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So for now, we’re stuck in a he-said, she-said limbo, where the spinmeisters on both sides are slinging as much hash as possible. Despite their conflicting predictions of reality, the truth is that nobody will know whether this deal is pro- or anti-competitive until long after it goes into effect–assuming that Uncle Sam’s minions give it the green light.

This agreement gives advertisers a new opportunity to bid for placement on an additional network that includes Yahoo inventory. They will bid for what they think this opportunity is worth at prices that produce positive ROI. That’s how pricing works today in this industry and this agreement won’t change that.

To be continued.

Since the deal’s announcement, Microsoft and the advertising community have been making the case against the Yahoo-Google agreement. The Association of National Advertisers, which represents over 400 companies, last month issued a public letter maintaining the arrangement would raise prices and limit choice. Google and Yahoo obviously see things differently. Yahoo president Sue Decker then responded with a blog refutation of the argument put forth by the ANA and other critics:

If the antitrust division decides not to oppose the agreement, the big question is whether it will attach conditions. One source involved with the opponents of the partnership said there’s not much chance the trustbusters will allow the deal to be implemented without modification. Of course, nobody outside of the Justice Department really knows the answer yet–and they ain’t talking. True to form, a spokeswoman for the Justice Department declined to comment.

Of course, the government being the government, maybe it’ll do something supremely annoying and keep us in the dark beyond next Friday. But the calendar suggests that a decision is nigh. In June, when Google and Yahoo announced their accord, the companies voluntarily delayed implementing its terms for up to three and a half months to let the Justice Department review the deal.

The buzz around Washington is that the Justice Department will rule on whether to approve the Google-Yahoo advertising pact by late next week.

Continuing to stick with its own chips, operating system, and hardware while the rest of the world moved to commodity x86 boxes.
The adoption of Intel’s Itanium chip, which remains a depressing joke of a product. A myopic view that the core market in high-end servers wasn’t being decimated by the rise of Solaris and Linux

Can Sun avoid the SGI trap? Maybe, but probably only if the company gets broken up into different business units that separate out the OS, software and hardware.

It sounds like a simple argument to suggest that x86 Linux killed SGI and is killing Sun, but the truth of the matter is that both companies could have made things significantly better for themselves by embracing Linux early on, instead of fighting the tide and waiting until their market position had been vanquished.

So what killed SGI? In addition to the rise of Nvidia and makers of other graphics chips that ran on cheaper hardware, it was bad choices:

In 1996 or so, I started seeing mass quantities of Sun Microsystems’ machines coming into Lucent, and by 1998, much of the company’s operations ran on Solaris machines. Sun commoditized SGI much in the same way that cheap x86 Linux boxes have subsequently commoditized Sun.

Sun has some good stuff. Solaris is great, the hardware is fine, if a bit expensive, and the company has good cash flow and products in better market segments than SGI did.

The fact that SGI was acquired by Rackable Systems for the sad sum of $25 million was big news on Wednesday only because most people had forgotten that the company, formerly better known as Silicon Graphics, still existed.

The other interesting aspect here is that Microsoft has proven to be the smartest of all, having realized that the decoupling of the operating system, hardware, and applications would eventually give it the ability to dominate multiple markets by owning the user platform.

When I first started working at Bell Labs in 1995, most of the servers we used were from SGI. People liked the stability of Irix and the fact that the machines looked cool (ask anyone what they remember about SGI, and they will tell you the gear was cool.)

But Sun also has a lot of junk. There is a vast array of Sun software that costs a lot to maintain but doesn’t deliver much revenue. This is arguably the area in which Sun’s strategy has been so off the mark. With the exception of MySQL, there aren’t many Sun software products that generate significant revenue. If software is crappy, and people don’t want to use it, then it doesn’t matter if it’s open source or proprietary.

Over the past three weeks, Brocade has made two funding announcements surrounding the Foundry acquisition.

If Foundry fails to receive a sufficient number of votes to adopt the merger agreement, Foundry may propose to adjourn the Foundry special meeting, if a quorum is present, for the purpose of soliciting additional proxies.

Two hours before the markets closed at 1 p.m. on Friday, Foundry’s stock went into a tailspin, falling nearly 26 percent to close at $12.67 a share.

Foundry representatives declined to comment, other than pointing to their company statement.

“A company will open the meeting in the morning, then call a recess until the afternoon to allow more votes to come their way. And if they still don’t have enough votes, they may decide to adjourn the meeting to give them more time to reach out to shareholders who didn’t vote,” said the proxy solicitor.

Update at 4:45 p.m. PDT, with information from Foundry’s proxy filing on adjourning the meeting to get more shareholder votes.

Foundry currently does not intend to propose adjournment at the Foundry special meeting if there are sufficient votes to approve Proposal No. 1 (passage of the merger). If the proposal to adjourn the Foundry special meeting for the purpose of soliciting additional proxies is submitted to stockholders for approval at the Foundry special meeting, such approval requires the affirmative vote of the holders of a majority of the shares present and entitled to vote, either cast in person or by proxy at the Foundry special meeting. All abstentions will have the effect of a vote against the proposal. Broker non-votes will have no effect.

Brocade, which agreed to pay $18.50 a share in cash and 0.0907 of a Brocade share for every Foundry share, announced on October 7 that it secured $1.2 billion in loans and revolving credit from Bank of America and a week later announced plans to also offer $400 million in senior notes, or corporate debt.

A decision to adjourn a shareholders meeting is a common move a company may take, if it appears it is not collecting enough shareholder votes in its favor, noted one proxy solicitor.

But shortly before 2 p.m., Foundry announced it would adjourn the meeting until Wednesday at 4 p.m.

Foundry called a special shareholders meeting at 10 a.m. PDT on Friday to vote on its proposed merger with Brocade, which was valued at approximately $3 billion when it was announced in July.

In a statement, Foundry said: “Given recent developments related to the transaction, its special meeting of stockholders scheduled to be held today, Friday, October 24, 2008, has been adjourned until Wednesday, October 29.”

According to Foundry Networks’ proxy filing, the company had a plan B if it did not get enough shareholder votes to approve the deal when it held its Friday meeting:

Foundry Networks delayed a meeting to vote on its merger with Brocade Communications Systems until next week, after failing to get enough investors to support the deal.

I didn’t have any luck getting it to work with
Firefox 3.1 beta 2, however it worked fine in the current public build of Firefox 3. As with all experimental add-ons, you’ll need to be registered with Mozilla to download it.

Here’s a fun extension from the experimental section of Mozilla’s Firefox add-ons site. It’s called Puzzle, and once installed lets you turn any image from a page you’re on into a sectional puzzle with pieces that can be moved around. Upon completion you have the option to ramp up the difficulty, which goes all the way up to a 15×15 grid. It’s also able to resize larger images into smaller, laptop-friendly versions.

(Credit:
CNET Networks / Josh Lowensohn)

To toggle it on you simply right click on an image and select which difficulty you want. It then opens up the image (in puzzle form) in a new tab.

With Puzzle installed you can take any photo and turn it into a quick game.

However, part of Opengear’s cheery outlook might be good old-fashioned schadenfreude: Among their publicly held competitors, Digi International cut their first-quarter sales forecast by almost 15 percent and Lantronix was just delisted from the NASDAQ.

The channel often needs to sell console servers to manage their data centers, and Opengear is counting on gaining ground in what used to be a pass-through market. Is it sexy? No. But it is smart.

Part of that optimism may come from their management. CEO Bob Waldie is an open source veteran and one of the pioneers of embedded Linux who has taken a number of open-source start-ups through to acquisition (most recently, SnapGear which is now part of McAfee).

Every so often, something unsexy and boring becomes interesting. Few people drool over console servers, even those who deal with them on a regular basis, but an announcement by Opengear, an open-source console server company, manages to make them look sexy by appealing to resellers’ wallets.

I talked to Opengear representatives who told me that their numbers are going up, with a record number of sales booked in December. The console server market is about $200 million annually, and Opengear is unusually optimistic about 2009.

Opengear’s VARs see up to 25 percent profit margins on console servers, notable because the market standard is about 3 percent to 5 percent.

By using free open-source software like Nagios and Powerman in addition to writing their own code, Opengear passes along significant price reductions compared with their competitors like Avocent, Lantronix, Perle Systems, and Digi International.

By keeping it simple and open source, the company is able to offer their partners something that competing products can’t–high returns.

While the primary beneficiaries of lowered prices are their customers, Opengear has identified and targeted another group that benefits–their partners.

For all intents and purposes, it appears the nation’s second-largest electronics retailer is on the verge of disaster. Even if this season’s sales results end up not being as bleak as some are predicting, it’s unlikely even that could save Circuit City at this point. Circuit City did not respond to a request for comment for this article.

Because of this, the business model of Circuit City and other electronics retailers doesn’t work without very fast growth. And sales of many of the big-ticket items like notebooks, flat-panel TVs, and even gaming consoles (it’s the first year in awhile there won’t be a hot, new, hard-to-get console), are tapering off.

Add to that a fundamental shift in the way media is consumed–more online video and digital downloads, slowly moving away from packaged media and accompanying players–and the future of the electronics retail business doesn’t look so bright. As prices drop, it gets harder to grow business. And without that growth, it’s impossible for Circuit City to pay back those loans, much less suddenly become profitable, said one analyst who asked not to be quoted.

In the meantime, Circuit City is closing some stores and renegotiating lease terms on some of its store locations. Shutting the stores will save money in the long run, but the company needs cash and especially credit now.

“The supply chain and the way (products) go to market continues to reinvent itself. It puts more pressure on retailers,” he said. “And they have the least flexibility and are culturally the most resistant to change.”

Buying a lot of products on credit up front means retailers are stuck with paying the bill even if consumers don’t buy the products at the price they paid. As a result, retail isn’t a particularly forgiving business for anyone even if they make one mistake, said Stephen Baker, who follows the retail electronics business for the NPD Group.

While many retailers are understandably nervous about what this holiday will bring, none is likely more so than Circuit City.

Circuit City is, of course, not alone in its struggle to keep up with the changing retail electronics business. Specialty electronics retailer Tweeter succumbed last week, and in early December last year–right in the midst of the crucial holiday season–CompUSA announced it was closing up shop.

(Credit:
Circuit City)

No doubt, the slumping economy is causing some consumers to be more conservative about purchases this year. Consumers polled by the Consumer Electronics Association say they plan to spend $200 less this year than last on holiday items.

The global credit crunch is hurting Circuit City in particular. The retailer buys TVs, stereos, laptops, and other gadgets on credit, usually at a good rate from vendors with the promise to pay it back once the company sells the goods in its stores. But as the company has racked up huge losses, vendors are not giving Circuit City reasonable financing rates. Though Circuit City hasn’t come out and said so, some vendors could be convinced altogether that the retailer flat out won’t be able to pay the money back and could decline to send Circuit City any products at all. At that point, it becomes almost impossible for Circuit City to operate.

Blockbuster rescinded an offer to buy the beleaguered chain earlier this year and its CEO stepped down in September. Its stock has been languishing below $1 for long enough that the company has been notified it could be delisted from the New York Stock Exchange. And now the company has been forced to close 155 stores right before the crucial holiday sales period because of the dearth of credit available in the market right now.

Liquidating those stores, or selling all of the products in those stores at closeout prices to a liquidating company, should bring in some fast cash. However, Circuit City still has to pay the vendors for their product. Without some sort of margin on the liquidated product, it’s unlikely the liquidation will have any immediate positive impact on the company’s current financial plight. If the company doesn’t bring in a decent profit this holiday, 2009 could bring about bankruptcy for the chain.

Though Wall Street analysts who watch Circuit City closest aren’t ready to go on record to go on a death watch for the electronics chain, suffice it to say, its pulse is getting weaker and things aren’t looking good.

That divide was illustrated Tuesday not just by Google’s release of the open-source Android software but perhaps even more starkly by its gleeful horn-tooting that even before the day ended, five Android patches from outside programmers had been accepted.

“It’s a small start, but knowing that we accepted our first patch from a contributor external to the Open Handset Alliance just 4.5 hours after unveiling the code reinforces to me why open-sourcing this is exactly the right thing to do,” Jeff Bailey of Google’s open-source team said in a blog post.

Open-source project members often pride themselves on the vitality of outside help–not just in the form of patches, but also detailed bug reports and feedback about developers’ ever-changing cutting-edge releases. And with the broad base that contributes to Linux, there is no such thing as “outside” developers.

The objective of Apple’s
iPhone and Google’s Android operating system may be similar–providing a rich mobile Internet experience–but the philosophy behind the two are just about as far apart as you can get in the technology realm.

Apple has some open-source ties, to be sure. For example, the
Safari browser used on both the
Mac and iPhone are built atop the open-source Webkit project. Google chose the same technology for use in its Chrome browser for PCs and the one built into Android.

But mostly that’s the exception that proves the rule. Apple’s iPhone is about as locked down as possible.

The App Store, while thriving, is a walled garden compared with the user-ranked, self-governing free-for-all that Google aspires to build with its Android Market download site. Google launched its Android software developer kit before launching Android to encourage people to write applications for the phones, whereas Apple only released its SDK much later and, only recently, partly lifted a nondisclosure agreement that muzzled developers from so much as sharing programming tips. And perhaps most clearly, the first Android phone, the T-Mobile G1 built by HTC, comes with a USB debugging mode to let programmers peer into its inner workings.

But just because the past is littered with companies that have failed miserably at trying to capture a place in the world of hardware, does that mean that no company ever will do it again? Microsoft is a late entrant into the space and Sony came on the scene in a big way when columns were being written about the same basic premise: companies can’t break into the console war.

In reality, the App Store is the first step in Apple’s would-be plan to dominate the video game market by providing a service that can handle the console business and capture a significant portion of the market that it’s trying so hard to be a part of: home entertainment.

Apple has a number of things going for it: it’s successful, people love the brand, and people will buy its products regardless of their usability. And although the Apple TV could have performed a bit better, a video game console is the kind of product that would make Apple zealots and hardcore gamers flock.

Check out Don’s Digital Home podcast, Twitter feed, and FriendFeed.

That said, I don’t think any company can break into the console space. In fact, I would say that only one company can do it. Not because it has worked in the video game business for such a long time or that it’s uniquely positioned to break in. No, the real reason why I believe this company could make a splash in the video game business (and why it possibly will) is because it commands the kind of hype and respect that no other company in the space does.

That’s not to say that it’ll be easy for Apple to solidify itself in the gaming business; it’s a tough industry, after all. But Apple’s track record of working with game developers, its unprecedented control over the general population, its cash on-hand, and its ability to understand what people want make it the ideal company to break into the video game industry and supplant the major players.

But because of the App Store, everyone is looking in the wrong direction. Everyone believes that the App Store is how Apple will break into the gaming business and make the
iPhone a compelling gaming platform.

Even better, Apple has the infrastructure in place through iTunes to create a real value proposition for those who want to extend the capability of their console beyond gaming. Also, the company has the cash–about $20 billion–to not only invest in the best components on the market, but in an online gaming experience that could rival Xbox Live.

The App Store has taught us a few things about Apple. It has taught us that the company is ready and willing to work with developers trying to create sound businesses and it’s taught us that Apple can create a device, albeit a bit small, that can provide users with a powerful gaming experience.

But Apple’s vision for the future is also tied to its obsession with controlling all the facets of your life. It already controls the music enjoyment part of your life and has taken a significant slice of the communication pie. It has Macs for those who want to be productive and an Apple TV for those who want to extend the capability of their home entertainment rig. But what about gaming?

If you ask me, Apple could (and should) release a video game console. And not just because it’ll be a success, but because it’s the only company that could make a dent in the market.

The gaming market is one of the largest and most important industries in technology. But it’s also one of the few key markets where Apple doesn’t have a presence. Beyond that, it’s one of the few places in the technology space that may actually be receptive to an Apple device.

Will it happen? Who knows. But if you ask me, it should. And soon.

Suffice it to say that Apple is inexorably tied to hardware.

The video game industry is a hotly contested space that’s currently being dominated by three major companies: Sony, Microsoft, and Nintendo. And although companies like Sega and others have tried to solidify their brands in the console space, they’ve failed in the face of those three giants.

I think that argument is pure rubbish.

One of the key success factors in the console market is playing well with developers. And although Apple has been less than ideal in that space in the past, its work with video game developers on the App Store is the ideal entree into coaxing them to support Apple’s game console.

That cash could also be put to good use by acquiring major developers (did someone say Take-Two?) that could go from third-party powerhouse to Apple’s first-party publisher.

Rest assured that Apple is a hardware company. If Apple was really concerned about software, it would have licensed
Mac OS X again and it wouldn’t have spent so much time trying to find unique ways of bringing Apple products to people in different ways. There would have been no iPhone, no
iPod, and Macs may have been irrelevant.

Sorry, but I just don’t buy the logic.

And all the while, Apple can solidify its position in the space as the de facto “cool company.”

Way back in October 2007, Microsoft invested $240 million in Facebook at a $15 billion valuation. The company’s actual valuation was never really that high, and with the recession, it’s currently somewhere south of $4 billion.

Early Facebook investor Peter Thiel’s interview with BusinessWeek make it sound like while the talks were serious, they simply didn’t go that far: “It became pretty clear it wasn’t going to happen…The deal would have to be done with Facebook stock. And then you have to figure out how much the stock is worth.” Twitter, according to an anonymous source, was told that the social network’s valuation was in the range of $8 billion or $9 billion but was aware that employees were privately trading stock at a valuation that was, at most, half that.

But valuations aside, would Twitter really have been a smart buy for Facebook? The “status update” feature on Facebook is very Twitter-like, but integrating the two services would’ve involved all kinds of complications. For one, Facebook’s content is still hidden behind a log-in wall, whereas Twitter’s “tweets” proliferate all over the Web. And while Facebook’s profitability woes have been well-documented, Twitter beats it in that department: the buzzworthy start-up hasn’t yet made public a business model of any kind.

Controversy over the true value of the privately owned company also came into play earlier last year when the settlement of the ConnectU vs. Facebook lawsuit was being negotiated. Court documents were redacted to keep the true valuation under wraps, and media outlets, including CNET News, petitioned to have the documents made public. The founders of small social-network ConnectU, who had sued Facebook because they claimed founder Mark Zuckerberg stole their code and business plan, contested the original settlement when they said they had been misled as to Facebook’s true valuation.

The murkiness surrounding Facebook’s valuation got in the way of its attempt to acquire Twitter last year, according to a BusinessWeek article posted Sunday.

In his interview with BusinessWeek, Thiel, one of the founders of PayPal, didn’t discount the possibility that Facebook could make other acquisitions in the future. But as the interview also points out, that could be difficult as long as Facebook’s valuation remains as volatile as it has been in recent months.

So the deal didn’t happen.

The platform’s Visual Programming Language tool, Microsoft’s drag-and-drop authoring tool, has been updated for greater ease of use when working with distributed applications, according to Microsoft.

As such, there are three versions of the software: Express, Standard, and Academic.

According to Microsoft’s own statistics, over 250,000 copies of its Windows-based development platform have been downloaded since its first version release.

This latest version of the software platform offers increased runtime performance, including faster load times and increased throughput.

The Standard version for professionals will be available for $499.95, with the Express hobbyist version offered as a free download. (Pricing for an Academic license was not disclosed.)

(Credit:
Lego)

Robotics Developer Studio 2008 is intended to satisfy the gamut of roboticists from hobbyists looking to program things like the iRobot Create to professionals developing commercial robots for sale.

The platform has been supported by a long list of robotics hardware manufacturers and component suppliers, including favorites like iRobot and Lego.

Microsoft released the latest revision of its robotics development software platform at the RoboDevelopment Conference and Expo in Santa Clara, Calif., on Monday.

Redmond has been increasing efforts in robotics, announcing earlier this year that it will lead several initiatives to promote the robotics industry as a whole, as well as double its investment in its Robotics Group.

Another difference is in the licensing restriction. Pros and academics who buy the license for the 2008 version will be allowed to distribute an unlimited number of copies of the Concurrency and Coordination Runtime and Decentralized Software Services runtime components, whereas the previous version restricted licensees to 200 copies.

Microsoft released the latest version of its robot-building platform for professionals and hobbyists of the Lego Mindstorms AlphaRex level.

Simulations can now be recorded and played back using the Visual Simulation Environment tool to see what things might go wrong before testing applications out on hardware.

The new version also includes support for Visual Studio 2005 and 2008.