tingilinde

some americans live in the modern age

But most of us have low quality Internet connections.

Om pays about $450 a year for over 200 Mbps to the home in San Francisco (of course these speed checks don't measure the connection properly, but they give a sense of the speeds - most Americans will see less than a 10th of this in their tests and much worse in real world performance)

What do you pay?  A friend in Copenhagen has about a dozen plans to select from and pays about $25 a month for 100 Mbps up and downstream (fiber to the home).  Her provider doesn't even provide email and they don't have TV or phone service.  You get all of those from different companies.  Your network connections is just that and nothing else.  The companies don't have conflicting interests.

In the US connectivity in many areas seems to be going backwards ...  One regular reader of this blog has some real horror stories.

spam and policy on posting comments

I get a lot of comments that are obviously spam. While comments are ver welcome, if they are spamish and have questionable links, they will be deleted. URL links will only be included if relevant.

The spammers can be awful...

evolution of the web

Noted by Bart - this inforgraphic is very pretty, although the eye candy to information ratio is way too high for my taste - a couple of crisper charts would have been more useful.  Note that it doesn't work in all browsers.

sorting out your network connection

Most people use speedtest or similar tools.  They give very little information and generally only show over-optimistic burst speeds that are atypical of normal usage.  Additionally they fail to note a lot of issues that may be present in your connection.  

A much better solution is the ICSI Netalyzer - my only problem with it is that it requires Java and I usually have that turned off for better security.  (no big deal as I can enable it for the few minutes Netalyzer requires).  Give it a try - you may be surprised what your provider is doing ...   a sample of an output here.

if you search for hotel rooms you may not want to use orbitz

That is if you use a Mac and are looking for bargins.  From the Wall Street Journal 

Unfortunately most of the article is behind their paywall, but I subscribe.  Orbitz found that Mac users tend to spent $30 to $40 more a night on hotels and 40% more likely to book high end hotels. So they are playing with building this into how information is presented to the user.  Of course filtering information is common, but the problem is we rarely know anything about the filters - I strongly recommend The Filter Bubble by Eli Pariser as a general introduction.

focus and the power of serious government employed hackers

It is likely some of the best hackers work for the government.   Comments on Flame from Technology Review.

and comments by one of the best security guys around - Steve Bellovin..

"free" rarely is ...

One of the catches with certain services - Google, Facebook and Twitter for example - is that you have to give up something in return to use them.  That "something" is then analyzed, repackaged and sold to another company - often, but not always, in the form of advertising.  You have become the product rather than the customer.  You might argue that it is your information that is the product, but you continually generate it as you work for them in payment - so it is you that is the valued product...

The NY Times has a piece on something that is either clever or nasty depending on your point of view that Facebook does.  Recommended reading.  

snip

... He found it irresistibly funny and, as one does in this age of instant sharing, he posted the link on Facebook, adding a comment: “For Valentine’s Day. And every day. For the rest of your life.”

Within days, friends of Mr. Bergus started seeing his post among the ads on Facebook pages, with his name and smiling mug shot. Facebook — or rather, one of its algorithms — had seen his post as an endorsement and transformed it into an advertisement, paid for by Amazon.

In Facebook parlance, it was a sponsored story, a potentially lucrative tool that turns a Facebook user’s affinity for something into an ad delivered to his friends.

Amazon is one of many companies that pay Facebook to generate these automated ads when a user clicks to “like” their brands or references them in some other way. Facebook users agree to participate in the ads halfway through the site’s 4,000-word terms of service, which they consent to when they sign up.

He found it irresistibly funny and, as one does in this age of instant sharing, he posted the link on Facebook, adding a comment: “For Valentine’s Day. And every day. For the rest of your life.”

Within days, friends of Mr. Bergus started seeing his post among the ads on Facebook pages, with his name and smiling mug shot. Facebook — or rather, one of its algorithms — had seen his post as an endorsement and transformed it into an advertisement, paid for by Amazon.

In Facebook parlance, it was a sponsored story, a potentially lucrative tool that turns a Facebook user’s affinity for something into an ad delivered to his friends.

Amazon is one of many companies that pay Facebook to generate these automated ads when a user clicks to “like” their brands or references them in some other way. Facebook users agree to participate in the ads halfway through the site’s 4,000-word terms of service, which they consent to when they sign up.

...

But this new twist on advertising has already proved to be tricky. Users do not always realize that the links and “likes” they post on Facebook can be deployed for marketing purposes. And Facebook has already agreed in principle to settle out of court a class-action lawsuit over the practice in California.

Not least, its algorithms lack a sense of humor, which can lead to surprises, as in the case of Mr. Bergus.

“I was mildly annoyed, though not to the point of deleting my Facebook account or throwing a hissy fit,” said Mr. Bergus, 32, a multimedia producer in Iowa City, who wrote about the glitch on his blog. “I know the costs of using Facebook. It does not cost me money. It uses lots of my personal information.”

...

 

Facebook will be under increasing pressure to generate much more from its product.  I suspect we'll see many other interesting schemes - from them, the other social media players and the so-called "free" services.  

It is my belief that this break in symmetry where the customer is not the end user creates a less than optimal user experience and potentially some nasty surprises.  At this time the whole social part of the net is at a very early stage with Facebook and Twitter and some others having a lot of luck, while hundreds or even thousands of others fail.  How we interact is a huge and poorly explored area and I suspect the current winners are far from optimal.  While optimal rarely wins early on, I also suspect it is so early and end user love for these services is iffy enough that there is still a good window for new players to emerge to displace them.

note - if you use these services for heaven's sake don't give fully accurate descriptions of things like birthdays, birthplaces and so on ...  it is relatively easy to guess social security numbers and access other information with this as a base.  Also be alert to the fact that terms of service and privacy settings are in nearly continual change on Facebook - and remember that they are now under serious pressure to turn you into a better money stream if they are to prosper ... to get you to work for them...

is social media a bubble?

I suspect to some extent it is if the main value is measured in terms of how much of the economy can it directly influence and perhaps capture...  If Facebook's model is to become another tool that makes the connections between seller and buyer easier and more likely I can't imagine why the IPO was valued so high.  User growth may indeed be another billion in the next few years, but that will mostly come from segments of the world economy that total less than 10% of the economic consumption of the first billion.  

They are in need of a model or two that will allow them to justify their valuation - my guess is they won't manage it, but at least I'm not a knowing investor (the funds we have money in may be in to some extent - that would be their own folly).

In the meantime I expect more than a few negative articles like this one in the Atlantic along with more than a few rumors and huge amounts of speculation.

 

fascinating tech talk

By Michael Jones of Google (Chief Technology Advocate) to a military group at the US Naval Institute.

hat tip to Bart

the emperor's clothing

Michael Wolff at Technology Review on what Facebook really is - an ad driven company?..

Is there a there there .?  

Determining value in social networking companies is not well understood - particularly those where personal connections aren't strong as issues like trust aren't well understood (and it isn't transitive).  Many companies have been experimenting with Facebook and Twitter, but I haven't seen any documented out of the ballpark success stories.  I wonder if the industry will be rediscovering learnings of conventional direct marketing that were learned in the 50s and 60s or if there is any new ground?  

Unless companies like Facebook can show significant improvements in the efficiency of marketing or move into entirely new areas their growth will largely be limited by the economic growth and materialism of their user base.  

Lsst year Peter Cauwels and Didier Sornette of the Swiss Federal Institute of Technology in Zurich published a paper on the value of social media companies.  

Quis pendit ipsa pretia: facebook valuation and diagnostic of a bubble based on nonlinear demographic dynamics

Peter Cauwels, Didier Sornette

(Submitted on 6 Oct 2011 (v1), last revised 1 Nov 2011 (this version, v2))

We present a novel methodology to determine the fundamental value of firms in the social-networking sector based on two ingredients: (i) revenues and profits are inherently linked to its user basis through a direct channel that has no equivalent in other sectors; (ii) the growth of the number of users can be calibrated with standard logistic growth models and allows for reliable extrapolations of the size of the business at long time horizons. We illustrate the methodology with a detailed analysis of facebook, one of the biggest of the social-media giants. There is a clear signature of a change of regime that occurred in 2010 on the growth of the number of users, from a pure exponential behavior (a paradigm for unlimited growth) to a logistic function with asymptotic plateau (a paradigm for growth in competition). We consider three different scenarios, a base case, a high growth and an extreme growth scenario. Using a discount factor of 5%, a profit margin of 29% and 3.5 USD of revenues per user per year yields a value of facebook of 15.3 billion USD in the base case scenario, 20.2 billion USD in the high growth scenario and 32.9 billion USD in the extreme growth scenario. According to our methodology, this would imply that facebook would need to increase its profit per user before the IPO by a factor of 3 to 6 in the base case scenario, 2.5 to 5 in the high growth scenario and 1.5 to 3 in the extreme growth scenario in order to meet the current, widespread, high expectations. To prove the wider applicability of our methodology, the analysis is repeated on Groupon, the well-known deal-of-the-day website which is expected to go public in November 2011. The results are in line with the facebook analysis. Customer growth will plateau. By not taking this fundamental property of the growth process into consideration, estimates of its IPO are wildly overpriced.

 

They came to the conclusion that Facebook might be worth abot $20B with 1.2 billion users.  If they are close to being right, and their simple model assumes about $1 of value per user - a historical number that one can quibble with on either side - Facebook shares have a long way to go ... down that is.  Technology Review has a non-technical  summary of the paper here.