Archive for March 1, 2013

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Andrew Mason’s Departure Letter Was A Bad Career Move

Groupon CEO Andrew Mason’s Honest, Charming Goodbye Memo: ‘I Was Fired Today’

Here’s The Infamous Battletoads Level That Andrew Mason Mentioned In His Groupon Farewell Letter

Just two weeks ago, then-Groupon CEO Andrew Mason did an interview with analyst Greg Sterling in which he showed no sign of concern about his job.

“My intuition has always been starting with the customers and building something that optimizes not for 2-3 months, but 2-3 years or even 20-30 years,” he told Sterling during the interview, which was conducted on February 19. “And being convicted about those principles and being unwilling to stray from them is the difference between success and failure.”

It may well have been the last time Mason did an interview with a member of the media. (Fast Company writer Elizabeth Spiers met with Mason in Silicon Valley in January; her interview, while not the last interview Mason conducted, is a must-read.)

Sterling’s interview will be published on Monday by Yext, a local-information software company, on Monday in its Yext Quarterly, a publication it’s creating for its business customers to educate them about trends in the market. With Yext’s permission, we’re publishing it here.

Cracking the Local Code
An Interview with Groupon Cofounder Andrew Mason

The story of Groupon is well documented. Born out of an earlier social-action startup called The Point, Andrew Mason launched Groupon in Chicago in 2008. The company quickly attracted investment and became the fastest-growing startup in internet history, expanding in the US and internationally through organic growth and acquisitions. Mason led the company to a highly anticipated IPO in November 2011.

More impressively, Groupon accomplished all this in the very challenging local and small business market, effectively bringing e-commerce at scale to local businesses for the first time. Now, in its post-IPO period, Groupon is diversifying beyond deals and seeking to become “the Local Commerce Operating System” for small business. In addition to deals the company now provides a point of sale system, electronic and mobile payments, scheduling and inventory management to local businesses.

In the following interview with Yext, Mason offers his reflections on the digital challenges facing small businesses, what it takes to succeed as an entrepreneur in local and what the market will look like five years from now.

Yext: What is the greatest challenge local merchants face in today’s evolving digital landscape?

Andrew Mason: We’ve found that local businesses aren’t early tech adopters. They are people who want problems solved for them. Evaluating all these different tools that are available to them, especially as we transition to mobile and tablets, is a real challenge.

Yext: How do they evaluate these competing sales propositions, channels, devices coming at them?

AM: They’re busy and they’re happy to rely on tried and true methods for marketing and tools to run their business. In order to understand the virtues of Groupon, we’ve had to hold merchants’ hands through the process of getting signed up, and have built a massive sales force to do so.

Yext: How have SMBs taken to adopting new marketing and advertising tools?

AM: Groupon is a form of advertising for SMBs. They measure the success too often by the size of the last tip that came through the door using Groupon, rather than a holistic analytical approach. We’ve found we have to coach them through how to evaluate the profitability of a Groupon campaign.

They know they need tools that help them improve their marketing and grow their business, but they will gravitate to the ones that will help them do it in a predictable way.

Yext: What has changed in local since Groupon was founded?

AM: I think for sure, mobile, that’s no surprise. Our business just in the last year has gone from 22% mobile, which was already doubling from the year prior, to 39-40% mobile this year.

In the same way that broadband facilitated the move of video from offline to online, mobile is doing so for local commerce. And it’s also enabling local ecommerce similar to how Amazon did for the move of product from offline to online.

Yext: What role will “Big Data” play in local?

AM: In our case, we can use just a few data points to help us find patterns and understand what consumers are looking for. We can also use it to help drive the right kinds of customers to a local business when they most need them. We’re just beginning to scratch the surface on how to use the data to build a local ecommerce ecosystem. The possibilities are endless.

Yext: What are the success factors for startups and digital media companies in the local market today?

AM: I was very deliberate when starting Groupon to make sure I had a model that did not have a chicken and egg problem – it had to work effectively at a small scale. Instead we actually had the opposite issue, it worked very well at small scale and, as we grew, we ran into issues bringing businesses too many customers. And we’ve had to innovate out of that problem.

They should also find a win-win-win model, where the business wins when consumers and merchants win. It’s unpleasant to have a business where you’re constantly forced to make tradeoffs between the best interest of the business and the best interest of the customers.

All of our success happens when we ruthlessly adhere to our values, which are to start with the customer and work backwards.

Yext: Five years from now, what problems in local will have been solved?

AM: The way people buy locally is going to be fundamentally different. There hasn’t been real tech innovation in local since the invention of the credit card, and mobile has catalyzed the disruption wave. Once we get the infrastructure to plug local businesses into the web, the innovation will exponentially increase.

Yext: What’s one thing you wish you would have known before you started Groupon?

AM: We didn’t just create a business; we created a category. Four and a half years later we are doing $5 billion in sales in 48 countries. The thing has grown massively and it continues to evolve at a similar rate. But you don’t have to be that smart to do well in business, you just have to have the courage to follow your intuition.

My intuition has always been starting with the customers and building something that optimizes not for 2-3 months, but 2-3 years or even 20-30 years.

And being convicted about those principles and being unwilling to stray from them is the difference between success and failure.

SEE ALSO: 
The Glory Days: How Andrew Mason And Groupon Rose To Incredible Heights

LinkedIn

Yahoo says this guy might have a case.

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Yahoo Expects To Pay Nothing In Its Mexico Lawsuit

Yahoo’s Top Lawyer In Mexico Has Left For Google

Yahoo Says Its Legal Costs In The Mexico Lawsuit Are More Than $300 Million

In its just-published annual report, Yahoo changed its tune about the giant lawsuit in Mexico it’s in the process of appealing.

Yahoo shocked investors in November when it revealed that a court had awarded a company run by Mexican entrepreneur Carlos Bazan-Canabal $2.7 billion in damages in a contractual dispute, a judgment Yahoo’s in the process of appealing.

In its fourth-quarter earnings call, Yahoo CFO Ken Goldman told analysts that it wasn’t setting aside money in case it lost—because it expected to win on appeal.

The language in Yahoo’s annual report is more nuanced, warning shareholders that it may have to put money aside in the future if it changes its mind about the prospects of winning.

Here’s the relevant paragraph:

On November 28, 2012, the 49th Civil Court of the Federal District of Mexico City entered a non-final judgment of U.S. $2.75 billion against the Company and our subsidiary, Yahoo! Mexico, in a lawsuit brought by plaintiffs Worldwide Directories S.A. de C.V. and Ideas Interactivas, S.A. de C.V. We believe the plaintiffs’ claims are without legal or factual merit and the Company and Yahoo! Mexico have filed appeals from the judgment. We do not believe that it is probable the judgment will be sustained on appeal, and accordingly, we have not recorded an accrual for the judgment. The Company cannot predict the timing of a decision or assure the ultimate outcome of the appeals. The Company intends to vigorously pursue all of its appeals. If all of our appeals are ultimately unsuccessful, however, and we are required to pay all or a significant portion of the judgment, together with any potential additional damages, interests and costs, it would have a material adverse effect on our financial condition, results of operations and cash flows. We will also be required to record an accrual for the judgment if we should determine in the future that it is probable that we will be required to pay the judgment.

Yahoo also gave a far more detailed account of the lawsuit. The most interesting thing: Yahoo says that the $2.7 billion judgment was issued by a law clerk, on behalf of a judge who had stepped down from his position before the judgement was entered.

Mexico Matter. On November 16, 2011, plaintiffs Worldwide Directories, S.A. de C.V. (“WWD”), and Ideas Interactivas, S.A. de C.V. (“Ideas”) filed an action in the 49th Civil Court of Mexico against the Company, Yahoo! de Mexico, S.A. de C.V. (“Yahoo! Mexico”), Yahoo International Subsidiary Holdings, Inc., and Yahoo Hispanic Americas LLC. The complaint alleged claims of breach of contract, breach of promise, and lost profits in connection with various commercial contracts entered into among the parties between 2002 and 2004, relating to a business listings service, and alleged total damages of approximately $2.75 billion. On December 7, 2011, Yahoo! Mexico filed a counterclaim against WWD for payments of approximately $2.6 million owed to Yahoo! Mexico for services rendered. On April 10, 2012, plaintiffs withdrew their claim filed against Yahoo International Subsidiary Holdings, Inc. and Yahoo Hispanic Americas LLC.

On November 28, 2012, the 49th Civil Court of Mexico entered a non-final judgment against the Company and Yahoo! Mexico in the amount of USD $2.75 billion and a non-final judgment in favor of Yahoo! Mexico on its counterclaim against WWD in the amount of $2.6 million. The judgment against the Company and Yahoo! Mexico purports to leave open for determination in future proceedings certain other alleged damages that were not quantified in the judgment. The judgment was issued by a law clerk to the trial court judge who presided over the entire case during the trial court proceedings but stepped down from his position shortly before the judgment was entered.

On December 12, 2012 and December 13, 2012, respectively, Yahoo! Mexico and the Company appealed the judgment to a three-magistrate panel of the Superior Court of Justice for the Federal District (the “Superior Court”). The appeals must be heard as a matter of law and are pending.

The Company believes the plaintiffs’ claims are without legal or factual merit. First, the plaintiffs’ claims are based on agreements that were either terminated by agreement with releases or had expired or terminated in accordance with their terms, a non-binding letter of intent pursuant to which no definitive agreements were ever entered into by the parties, and correspondence that did not constitute agreements. Second, the loss of profits of the type claimed by plaintiffs are not awardable under Mexico law because they were not a direct and immediate consequence of a breach of contract. Of the $2.75 billion in total damages alleged by plaintiffs, more than $2.4 billion were for loss of profits. Third, the plaintiffs’ alleged damages and loss of profits were further precluded by the agreements at issue through, among other things, contractual and legal limitations of liability. Fourth, the plaintiffs’ pleadings in the complaint, as well as documentary evidence filed by the plaintiffs in support of their allegations, were generally deficient to support or establish plaintiffs’ claims. Fifth, the decision failed to consider substantially all of the defenses asserted by the Company and Yahoo! Mexico. Finally, the Company believes that the law clerk who entered the judgment lacked the requisite authority to issue the judgment.

The Company does not believe that it is probable that the judgment will be sustained on appeal and, accordingly, has not recorded an accrual for the judgment.

The Company cannot predict the timing of a decision or assure the ultimate outcome of its appeals. The Company intends to vigorously pursue all of its appeals. If the current appeals were to be unsuccessful, the Company and Yahoo! Mexico may file a petition with the Mexican Federal Civil Collegiate Court for the First Circuit (the “Civil Collegiate Court”) to challenge the decision of the Superior Court as unconstitutional, unlawful, or both. If filed, this petition also must be heard as a matter of law. The parties may then petition for review of any decision of the Civil Collegiate Court to the Supreme Court of Justice of the Nation of Mexico (the “Mexico Supreme Court”). A petition to the Mexico Supreme Court, if filed, is granted at the discretion of the Mexico Supreme Court and its review is limited to interpretations of the Constitution of Mexico or the constitutionality of a provision of Mexico law.

The Company has determined, based on current knowledge, that the amount or range of reasonably possible losses, including reasonably possible losses in excess of amounts already accrued, is not reasonably estimable with respect to certain matters described above. The Company has also determined, based on current knowledge, that the aggregate amount or range of losses that are estimable with respect to the Company’s legal proceedings, including the matters described above other than the Mexico matter, would not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. Amounts accrued as of December 31, 2011 and December 31, 2012 were not material. The ultimate outcome of legal proceedings involves judgments, estimates and inherent uncertainties, and cannot be predicted with certainty. In the event of a determination adverse to Yahoo!, its subsidiaries, directors, or officers in these matters including in the Mexico matter, however, the Company may incur substantial monetary liability and/or be required to change its business practices. Either of these events could have a material adverse effect on the Company’s financial position, results of operations, or cash flows. The Company may also incur substantial legal fees, which are expensed as incurred, in defending against these.

Yahoo Finance

It was an up day for the market and most technology stocks, but not for Apple.

Apple stock fell another 2.5% to close at $430–its lowest closing price since the stock’s slide began last September.

Apple is now down almost 40% from its peak.

And for the first time in forever, anyone who has bought Apple in the past year and held it has lost money on it.

What’s going on with Apple’s stock?  How low could it go?

On the first question, there are several things going on with Apple’s stock.

Some are fundamental, having to do with changes in Apple’s business.

Apple

Pretty. But expensive.

Others are related to sentiment and changes in Apple’s shareholder base (“Momentum” and “growth” investors are dumping the stock, on the theory that Apple’s growth days are over. And as they dump it, the only folks willing to buy it are “value” investors who care deeply about price).

One of the things that is not happening with Apple’s stock anymore, which many people thought was a big reason for Apple’s collapse at the end of last year, is tax-related selling. Tax rates have already gone up. So anyone selling Apple now is selling it for reasons other than trying to lock in a low capital gains rate.

Here are some of the issues with Apple’s stock:

• First, Apple’s earnings are no longer growing. On the contrary, this quarter, Apple’s earnings are expected to shrink year over year. Investors don’t pay a lot for the stocks of companies where earnings are shrinking.

• Second, several reports have suggested that Apple has been cutting orders for this quarter for its most important product, the iPhone. Late last year, for example, according to UBS and other sources, Apple cut its “build” orders for iPhone 5s from 35-40 million units to 25-30 million. There have been other reports that iPhone 5 sales are decelerating faster than expected and that Foxconn, Apple’s iPhone assembler, has frozen hiring. All this suggests that sales of the all-important iPhone in the first quarter may be far lower than Wall Street has been expecting. It also suggests that the iPhone 5 has not been the colossal hit that Apple needed it to be.

• Apple refreshed its entire product line last fall, and we’re in the middle of what amounts to a new-product blackout period. Analysts expect that we’ll get something new from Apple in March, but it’s not clear what. The next iPhone, meanwhile, isn’t expected until June, and it is likely to be a boring minor upgrade to the already underwhelming iPhone 5. (In the meantime, Samsung will have launched its new Galaxy S4). Later this year, we’ll probably also get a new iPad Mini, but that won’t be that exciting, either. The only potential for real excitement is a blockbuster new smartwatch (iWatch) and an amazing new Apple TV. But the latter has been expected for two years now, and it’s not clear whether Apple really has a chance to do anything revolutionary or cool here.

• Apple’s amazingly high profit margin is declining and is likely to continue to decline over the next several years, as Apple’s product mix shifts toward lower-margin tablets from the high-margin iPhone and the iPhone margin itself declines with the introduction of lower-priced phones. This suggests that Apple’s earnings are likely to grow more slowly than revenue, in contrast to the situation for the past 5 years.

• One of Apple’s next revolutionary new products–a TV or TV device of some sort–always seems to be about a year away, with the expected date of release perpetually getting pushed farther into the future. Analysts are also not sure what this product will be and how it will sell. Dozens of companies have tried to reinvent TV over the last 15 years, and almost all of them have failed. Apple also appears to have met resistance from the TV content and distribution industry, which will do everything it can to preserve the status quo.

• The timing of Apple’s other expected revolutionary new product, a smartwatch (iWatch), is also still uncertain, and it’s not clear whether consumers will actually see a need for this product. The iWatch is also likely to be relatively low-priced ($99? $199?), so the company would have to sell a boatload of them to really move the needle. The profitability of the watch is also not clear.

• The smartphone market, which has driven Apple’s spectacular iPhone sales over the past 5 years, is entering a new phase, in which low-priced phones are capturing most of the market share. Apple does not yet offer a low-priced phone, so it is missing out on this growth. If Apple does release a new cheap iPhone this year, as is widely expected, this will likely add to the pressure on Apple’s profit margin.

• Apple’s competitors are catching up in smartphones and tablets (and now, possibly, in prospective TVs and watches), so Apple no longer has the leverage with distributors and consumers that it once did. Samsung and Google in particular are stealing much of Apple’s thunder (and potential customers). This, too, could eventually lead to more margin pressure, as Apple is forced to cut prices to remain competitive. Apple recently had to do this with a new Mac.

• Lastly, Apple really has finally entered the “post-Steve Jobs” era, and it remains to be seen how successful the company’s next generation of leaders and products will be.  One Apple observer, Paul Kedrosky, recently blamed Apple’s inability to meet demand for its new Macs on a culture in which no one will say “no” to Apple’s design teams. Others dispute this, but the broader question is whether Apple’s leadership team will be able to drive the company forward smoothly and aggressively without Steve Jobs.

All of these factors are likely weighing on Apple’s stock.

But here’s the good news:

The stock is now cheap.

Apple is now trading at 10X trailing earnings per share.

That’s not screamingly cheap. Apple could certainly get “cheaper,” especially if its earnings continue to decline. In the old days (mid-1990s and earlier), hardware stocks used to trade between 8X-12X earnings, and Dell, HP, and other companies are actually trading at even lower multiples than that now. (Dell is going private at about 8X earnings. HP is trading at 5X next year’s estimated EPS).

But unlike HP, Dell, et al, Apple is still a healthy company, so if Apple ever gets to 8X earnings, it will be screamingly cheap.

At 10X earnings, Apple is just cheap–cheaper, for example, than the stock market as a whole.

And Apple also has $137 billion of cash.

Factor out that cash, and the value of the business itself is actually getting close to the Dell level.

What will Apple’s stock do from here?

No one knows, so don’t get fooled into thinking that there’s some guru out there who can tell you definitively.

Apple may release some exciting new products later this year that will get investors buzzing and cause them to pay, say, 14X for Apple’s earnings instead of 10X. And that will produce a nice jump in the stock.

Or Apple may be in the early innings of a long secular decline in which it eventually becomes the equivalent of Dell (or, worse, Nokia. Or Digital Equipment Corporation.) That depressing future is entirely possible, so don’t delude yourself into thinking that it isn’t.

One thing we can say, though, is that, at 10X earnings, Apple looks cheap and is still in robust financial health. That means that even modest unexpected good news may drive the stock significantly higher.

(I don’t buy individual stocks these days, but if Apple were to double its dividend to a 4%+ yield, I might find that irresistible. Even if Apple is in the midst of a secular decline, it will likely be able to keep paying those dividends for a good long time.)

SEE ALSO: APPLE MARGIN SQUEEZE: Carriers Refusing To Pay Up For The iPhone

Ok, so this is obviously a simple designer’s error, but it is one rich in karmic potential. Sharp-eyed writer Kyle Gray picked out an interesting graphic on a section of YouTube’s site here.

The section is dedicated to YouTube’s efforts in unifying the feel and look of channels across devices like smartphones, tablets and traditional computers. Google uses an Android phone and tablet, and a brand-new Samsung Chromebook to illustrate the page.

Here’s the illustration:

Notice anything wrong with the Chromebook? Look closer.

Yep, it’s running OS X, which you can clearly see from the trademark window buttons, not present on Chrome OS. When the new Chromebook was introduced in October, a lot of people noticed that it looked almost exactly like the MacBook Air. Apparently, it’s so close even Google designers can’t tell.

Intel Capital, the venture arm of the Intel Corporation announced that it had recruited Sumeet Jain, formerly a partner with CMEA Capital, as its newest investment director. In his capacity, he will be focused on the consumer Internet, mobile Web, and “virally distributed software investments”, similar to what he did at CMEA where he invested in AWR, Blekko, Intermolecular, Pixazza, and Schooner.

Jain himself made the announcement in a blog post where he said that he’s hoping to become more involved with portfolio companies that will bring him “deeper into the intersection of finance and technology.”

In joining Intel Capital, Jain brings with him not only experience as an investor, but also as an entrepreneur. When he first started his career, Jain says that he started an Internet analytics company called Personify, which merged with Angara in 2001. Soon after, he worked to in sales at iManage, which also sold to Interwoven in 2003 for $171 million, before winding up as an investment banker at Goldman Sachs. Eventually, he grew tired of that life and says he missed the “fast moving emerging technology ecosystem” and that brought him to CMEA Capital.

When asked why Jain chose to join Intel Capital, he says:

Intel Capital has an entire platform of important resources for startups; access to the Intel’s global business and brilliant technologists, the ability to leverage the technology ecosystem that in some way most technology companies utilize, ability to provide access to key C level industry contacts, one of the few truly global investor networks and the credibility that comes with being a Fortune 500 company.  At Intel Capital, in addition to capital I will be able to bring these resources to startups to help them grow.

Intel Capital is a venture firm that has a $750 million fund split up into four different accounts, the Intel Capital India Technology Fund, Ultrabook Fund, AppUsSM Fund, and Intel Capital Connected Car Fund. It says that since 1991, it has invested more than $9.7 billion in over 1,100 companies with 189 going public and 258 getting acquired.

The firm invests in various types of companies, including those within the hardware, software, and services space — specifically those targeting enterprise, home, mobility, health, consumer Internet, semiconductor manufacturing, and cleantech. Some of the more notable companies recently funded include Urban Airship, Fortumo, Storenvy, and Sprinklr.

Photo credit: Justin Sullivan/Getty Images

Apple’s new Lightning Digital AV Adapter appears to have a system on a chip inside of it and may actually function as an AirPlay receiver, according to some recent investigation by Panic Software. The guys at Panic ended up tripping down the rabbit hole of Apple’s latest AV adapter while working on a new project that required TV-out work.

As they attempted to work with it, they noticed lag and performance issues, many of which have been reported on forums since the new adapter replaced the old dock-connector version. The adapter, if you’re unfamiliar, simply plugs into the iPad or iPhone on one end and provides an HDMI connector on the other. After butting heads against the problem for a while, they hacksawed one apart.

What they discovered inside is pretty nuts. There’s what appears to be an ARM SoC with a stacked 256MB Hynix memory module, along with a slew of other components. They’re still poking around inside, but it’s certainly intriguing.

I spoke with Brian Klug of Anandtech, and he posits (on brief examination) that it actually may be an AirPlay-like component that decodes an encoded video signal sent over the wire from an iDevice. What container is used to encode the video is up in the air, but it certainly could be the same one used for AirPlay, just sent over USB.

Head on over to the Panic Software blog for the whole tale, it’s a fascinating read.

Image Credit: Panic Software

Guest author Daniel Lopez is co-founder and CTO of BitNami.

It is difficult to avoid a weird feeling of Deja-vu when looking at the current cloud-computing landscape. Microsoft is once again battling for the future of the technology industry.

For years, Microsoft dominated the IT landscape with its Windows operating system, providing an industry-standard platform that others built on top of. Regardless of any pricing issues or technical shortcomings, the vast ecosystem of Windows applications and service providers ensured the continued success of the platform for many years and was an insurmountable barrier for competitors. It was not until the Web came along that this dominance was seriously challenged. The book High-Stakes, No Prisoners chronicles the story of the Frontpage acquisition and does a good job of providing a peek into the ruthless ‘battle for the Web’ against Netscape.

Microsoft Is A Cloud Computing Underdog

Microsoft is now waging another platform war: the battle for the cloud. The difference is that this time, Microsoft is the underdog.

Amazon has built not only an automated way to spin up new servers and databases, but an entire platform for building and running a whole new generation of applications. Where in the past you had to write apps using Win32 APIs and third-party OCX controls, you can now write applications using Amazon’s cloud APIs for file storage, database access, message queues and dozens of other services. The launch of the AWS marketplace further solidified Amazon’s move up the stack. If Amazon acquires a critical mass of users and vendors to build on top of its platform, the network effect will make it very difficult to displace that ecosystem.

Microsoft has not been sitting idle. The original version of Windows Azure was architected around a Platform-as-a-Service (PaaS) offering and was very Windows-specific. It had many shortcomings and attracted little developer and partner support.

Making Windows Azure More Competitive

However, in 2013 Microsoft has refreshed its Azure offering, providing a Virtual-Machine-centric offering modeled after Amazon’s Elastic Compute Cloud (EC2). The company went out of its way to make sure Linux and open source were first-class citizens. Microsoft has even demoed Azure using Apple MacBook Pro laptops and launching Ubuntu images. Microsoft finally “got it” – the launch of Azure Virtual Images was the first step towards fighting AWS head on.

About a month, Microsoft unveiled the Windows Azure Community portal, which provides dozens of popular open source applications and language runtimes contributed by partners. Even more recently, Microsoft took this a step further and made the images from the portal available directly in the Azure console, so they can be easily deployed onto Azure infrastructure. By making it easier to deploy third-party apps on its cloud, Microsoft is helping to grow its own ecosystem while increasing the utilization of its infrastructure. It also provides a counterpart to the AWS marketplace that, while limited, it is in many aspects simpler and easier to use.

Not Better, But Maybe Good Enough?

Microsoft still offers only a fraction of the functionality of Amazon, but it has a much bigger established user base among small and medium businesses and the enterprise. Coupled with its willingness to aggressively compete on price, Microsoft does not necessarily need to be better than Amazon to win. It just needs to be “good enough” to prevent its own users from switching.

It is incredibly refreshing to finally see viable competition to Amazon in the public cloud arena. Together with Google Compute Engine, Microsoft should be able to give Amazon a good run for its money.

Who will be the big winners of this war? For one, end users, who will benefit from lower prices from increased competition, as the cloud giants fight for market share.

Image courtesy of Shutterstock.

News Feed, one of the three so-called “pillars” of Facebook – alongside Timeline and Graph Search – is the bustling epicenter of the social network. And it’s overdue for an overhaul.

In a press invite sent out Friday, Facebook invited us to “Come see a new look for News Feed” on the morning of Thursday, March 7, at the company’s Menlo Park, Calif., headquarters.

News Feed Needs Some Spring Cleaning 

At turns maddening, cluttered and ad-ridden, News Feed is the core of the Facebook social experience. If you click the “Home” button that’s where you’ll land – and it’s certainly where Facebook wants its users to hang out.

Facebook’s real-time, algorithm-driven, social ticker is also what makes the social network so confoundingly addictive: When did my college roommate get hitched? Why can’t I stop reading about people I haven’t spoken to in years and barely knew to begin with? 

While Facebook obviously has the hyper-engaged can’t-peel-your-eyes-away aspect of News Feed on lock, it’s still a confusing, busy page. Managing who and what shows up on News Feed remains a Sisyphean grind.

The News Feed redesign is likely to remove some of the micro-managing necessary to maintain a relevant social stream. Facebook might also rethink the formula that determines what shows up in the News Feed – but better, more centralized controls for sorting and hiding content would also be a good idea. 

A (Literal) Stream Of Revenue

The cunningly engineered sense of addictive voyeurism is what powers News Feed – and what drives advertising revenue straight into Facebook’s pocket. In the fourth quarter of 2012, Facebook raked in $1.33 billion in advertising revenue – a 41% leap.

The last time Facebook changed News Feed in a major way was back in September 2011, though it aggressively tinkers around with all of its features on a rolling basis.

We know Facebook is playing around with a cleaner, more image-centric Timeline design, so it’s possible that the News Feed revamp could follow suit. Rumors are also afloat that a very visual redesign for the mobile News Feed is on the way – and with Facebook’s mobile mindedness, we’d expect some news on that front too.

We won’t know what the company has up its sleeve for certain until March 7, but we can cling to one certainty – it’s not going to be a Facebook phone.

Image by Taylor Hatmaker.

Turns out Apple CEO Tim Cook and his team celebrated too soon when they took a big victory lap last summer after a jury awarded Apple more than $1 billion in damages based on claims against Samsung.

Because the judge overseeing the case just tossed out almost half of that judgment — saying, in effect, that the jurors were a bunch of idiots who didn’t calculate damages correctly. And if Apple wants another crack at that money, it will have to go trial all over again. (In case you care, here’s Judge Koh’s actual ruling.)

It’s an amazing setback for Apple, but perhaps no big surprise. A lot of people right from the start seemed to realize that the jury in the case had done a lousy job by ruling too quickly without seeming to fully understand the laws it was charged with applying.

(See also: Apple’s Thermonuclear Patent War Is A Farce)

Worse, this band of buffoons was led by a foreman, Velvin Hogan, who after the verdict went around giving interviews in which he revealed, over and over again, the many mistakes that he and his minions had made. Hogan indicated, for example, that the jury was trying to “send a message,” even though that wasn’t its job. That was just one of many dumb moves on its part.

“Impermissible Legal Theory”

In her ruling today, Judge Lucy Koh said she was tossing out part of the judgment because the court had “identified an impermissible legal theory on which the jury based its award.”

Consequently, Koh ordered a new trial for damages on a bunch of Samsung products that Apple claimed infringed on its patents. The judge isn’t saying that the products don’t infringe, just that the jury didn’t follow the right procedure in calculating damages.

(See also: Another Apple Patent Gets Smacked Down; ‘Thermonuclear War’ Even More Of A Farce)

At the time of the verdict some observers noted that there seemed to be lots of problems with the jury’s decision. Nevertheless, Apple fanboys cheered. And Cook put out a ridiculous statement about how Apple wasn’t doing this for money, or to thwart competition, but because of “values.” (Gag me.) “We owe a debt of gratitude to the jury,” Cook wrote. “We applaud them for finding Samsung’s behavior willful and for sending a loud and clear message that stealing isn’t right.”

Patent Medicine

Problem is that since then, some of Apple’s patents have been struck down as invalid, because, well, it turns out other people invented the stuff that Apple had gone out and patented. In other words, Apple found stuff that other people had invented, tricked the patent office into granting Apple patents on that technology, then used those patents to file bogus claims against competitors, hoping not to squeeze money out of them but to drive them out of business.

So much for “values.”

I pointed in December that Apple’s “thermonuclear” patent war is turning out to be a farce. Apple’s claims have been laughed out of court all around the world. In a few cases where Apple has won some minor victory, its claims have been so trivial that opponents developed workarounds in a matter of days.

Today’s news makes Apple look even more ridiculous and pathetic.

Worse, while Apple has been pursuing this quixotic legal quest, its rivals in the Android camp just keep gaining market share. Android now runs on 75% of smartphones. Even in tablets, Apple has seen its market share eroding at a stunning rate, thanks to the rise of Android.

Thermonuclear Crater

All this started because Apple’s late CEO, Steve Jobs, threw a temper tantrum and vowed to go “thermonuclear” on Google for daring to create a rival to the iPhone. Jobs might have been a genius, but he was also a bully and a spoiled brat who couldn’t stand the idea that he couldn’t have the smartphone market all to himself.

Jobs was wrong. And now he’s gone. It’s time for Apple to stop this bullshit. Settle the cases and go back to competing based on products. Supposedly Tim Cook never wanted to sue Samsung in the first place. Now’s his chance to step up and do the right thing.

Image courtesy of Reuters

A quick word: We are kicking off GigaOM Reads, a weekly column that look back at some of the important technology stories of the week and our take on the news. In addition, we will curate some of the more interesting stories and blog posts we find worth sharing – Om Kristy.

Groupon’s 2-for-1 CEO deal: Groupon, decidedly the most non-tech company pretending to be a tech company fired Andrew Mason, founder CEO, and replaced him with not one but two CEOs — Executive Chairman Eric Lefkofsky and Vice Chairman Ted Leonsis, who are taking over as co-CEOs. Not to poop on their parade, but weren’t these two gentlemen supposed to prevent the current state of chaos at the company as board members? Something stinks, and it is not kielbasa. In what seems to be a perfect exit interview, Mason had some choice things to say:

“I think in the first phase of our company, we were a glorified mailing list. We had a completely unintelligent email that we sent out once a day and we had a human sales force that was going around and procuring the deals.”

As for Mason, he is looking for a fat farm to lose what he adorably calls “Groupon 40.” I am going to miss his nonsensical utterances.

Everybody hates (or loves) Marissa Mayer loves(or hates) Sheryl Sandberg: Well, at least everyone in media has something to say about two of the brightest and more powerful women in Silicon Valley, Marissa Mayer and Sheryl Sandberg. They were both making headlines this week for what seems to be all the wrong (or right) reasons.

Mayer wants her remote-working Yahoos to come back to the office, and while some claimed that this was the worst decision possible for the company (and its working parents), others argue that maybe we could all use more separation between work and life. Even we couldn’t decide with Mayer’s idea that the best ideas come from “hallway and cafeteria collaboration,” the fact remains — people are talking about Yahoo again.

Hoping to recreate a Betty Friedian-like social movement empowering women in the workplace, Sheryl Sandberg’s individualized take on feminism outlined in her new book, Lean In, may not strike the cord she had hoped. In fact, prominent entrepreneurial women have denounced the cause as unrealistic, while others insist that men must also become passionate change agents  in order for the business world to become more balanced.

By the way, those two news items sparked a lively thread on our internal messaging system.

Technology’s worst dressed guy is emasculated by phones: Google co-founder Sergey Brin, who is not exactly Bernard Arnault (CEO of LVMH, if you must ask), feels that smartphones are “emasculating.” He was speaking at the TED conference and his comments resulted in a flurry of commentary around gender issues.

The general body language of your average smartphone user aside, his comments indicate that Glass could evolve to include cellular phone service, but the truth is that health concerns might hinder adoption by the masses. One thing that might help make Google Glass cool? Its rumored partnership with hipster darling Warby Parker. But those are minor issues, as author Mark Hurst rightfully argues. The real issue is how we as human beings will interact with people with Google glasses and how that will change our daily experiences, he said.

“Google Glass is like one camera car for each of the thousands, possibly millions, of people who will wear the device – every single day, everywhere they go – on sidewalks, into restaurants, up elevators, around your office, into your home. From now on, starting today, anywhere you go within range of a Google Glass device, everything you do could be recorded and uploaded to Google’s cloud, and stored there for the rest of your life. You won’t know if you’re being recorded or not; and even if you do, you’ll have no way to stop it. And that, my friends, is the experience that Google Glass creates. That is the experience we should be thinking about. The most important Google Glass experience is not the user experience – it’s the experience of everyone else. The experience of being a citizen, in public, is about to change.” [Mark Hurst]

Does that future scare you? Then you should read Joel Hladeck’s amusing letter from the future that talks about why Google glasses kinda went the way of AltaVista.

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Oscars Hard times at CGI Corral: Darlings of the big screen and red carpet took home their golden statues at the Oscars last Sunday, but not all is well for the behind-the-scenes crew. The visual effects industry is facing hard times due to foreign outsourcing and subsidies, with large and small studios alike facing layoffs and closures. You may have caught Bill Westenhofer attempting to broach the subject after winning the Academy Award for Best Visual Effects for Life of Pi before being ushered off the stage to the theme of Jaws, which now seems oddly appropriate given that thousands of jobs are dead in the water.

Talking about Oscars, congrats to PopSugar for launching PopSugar Live. Their live red carpet show from the Oscars got about a million views, putting them in the cable television territory. Who needs cable (TV) when you have broadband?

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Fashion and tech in one place! What could go wrong: Conde Nast rolled out the red carpet for geeks during this years’ New York Mercedes-Benz Fashion Week by hosting a first-of-its-kind fashion and tech hackathon to create new ideas around how to use technology in the industry. We do admit that does sound kinda crazy and, well, Conde Nast isn’t who we turn to for innovation tips. But then again, the fashion industry is so far behind that they need to start somewhere. We would also recommend watching out for a whole new breed of fashion media upstarts that are frankly more fun and engaging than perusing dowdy Conde Nast.

Beyond Fashion Week, a handful of forward-thinking companies are already capitalizing on the use of technology in fashion, and creating a brand new way to shop, and find the perfect fit online

It is now the Internet of things:

“We are beginning to learn what it is like to use the Internet to communicate with things that are not humans.” — Vint Cerf at TED2013 (via Twitter)

We at GigaOM have been on it for a while, writing about the topic for a few years now. But now we are taking the show on the road and are hosting a series of meetups like the most recent one in San Francisco and the next one in Boulder, Colorado. Our belief: Ideally, the internet of things should fade into the background; what matters is what it allows people to do.

And what here are some stories from this week you might have missed.

1. Battle of the campuses: Google told Vanity Fair that it would soon be breaking ground on a new 1.1-million square foot campus, and it’s quite the contrast from Apple’s upcoming futuristic spaceship-like HQ coming in 2016. Richie King at Quartz explored what these vastly opposing architectural footprints say about the personality of each company.
2. Jimmy Iovine needs to make up his mind: He can’t undermine music curation without undermining Music by Beats, the company he owns and will disown soon.
3. Microsoft wants to be cool: And it will never be cool, according to a former Apple guy and a former Microsoft guy.
4. Tim Cook Apple versus Wall Street: The New Yorker’s John Cassidy rightfully argued that we shouldn’t pity the hedgies.
5. The problem with Facebook data: Well, there is a lot to dislike about Facebook’s “Like” argued Alan Wolk.

Read this and other in-depth articles on GigaOM’s Flipboard channel