September 02, 2006

DivX IPO: Is it a Good Deal?

posted by MR WAVETHEORY at 9/02/2006 04:44:00 PM
Divx (DIVX) , the producer of the DivX Player, is going public during the week of September 18th. JP Morgan is underwriting the deal. It will be the first company related to online video sharing to go public - ever. Is the DivX IPO a good deal? I walked through the DivX S-1 to answer that question.Market Opportunity
DivX Inc describes itself as being in the business of providing video compression codecs used for delivering high-quality video online.

We create products and services designed to improve the experience of media. Our first product offering was a video compression-decompression software library, or codec, which has been actively sought out and downloaded by consumers over 180 million times in the last four years, including over 50 million times during the last twelve months. We have since built on the success of our codec with other consumer software, including the DivX Player application. During the second quarter of 2006, we distributed over 15 million copies of the DivX Player application to consumers from our website, DivX.com, which averaged over five million unique visitors per month during that same period.

The DivX codec is the heart of DivX's business. Consumers download the player so they can play videos online. The fact that DivX has been downloaded 180 million times is very impressive. Download.com lists it as the 13th most downloaded software as of the week ending August 27th - the top 3 downloads title are all spyware removers - AdAware, WebRoot, and Spyware Doctor.

The truth is that it is also somewhat troubling, because consumers often use the player to view pirated content. In fact, DivX admits this is a major risk to its business in its prospectus:
We have also been asked by content owners to stop the display or hosting of copyrighted materials on our websites pursuant to the Digital Millennium Copyright Act.
Many consumers download the player specifically to view content encoded in DivX as opposed to the other way around. As big media goes after pirated content, there will be less pirated content and there is a risk that consumers will stop downloading the player.

Business Model
DivX describes itself as being in the business of providing video compression codecs used for delivering high-quality video online. At a very high level, DivX makes money from 1) installing Google ToolBar on computers when consumers download the DivX player and 2) fees paid by consumer electronics manufacturers who license the DivX codec to embed in their DVD players.

1) Consumers download the DivX player for free, and DivX makes money by bundling the Google Toolbar with its application. DivX writes that Google accounted for 20% of its revenues in the first half of 2006 or roughly $5 million.
Assuming 25 million downloads during the first half of 2006, that means DivX earned an average of $.20 per download of DivX Player. DivX writes,

The Google agreement accounted for approximately 20% and 15% of our total revenue in the first half of 2006 and in the full year ended December 31, 2005, respectively.

In the first half of 2006 and in the full years 2005, 2004 and 2003, we derived 20%, 15%, 17% and 28%, respectively, of our revenues from the inclusion of advertisements and third party software applications in our software products.

This part of its business carries certain risks, because the more successful and popular Google becomes, the less money DivX makes. The major risk is market saturation of the Google Toolbar. For instance, like many people, I already have the Google Toolbar installed on my computer. That means, DivX is not paid when I download the DivX player since it would be a duplicate install. As more people have Google Toolbars, revenue from Google Toolbar to decline.

Any decline in the popularity of either our products or Google's products among consumers or market saturation by these products could result in a decrease in revenue under this agreement.In particular, the Mozilla Firefox Browser may not achieve widespread adoption by consumers and may lead to fewer downloads and activations than past versions of Google's software included with our products.

Market saturation of the Google Toolbar is a major risk.If we assume that revenue from Google declined to zero (from $5 million during the first half of 2006), then DivX would go from being a moderately profitable business to a breakeven business. We can see that DivX generated $6.6 million in operating profit in the first half. Stripping out the Google revenue, DivX would only have generated $1.5 million in profits in the first 6 months of 2006.

In fact, I would venture to go as far as to say that DivX as a business would have seen much slower revenue growth without Google. After all, the company generated $14 million in the first half of 2005 and $27 million in the first half of 2006. Strip out Google revenue of $10 million, and you have a flat business that is growing 50% per year as opposed to 100% per year. Furthermore, you cannot assume that DivX will be able to do a repeat performance of that growth in 2007 due to market saturation of the Google Toolbar.

Therefore, the consumer side of the business is very risky.

2) The bulk of DivX revenues come from technology licensing to consumer electronics manufacturers.

Our technology licensing revenues from consumer hardware device manufacturers comprised 70%, 71%, 55% and 22% of our total revenues in the first half of 2006 and in the full years 2005, 2004 and 2003, respectively, and are derived primarily from per-unit royalties received from original equipment manufacturers.

This business has been growing rapidly.

The $14.4 million, or 161%, increase in revenues from technology licensing to consumer hardware device manufacturers from 2004 to 2005 resulted primarily from a $13.5 million increase in net royalty revenues due to an increase in the volume of consumer hardware devices sold by our licensees that incorporate our technologies, principally attributable to the worldwide growth in sales of DVD players that incorporate our technologies.

However, the licensing business is very hard to predict because DivX enters into these agreements for only 1 to 2 years.

Original equipment manufacturers pay us a per unit fee for each DivX Certified device they sell. Our license agreements with original equipment manufacturers typically range from one to two years, and may include the payment of initial fees, volume-based royalties and minimum guaranteed volume levels.

There is also a question of whether its largest customer, Phillips, will renew its agreement with DivX which comes up in June 30, 2007.

One of our original equipment manufacturer customers, Philips, accounted for approximately 13% and 10% of our total revenue in the year ended December 31, 2005 and in the first half of 2006, respectively. Our agreement with Philips, under which Philips is obligated to pay us a minimum of $11 million over the two year term of the agreement, expires on June 30, 2007. Philips is under no obligation to renew this agreement.

Valuation
The valuation of DivX is by no means cheap. Underwriters are seeking to list the shares at between $12-14, implying a fully diluted valuation of $300-$350 million or 6-7x times.

Conclusion
DivX is by no means an easy deal to understand. In its prospectus, DivX tries to position itself as a media and entertainment business by mentioning Stage6.com, its nascent video sharing site no more than 38 times (it generates no revenue as far as I can tell), but the basic metrics of the business seem to suggest that DivX is hardly an exciting media business, but a Toolbar and codec business, that faces significant competitive risks.DivX even cites MySpace and YouTube as competitors, but it is not close to being in the same league. Daily traffic reports seem to say DivX.com gets about 800,000 users per day.

Given the excitement over online video, it could price wildly into the stratosphere, for no simple reason than the fact that online video sharing is taking off. In fact, if DivX takes off as a deal, it could mean a faster than expected IPO for YouTube which recently hired a CFO who hails from Yahoo. If you are lucky to get an allocation, take it, though it may be wise to sell it on the pop. However, for those who are less fortunate, rather than jumping in hole hog on opening day, you may be better off taking a wait and see approach on the DivX IPO.

Posts of Note

posted by MR WAVETHEORY at 9/02/2006 02:18:00 AM
YouTube is hiring a CFO - the former Treasurer of Yahoo. Maybe they are preparing for a sale or IPO.

Myspace is partnering with Snocap to offer music downloads.


Baidu is considering listing China Depositary Shares (CDS) in Shanghai. It intends to use proceeds to acquire search engine related assets.

Barron's writes that Microsoft is granting 37 million shares to 900 executives. These shares are worth $956 million. What I find most interesting is that one of third of these shares vest immediately - call it a mid-year (retention) bonus. Vesting is the amount of time it takes to get your shares. Microsoftees get 1/3 of the shares immediately, 1/3 in a year, and 1/3 in two years. Typically, tech companies usually choose to vest their shares in 4 years, so that employees don't leave immediately after getting them. Rarely do they vest on a two year schedule. By the looks of it, Microsoft is using an accelerated vesting schedule to retain employees. After all, you can just imagine the frustration of the typical Microsoftee, watching their stock go no where in a nearly half a decade while Google's stock has more than quadrupled in that period of time.

What are you doing with your garage? Some home owners are spending $20,000 to $200,000 modifying their garages.

A garage's main purpose continues to be storing cars, but that doesn't mean it has to look like a garage. Driving into David Rodrigues' four-car garage is like entering your family room. The Pewaukee (Wis.) builder spent $20,000 just on wood-paneled walls, red alder pantry-style cabinets, and a bronze stained floor. There are also wall-mounted racks for golf and ski gear, and a lift system to keep his Heritage Harley-Davidson motorcycle off the floor.

Lawyer Bob Wade spent about $275,000 to build an unassuming 2,400-square-foot cedar garage at the foot of his driveway in Northampton County in eastern Pennsylvania. But inside, it's more like a museum to house his collection of six classic cars, including a 1965 Porsche Cabriolet. The space features a 130-square-foot work area and a hydraulic car lift. It even has a shower so Wade can clean up when he's finished working on the cars.

September 01, 2006

Do You Really Need a Mobile Locker?

posted by MR WAVETHEORY at 9/01/2006 08:46:00 PM
Forbes recently posted an article about Mobile Lockers, which are supposedly places where mobile phone users can store their games and ringtones online. The companies offering these services include Navio, Oasys, FusionOne, and Verisign. This is a heavily funded space. Navio raised $25 million late last year. FusionOne has raised over $140 million - and probably more - since news of its last fund raising activities were from late 2000.

With phone memory getting cheaper by the day, I question whether consumers actually need a place for them to store their music, ringtones, and games online. In Europe, many mobile content companies are already selling games and ringtones on multimedia memory cards (MMC). Telcogames, for instance, offers a MMC card with its top selling games for 19.95 British pounds and there are no bandwidth or airtime charges through Carphone Warehouse, a mobile phone retailer. Rok Entertainment offers TV shows, ringtones, and video on MMC cards. Many of these cards come with hundreds of ringtones, wall papers, and graphics. Does this remind you of the CD multipacks that wiped out the retail consumer software business?With all of this storage available on MMC cards, I see very little room for Mobile Lockers to flourish. Mobile Lockers only make sense when the pricing of a single piece of mobile content remains very high, and it is costly to replace them when you switch to a new phone. When pricing of mobile content drops precipitously as it will when MMC cards become prevalent in the US, Mobile Lockers will no longer make sense as a business. After all, why store your content online when you can store it all on a tiny MMC card? The convenience of being able to take your content with you on an MMC card outweighs the advantages of a mobile locker.

Squeezing 30 Second Spots Into 15 Seconds

posted by MR WAVETHEORY at 9/01/2006 08:08:00 PM
Jonathan Berr talks about the ever decreasing attention span of internet viewers which is forcing marketers to turn 30 second television spots into 15 seconds. Maybe marketers just don't get it. It's not about the lengthe of the ad - it's about relevance. Putting 15 second ads in front of content as a blocker page or a pre-roll makes very little sense.

Make advertising the content. Or turn content into advertising. That's what NBC has been so great at doing.
Each episode of the Apprentice is a 40 minute spot for the sponsor. I give the Donald, who had no prior experience in television, a lot of credit for being the most creative mind in advertising. While the first season (and the first episode) was a complete fluke in terms of commercial value (remember the premier episode where the contestants tried to figure out who could peddle the most lemonade in downtown Manhattan?), the second season really hit its stride starting when the first episode of the season was essentially a big promo for Toys R Us and Mattel.

The Apprentice singlehandedly brought NBC prime time back from the brink by marrying content and product placement into a package that not only consisted of televison air time but also Internet marketing. I can't tell you how many times I've visited the Apprentice website after watching the show to read the biographies of the contests, to catch up on the episodes that I missed, and to check out the products of show sponsors - even products as silly as Tide to Go.

The big lesson from shows like the Apprentice is that consumers no longer want to be sold as a mass audience. That is why 30 second spots are turning into 15 second spots. Soon enough, it might be 0 seconds. Consumers want a one-to-one message delivered to them. That's why Internet advertising is growing. Every paid per click message you see is a one-to-one message delivered as a result of your search query - where you, the consumer, call the shots. That's what I find so ironic when I hear about the woes of traditional advertising. The success of the Internet as a one-to-one medium is in our face everyday.

My best advice for television companies is to identify shows like the Apprentice who have aggregated a great niche audience, learn how they are working with brand marketers, and use the lessons learned to re-engineer how you work with advertisers. It's time to rethink how you sell the incredibly shrinking 30 second spot.

20,000 Not 10,000 Jobs to Be Lost at Intel!

posted by MR WAVETHEORY at 9/01/2006 04:14:00 AM
Apparently, I may have underestimated the mass firings at Intel which originally I had put at 10,000 job cuts. I wonder where those jobs are going - AMD?

August 31, 2006

Carolyn - You're Fired!

posted by MR WAVETHEORY at 8/31/2006 06:01:00 PM
I just came across this hilarious article. Carolyn from the Apprentice fame is fired! There can only be one big ego in the Trump Organization
"She became a prima donna," a presumably close, unnamed "insider" told the newspaper. "She was giving speeches for $25,000 and doing endorsements."
And it's good to know that nepotism is well and live!
Proving nepotism is alive and kicking, Trump earlier tapped daughter Ivanka to take over as the reality show's requisite female sidekick, with Donald Trump Jr. chosen to fill-in for the other longtime Apprentice lackey, George Ross.
I can only imagine how it ended.

The Donald: "Carolyn, as you know you were in charge of my golf courses in Jersey City and my estate at Mira Lago. Therefore, I hold you partially accountable for the recent hurricanes. Not planning for the hurricanes was a big mistake. And I don't tolerate big mistakes. Why did you not forsee the hurricanes?"

Carolyn:"Mr Trump, I've worked my ass off for you for the last 10 years. I've proven my leadership ability and my ability to play the part of the hatchet lady on the Apprentice. "

The Donald: "Carolyn, there is only room for one prima donna in this organization. And with Baby Donald and Ivanka in the Board Room, there will more egos than I can handle. I can't allow that. That is unacceptable. You're fired!"

Updated: At least the Donald looked her in the eye before doing her in. Modern Day Alchemist reports that Radio shack fired 400 workers using e-mail. I wonder how the 10,000 workers at Intel will be fired? That's 10,000 pink slips. Hmmm. Maybe they can save some paper this time - after all, that's what cost cutting is about right? My suggestion, keep it short and simple and stupid so there can be no doubt that the person receiving the email is fired. Something like:

"U R Fired"
"Leave"
"Fired"

will probably do. And don't feel sorry for these product marketing fools. They'll all be working at the Googleplex by next week. I'll bet the recruiter from Google has been lurking around for some time.

Update 2: Oh, Carolyn (and those woeful souls at Intel), I've got a tipe for you when you're working your next job: dress better. Even this 11 year old running a lemonade stand knows that dressing well pays. And he's just selling lemonade.
Ethan Esparza takes dressing for success to a new level.

"When the people saw me, they just really thought it was cute," Esparza said. "I got a lot of money, so I thought, ‘Maybe I’ll wear a suit every time I do a lemonade stand'."

He started three years ago, when he was only eight, wearing the suit and tie almost every day.

Esparza’s casual attire was a disaster, "Once I wore a T-shirt, I just made five bucks."
With Suit: $40 per day. Without Suit: $5 per day.

Adding Ads into EA Games

posted by MR WAVETHEORY at 8/31/2006 05:39:00 PM
Playing games used to be a chance for players to blast beasts and monsters. Now, it's become another way for for advertisers to blast players and gamers. EA announced that it is partnering with IGA and Massive to feed live advertisements into Battlefield Earth 2142 and Need for Speed: Carbon - on the heals of announcing that it had sold 2 million copies of Madden in the last week raking in $100 million which according to EA tops most summer films!

Brandweek thinks it heralds a new era for in game advertising since EA was one of the last holdouts.

The IHT thinks it adds realism to games.

HunterTrack gives kudos to Massive for locking in the deal.

Businessweek profiles the history of EA.

NetVibes - A Cool Ajax RSS Reader

posted by MR WAVETHEORY at 8/31/2006 04:48:00 PM
I came across NetVibes recently and took it for a test drive. It's a web-based RSS Reader that lets you aggregate news from sites like Mr Wave Theory.

What I liked best about NetVibes is the interface. It's really easy to use. NetVibes has an autodiscovery feature, which means you can type in the url of the site you would like to add and it will give you a bunch of options on the potential feeds kind of like below. With this nifty feature, it took me just 2 seconds to plug in my feed to Mr Wave Theory.Adding content is also easy. You can also add games to your page like Sudoku, Daily Cartoons, or simple Weather module. There is even a Google Maps module and one to watch TV on your home page.

What NetVibes can improve on is the user interface. You can change the heading colors of the different elements on your page. But beyond that, it seems like it's hard to change the background image. It looks like they are working on making user interface improvements.
The next step ahead for netvibes includes a wide array of improvements. We'll be ramping up our user support and working around the clock to respond to your feedback. We'll be adding greater personalization, including netvibes skins and more customizable settings. We'll also be working to dramatically increase the speed of your netvibes experience — we're in the process of rewriting the entire backend to optimize page loads.
The service is available in many different languages: English, French, German, Spanish, Chinese, Russian, Croatian, and Hindi.

Like many Web 2.0 businesses, NetVibes doesn't have a business model. Aramki thinks it could be advertising. In this case, NetVibes would create and promote widgets for sponsors, and get paid each time it is downloaded. It sounds like an interesting idea.
That's what Desktop.com, an ideaLab company, thought during the heyday. Maybe the timing is better in 2006!

What's the Hottest Place to Hangout: Facebook, Bebo, or Friendster

posted by MR WAVETHEORY at 8/31/2006 03:11:00 PM
Social networking has been on fire lately. Friendster, which was thought to be left for dead, just raised $10 million. FaceBook is thinking that it is worth $2 billion. And even a company in the UK has raised money to attack this huge growing market - I'm being sarcastic.
We all know about MySpace. So the interesting question is, among the second tier sites, who's winning in social networking? I decided to run a trend analysis among Facebook, Bebo, and Friendster. The results as you see are below:
From the looks of it, the winner is non other than Bebo. Several conclusions can be drawn from the chart:

1) FaceBook has seen a pretty dramatic slowdown in traffic in the last 3 months in terms of traffic. This is probably to be expected since FaceBook serves the college going crowd. However, it is not comforting if you were an investor since the valuation of the last round was north of $500 million. Geographically, FaceBook is leading in the US.

2) Friendster has is trailing both FaceBook and Bebo. Friendster had a spike in traffic earlier in the year. This appears to be shortlived. I believe Friendster is being used by non US users so the query volume may not be representative. Friendster is leading in Canada.

3) Bebo is really knocking the cover off the ball. It has overtaken both FaceBook and Friendster in terms of traffic in the first half of this year, and that's pretty amazing. It is the clear leader in the UK.

Who is Bebo?
Bebo was founded by Michael Birch - also the founder of BirthdayAlarm. It is a cross between FaceBook and MySpace. The demographic is organized like FaceBook - but younger skewing than FaceBook. The site claims to have 25 million users and 3 billion monthly page views vs 75 million users at MySpace at 30 billion page views. Traffic has been blazing. The site literally came out of nowhere a year and a half ago. What's incredible is that the company rejected a $500 million offer from BT just a year into its founding.

How did it grow so fast?

I think a good part of the growth is due to the fact that Michael converted a large number of his BirthdayAlarm (auspiciously launched on 9-11) users to Bebo. It's a great strategy.What is Bebo doing now?
I think Bebo is trying to figure that out. Originally, it was a junior Facebook, a place where kids picked out the schools they went to and signed up with an email address. However, the gated community approach doesn't seem to have worked, so the last remnants of its FaceBook approach is simply a College and a Schools today. Today, it is more like MySpace. Anyone can sign up - with any email address. There is no real authentication and verification of identity - with lots of fake profiles - taking a page straight out of MySpace's playbook. More recently, it looks like they are trying to be more like YouTube now, and the front page is filled with viral videos. What is Bebo's strategy? I really don't know, but apparently it was good enough for investors to put in a nice chunk of change. They've got $15 million to figure out what to do.

Where to next after Web 2.0?
I have wondered recently what Web 3.0 will look like. After everyone has been socially networked and Ajaxified, what will be the next big hit? What will happen to the Web 2.0 companies?

A recent quote I read by Steve Rubel of Micro Persuasion comes to mind:

When it comes to social media, there's one -- and only one -- thing you can bank on: No one puts down roots.

Steve warns that the top media properties of 2001 like Homestead.com, FortuneCity, and MadBlast, are nowhere to be found! In the case of Homestead, Google is gunning at its SMB turf with Google Apps for Your Domain. In the case of FortuneCity, I don't think anyone even remembers what it is. Never mind Madblast!

So, will we look back 5 years from now at FaceBook, Bebo, and Friendster and see what we see looking back 5 years from today? I can only venture to guess that history repeats itself more often that you would think! To the hearty, adventurous VCs who have money in these deals, I wish you the best of luck! Lightning is known to strike twice in the same place - particularly in Silicon Valley.

Follow-up: Tivo

posted by Robson Lee at 8/31/2006 02:54:00 PM
Following up on yesterday's Tivo article, I noticed that the stock went up 0.59 to close at 8.25 today, but the bigger news is that over 5000 September '06 calls were transacted today. It seems that someone out there is expecting some bigger moves to come and soon.

While I applaud the optimism of the move, I think that Tivo is a long-term play. The losses can't be stemmed for another couple of years if ever. As Eric Savitz points out, "the company came up far short of expectations in adding new subscribers, which is a troublesome trend." The revenue sharing agreements and rebates offered to customers are a substantial burden on Tivo's revenue stream, but they are a necessary cost to expand market share so we won't see an end to them soon. The question is: can Tivo survive long enough to reap the rewards of its long-term, slow-and-steady strategy?

Venture Capital - What's the Rush

posted by MR WAVETHEORY at 8/31/2006 12:18:00 PM
Frank Addante, the founder of L90, has a great post today called Venture Capital - What's the rush?

Recently, I have noticed a developing trend of people starting companies and rushing to raise venture capital. I've had more people come to me in the past 6 months seeking advice on raising venture capital than I have had in the past 6 years.

It sound like another Internet landgrab doesn't it? Web 2.0. Dot-com mania 2.0. Yet, this time around, Frank points out that venture capital is no longer a required ingredient for starting a company. After all, why raise capital when open source software, Linux hardware, and hosting all be had for a fraction of what it cost just a few years ago. The VC is no longer needed in early stage.

The best advice he gives to entrepreneurs is to build a business, and get the VCs in when there is momentum, because "
Momentum sells. Period. Why?" It's simple.

1) As Frank points out, venture capitalists provide capital. Few venture capitalists today are operators. Your typical venture capitalist today might have worked a few years at a company, gone to McKinsey, gotten an MBA, and gone the VC route. Alternatively, your typical VC might have started out in banking, worked on a few deals, and been picked from a perenially abundant crop of bankers. Few VCs have started a company, lived on "roots and berries" and Ramen noodles, and racked up so much credit card debt that the monthly interest is equal to his or her net worth.

2) Venture capital is becoming institutionalized. Thirty years ago, your typical VC was your neighbor in Palo Alto who happened to get lucky sprinkling investments deals in companies started by a next door neighbor. Today, VCs are managing not tens of millions but in some cases billions. There simply isn't that much 1) time to work with companies 2) time to find deals 3) eat and sleep.

3) VCs like to say "We provide Value Add." I say most VCs today provide "Value Subtract." Many VCs sit on 5-10 boards. That's 5-10 board meetings every 90 days (or 64 working days). That means he is spending up to 15.625% of his time sitting in meetings - not to mention the time sitting in the car, the airplane, or his desk (finding the next deal).

With so many responsibilities, it's obvious why, for the entrepreneur today, there's no rush to raise venture capital. All you need are the 3 As - Ajax, Apache, a dose of Arrogance!

JDS Out of Phase or Back in Phase

posted by MR WAVETHEORY at 8/31/2006 11:25:00 AM
JDS Uniphase is down about 14% after reporting Q4 earnings yesterday, $2.25 (-.38). The good news is that gross margins improved from 14% to 30%. Operating margins also improved from -73%% to -20%. These improvements were largely driven by the results of Acterna, which JDS Uniphase acquired.

Even though results did improve, operating margins were still negative! Furthermore, the top line (ex Acterna) would have been flat as pointed out by Motley Fool, implying zero organic growth.

My take is that JDS is really a show me stock. With a decent acquisition under its belt, the current management team have once again shown that they are good deal makers. Now, they need to show they are business operators. Or it might not be long until the team at Acterna starts calling the shots.

How to Launch Your Own Ecommerce Store With Amazon AStores

posted by MR WAVETHEORY at 8/31/2006 01:56:00 AM
I just spent some time setting up an Amazon.com aStore. In case you don't know, it is Amazon's new affiliate program that enables you to setup your own ecommerce store online - with the click of a few buttons (well - maybe 100 clicks and 30 minutes).
Setting up an AStore is easy!
1) First go to to the Amazon.com AssociateHome Page. If you have an Amazon account, you can login. Otherwise, register for an account.2) Once you are logged in, click on "aStore Page." See the picture below.
3) Next, click on Edit Store.

4) You will be asked to select 9 different products to Feature on your AStore. Just type in "Apple iPod" in the Search Box and click "Go". When the search results return, click "Add". Repeat this until you have 9 products (technically, selecting this step is optional since you don't need to feature products to start a store.) When you are done, click "Continue."5) Then, Amazon will ask you to pick your Category Pages. These are the links to Product Categories that will appear on your AStore. I recommend you just pick 5 categories since adding all of the them with "Select All" really makes the navigation bar look clunky. Click "Continue."
6) Pick your color and design. Choose one of the predetermined layouts or customize the look and feel to your site. I would recommend blending at least the background color which is proven to improve conversion rates. You can add a logo by giving Amazon the url of an image. Click "Continue."
7) Once you are done with the design, pick your layout. I just went with the default which was SideBar Right. You can click on the check mark boxes to include and not include various items like ListMania, Reviews, etc. on your pages. That is a matter of your preference. I just went with the defaults. Click Finish & Get Link!
8) You are done! Take the link in the box and put a link on your personal web page or web site in the format:
<a href="http://astore.amazon.com/affiliate_id" style="">Come to My Amazon Store!!</a>

What I Think About AStores

In any case, after having gone through the process, I think it's a great idea!
Through AStores, Amazon wins by further familiarizing affiliates with its products.
How? I took the AStore for a test drive, and the first thing that AStores asks you to do is to pick 9 products to feature on your page. It took a good 15 minutes to do that, and by the time I was done, I had visited 15-20 pages of products, including products that I never knew Amazon carried - like these huge Samsung plasma TVs that start at just $9499! Nice TV - must be!

How to Improve AStores

I like the idea of AStores, but I do have
several suggestions for Amazon AStores / Jeff Bezos & Company:

1) Allow Affiliates to Customize the Stores. Currently, Astores allows you to pick colors for the look and feel of the store. I think even adding a tiny feature like personalized background/wallpaper would give the AStores more character. After all, if I wanted to shop at Amazon.com, why would I venture into an AStore. AStores should have more character and local flavor - depending on the affiliate's site. The customization that comes to mind is MySpace. It's loose and spunky, and it sure is popular. People spend hours customizing their MySpace page. Why not Astores?

2) Give Affiliates the Ability to Host Multiple AStores. The infrastructure is already there. Why limit it to one store? Think scaleability! After all, isn't build once, deploy many the core paradigm of Amazon S3 and Amazon Elastic Computing Cloud? Not sure what the technical issues are, but should be easy to solve.

3) Provide more skins. By skins, I mean templates of predefined sets of products to feature on the page. I'm sure you have a load of customer data. Why not use it? If I run a venture capital blog ( maybe that's too specific ), I'm sure you know what types of products my readers buy. If someone else runs a blog on homebuilding, I'm sure you've got lots of hardware to sell them. By all means, make it easy to set up an AStore. It takes too much time right now to get one up, especially since the search interface for adding products is - well - I'll say it - it's clunky!

So, those are my three suggestions for AStores! Do you have one too? Post a comment on my blog.

Speculation of A Sun Apple Tieup

posted by MR WAVETHEORY at 8/31/2006 01:38:00 AM
John Dvorak is speculating that Sun and Apple will tieup. I don't believe it will be easy. Dvorak argues "With Eric Schmidt in the game as a middleman it's quite possible that he could take the reins of such a combined operation and make it work." While I agree that Eric's leadership can be a great asset if the two companies merged, I don't believe these two companies fit together. Therefore, I disagree with John's premise that Eric will be able to bring it all together.

Apple and Sun are such different businesses that a merger won't make sense, because of architectural, cultural, and business reasons. Architecturally, Apple just made a big bet on the Intel platform for its iMacs. If Apple and Sun combine, it means that Sun will at some point have to make the switch as well. However, as Dvorak points out, "[Andy] Bechtolsheim, considered a genius by many, was brought back to Sun in desperation to reengineer its server lineup. There he developed the multiprocessor AMD-based line of systems that are cheap, reliable and very fast." Therefore, it would be a big change in technology strategy.

Secondly, Apple and Sun are very different places to work. Apple is a very centrally controlled place, where the charismatic leader that is Steve Jobs makes the most crucial business and technology decisions. Steve is a consumer products marketing whiz. Sun, on the other hand, is guided by Jonathan Schwartz who is much more of a tech guy - a software guy. And one can hardly call Sun a consumer products company. It sells big servers and big irons.

Finally, the businesses don't seem to have synergies. Apple sells to the consumer. Sun sells to businesses. I just don't see it. Do you?

August 30, 2006

A Pyrrhic Victory for Tivo?

posted by Robson Lee at 8/30/2006 06:04:00 PM
While I love my Tivo, its legal victory over Echostar concerning a "time-warping" patent is just the first step on the road to profitability for Tivo. It reported a net loss of 7 cents a share, beating Wall Street expectations of a 14 cent loss, as a result of legal costs associated with the patent dispute.

Anyone who has used Tivo before is familar with its intuitive user interface and helpful suggestions feature. That's what Tivo is counting on in signing deals with Cox and in 2005 Comcast that will allow cable subscribers to pay an additional $10 a month for using Tivo software on their DVRs. The deal with Comcast 2 years ago still hasn't borne fruit as Comcast customers are still unable to use the service. Similarly, the Cox deal won't start until early 2007. Suspicious minds might think that the cable companies are just making peace offerings while secretly waiting for Tivo to finally go bankrupt so they can go on a discount patent shopping spree. Still, they might be waiting a long time since Tivo's stock has done well over the past year, almost doubling to $8.

August 29, 2006

JaJah Provides Free Phone Calls - No Headsets Required!

posted by MR WAVETHEORY at 8/29/2006 07:24:00 PM
I just recently ran into a friend who invested in JaJah, a VOIP startup backed by Sequoia Capital and Globespan Partners. Now, before your eyes roll over (yeah, another VOIP startup), JaJah is providing free phone calls on its website. You enter your phone number, your friend's number, and Jajah dials both of you on your regular telephone. No headset, no download! The best part, it's free - for 5 minutes! Next time you don't have your phone with you, just go to the site and enter the enter you want to dial and the number of your nearest pay phone. Now, that's a potential Skype killer!

Google Trends Suggests Housing Market Will Pick Up

posted by MR WAVETHEORY at 8/29/2006 06:03:00 PM
If you've used Google Trends, you know that it's a cool tool that shows you what people are searching for online. A recent query for "homes for sale" suggests that the housing market may be picking up. The chart below shows that search query volume for "homes for sale" has been increasing over the past 5 weeks.

Google also shows the top 10 cities where the queries came from. Orlando, Las Vegas, and Phoenix top the list of cities where buyers are looking for homes for sale! So if you are a real estate speculator, start packing! It's time to head over to Orlando!Update: Google isn't the only one predicting a rise in home prices. Over the past five weeks, there's been a 42% increase in the number of Internet searches involving the phrase "homes for sale," according to Hitwise, a firm which measures Web traffic. Bill Tancer thinks the housing market is about to pick up.


Barrel of Apple News Today!

posted by MR WAVETHEORY at 8/29/2006 04:10:00 PM
First, SpiralFrog announces that it is giving music away for free in a partnership deal with Universal - giving Apple a run for its money. To drive the point home, SpiralFrog announced that the service will work on every music player but Apple iPods!

Then, Apple neutralizes that news by announcing that Eric Schmidt will be joining the board of Apple - giving investors hope that Google will not be among Apples' potential competitors. Both stocks fell today in spite of the news. The press release was celebratory as would be expected!

What do you make of it? It's the old Microsoft vs Apple. PC vs Mac format war all over again. I think Apple realizes that it needs to align itself with Google.

Microsoft Getting Contextual with ContentAds

posted by MR WAVETHEORY at 8/29/2006 04:00:00 PM




Jensense reports that Microsoft (MSFT) has invited a small number of advertisers to participate in ContentAds. The email from Microsoft says,

Content Ads is Microsoft's next product that allows advertisers to place content-targeted, text-based advertisements primarily on Microsoft-owned properties including MSN Money, Real Estate, and many others within the www.msn.com portal.


Maybe an AdSense/Yahoo! Publisher competitor is next. But things aren't happening as fast as they look, because Microsoft still works with Yahoo. The implication however is that Microsoft is slowly removing Overture off its content properties, after having removed Yahoo from its search properties. For instance, a visit to MSN Money shows that MSN is still showing Yahoo! Overture ads at the bottom of the fold such as the one below.

ValueClick Rolls Video with EyeWonder

posted by MR WAVETHEORY at 8/29/2006 03:12:00 PM
With video sharing really taking off, ValueClick (VCLK ) just announced a deal with Eyewonder to roll video ads. EyeWonder's format is accepted by Yahoo!, AOL, and MSN. This will be a much needed boost for Eyewonder and a good deal for ValueClick since video advertising rates are often ten times higher than banner rates. The video advertising market is growing between 50-100% per year so maybe it will do something for ValueClick. ClickZ says,

Mediaplex will add rich media ad creation and management services from EyeWonder to the dashboard of its flagship Mojo Adserver product. ValueClick previously worked with rich media vendors on an individual basis, based on its client's preferences.

For those of you who are unfamiliar, ValueClick runs a performance based banner advertising network. CPA campaigns are its bread and butter. However, ValueClick appears to be getting more aggressive with its marketing tactics lately. Chet writes that ValueClick has been using JonBennet Ramsay to promote a spam trap to collect personal information.

One of the reasons ValueClick that it is getting more aggressive is competition. ValueClick faces competition from Google which is beta testing a CPA network. Google is asking publishers to add a Content Referrer unit to their pages to test out the ad. If all fares well, Google could soon be in the CPA business. That would put pressure on ValueClick's core affiliate network business - Commission Junction.

AOL To Launch 80 FootBall Blogs!!

posted by MR WAVETHEORY at 8/29/2006 02:55:00 PM
I couldnt' believe it when I read it, but AOL is launching 80 football blogs!

The first set of blogs--which quietly rolled out last week--are devoted to the NFL, with AOL Sports now hosting one blog for each of the 32 professional NFL teams as well as a handful of other blogs devoted to subjects like fantasy football. The new blog section, dubbed "Fanhouse," will soon add more than 40 additional blogs devoted to college football. AOL is paying all of the new bloggers for each entry they write.

Now, am I the only person asking this question or is this going a little overboard with the blogs? Does AOL really need 80 football blogs or is AOL putting quantity over quality?

AOL is calling the service FanHouse. For instance, you can see the Broncos Blog which has an article.

I think the jury will be out on this one for a while, but I do applaud AOL for taking the initiative to bring its media and content creation capabilities and resources online. If this is successful, AOL will look like a genius and you can only imagine how fast the other media houses will follow.

AOL Launches Music Service. Also FlickR Relaunches

posted by MR WAVETHEORY at 8/29/2006 02:38:00 AM
Where Apple Goes, So Goes AOL ...

FlickR is relaunching with geotagging. Nice!

Don Dodge calls Google Apps for Your Domain a 24x0 service. How did come up with that one?

August 28, 2006

Do Pump and Dump Scams Work?

posted by MR WAVETHEORY at 8/28/2006 07:28:00 PM
Do you get emails from spammers who promise to make you a fortune on the next hot drilling stock? Well, I think that was a rhetorical question. Because we probably all do. Now, a study shows that the reason spammers keep spamming is because it works.

Pump and Dump Scams Work
Eric Savitz at Barron's reports that "a study that found people who respond to e-mailed “pump and dump” scams can lose 8% of their investment in two days, but that “spammers who buy low-priced stock before sending the e-mails, typically see a return of between 4.9% and 6% when they sell." It proves the law of conservation: 8% loss for buyers, 6% gain for scammers - what about the other 2%? It probably goes to the stock brokers - commission!

Is Hollywood Media Restructuring?

posted by MR WAVETHEORY at 8/28/2006 06:55:00 PM
Hollywood Media (HOLL), owner of Hollywood.com, Broadway.com, and Theatre.com, has sold its Baseline Studio Systems business. to NY Times for $35 million. It looks like the company may finally be restructuring so that it can focus on its entertainment properties.
Hollywood Media has been short on cash. Revenues have been growing at 30%+ but the company has not been profitable on a net income basis. It's been losing a million or two every quarter. Thus, the stock has traded at roughly 1x sales. Pretty awful for an internet stock!

Will Hollywood Media stock rise? That's a good question. I applaud management for selling the non core business to focus on entertainment content and ticketing. It'll be interesting to see what management has in store for that $35 million of cold hard cash that's now sitting in the bank. Staci confirms this view and also says that it means the NY Times will be an authoritative destination for entertainment using the data.

Did Hollywood Media get a good deal for Baseline?
Apparently so. According to Dealscape, the Times paid close to 6x sales for the property. "The new purchase offers access to more than 1.5 million records of information on the entertainment industry. The Times says that it expects Santa Monica, Calif.-based Baseline to generate about $6 million in revenue in 2006." Adotas thinks Baseline will fit well with About.com.

Is traffic growing at Hollywood Media's web properties? It looks like the answer is no. From the chart below, you can see that the traffic has been flat. What is growing seems to be monetization. It's nearly impossible to do a movie launch without a web campaign, and you can just imagine the importance of being on Hollywood.com.

Hedge Fund Cowboys Silicon Valley Style!

posted by MR WAVETHEORY at 8/28/2006 06:48:00 PM
Clarium Capital is being sued for fraud by Cyprus based Amisil Holdings which invested $300,000 in the company for a 1% interest in 1998. The prosecution is seeking $18 million.

The suit said that while Thiel reaped multimillion dollar distributions from the fund, Amisil received no gains and was blocked from obtaining financial information about the fund.

The late 90s was a crazy time! And now the skeletons and shady deals are all coming out of the closet! Clarium was founded by Peter Thiel, founder of Paypal. It's had a great run. Thiel has been quoted in many trade publications like Barron's and Marketwatch. I like the Clarium website because of its cool facts and macro statistics. Now, maybe, the fact slide show will say, "2006, Clarium Capital Sued by Investor for ..."

How Many Domains Does Google Have?

posted by MR WAVETHEORY at 8/28/2006 06:40:00 PM
Resource Shelf found that Google has 184 domains and subdomains! Thanks to Inside Google for point that out! Now you know! And when you know ...

A List of Google's active domains and subdomains (184 total):

3dchallenge.sketchup.com
adwords.google.com
adwords.google.com/select
base.google.com
base.google.com/base
bbs.keyhole.com
blogsearch.google.com
books.google.com
books.google.com/intl/
calendar.google.com
catalogs.google.com
checkout.google.com
code.google.com
code.google.com/apis
desktop.google.com
directory.google.com
dl.google.com
downloads.google.com
earth.google.com
finance.google.com
froogle.google.com
gmail.google.com
gmail.google.com/gmail
groups.google.com
groups-beta.google.com
help.blogger.com
investor.google.com
images.google.com
labs.google.com
local.google.com
mail.google.com
mail.google.com/mail/
maps.google.com
mars.google.com
mobile.google.com
news.google.com
pack.google.com
pages.google.com
picasa.google.com/linux/
print.google.com
print.google.com
reader.google.com
registration.keyhole.com
services.google.com/
services.google.com/tcbin/
scholar.google.com
search.blogger.com
sketchup.google.de
sketchup.google.es
sketchup.google.fr
sketchup.google.it
sms.google.co.uk
sms.google.com
spreadsheets.google.com
toolbar.google.com
toolbar.google.com/firefox/
translate.google.com
video.google.ca
video.google.com
video.google.com/videouploadform
video.google.de
video.google.es
video.google.fr
video.google.it
video.google.nl
video.google.pl
vp.video.google.com
webaccelerator.google.com
wml.froogle.com
help.orkut.com
pagead2.googlesyndication.com
ssl.google-analytics.com
www.googleadservices.com
www.google-analytics.com
www.googlepages.com
www.googlestore.com
www.googlesyndication.com
www.gmail.com
www.google.com
www.blogger.com
www.orkut.com
www.google.com/contact
www.google.com/coop
investor.google.com/pdf
investor.google.com/board.html
investor.google.com/conduct.html
investor.google.com/contact.html
investor.google.com/faq.html
investor.google.com/fin_data.html
investor.google.com/guidelines.html
investor.google.com/news.html
investor.google.com/notify.html
investor.google.com/order.html
investor.google.com/releases
investor.google.com/webcast.html
www.google.com/language_tools?hl=en
labs.google.com/intl/uk/frooglewml.html
labs.google.com/sets
labs1.google.com/gvs.html (demo offline)
www.google.com/mail
www.google.com/mobile
www.google.com/options
www.google.com/options/specialsearches.html
www.google.com/pages
www.google.com/permissions
www.google.com/pfetch
www.google.com/plex
www.google.com/preferences?hl=en
www.google.com/press
www.google.com/relatedlinks
www.google.com/searchhistory
www.google.com/services
www.google.com/sitesearch
www.google.com/sms
www.google.com/submit_content.html
www.google.com/support
www.google.com/talk
www.google.com/technology
www.google.com/tools
www.google.com/Top
www.google.com/trends
www.google.com/trends/music
www.google.com/webmasters
www.google.com/wireless
www.google.com/notebook/
www.google.com/trends
www.google.com/transit
www.google.com/addurl/
www.google.com/
www.google.com/about
www.google.com/accounts
www.google.com/accounts/ServiceLogin
www.google.com/ads
www.google.com/adsense
www.google.com/alerts
www.google.com/analytics
www.google.com/apis
www.google.com/appliance
www.google.com/base
www.google.com/calendar
googlecheckout.blogspot.com
googlechinablog.com
www.google.com/corporate
www.google.com/earth
www.google.com/educators
www.google.com/enterprise
www.google.com/froogle
www.google.com/gmm
www.google.com/googlefinance
www.google.com/help
www.google.com/ig
www.google.com/images
www.google.com/intl
www.google.com/jobs
googlewebtoolkit.blogspot.com
www.google.com/librariancenter/
www.google.com/local
www.google.com/macwidgets
adsense-de.blogspot.com
adwords.blogspot.com
adwords.blogspot.com/
analytics.blogspot.com/
googedesktop.blogspot.com
googlajaxsearchapi.blogspot.com
googlebase.blogspot.com
googleblog.blogspot.com
googlebloglist.blogspot.com
googlebrasilblog.blogspot.com
google-code-featured.blogspot.com
google-code-updates.blogspot.com
googleenterprise.blogspot.com
googleitalia.blogspot.com
googlekoreablog.blogspot.com
googlemapsapi.blogspot.com
googlemexicoblog.blogspot.com
googleresearch.blogspot.com
googlevideo.blogspot.com
googlewebmastercentral.blogspot.com
photos1.blogger.com
sitemaps.blogspot.com
adsense.blogspot.com
analytics.blogspot.com
googletalk.blogspot.com
googlevideo.blogspot.com