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March 11, 2010

Kayak’s Projected Market Cap: More Than $705M

One of the more solid and genuinely useful Internet startups out there, travel fare aggregator Kayak, was dissected in a report released today by NeXt Up Research for SharesPost. NeXt Up thinks that with a heavy advertising spend, Kayak should have a compound annual growth rate (CAGR) of 18 percent from 2009 to 2012. Based on estimated revenue and comparison to competitors, the report estimates Kayak’s market cap at between $705 and $771 million.

Is Kayak a promising IPO candidate? You decide. Here are some of the relevant assessments:

  • Meta search engines like Kayak accounted for less than 8 percent of online travel booked in 2009, due mostly to low awareness.

  • Kayak is spending heavily to make itself better known — NeXt Up estimates an advertising budget of $50 million a year, but Kayak has said itself it plans to spend $100 million on marketing.

  • The travel industry should recover from the recession and see a CAGR of 4 percent from 2009 to 2013, with online travel agents growing with a 7 percent CAGR.

  • Promising Kayak initiatives include its iPhone apps (see our story) and Travelpost, its TripAdvisor competitor.

  • Kayak is projected to have revenue of $180 million in 2010, growing to $305 million in 2014 with EBITDA margins of 30-35 percent.

  • Kayak has raised about $224 million in venture funding and debt from General Catalyst, Sequoia Capital, Accel Partners, Oak Investment Partners, Tenaya Capital, Trident Capital, Gold Hill Capital, Norwest Venture Partners, Silicon Valley Bank and AOL.

Related content from GigaOM Pro (sub req’d):

What Twitter Airfare Sales Tell Us About Real-Time E-Commerce

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Kayak’s Projected Market Cap: More Than $705M

Verizon Whittles Down Date for LTE Phones

Verizon Wireless will bring its first 4G handsets to market by the middle of 2011, CTO Anthony Melone said in a Wall Street Journal piece (hat tip Engadget). But using those super-fast Long Term Evolution phones is going to cost you.

We learned last year that Verizon would launch its first LTE phones sometime in 2011, but the new ETA is several months earlier than the company had previously forecast. The phones will support promised speeds of 5-12 Mbps on download and 2-5 Mbps on uploads on the LTE network, which will launch in 25-30 markets this year.

But Melone also said that all-you-can-eat data plans are “the big issue that has to change.” (AT&T’s Ralph de la Vega made similar comments in December, pointing the finger at data-hungry iPhone users.) Verizon Communications CTO Dick Lynch in January told the Washington Post that LTE pricing would likely involve a base subscriber fee plus usage charges for bandwidth consumed. That scenario could apply to several different pricing models, as Stacey has noted. Regardless of how, exactly, Verizon chooses to bill for 4G service, one thing is clear: High-end users are going to pay substantially more than they’ve been paying for 3G.

Related content from GigaOM Pro (sub req’d):

Metered Mobile Data is Coming and Here’s How

Image courtesy Flickr Hector Milla.

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Verizon Whittles Down Date for LTE Phones

LivingSocial Gets $25M for Group Buying

We know there are lot of entrants in the group deals space — see my recent piece, Groupon and the Wannabes — but now the competitors are seriously bulking up. LivingSocial — which has more than a million daily email subscribers — is today announcing it’s raised a $25 million Series B round led by U.S. Venture Partners and including Grotech Ventures and Revolution Capital, bringing the company to a total of about $35 million raised. That follows Groupon’s $30 million B round from Accel Partners and New Enterprise Associates announced in December.

Setting up group deals does require capital, because you need salespeople on the ground to find desirable venues and negotiate with them — and given the now tens of competitors in some cities, elbow out your rivals’ salespeople. LivingSocial is currently in 13 cities (it launches four more today), still quite a bit behind category leader Groupon, which is in 40. But armed with this new capital, LivingSocial CEO Tim O’Shaughnessy said the company hopes to rapidly expand its business.

O’Shaughnessy said LivingSocial’s angle, beyond deals, is to help small businesses grok social media in order to keep in touch with their customers. The Washington, D.C.-based company, which has been around for two and a half years with products like online book reviews and drink coupons, launched the deals product last summer. “We’re basically creating marketing budgets for people who never had marketing before,” he said. “There are not a lot of ways to guarantee customer foot traffic like we do.”

LivingSocial, which is not currently profitable as it expands (again, regret the incessant Groupon comparisons, but they say they have been turning a profit for a while), takes a 30-50 percent split of revenue collected from its deals, but it only pays out if its customers spend money, so there’s little financial risk for participating businesses. It primarily brings in customers through daily emails, but it also has an iPhone app with push notifications and a Facebook presence. O’Shaughnessy pushes off the competitive angle, saying many more merchants want to work with his company than they have space for, but says he’ll work to stand out from the crowd with the launch of an affiliate program today and soon launching more personalized subscriptions.

P.S. For those of you who are skeptical of group buying and competing in such a jam-packed space, I should say I’m a total believer. In the course of writing this article, I happily bought a half-off coupon for my neighborhood sushi joint, which happened to be LivingSocial’s San Francisco deal of the day. Speaking from personal experience, group deals totally spark spending and loyalty.

Related content from GigaOM Pro (sub req’d):

How Social Networks Will Help Yelp, Not Kill It

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LivingSocial Gets $25M for Group Buying

March 10, 2010

Former FCC Chair Lays Out the Limits on the Agency’s Authority

Filed under: gigaom — Tags: , , , , , , — @ 10:30 pm

Regulating big consumer issues such as the availability of Internet apps on mobile devices and metered broadband are outside the Federal Communication Commission’s authority, said Kevin Martin, the former FCC chairman, speaking today in Seattle at the Mobile Broadband Breakfast. Martin, who is now with Patton Boggs LLP, responded to a question about how as networks open up, the activities to keep them closed are being pushed to hardware, by saying, “The further it is pushed out the more difficult it is for the Commission to address it. The FCC’s core regulatory authority is on wireless and carriers, so its direct authority is less and less the further out you go.”

The issue of just how far the FCC’s authority reaches was raised last summer, when the agency opened up a probe into the blocking of Google Voice on the iPhone. It turns out that Apple had blocked the application, not AT&T, prompting questions as to what the FCC could really do to force Apple to allow Google Voice on the device. Apple has yet to relent.

Additionally, the FCC doesn’t appear to have authority to stop the recent efforts of carriers and ISPs to introduce metered wired broadband, according to Martin. The Commission can, of course, step in when ISPs discriminate by tying services to required service bundles, but he doesn’t think metering violates any rules.

Martin also praised the potential for more spectrum for mobile broadband, but suggested that more spectrum alone isn’t the key. He said getting traffic off the wireless network faster will help, as will bigger and better fiber connections. Additionally, he said the FCC’s stated goal of providing 500MHz of spectrum to carriers, and its plan to offer broadcasters compensation for relinquishing some of their spectrum, will require changes in the law that only Congress can implement.

Martin steered clear of making judgments on the current FCC, but by delineating the limits of the Commission’s authority, I left feeling doubtful that the agency has the authority to implement some of the policy goals it’s recommending in the National Broadband Plan. I also wish that instead of focusing on things it can’t control, the FCC comes up with a solid plan to address competition in wired and wireline, so that a competitive market can do what the FCC cannot.

The rest is here:
Former FCC Chair Lays Out the Limits on the Agency’s Authority

Thing Labs Acquires Birdfeed, Wikirank to Add to Brizzly

Thing Labs has acquired two “passion projects” from former Apple and Google developers to expand its social web aggregator, Brizzly. Birdfeed, a premium Twitter app for the iPhone made by Buzz Andersen (formerly of Apple, now at Square) will become the free Brizzly for iPhone app (existing Birdfeed customers, who paid up to $4.99 for it, can continue to use the app but Brizzly won’t provide support or updates for it). Brizzly for iPhone is live in the App Store today. Thing Labs CEO Jason Shellen said some of its coolest features are around geolocation and Twitter support.

And Wikirank, a visualization for Wikipedia data from Small Batch (the makers of Typekit, formerly from Google and Adaptive Path), will serve an as-yet undecided purpose for exposing data in interesting ways. One of Brizzly’s goals is to help people explain the real-time social world around them — e.g. what do these Twitter trending topics mean? — which with Wikirank will help (on that note, Brizzly is also releasing publicly accessible guides to buzzing topics today).

Shellen said the acquisitions mark a turning point for his company, which is now committed to focusing on Brizzly as its core product (previously it had been posed as one of potentially many) — similar to what happened to Obvious Corp. and Twitter. He didn’t disclose the price of either buy. Shellen said Brizzly, which opened to the public in November, has had “hundreds of thousands” of signups.

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Thing Labs Acquires Birdfeed, Wikirank to Add to Brizzly

A Belated New Year’s Resolution: No Walled Gardens!

Filed under: gigaom — Tags: , , , , , , , , , , , , , — @ 1:00 am

The Comedy Central-Hulu announcement last week made me recall my New Year’s resolution, one that I wanted to share publicly, and encourage you to embrace as well. It is simple in its concept, but epic in scope. It involves eliminating something from your routine, something unhealthy –- not for your body, however, but for your wallet, and the world at large. In short, I’m asking you to join me in giving up Walled Gardens.

What does that mean? Well basically it means to eschew controlled environments, whatever the cost , and to embrace open platforms with all your heart. In practice, here’s what you’ll have to give up:

iPhone and iPad: This first stipulation is a doozy. Resolve to give up your iPhone, and walk past the iPad display without ponying up. Why do this? Well despite Apple’s claims of embracing everyone, the iPhone and iPad are huge walled gardens. You can’t just load any app -– no, you’re forced to load just those programs that some soulless corporate drone on Infinity Loop deems “appropriate.”

Yes, that means T&A from Sports Illustrated, but not from many other similarly legitimate sources. Want your iPhone to quack like a duck? Sorry. Google Voice, Groovy Sharks — nope, can’t use ‘em, says Apple — and the list just goes on and on.

And the iPad looks to be even worse. Heck you can’t even watch Flash on the darned thing, which tends to obviate much of the most interesting content on the web. Luckily, there are many other awesome alternatives, including the Motorola Backflip, Nexus One, and other great Android phones. And expect everyone else’s pad — from the sexy U1 Hybrid from Lenovo to Dell’s new super-small slate — to deliver more functionality.

These pads will deliver an open, anything-goes platform, for less money, probably. I know it’ll be hard, but this year, vow to embrace an open marketplace of apps, video, web sites and books, rather than a locked down, overpriced, shiny gewgaw.

Kindle: Speaking of books, are you thinking of a Kindle? That’s also a walled garden. Want to buy a book? You have to go through Amazon. Sure you can load your own stuff onto the Kindle, but only via a few formats, and you even have to pay for that privilege. Many other types of e-books simply don’t convert well at all. The Kindle lacks good support for tables and monospaced fonts, has lousy PDF rendering, and worst of all, doesn’t even support the open ePub format.

The lack of ePub means you can’t borrow e-books from your library and read them on the Kindle. It’s as if Jeff Bezos is declaring war on the local library! But even worse, the Kindle is the roach motel of e-books: Books go in, but they never come out.

Luckily there are other options. f you must have an e-reader today, opt for Sony’s latest touch version. But if you can wait, do. There were zillions of e-readers on display at CES, and by this fall we should see an explosion of low-cost E Ink-based alternatives that support open standards and a wide variety of off-the-shelf books.

Hulu: And that leads me to Hulu. Although web-based, Hulu is another walled garden, locking you into its platform. Want to see it on Boxee? Sorry. Oh, well, maybe you can now, but probably not tomorrow. What about other over the top services? Not likely. Hulu is designed for PC viewing only, even though any 15-year-old can easily figure out how to connect a PC to the big screen. And now Hulu’s been out-gardened by Comedy Central, which is pulling its programs, among them “The Daily Show” and “The Colbert Report,” viewable only at ComedyCentral.com –- another walled garden!

NBC’s Olympics coverage was yet another ridiculous approach to walling off viewership and screwing consumers. And don’t even get me started on TV Everywhere, the misguided attempt to transmogrify the ultimate walled garden –- cable TV –- into a narrowly protected online universe. It just isn’t going to work, guys. Instead, embrace open video platforms like YouTube –- which you can embed and watch everywhere — along with Boxee, Roku, Popcorn Hour, Play On and other wide open services and providers (including Revision3, where I work).

Why? Because these walled gardens are not only expensive, they lock you in to a never-ending merry-go-round of price hikes, poor customer service and reduced choice. In the end they will turn the Internet into a monolithic series of silos, accessible only to those with the money, influence or power. The promise of a democratic medium that lets you reach the entire world with your voice, your vision and your creativity will be gone forever, locked behind corporate palaces that will turn us all into nameless, faceless drones.

Well, maybe it won’t be that bad. But still, I’m staying away from the iPhone, the iPad, the Kindle and Hulu this year. And you should, too.

Jim Louderback is CEO of Revision3. He was previously vice president of Ziff Davis Media and Editor-in-Chief of PC Magazine and PCMag.com.

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A Belated New Year’s Resolution: No Walled Gardens!

March 9, 2010

Not Every iPhone Apple App to Get the iPad Treatment

Apple has a default set of apps that come with every iPhone and iPod touch that you can’t remove from the device, and that provide some basic features that are likely to appeal to a wide swath of users. The iPad will have a default set, too, but it won’t necessarily include all the familiar apps you know and possibly love.

According to John Gruber of Daring Fireball, apps that Apple didn’t show off during its iPad unveiling event weren’t just left out because there weren’t many major changes made to them, they actually won’t appear on the platform at all. Or, if they do, they won’t ship with the product and instead will be downloadable after the fact via the App Store.

The apps in question are Calculator, Stocks, Weather, Clock and Voice Memos. According to Gruber’s sources, the apps won’t be included not because Apple has deemed them any less useful or appealing to consumers in terms of function, but because Cupertino couldn’t come up with iPad-complementary large-format designs for their user interfaces.

Personally, I’m not too upset about the omissions. I barely ever use Calculator and Voice Memos, and I’ve opened Stocks maybe once or twice. Weather I’ve replaced with a much more functional third-party app. Clock is the only one I use regularly, but I suspect it won’t be that hard to replace it via third-party sources if necessary, either, and I probably won’t have the iPad at the gym anyway, which is where I use Clock the most for its stopwatch functions.

I’m still of the opinion that Apple should make all of its native apps downloadable content, aside from the iPod and phone-related apps on the iPhone, so this is probably as close as I’ll get to that coming true. But it raises an interesting question about third-party apps: if Apple can’t see a way to make some of its content work on the iPad, how are developers going to be expected to cope?

Changing screen size doesn’t only change the amount of space you have in which to display things. It changes a user’s expectation of what a piece of software will be able to do, and the way in which the program will do it. Games may be able to escape this expectation gap, since they provide roughly the same thing whether portable or not (hence the success of PS ports on the PSP), but utilities and other apps likely won’t.

It’s fine for existing iPhone and iPod touch owners, who will probably just find using old apps dissatisfying, but know to wait for iPad-specific programs. But what about users new not only to the platform, but to iPhone OS as a whole? Ill-fitting apps could sour these new customers against the iPad right out of the gate, conceivably alienating some so strongly that they might not return to Apple for future products.

There’s two ways Apple can fight this: from launch, it should highlight and drive new customers to an iPad-specific section of the App Store, possibly through a modification to the App Store application itself on the device. I’m almost certain this will happen anyway, but the app should default to iPad-only titles at launch to make certain that inexperienced users will only be exposed to those if they don’t understand App Store navigation fully off the bat.

Finally, Apple needs to better encourage developers to convert existing apps to the iPad’s dimensions, and alter their UIs accordingly. I’m not sure yet how Apple is planning to deal with developers wanting to offer iPad and iPhone-specific versions of the same app, but making that process as simple as possible for consumers looking to choose one over the other will be key to establishing developer good faith, and convincing users that the iPad isn’t jut the big iPod many detractors are making it out to be.

Related Research from GigaOM Pro:

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Not Every iPhone Apple App to Get the iPad Treatment

Are Virtual Keys the Key for NFC?

Filed under: gigaom — Tags: , , , , , , , — @ 2:57 pm

Apple has secured a patent for a system that would enable consumers to use an electronic gadget — say, um, an iPhone — in place of keys to unlock their cars and front doors. It’s an effort that could finally move the needle for the short-range wireless connectivity technology known as near field communication.

As first reported by the Daily Telegraph, Apple would allow users to enter a PIN code and wave the phone over an electronic pad fitted to a door. The system would be based on NFC, which has long been envisioned (and trialed) as a technology that could power retail transactions but has so far failed to gain any real traction — due at least in part to the fact that consumers don’t see much additional value in using their phones instead of their credit cards to make payments. But replacing keychains with phones could be a very attractive proposition for consumers — and as such could encourage handset makers to finally add the technology to their devices.

Related content from GigaOM Pro:

NFC + Retail = Fail

Image courtesy Flickr user BlakJakDavy.

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Are Virtual Keys the Key for NFC?

Where, a Geo App Launches a Local Mobile Ad Network

Where, a geo-enabled local search and recommendation service by Boston-based uLocate Communications, has launched Where Ads, a hyper-local advertising network. The company is launching the new network because it believes that its access to carrier infrastructure gives it an ability to deliver hyper-local and contextually relevant content and by extension highly targeted local advertising.

ad.pngAccording to Dan Gilmartin, uLocate’s VP of marketing, the company has decided to scrap running generic ads (such as ones for ringtones and chat) on its app and replaced them with local ads (for local merchants that also include special offers and deals) they aggregated from partners such as Quattro Wireless, a company acquired by Apple. Upon launching these new ads, the company saw click throughs almost triple and boosted their CPMs.

“About 30 days ago, we reached to some other mobile content publishers assuming they were dealing with the same issues we had, poor ads that degraded the app experience and low revenue,” he said. The company launched Where Ads with ten publishers who will run ads from Where’s ad network.

I like this move by the company: it is not only solving the problem with low relevance of mobile ads, it is doing so by building what could potentially be a sizable business. Where offers its app on multiple mobile platforms including the iPhone and has seen its app downloaded over 10 million times.

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Where, a Geo App Launches a Local Mobile Ad Network

10 Austin Startups You Should Meet While You’re at SXSW

SXSWSince more than 30,000 people are coming here to Austin for South by Southwest, I figured I’d offer up a list of local companies that members of the digerati should take the time to meet while they’re in town. Austin has a ton of startups, but I tried to highlight the ones doing things that Austinites do well (such as enterprise social media efforts and hardware) as well as those I think are about to break out and become bigger.

A note to those folks following the manufactured Foursquare-Gowalla smackdown: Gowalla is not listed because most people have already met with Josh Williams, Gowalla’s founder, and I wanted to save room for some unknown Austinites.

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