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Courseware & Insight at the Intersection of Tech & Strategy by Prof. John Gallaugher, Carroll School of Management, Boston College

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The Week in Geek™ – August 24, 2010

NOTE: I’ll be taking a break from regularly publishing the Week in Geek.  I’m on sabbatical until January 2011, and am also nursing an arm injury.  Fun/interesting articles will still be posted via Twitter @gallaugher (where I can post via iPhone and avoid excessive typing at an RSI-inducing keyboard).

Netflix to Pay $1 Billion to Add Films to Streaming Service
A quick update for those following along with our Netflix Case.  CNet reports that Netflix has significantly increased spending on streaming: $66 million in the June ’10 quarter vs. $9 million during the period a year ago, and that figure’s slated to go way up.  Starting Sept. 1st, Netflix gains the rights to stream films by Paramount Pictures, Lions Gate and MGM.  To make the deal happen, the firm’s Chief Content Officer says Netflix is taking a “huge pile of money” and diverting it from postage & DVDs by mail, to “pay it to studios and networks”. The total figure may top $1 billion over several years. The three-studio deal is actually made with Epix, an HBO-like premium cable outfit that holds the studio rights.  The Netflix pact will allow tiny Epix (which isn’t on Comcast or DirectTV) to break even in its next fiscal year.  Still holding out on Netflix is HBO, a power-player that has the rights to Fox, Universal and Warner films locked up for at least the next four years. It also looks like HBO is ready to go toe-to-toe with Netflix in streaming.  The big daddy of premium cable just launched HBO Go, a rival streaming service. As an aside to our Eagle readers, HBO’s parent, Time Warner, has a new Chief Executive, Jack Griffin, a Boston College alumnus

Facebook, Google Square Off on ‘Places’
Mashable offers a field guide to Facebook’s new location-based service hub, called ‘Places’ (and TechCrunch points out that the logo (right) for Facebook Places looks an awful lot like ‘a four in a square’, heh heh). Roughly a quarter of Facebook users access the site via mobile devices, suggesting the site already has a huge, potential head-start in enveloping this market (see slides & commentary from our Facebook Case for how the firm has enveloped other markets, such as photos).  Places can be used to ‘check in’ and share a location with friends, find out where friends have ‘checked in’, and discover places nearby.  Places will also play with other location-based apps. Foursquare, Gowalla, Booyha’s MyTown, and Yelp are all initial partners with Facebook Places, but eventually other developers will be able to access certain Facebook Places data. Facebook has placed users in charge of what location-based data is released, with the default set to share with ‘Friends only’.  A ‘People Here Now’ setting will show if any of your friends are also that location (e.g. who else is at the game). Business owners can also issue a verifiable claim to mark their ‘Place’ at a given location, sending updates to people who ‘Like’ that page, and more.

Also curious – other potential competitors are using the “Places” name, too. “Twitter Places” launched earlier this year, and “Google Places” launched last September.  In Google’s version is Maps-based, offering street-level images, and customer reviews of nearby locations. All of these efforts are really about local advertising.  Businesses with fewer than 100 employees spent $35-40 billion on ads in 2009, and both Facebook and Google covet that coin. Borrell Associates thinks these online services could generate over $4 billion in ad sales by 2015.

BusinessInsider says Facebook will be THE platform hub for location services, with other services hanging off Facebook’s platform.  BI also thinks Google & Twitter are non-players in social location & that Google’s chances of succeeding in social get further away each day.  Interesting how one announcement changes things.  Just a few weeks back (when FB was suffering privacy outrage in the tech press echo-chamber), some thought a Google social network could be timed right.

How to Make an ATM Spit Out Money (Video)
A chilling yet hillarious video (and a great accompaniment for the Security Chapter) from the recent Black Hat security conference shows that ATMs are just computers, with their own vulnerabilities. The video shows how Barnaby Jack, head of research at IOActive Labs, installed software over the air using a known vulnerability, then used a fake ATM card to take out money. Jack also used the same software to steal credentials of other users, allowing the withdrawal of cash from their bank accounts.  In another hack, Jack opened an ATM using a universal key purchased online, accessed the motherboard, and used a USB drive to change the display and play music while the ATM spit out money, Vegas jackpot-style.  Don’t try this at home, kids!

Oracle Sues Google – Says Android Violates Java Copyrights
When Oracle’s purchase of Sun Microsystems closed last January, the world’s largest database firm gained a treasure trove of open-source code, including MySQL, OpenOffice, and Java. Oracle exec Larry Ellison (who had a cameo playing himself in Iron Man 2) has sent shudders among those reliant on Oracle-owned, broadly adopted open source products, by suing Google, claiming Android infringes on Oracle’s Java intellectual property. Google’s Android is now the #3 smartphone OS worldwide and #1 in the U.S., so the suit is a big one within just this context; however any ruling may have widespread implications throughout markets reliant on open-source code.  Computerworld claims “How Oracle Sees Open Source Ma Not Be How You See Open Source”. We’ll see what the courts say.

A123 Spins Out Power Storage Firm 24M
Last spring our students & alumni enjoyed a talk by David Vieau, CEO of publicly traded battery firm A123 Systems, a key player in power systems for the electric vehicle market. Now one firm has become two.  Energy storage system producer 24M Technologies has spun out of A123 Systems. 24M raised $10 million in Series A funding from Charles River Ventures and North Bridge Venture Partners. 24M brought in an additional $6 million via the Department of Energy‘s Advanced Research Projects Agency – Energy grant program. Look for 24M to develop batteries that can store more juice for less cost.

Brands Friending Social Gaming
Last March, Microsoft gave away “Farm Cash” to users who became Facebook “fans” of Bing (Microsoft claims 70% of these users then visited Bing at least once the next month). Honda will promote its sporty hybrid CR-Z on the “Car Town” social game by Cie Games.  The game will feature Honda billboards, Honda commercials running on screens inside the game, and a virtual Honda showroom.  McDonalds has apparently inked a deal with Zynga’s Farmville, and Disney recently committed as much as three quarters of a billion dollars to acquire Playdom, the firm behind Social City and Sorority Life. Social games have clearly gone mainstream. In another example of how social gaming is changing the rules, this summer during the World Cup, EA’s Playfish social game unit (acquired last year for $300 million + a $100 million earnout) launched, the free EA Sports FIFA Superstars,  on Facebook. The free, social-game launch occurred before EA made the console version of the game available.

At FreshDirect, A Reinvention After Crisis
Those seeking to dive deeper into Fresh Direct, a case we regularly cove rin class, may be interested in some recent depth offered by the NYTimes.  It seems a few years back, the firm had great difficulty retaining customers and had severe operational problems, plus a 2008 immigration audit led to the loss of some 200 employees almost overnight.  However, in the follow-up piece it looks like data-driven & process-focused technology allowed the firm to zero-in on quality problems, strengthen customer retention, and boost reorder rates among its best users. Thanks to Prof. Jim Gips for sending these to me!

MacCalvin Romain, BC Undergrad IS Major, Speaks at TED!
In the world of geekdom, there may be no higher honor than to be invited to speak at a TED conference.  Those who speak are coronated as the best of the best – the world’s finest thought leaders.  To be considered worthy of a speaking invite is a closet dream of CEOs, authors, politicians, and (dare I say) faculty worldwide.  Past speakers include the founders of Google, Bill Gates, Steve Jobs, and Al Gore.  So when I went to catch up on TEDxBoston videos and saw one of our IS majors, MacCalvin Romain, speaking (and announcing his BC ties), I got chills. MacCalvin opened and closed the talk with John Werner of Citizen Schools.  With students like this it’s no wonder we continue to rise in the rankingsWell done, MacCalvin!

From Boston College Mascot to Venture-Backed CEO
It’s also a very good day when the Wall Street Journal covers a business founded by a former student. Bill Clerico was profiled by the journal in a story describing how the firm initially established connections with BC Trustee Peter Bell of Highland Capital PartnersBell’s firm has invested $7.5 million in WePay and he’s now a board member of the group payments service.  WePay was founded by Clerico (a former BC TechTrekker) and Rich Aberman (also a Boston College Presidential Scholar).  The service is growing like gangbusters and boasts other A-list investors, including Ron Conway (a Google & Facebook Angel), Max Levchin (co-founder of PayPal and Slide), and Paul Graham (whose Y-Combinator selected WePay for incubation in 2009). The firm even powered will.i.am‘s campaign, which was featured on Oprah!  Way to go Bill, Rich, and Peter!

Appswell Powers GE’s Challenge
Appswell, a Cambridge firm that crowdsources ideas for apps, then builds them, has just snagged a huge client at the launch of its business services unit – General Electric. Appswell will power GE’s Ecomagination Challenge, a $200 million contest aimed at generating ideas in renewable energy, smart grid technology, and eco-friendly building techniques. Some BC ties in the deal –Appswell CEO Dan Sullivan is a BC alum, and GE CEO Jeff Immelt spoke at May 2010 commencement (and delighted the geeks in attendance when he claimed to have crowdsourced ideas for his speech by inviting Eagle at GE to comment via his blog). Appswell also baked inside the Boston-based TechStars accelerator program, and Shawn Broderick, founder of TechStars spoke to the BC Venture Competition crowd in Fall 2009.

Clouds, big data, and smart assets: Ten tech-enabled business trends to watch
McKinsey’s most recent list of things to pay attention to comes complete with suggestions for additional reading.

And it’s nice to get a bit of buzz for our own efforts, too.  The Boston Globe mentioned my textbook with Flat World Knowledge in the lead story on the front page (I have to confess it was fun to share that with the family over breakfast – thanks, Globe!). And BusinessWeek covered our classwork in Social Media (although for the record, our own social media rockstar, Prof. Jerry Kane, is teaching our social media class this Fall).

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