Sunday, January 30, 2005

Fox on Fire!!!

Momentum (21M downloads in 3 months -

Opensource Assault:

For more info. see cover story in current issue of Wired.

" . . two people in particular are most responsible for the browser's success: Blake Ross, an angular, hyperkinetic 19-year-old Stanford sophomore with spiky black hair, and Ben Goodger, a stout, soft-spoken 24-year-old New Zealander. At age 14, Ross, logging on to his family's AOL account, started fixing bugs for the Mozilla Group, a cadre of programmers responsible for maintaining the source code of Netscape's browsers. Ross quickly became disenchanted with Netscape's feature creep and in 2002 brashly decided to splinter off and develop a pared-down, fast, easy-to-use browser. Goodger, who plays the David Filo or Larry Page to Ross' frontman, took the reins when Ross became a full-time college student in 2003. "

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Sunday, January 23, 2005

The Threat of Tux!!!

Universally acknowledged (even by Redmond) as the No. 1 threat to Microsoft dominance in the OS market.

BW has taken a lengthy look at how Linux was developed and the potential impact on the incumbent player in the market.

Put it all together, and Linux has become the strongest rival that Microsoft has ever faced. In servers, researcher IDC predicts Linux' market share based on unit sales will rise from 24% today to 33% in 2007, compared with 59% for Windows -- essentially keeping Microsoft at its current market share for the next three years and squeezing its profit margins. That's because, for the first time, Linux is taking a bite out of Windows, not just the other alternatives, and is forcing Microsoft to offer discounts to avoid losing sales. In a survey of business users by Forrester Research Inc., 52% said they are now replacing Windows servers with Linux. On the desktop side, IDC sees Linux' share more than doubling, from 3% today to 6% in 2007, while Windows loses a bit of ground. IDC expects the total market for Linux devices and software to jump from $11 billion last year to $35.7 billion by 2008.
"Tux" (pictured above) is the group's mascot - a friendly pint-sized penguin :)

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Tuesday, January 18, 2005

The (Desktop) Search for Profits!!

BW analysis is very similar to my earlier post on the topic. Refer to Cotton Green blog "Desktop Search - Precedent is Free!!!" posted Jan. 10, 2005.

BW analysis explores the possibility of a business model associated with customized advertising based on results of a desktop search ie. desktop search tool scans your HD and then provides customized ads based on results. Will this work?

It's a critical new niche in the lucrative search market. While searching for information across the billions of documents on the Internet has become relatively easy, locating a Microsoft Word file on one's own hard drive can still prove thorny. Solving this problem for customers could build brand loyalty that will spill over into Internet search, where there are billions to be made through selling targeted advertisements linked to search results.
Another hypothesis explored is that desktop search is a step towards - "Universal Search" - query all media (file, email, web etc.) from a single location. Once this is attained . . monetization will follow. Will this work?
Solving the desktop search headaches may be the first such step in that direction. "Universal search is the Holy Grail," says Chris Sherman, editor of SearchDay. "We're finally getting some movement in that direction."
Regardless, desktop search has quickly become a strategic necessity in the competitive search space and the winner must quickly find a way to make it pay. My bet is on Idealab startup X1 - "Breaking the Found Barrier" ( The "find-as-you-type" search and "quick background indexing" technologies provide for users the fastest desktop search tool across multiple object types and protocols. These technologies allow for your search to be completed even before you complete entry of your search request.

Find out how . . . try the free download and you will never go back -

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Sunday, January 16, 2005

Godzilla vs. Mozilla (I switched to Firefox!!)

Godzilla: Microsoft, the world's largest SW company, with $37B sales, $280B+ value and 57K employees spread all over the world.

Mozilla: A non-profit with a $2M budget & 16 employees in a single room in Mountain View, CA.

Mozilla the midget is pulling off the impossibe - it is taking signficant share from Microsoft in the Internet browsing market. According to a survey released Jan. 12 by Web site analytics firm WebSideStory, Mozilla's free Firefox browser has grabbed a 4.6% share over the past six months and seems well on the way to its stated goal of 10%.

I am among the 18 million consumers that have switched to Firefox. The upstart browser is safer from viruses, trojans and other malware and packed with innovations that include: tabbed browsing, integrated RSS feeds, multi-web page browsing, integrated websearch and tabbed bookmarks.

List of features -

But Microsoft has an overwhelming lead - 90% market share. Why should there be concern? As expected the answer is beyond browsers. Analysts say Firefox could have an outsized impact on the Net's future. If Mozilla and the other non-Microsoft browser outfits hold their own or gain share, the 15% of Web sites that aren't completely compatible with non-Microsoft browsers will come under pressure to design their sites to open Net standards. That way, Microsoft won't be able to control how content is presented on the Web. It would also create opportunities for competitors to sell rival Net software - since Microsoft wouldn't be able to take advantage of the links between Windows and its Net programs.

"We're not out to get Microsoft," says Mozilla Foundation President Mitchell Baker. "Our goal is to offer people a better experience so the Web remains open, and people actually have a choice."
Firefox is just the start to the above initiative. Mozilla has recently launched an email program called Thunderbird that competes with Microsoft Outlook and has 2 million downloads after just 2 months. The product development roadmap also includes: Sunbird (electronic calendar) and Minimo (browser for PDAs).

If you are in search of a more fulfilling browsing experience - switching is easy. Firefox imports your existing settings from Internet Explorer. An import wizard will run when you first install Firefox and it imports your Favorites, options, cookies, stored passwords, and a variety of other data. This saves you time customizing Firefox to fit your needs.

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Wednesday, January 12, 2005

Macworld Mania at Moscone ($99 IPOD & $499 MAC)

Macworld Expo is hosted by Apple and is the marquee annual event for the Mac community. The opening keynote is conducted by the CEO and serves as the forum to introduce new products to the community. Two new products were introduced for the value market at Macworld today - details below:

Both products are intended to make the Apple brand more affordable for the masses. The company unveiled its cheapest Macintosh computer ever and a version of its iPod digital music player for under $100. Apple has traditionally aimed for high-end markets both for its Mac computers and the iPod, eschewing discount models. But the company reversed that course in one fell swoop today with the $99 "iPod shuffle" and the $499 "Mac mini."

The "iPod shuffle," is shaped like a pack of gum with no display screen. The smaller one, with 512 megabyte of memory, holds about 120 songs and costs $99. The larger one holds 1 gigabyte, or about 240 songs, and costs $149.

The "Mac mini" will come in $499 and $599 models, depending on processor speed and hard-drive size. Weighing less than 3 pounds and under 2 inches tall, the mini connects to televisions as well as PC monitors.

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Monday, January 10, 2005

Desktop Search - Precedent is FREE!!!

If you are an information worker your data is voluminous and it resides on your PC. At any given time there is a significant requirement to search for content in files, emails, contacts, calendars, web pages etc. Until recently desktop search was a slow and laborious process due to the weak search capabilities of the Windows OS. Ironic that one can find information on the Internet in less than a minute, yet it is near impossible to find an email from 6 months ago using search capabilities from outlook.

Lucky for us the leading search engine companies are falling all over themselves to create free programs that efficiently search all content on the hard drive. Google, AskJeeves, Yahoo, MSN and Hotbot have all released or announced plans to release desktop search tools over the past few months and they are all FREE!!!!. How does it work? How can thes tools search through all the data (multi GB) on the desktop and display results in only a few seconds.? These solutions memorize the contents of the hard drive in advance. In simplest terms, a desktop search program works by pre-scanning files on your computer—e-mail messages, Web pages in your browser's cache, spreadsheets, etc.—and compiling a list of the words and phrases it finds. This index of your hard disk's contents get stored as a compact file or folder that's optimized for fast access.

The many emerging technologies (startups) in the space have not had liquidity events commensurate to the customer pain or the complexity of the technology. Liquidity events associated with Tukaroo, Copernic and Lookout acquired by AskJeeves, and Microsoft resulted in less than adequate returns. The technology leader in the space is startup X1 ( X1 is the fastest and most efficient desktop search tool I have reviewed. So much so that the much anticipated search tool from Yahoo! is based on technology OEM from X1.

But, will X1 have a successful liquidity event?

A market with significant customer pent-up demand, strong customer willingness to pay, relatively inelastic price demand and complex technology will result in no significant returns for vendors. While consumers I am certain are willing to pay the customary $29.95 for an annual subscription to use consumer software. That is a $3B potential market that will not be realized.

Good for consumers . . . confusing for investors . . detrimental for vendors!!!

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Friday, January 07, 2005

Security Wars - Bellwether Banter


January 6, 2004: MSFT Announces New Solutions to Help Protect Against Spyware and Viruses

Customers can download a beta version of Microsoft® Windows® AntiSpyware, a solution that will protect Win. users from spyware and other potentially unwanted software.

"We will have a stand-alone antivirus product that is one of the things you can
buy from Microsoft . . . " said Rich Kaplan VP for MSFT Security BU

December 16, 2004: Microsoft Acquires Anti-Spyware Leader GIANT Company

The acquisition to provide Microsoft® Windows® customers with new tools to help protect them from the threat of spyware and other deceptive software.

"Spyware is a serious and growing problem for PC users, and customers have
made it clear that they want Microsoft to deliver effective solutions to protect
against the threat," said Mike Nash, Corporate VP of MSFT Security BU

October 1, 2004: Gates: Microsoft to offer Anti-Spyware

Gates said Microsoft will offer software to detect malicious applications and that the company will keep it up-to-date on an ongoing basis.

"This malware thing is so bad . . . Now that's the one that has us really
needing to jump in. I have had malware, (adware), that crap on my personal
machines" Bill Gates, MSFT Chairman

June 10, 2003: Microsoft to Acquire Antivirus Technology From GeCAD Software

Company announced definitive agreement to acquire GeCAD Software Srl., a provider of antivirus technology based in Bucharest, Romania. Microsoft’s acquisition of GeCAD’s technology will help secure customers by providing antivirus solutions for Microsoft® products and services.

"Customers told us they needed a safer, more trustworthy computing experience to help combat the threats posed by those who write viruses and malicious code," said Mike Nash, Corporate VP of MSFT Security BU


"You can't put the words 'Microsoft' and 'security' in the same sentence without
laughing. Microsoft is features oriented, not security oriented," an
unidentified pharmaceutical company executive lashes out.

Microsoft takes a pounding when it comes to security, most of it from the publicity and damage caused by attacks that have exploited vulnerabilities in IE and Windows OS - Code Red worm, SQL Slammer virus, Klez virus and Nimda to name only a few. These hacker exposures to vulnerabilities in core Microsoft products have resulted in over $40B of productivity loss.

The result:

  • Enteprise and consumers find MS products vulnerable to security flaws

  • A $6B+ market has emerged for security products giving rise to industry bellwethers like Symantec (SYMC), McAfee (MFE), Trend Micro (TMIC), Checkpoint (CHKP) etc.

  • Alternate browsers (Firefox) and OS (Linux) that are more secure are gaining market share. Linux is the single most significant threat to MS dominance at the OS
For the reasons stated above over the last 3+ years Microsoft has engaged on a major initiative to improve security in all underlying products. They have built a Security Business Unit and embarked on several initiatives ("Trustworty Computing") in the security space including some highlighted above. Wall Street and pure-play security bellwethers have been anticipating the Microsoft product release in this space and today's announcement removes all doubts related to MS intentions in security.


Wall Street, on the other hand, for valid reason has little regard for the naysayers. The general consensus is that the consumer desktop security software space is under immediate threat. Symantec derives about 50 percent of its revenue from the consumer market and McAfee generates about 40% from this market. Symantec, however, is more diversified with signficant business unrelated to security and alien to the Microsoft threat - the company will soon integrate on the potential $13B acquisition of Veritas (largest M&A deal in software history). Both companies generate signficant margins from the consumer business and the street justifiably projects a signficant impact on top line revenues and cash flow. The impact on the enterprise desktop, server and gateway market will be less forthcoming.

For these reasons investors today jumped out of SYMC and MFE on worries both would be squeezed out of the security market with MSFT product release. Shares of SYMC dropped $1.79, or 7.15 percent, to $23.25 on the Nasdaq. McAfee Inc. fell $1.35, or 5.07 percent, to $25.28 on the New York Stock Exchange.


So after much speculation (2+ years worth) MSFT has unambigously confirmed plans to provide consumers with stand-alone solutions for both spyware and virus detection and removal. Currently the plan is for a free antivirus and spyware tool to be introduced as a beta version due out Jan. 11. But, a senior Microsoft executive confirmed the company's plans to put out its own antivirus software that could be on computer store shelves by the end of the year.

What does the future hold for security bellwethers? These companies have enjoyed 85% gross margins for over a decade selling antiquated anti-virus technology and the high cash flow consumer business ($30+ /user/year) is under immediate threat. SYMC is in a better position than MFE and TMIC with a signficantly diversified non-security product portfolio. What about emerging security technologies (startups)? Are the days of robust M&A valuations (10x+ LTM) for these vendors numbered? Will VCs no longer see the need to invest in 100+ security startups each year?


  • Hackers are already working on discovering vulnerabilities in the newly announced MSFT security products and within the next quarter these will be exploited - DaCeG.a!!

  • MSFT will continue with their weekly "Security Bulletins" and these will serve the amusing dual purpose of informing customers and hackers of new vulnerabilities

  • Pure-play bellwether stocks will rebound first after they announce another blow out Q4 during Jan. and then following the next hacker attack on IE or Windows

  • SYMC will be the 4th largest SW company following VRTS ($25B+ EV, $4B sales & >10% growth) with a very diversified product portfolio and a management team with strong precedent for executing over the last few years

  • Both SYMC and MFE trade at a discount to the software industry on earnings and earnings growth and both are good buys this week as investors bail on MSFT news

  • VCs will continue to fund enteprise security startups. The potential exits even with the MSFT threat are still higher than any other in the enteprise software space


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Thursday, January 06, 2005

M&A All Wrong!!!


On December 14th, 2004 Microsoft announced acquisition of GIANT - leader in spyware detection/removal tools.

On December 16th, 2004 Sunbelt software, a Florida software startup, announced that they co-own the Giant Anti-Spyware code and all future defintion updates.

"This is fantastic news for us because we co-own the Giant code and all future
definition updates," Sunbelt president Alex Eckelberry said in an interview with "We now get the benefit of the Microsoft research on anti-spyware to give us, bar-none, the best anti-spyware signature database on the market."
According to industry experts:

Attorney Steve Frank (Testa Hurwitz) doubts that Microsoft would have been so
cavalier, had it known about Sunbelt's rights to the Giant code. "These are
exactly the kinds of things that come out of the woodwork when there's lots of
money on the table," he says. "This will come as most unwelcome news.",1759,1743722,00.asp,aid,118994,00.asp


Only $25.98 Used on!!! :)

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Monday, January 03, 2005

First Blog - Why Blog?

For several reasons (some below) . . it is time to blog.

ABC News - People of the Year - Bloggers(

TIME Magazine - "10 Things we Learned About Blogs" -(

More US Adults Reading Weblogs - Pew Interent Report (

Blog Readership up 58% in '04. (

and finally . . .

Bill Gates on Weblogs Microsoft CEO Summit May 20, 2004

This (weblogs and RSS) is a very interesting thing, because whenever you want to send e-mail you always have to sit there and think who do I copy on this. There might be people who might be interested in it or might feel like if it gets forwarded to them they'll wonder why I didn't put their name on it. But, then again, I don't want to interrupt them or make them think this is some deeply profound thing that I'm saying, but they might want to know. And so, you have a tough time deciding how broadly to send it out.

Then again, if you just put information on a Web site, then people don't know to come visit that Web site, and it's very painful to keep visiting somebody's Web site and it never changes. It's very typical that a lot of the Web sites you go to that are personal in nature just eventually go completely stale and you waste time looking at it.

And so, what blogging and these notifications are about is that you make it very easy to write something that you can think of, like an e-mail, but it goes up onto a Web site. And then people who care about that get a little notification. And so, for example, if you care about dozens of people whenever they write about a certain topic, you can have that notification come into your Inbox and it will be in a different folder and so only when you're interested in browsing about that topic do you go in and follow those, and it doesn't interfere with your normal Inbox.

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