YouTube, Android and advertising; the architect of Google Maps; and at least two Gmail co-founders, this week, Facebook claimed Paul Adams, a former Google employee who was previously an outspoken critic of the social network. Sheryl Sandberg, Facebook’s venerable chief operating officer, also came from the big G.

But abandoning Google hasn’t always proved to be a wise or permanent move. Anna Patterson left the company in 2007 to start a rival search engine called Cuil. When that tanked, she returned to Google in September.

Booming app stores search for developers to fill them

Posted by arnon_k On December - 23 - 2010 ADD COMMENTS

(CNN) — App stores are booming, but there may not be enough applications to fill them all.

Google, Apple and Facebook all maintain app marketplaces for their respective platforms and more companies are preparing to launch their own stores. With their online storefronts, big technology companies help smaller developers reach vast audiences.

But beyond big, established app retailers like Apple’s App Store or Google’s Android Market, will these rivals be able to find developers willing to custom tailor software for their systems? And will enough consumers bother thumbing through their catalogs?

Even in the hot smartphone app space, manufacturers of the most-used platforms are struggling to attract developers.

Nokia and BlackBerry’s maker, Research in Motion, both lag behind other smartphone platforms in attracting new software. Each have less than a tenth of the number of apps in the second-place Android store and far less than Apple’s, which has more than 300,000.

For its Windows Phone 7 system, Microsoft paid some developers and offered free hardware to coax them into building apps. Even still, prominent developers such as Jack Dorsey, co-founder of Square and Twitter, say they’re taking “wait and see” approaches.

Gowalla, the location-based networking service, says it’s only focusing on a few of the most popular platforms for apps. The company’s resources are limited, and finding developers experienced with lesser-known platforms is difficult, Gowalla CTO Scott Raymond said.

Browser makers Mozilla and Opera Software are each working on app stores that could tie into their desktop and mobile browsers. Mozilla Labs, the research and development arm of the company that makes Firefox, is working on an app framework that spans desktops and phones.

“I believe very firmly that we’re at the beginning of a major explosion of this,” Mozilla Labs Director Pascal Finette said recently. “Before the iStore, there wasn’t a concept of a 99-cent application — and kudos to Apple for that.”

Mozilla’s plan is to create a system to sell powerful apps that work in browsers on most platforms. “You need to have an underlying architecture, the plumbing, to do all of this,” Finette said.

“What we’d offer is a simple technology that supports multiple stores,” Mozilla product vice-president Jay Sullivan said in an interview. He described the concept as a “shopping mall” for app stores.

Google recently opened its Chrome Web Store for listing free or inexpensive “Web apps,” which are indistinguishable from websites save for a button that’s installed on the browser’s start page. Early users say they’re confused about why this much-touted feature appears to be nothing more than a new means for creating bookmarks to Web pages.

The store organizes what’s out there and aims to help people discover apps through ranking systems and search, according to Google. This is supposed to simplify that process, especially for owners of yet-to-debut netbooks running Google’s Chrome OS.

Online retailers traditionally register with third-party payment platforms or install payment infrastructure on their websites. But PayPal, one such payment provider, plans to launch an app store of its own next year. Web and mobile apps may soon be found, bought and, in some cases, used through

Google takes a cut on apps it sells through the Web Store, like it does for the Android marketplace for smartphones, which has 130,000 apps. Proprietary app stores from Verizon, Amazon and others will soon join Google’s official market on Android. Taiwanese smartphone maker HTC is also weighing opening an app store, according to a report in the Financial Times.

Apple kick-started the lucrative business of selling software in a central, curated shop with its iPhone App Store. (Mobile apps are popular because they can do more with the smartphone’s unique hardware features than a website can.) Apple plans to extend that idea to its laptop and desktop computers on January 6 when it cuts the ribbon on the Mac App Store.

Acer, the world’s second-largest PC maker, says it plans to launch a “next-generation” app store.

While these stores can be rewarding for those running them, there’s fear that customers could get nudged toward more expensive apps because they generally yield higher returns for shop owners.

“I don’t know if we need them,” Christa Quarles, the chief financial officer for the Walt Disney game company Playdom, said of app stores at a conference last month. “What is an app store at its core? It’s a search engine.”

“The search engine is biased toward whatever pays,” when the company running the system profits from paid apps, Quarles said.

And it remains to be seen whether the influx in these online app storefronts will supplant social media and other channels as the primary way most people discover new sites.

The challenges with convincing developers to list — and in many cases, pay member subscriptions and per-sale fees — are even greater when platform providers, like Facebook, Mozilla and many others, ask them to incorporate proprietary code.

Yahoo CTO Raymie Stata referenced his company’s app platform in a recent conference fireside chat, describing it as a project that’s “less known.”

If a developer jumps through the hoops and adheres to Yahoo’s guidelines, they can potentially reach some 134 million visitors to Yahoo’s home page and other properties, according to Compete traffic data. Despite Yahoo’s much-coveted numbers, the company has struggled to attract developers to its platforms.

Among Facebook’s top priorities, says CEO Mark Zuckerberg, is its platform. The company is currently extending it deeper into smartphones, bridging the gap between mobile and desktop.

The two areas will quickly merge, and the Web may be the collision point, Jim Lanzone, the CEO of video app maker Clicker, said at a conference recently.

“We needed apps because browsers were very hard to navigate,” he said. “Browsers and apps are starting to merge.”

The number of incubating and fledgling app stores seems to grow every week. We’ll soon know if there are there enough virtual inventory and customers for all these shops to survive.

WikiLeaks: Chinese attacks on Google came from the top

Posted by arnon_k On December - 6 - 2010 4 COMMENTS

(CNN) — Several U.S. diplomatic cables obtained by WikiLeaks show growing anxiety among Chinese officials about citizens getting uncensored online content through Google — with one Politburo member reportedly angry to find negative comments about himself online.

In May 2009, Google approached the U.S. Embassy in Beijing, according to one leaked cable, “to discuss recent pressure by the Chinese government to censor the company’s Chinese website.”

Chinese officials were unhappy that the sanitized, which was established by Google in 2006, contained a link to the uncensored, and appeared especially sensitive about the issue because of the imminent 20th anniversary of the Tiananmen Square protests.

The redacted cable, dated May 18 and written by Economic Minister Counselor Robert Luke, says U.S. diplomats had been told that “the root of the problem was China’s Politburo Standing Committee member (name redacted).” Later it says: “(name redacted) allegedly entered his own name and found results critical of him….He also noticed the link from’s homepage to, which (redacted) reportedly believes is an ‘illegal site.'”

In another apparent reference to the Politburo member, the cable says he “believes Google is a ‘tool’ of the USG being used to ‘foment peaceful revolution in China.'”

The New York Times, which had advance access to the cables obtained by WikiLeaks, says that official is Li Changchun, who is a member of the Chinese Communist Party’s Standing Politburo Committee — its highest body — and runs the Politburo’s propaganda apparatus. He subsequently asked three ministries to demand that Google end its “illegal activities,” according to the cable.

At the same time the Chinese government was taking commercial steps against Google, instructing state-owned telecom firms to stop doing business with the company — “a hard blow because mobile Internet is Google’s ‘big bet in China,'” the cable added.

Google refused to remove the link on its Chinese site, and its lawyers “found no legal basis for China’s demands.”

The dilemma for the company was that it risked “losing the Chinese market in retaliation for maintaining its integrity and brand,” the cable said.

Google had entered the Chinese market on three principles: it would never disclose to the Chinese government any personal information about its users or their search habits; it would always include a disclosure notice to identify when search results had been removed due to censorship; and it would always provide an uncensored, U.S.-hosted site, subject to U.S. law.

Two months later — in July 2009 — Google’s servers were “virally infected” for 24 hours, amid claims that Google was failing to filter out pornographic sites. The embassy’s sources, says a cable from that month, believe “the real reason for the government’s wrath is the company’s refusal to remove a link to from the website.”

The cable continued, apparently quoting a Google official,: “(redacted) said the negative press coverage and service outages have caused the company to lose market share…..(redacted) said that, faced with the continual difficulties of doing business in China, the company may even consider pulling out of the market.”

The attacks on Google servers continued, with the company reporting in January of this year that it had been the victim of a sophisticated cyber attack originating from China. It said it also discovered that the “Gmail accounts of dozens of human rights activists connected with China were being routinely accessed by third parties.” So it began redirecting users visiting to the uncensored content of

A US. cable written from Beijing after that cyber attack said: “A well-placed contact claims that the Chinese government coordinated the recent intrusions of Google systems. According to our contact, the closely held operations were directed at the Politburo Standing Committee level.”

The cable noted: “An appeal to nationalism seems to be the Chinese government’s chosen option to counter Google’s demand to provide unfiltered web content.” An unnamed Chinese contact “stated that PRC operations against Google were ‘one hundred percent’ political in nature and had nothing to do with removing Google, with its minority market share, as a competitor to Chinese search engines.”

The cable also suggested the move might backfire on the Chinese authorities, apparently citing a Chinese contact. “All of a sudden, (redacted) continued, Baidu (a state-owned internet search engine) looked like a boring state-owned enterprise while Google ‘seems very attractive, like the forbidden fruit.'”

However, the cables suggest that the Chinese leadership — and specifically the State Council Information Office — believed that the internet in China could be controlled. “Through the Google incident and other increased controls and surveillance, like real-name registration, they reached a conclusion: The Web is fundamentally controllable,” according to one source quoted in a cable.

Long before the crisis in 2009, Google was running into hostility from Chinese officials.

In November 2007, China asked the U.S. government to reduce the resolution of Google Earth images of military, nuclear and other sensitive sites in China.

Chinese officials warned of “possible ‘grave consequences’ if terrorists exploit the information to harm China.” A diplomat at the embassy said he would report the Chinese request to Washington, but noted that Google is a private company.

Other cables suggest close ties between Chinese state enterprises and private hackers in China. According to a cable from the U.S. secretary of state’s office written in June 2009, the China Information Technology Security Center “has recruited Chinese hackers in support of nationally-funded ‘network attack scientific research projects.'”

One such enterprise — TOPSEC — employed “a known Chinese hacker, Lin Yong (a.k.a. Lion and owner of the Honker Union of China), as senior security service engineer to manage security service and training.” Another was “known to affiliate with XFocus, one of the few Chinese hacker groups known to develop exploits to new vulnerabilities in a short period of time.”

The cable concludes: “While links between top Chinese companies and the PRC are not uncommon, it illustrates the PRC’s use of its ‘private sector’ in support of governmental information warfare objectives, especially in its ability to gather, process, and exploit information.”