survival of the twittest: enter the new...

survival of the twittest:enter the new Guard

As consumers move away from their PCs toward mobile devices,once cutting edge tech firms could be upstaged by young upstarts.

The next U.S. election may be won or lost on Facebook. First word of an

earthquake or revolution may come via twitter. Phones can find bargains and pay for coffee. Angry Birds are everywhere.

there is no doubt new mobile technology is capturing the imagination of Washington, Wall Street and every corner of the world. It’s all part of the post-PC landscape -- where powerful, ultra-portable devices

connect people continuously to their data and their social networks, shunting aside bulky equipment and inflexible software.

traditional forces may quickly find themselves obsolete as new powers arise from nowhere. Apple’s iPad is uprooting the PC. At&t’s daring $39 billion bid for t-Mobile USA has investors and regulators on alert. nokia is slashing jobs to make way for Microsoft phones. Valuations for social

sites are reaching into tens of billions of dollars.

the Reuters Global technology Summit in new York, Paris and tokyo, May 16-19, presented exclusive interviews with more than 30 executives forging the infrastructure of this new order, from chip and device designers to wireless carriers and the people running the websites that are changing the way people live and work.

may 16-19, 2011

Global technoloGy summit

global technology summit may 16-19, 2011

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facebook looks at china

FacebooK has the PoWeR: A protester holds a "f" in recognition of social network site Facebook's role in the north African revolts, during a protest in Rabat March 20, 2011. ReuteRs/adam tanneR

Facebook ..............................................2-3Verizon ................................................ 4-5Angry Birds ..........................................6-7Games ................................................. 8-9Mobile Wallets .................................. 10-11Apple ......................................................12AOL ........................................................13Dell .........................................................14Venture Capital ......................................15Viadeo ....................................................16

http://www.reuters.com/summits

index

by alexei oResKovic and JenniFeR sabaSAn FRAnCISCO/neW YORK, MAY 19

FACeBOOK CeO Mark Zuckerberg is planning to make his second visit to

China as the world’s no. 1 social networking company looks for the best way to expand into that country.

“Our company mission is really clear, which is we want to connect the whole world,” said Facebook Chief Operating Officer Sheryl Sandberg at the Reuters Global technology Summit on thursday. “And it’s impossible to think about connecting the whole world right now without also connecting China.”

Sandberg also described a public offering of Facebook shares as “inevitable,” though she declined to provide details on when Facebook expects to have an IPO.

“It’s a process that all companies go through. It’s an inevitable process for us, the next thing that happens,” she said. “People used to ask us if we were going to get sold. People have stopped asking that question -- we’re not ... no one is buying us, we’re going public.”

the comments came as LinkedIn, a social

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networking site for professionals, made its debut on thursday as a publicly traded company, whose shares more than doubled.

Sandberg said the LinkedIn IPO validated the importance of the business behind social networking.

Founded in a harvard dorm room in 2004 by the now 27-year-old Zuckerberg, Facebook threatens Internet companies like Google and Yahoo as it becomes a popular online destination for Web surfers and an important marketing channel for advertisers.

In the first quarter, Facebook accounted for nearly one-third of the graphical, online display ad impressions in the U.S. according to research firm comScore.

agReement on china“We ARe BeCOMInG core to people’s advertising strategy and their advertising buy, going from spending tens of thousands to the millions to bigger than that. We have hundreds of thousands of advertisers,” Sandberg said, though she declined to provide specific revenue figures for Facebook.

Since she joined Facebook as COO in March 2008 to oversee sales, marketing and business development, Sandberg, 41, has turned the website into a multi-billion dollar business.

A former Google sales executive who also

served as chief of staff to former U.S. treasury Secretary Lawrence Summers, Sandberg is credited with bringing valuable business experience and organizational discipline to the company.

there have been reports that the two executives had different views about entering China.

“Despite what you may have read, Mark and I actually really agree on the importance of China,” Sandberg said.

China, the world’s largest Internet market by users, represents an attractive frontier for Facebook, which is blocked there. Zuckerberg visited China in December and met with the heads of Chinese Internet companies including Baidu Inc, Sina Corp and Alibaba Corp.

But China, where the government exercises tight control over online information, has proven hard to crack for Western Internet companies. Last year, Google partially withdrew from China following a spat over online censorship and cyber attacks that Google said originated in China.

On Wednesday, eight new York residents sued Baidu and the Chinese government, accusing the search engine of censoring pro-democracy speech.

Sandberg said the timing and the agenda of the trip was undetermined, but that

Zuckerberg, who is studying Chinese, would probably return this year.

“We don’t know exactly what he’d do, but certainly engagement is really important. Plus, Mark really likes tech entrepreneurs,” she said. “he likes meeting with them always, everywhere he goes.”

Facebook is expected to generate roughly $4 billion in ad advertising revenue in 2011, up from $1.86 billion a year earlier, according to market research firm eMarketer.

Some industry observers have speculated that Facebook could eventually begin serving ads on third-party sites, perhaps using its “like” buttons on websites as a vehicle for ads.

But Sandberg said no.“We’re not working on an ad network right

now. We have a lot of growth in our own inventory, our own pages,” she said.

(editing by Robert MacMillan)

the WRiting is on the Wall: Anti-government protesters sit next to a "Facebook" graffiti sign during demonstrations inside tahrir Square in Cairo February 7, 2011. ReuteRs/dylan maRtinez

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verizon eyes family data plans

all in the Family: Customers purchase the iPhone 4 shortly after the phone went on sale with the Verizon Wireless network in Boca Raton, Florida February 10, 2011. ReuteRs/Joe sKiPPeR

by sinead caReWneW YORK, MAY 19

VeRIZOn WIReLeSS expects to offer family plans at some point in the

future for data services supporting multiple devices including smartphones and tablet computers, according to a top executive of parent company Verizon Communications.

Verizon Wireless plans to kick off pricing changes this summer by eliminating smartphone plans that allow unlimited Web access for a flat fee. It will replace them with tiered pricing that forces heavy data users to pay more for mobile data.

After this change the company will look

to soften the blow by offering more options such as family plans for data services, Chief Financial Officer Fran Shammo told the Reuters Global technology Summit.

While families can share a bucket of minutes for phone calls today, each family member with a smartphone has to pay $30 per month each for data services. If they own a tablet computer they pay another separate data fee.

“We had individual minutes for individual users. then we eventually got to what we call family share where everyone in the family shares the same minutes,” Shammo said.

“I think it’s safe to assume that at some point you are going to have mega-plans (for

data) and people are going to share that mega-plan based on the number of devices within their family. that’s just a logical progression,” he said, but did not provide a time frame for such mega-plans.

high-sPeed iPhone?LIKe ItS RIVAL At&t Inc, Verizon is limiting usage of data services to avoid putting a

For graphics on the top players in the phone industry, click here:http://r.reuters.com/maz49r

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strain on its network or increasing network costs out of proportion to monthly fees.

Operators are dependent on data services for revenue growth, and they are still figuring out how to cap usage in a way that makes data services affordable enough for consumers to use devices other than phones.

In February Verizon ramped up its competitive efforts against At&t by launching a version of the Apple Inc iPhone, which had been exclusive to At&t.

While Verizon has sold fewer iPhones than some analysts expected, Shammo said he was happy with sales of a “six-month-old phone” that only works in some countries. Verizon’s device was a version of the iPhone 4, which At&t had launched the previous summer.

When the next iPhone model launches, Verizon will be able to offer it at the same time as At&t, according to Shammo, who had said in April that Verizon’s next iPhone would have global coverage, like At&t’s iPhone.

Some customers held off on buying the first Verizon iPhone because they were waiting for a model that supports Verizon’s high-speed wireless service, which runs on a new technology called Long term evolution (Lte).

Shammo said that even if the next iPhone does not support Lte, Verizon will have enough high-speed alternatives to sell.

“I think it’s a bigger issue for Apple than it is for us,” he said. “Depending on where Apple plays, that’s where we’ll sell.”

PRePaid “imPoRtant”FOR VOICe SeRVICeS, Verizon focuses mainly on postpaid customers who pay monthly bills and commit to a long-term contract. It is also experimenting with prepaid services, where customers pay in advance but do not commit to a contract as this is the one area of voice services that is growing.

Until now Verizon’s prepaid services have been uncompetitive with more specialist rivals and have made the biggest in-roads in the market by renting network space to prepaid provider tracfone, a unit of America Movil.

the company has yet to decide if it will expand nationwide with a $50 per month prepaid plan it is testing in Florida and elsewhere, according to Shammo. he said Verizon would do what it needs to do in prepaid.

“We’ve always said we’re a postpaid company,” he said. “that doesn’t mean that

prepaid is not important to us.”expansion of the prepaid plan would put

Verizon into direct competition with smaller rivals such as MetroPCS and Leap Wireless.

Verizon Wireless is currently the top U.S. mobile provider, but it will be leapfrogged by At&t next year if At&t gains regulatory approval for its $39 billion plan to buy t-Mobile USA, a unit of Deutsche telekom.

Verizon, which recently bought business services firm terremark, may add to this deal with the purchase of boutique software companies worth less than $100 million, Shammo told Reuters.

Verizon is the majority owner of

Verizon Wireless, its venture with Vodafone Group Plc.

Verizon shares closed up 23 cents or 0.6 percent to $37.32 on new York Stock exchange.

(Reporting by Sinead Carew; editing by Matthew Lewis and Steve Orlofsky)

ReuteRs video

Verizon CFO Fran Shammo explains his company's decision to eliminate unlimited mobile data mobile plans.http://r.reuters.com/zyp69r

World PC sales steady, mobile takes off

* Includes laptops, netbooksSource: Gartner Research

Reuters graphic/Stephen Culp

11/05/11

PC shipments – mln units Smartphone sales – mln unitsMobile*

Mobile devices now represent the majority of PC sales.

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theme PaRKs next?: Rovio Chief executive Mikael hed stands in front of an Angry Birds poster at his company's offices in helsinki August 16, 2010. ReuteRs/geoRgina PRodhan

anGry birds, the next mickey mouse?

by geoRgina PRodhanPARIS, MAY 19

MIKAeL heD IS unrepentant about the 200 million minutes per day that

people around the world fritter away playing Angry Birds, the iPhone game created by the company he heads.

“It’s great. think of all the other stuff they could be doing that’s so much more boring,” said the chief executive of Rovio Mobile, a

Finnish start-up almost unheard of before it unleashed the addictive game on an unsuspecting world in 2009.

Angry Birds, the most popular paid-for game in the Apple App Store’s four-year history, has just passed 200 million downloads.

the deceptively simple puzzle game in which players use a slingshot to fire birds at green pigs hiding in buildings has hooked a whole new audience, many of whom were

never interested in video games before.“these new touchscreen portable devices

have changed the way that people behave. nowadays, people have to be entertained all the time, whenever you have just a few moments spare,” hed told the Reuters Global technology Summit in Paris this week.

“Much of those 200 million minutes comes from this type of micro spare time, filling the little gaps.”

Rovio plans to use its hold over of those

“I would be surprIsed If wIthIn 10 years there wouldn’t be at least a theme park wIth somethIng related to angry bIrds In It. ”


7

millions of spare moments as a wedge to expand into hollywood and possibly even Disney-style theme parks.

“Believe it or not, we have had such suggestions, and I believe Angry Birds Land was actually the name they used.”

“Whether there will be a theme park dedicated to Angry Birds or not, I don’t know, but I would be surprised if within 10 years there wouldn’t be at least a theme park with something related to Angry Birds in it,” said hed.

micKey mouseFOR nOW, the next step is to build the birds’ characters and flesh out the rather thin Angry Birds story, which is that the birds are attacking the pigs because the pigs stole their eggs.

hed says there would be news in the next days relating to Rovio’s media ambitions, but declined to elaborate.

Already, Rovio has teamed up with news Corp’s 20th Century Fox to hitch a new game to the animated 3-D movie Rio, which has

taken hundreds of millions of dollars at the box office around the world.

A clue to Angry Birds Rio even featured in 20th Century Fox’s ad at this year’s SuperBowl -- the year’s highest-profile advertising spot in the United States.

hed has held talks with hollywood studios about an Angry Birds feature film but so far has not found the right partner or deal. he said he wants to proceed with caution to protect the brand, and sees Mickey Mouse as a brand to aspire to.

these may seem grand ambitions for a company with just one megahit to its name, and Rovio is under pressure to show it is not a one-hit wonder. Angry Birds was its 52nd game.

Rovio plans to cement the popularity of Angry Birds with a version for Facebook this summer -- which will add social aspects to the essentially solitary game by building in features for players to help one another.

hed also says a new Angry Birds game and another, different type of game are in the works. But he seems relaxed

about their likely success.“At some point you get to a point where

you no longer associate a brand with just one product,” he says.

“While games will always be our strong area, I also believe that Angry Birds is already beyond that point. It has the critical mass where it doesn’t really need the game in order to be very known.”

Rovio has just raised $42 million in venture capital funding but is already thinking about going public in two to three years’ time.

hed says the company has had takeover approaches but has so far resisted. “We’re having too much fun to be a part of something bigger. that said, people do crazy things when presented with obscene amounts of money.”

Asked whether he has been offered such sums, he answers: “Well, we’re still independent, so not obscene enough.”

(Additional reporting by Joachim Dagenborg, Roberta Cowan and Matt

Cowan. editing by Jane Merriman)

dReaming oF hollyWood: Mikael hed, CeO of Rovio Mobile, attends a Reuters Global technology Summit in Paris May 18, 2011. ReuteRs/chaRles Platiau

hed has held talks wIth hollywood studIos about an angry bIrds fIlm.


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Playing aRound: A woman walks past icons for Apple applications at the company's retail store in San Francisco, California April 22, 2009. ReuteRs/RobeRt galbRaith

competition Gets uGly in mobile Games market

by geoRgina PRodhan PARIS, MAY 20

The OnLIne GAMInG industry is hotter than it has ever been thanks largely to

Facebook and Apple’s iPhone, which are bringing video games to vast new audiences who have never been gamers before.

But lower barriers to entry for game developers mean competition is intense, and would-be market entrants should beware of being carried away by the success of a handful of games like Angry Birds, industry executives said this week.

“It’s an ugly scene,” Alexandre de Rochefort, chief financial officer of mobile video game specialist Gameloft, told the Reuters Global technology Summit in Paris.

“the smartphone market is not a goldmine for developers. It’s a bit like playing the lottery.”

Developing and distributing games is easy now thanks to companies like Amazon, who rent out computing capacity that can be used

to test games, and platforms like Facebook and Apple’s App Store, that can reach huge audiences at one stroke.

UK-based media research firm Screen Digest says the market excluding advertising revenue grew to $3.7 billion in 2010 from $2.2 billion in 2007 -- the year before the Apple App Store opened -- and will grow to $7.8 billion by 2014.

the App Store offers 350,000

“the smartphone market Is not a goldmIne. It’s a bIt lIke playIng the lottery.”


9

applications, mostly games.“Since Apple launched its App Store, the

mobile gaming market has undergone a transformation,” says Screen Digest analyst Jack Kent.

“Before, less than 5 percent were paying to access mobile games, in europe at least ... since then consumers are a lot more willing to pay for content and particularly games.”

deals the ChAnGeS in the industry have also sparked a flurry of dealmaking, as big gaming companies like electronic Arts and privately held Zynga, maker of Facebook games including FarmVille, have gone on the acquisition trail.

Screen Digest tracked 26 mobile gaming-related acquisitions last year, up from 12 in 2009, and 11 in the first quarter of this year. Venture capital funding has also risen, with 21 deals worth a total of $200 million last quarter, compared with just three worth a total of $27 million a year earlier.

Index Ventures, an early investor in Facebook game maker Playfish which was sold to electronic Arts for $400 million in 2009, says the industry has become far less risky for investors.

“We used to stay away from games,” neil Rimer, Index co-founder and partner, told the summit. “It was really like the movie industry where you had to come up with this basic idea for a game and then spend 5 to 15 million euros ($7 to $21 million) and two years building the thing,” he said.

“Sometimes it would work. Many times it would bomb and you were out 15 million bucks.”

For developers, though, it is still a hit or miss business. even Rovio Mobile, maker of the most successful ever iPhone game, created 51 games before Angry Birds.

Rovio is moving to capitalise on the game’s popularity by turning Angry Birds into a media franchise, with toys and t-shirts already on sale, ambitions for a feature film and possibly even theme parks.

Mind Candy, the UK company behind the Moshi Monsters website -- a kind of children’s Facebook crossed with tamagochi -- is also talking to hollywood about making a film. It already has Britain’s best-selling children’s magazine and a range of toys.

“the vision here is to build the largest kids’ entertainment property in the world ... the harry Potter or the Star Wars or the Pokemon for a new generation,” founder

and CeO Michael Acton Smith told the summit.

tolls tOLLS ChARGeD by gatekeepers such as Facebook and Apple are also significant -- typically 30 percent -- and mobile operators charge more.

even established players like Finland’s habbo hotel, a teen hangout website that has been going since 2000, is struggling as telecoms operators charge up to 70 percent of the micropayments that users make for virtual goods through premium SMS texts.

“even the 30 percent that Apple and Facebook are charging is still outrageous,” timo Soininen, chief executive of habbo owner Sulake, told the summit.

Gameloft, which focuses on simple, so-called feature phones -- those with cameras or music players but without advanced Internet connections -- reckons it is relatively safe precisely because most of its business is not on Facebook or the iPhone.

Despite dwindling feature phone sales, the sheer number of different phone models for which game adaptations are needed puts off new entrants, meaning Gameloft shares the bulk of the hard-core mobile gaming market with just one competitor, eA.

“Zynga has made it very clear that their typical client is a female, 40 years old,

staying at home in the mid-West,” Gameloft’s Rochefort said. “Gameloft has not sold a single game to this kind of client in the last 11 years.”

(Additional reporting by Leila Abboud, Marie Mawad, Matt Cowan and tarmo Virki;

editing by David holmes)

used to stay aWay FRom games: neil Rimer, co-founder of Index Ventures, attends a Reuters Global technology Summit in Paris May 17, 2011. ReuteRs/PhiliPPe WoJazeR

ugly scene: Alexandre de Rochefort, Gameloft's chief financial officer, attends a Reuters Global technology Summit in Paris May 18, 2011. ReuteRs/chaRles Platiau


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mobile wallet starts with small chanGe

by RobeRta b. coWanPARIS, MAY 20

VIRtUAL WALLet technology that lets people pay for a coffee, newspaper

or sandwich by swiping a cell phone at a checkout is finally set to start rolling out, executives told the Reuters technology Summit this week in Paris.

Retailers, fast-food chains, advertisers and banks are preparing for a sea change in electronic commerce as more smartphones capable of making financial transactions are released. Many say it will change the way they do business.

near-field-communication (nFC), the technology most likely to be used in the West, is a wireless way to swap data at short range, which means nFC-enabled smartphones can pay for goods, store electronic tickets, collect coupons or swap photos.

“2011 is likely the year when nFC could be on its way to become a mainstream technology in US and Western europe,” said Andrew Gardiner, an analyst at Barclays Capital.

Richard Clemmer, chief executive of top nFC chipmaker nxP, said Google has given a great boost to adoption by including nFC capability in its Android software, which is used by smartphone makers the world over.

“We co-invented the nFC technology eight or nine years ago with Sony. We tried to push it but frankly we just didn’t have the influence,” he told the summit.

“What we did by aligning with Google allowed us really to have a much larger impact. We’d been working with credit card companies, and it kept being on the roadmap four quarters out.”

On Friday, Orange and Barclaycard launched Britain’s first mobile payments service, allowing certain customers to make small payments in branches of fast-food chains including McDonald’s and Subway.

In other countries, notably Japan and South Korea, nFC technology is already well established.

“I was blown away in Japan by nFC

payments in action and with the ease and convenience of payments,” timo Soininen, chief executive of Finnish Web games company Sulake, said when asked what was the coolest thing he had seen in technology this year.

“It will change everything.”Clemmer said every smartphone

manufacturer was looking at putting nFC in its phones. he reckons up to three-quarters of all smartphones will be nFC phones in five years and that some traditional phones will also start adding the technology, particularly for use in developing markets in Africa and Asia.

Barclays Capital’s Gardiner said: “nFC has the potential to evolve into a billion-dollar-plus semiconductor market over the next four to five years.”

loW RisK, small change LOW RISK DAtA transfers like using nFC to read tags on movie posters, connect to wifi at cafes and swap business cards will help boost acceptance and drive the first big wave

of nFC rollout to the consumers.the interaction of smart posters and

coupons is projected to help drive the adoption of nFC with consumers, according to Don tait from IMS Research in the UK.

IMS estimates that by 2015 there will be more than 900 million devices with nFC technology including cellphones but also in terminals, laptops, tablets, tags, tokens, posters, watches, headsets and AtMs.

the “physicalisation of social media” or swapping LinkedIn Profiles or Facebook pages, Foursquare checkins and sharing games on line, is expected to be one of the most popular uses, according to David Birch from Consult hyperion.

electronic payments will still be the key driving force in the widespread acceptance of nFC, but initially the financial amounts in question will remain limited.

the Barclays-Orange mobile service launched on Friday only allows transactions up to 15 pounds, ($24) at a time, since the initial scheme wants to try to replace the cash people fumble for when looking to pay

WheRe did i Put my Wallet?: Richard Clemmer, Chief executive of nxP Semiconductors, attends a Reuters Global technology Summit in Paris May 19, 2011. ReuteRs/chaRles Platiau


11

for that first coffee or morning paper.“Right now we are looking at areas around

low value transactions, as we’re trying to see what consumers want and how much they feel comfortable with, said James Rees from Orange, adding that eventually that sum would be raised.

Opera Software co-founder Jon von tetzchner told the summit nFC in its current form was “cute” but that he’s still waiting to be able to do “real commerce” from the mobile phone, at least as much as is now currently possible from a personal computer.

From initial nFC trials, consumers have found nFC-enabled phones intuitive and easy to use and finding it easy will help the technology to be adopted by wide sectors of the population.

Olivier Piou, chief excutive of smartcard maker Gemalto speaking at the summit said nFC pilot projects Gemalto has been involved with have shown that consumers find it so easy, they welcome using the technology.

“If you ask a grandmother in nice or Colombia, for them it is normal, it’s just a wireless device, and the fact that it works by proximity is absolutely normal.”

(editing by Jane Merriman)

coolest thing in technology: timo Soininen, Chief executive Officer of Finnish internet company Sulake, known for its habbo hotel teen networking site, attends a Reuters Global technology Summit in Paris May 17, 2011. ReuteRs/John schults

“I was blown away In Japan by nfC payments In aCtIon

and wIth the ease and ConvenIenCe of payments.”

easy to use: Olivier Piou, Chief executive Office of Gemalto, attends a Reuters Global technology Summit in Paris May 16, 2001. ReuteRs/John schults


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apple planssmaller sim card

by leila abboud and geoRgina PRodhanPARIS, MAY 17

APPLe hAS PROPOSeD a standardized SIM card smaller than those it currently

uses in the iPhone and iPad to be able to produce thinner devices, an Orange executive told Reuters on tuesday.

the move by Apple to work with operators is symptomatic of warming relations as Apple, no longer a new market entrant, depends on mobile carrier subsidies to help it maintain high volumes of iPhone sales.

A spokesman for european telecoms standards body (etSI) confirmed Apple had made the proposal for the new standard for SIM cards, but decision on starting the standardization work, which can take more than a year, was not yet made.

“this process may take some time, up to a year or more, if there is strong disagreement between industry players. however, when there is broad consensus among the companies participating in the standards committee, the process can be accelerated to a number of months,” he said.

Orange said it, and other operators, welcomed the move.

“We were quite happy to see last week that Apple has submitted a new requirement to etSI for a smaller SIM form factor -- smaller than the one that goes in iPhone 4 and iPad,” said Anne Bouverot, Orange’s head of mobile services.

“they have done that through the standardization route, through etSI, with the sponsorship of some major mobile operators, Orange being one of them,” she told the Paris leg of the Reuters Global technology Summit.

She said first devices using such SIM cards could come out next year. If the smaller SIMs become standardized, other phone makers are also likely to adopt them.

“At some point other vendors will follow as size and weight will be crucial for smartphones,” said analyst Francisco Jeronimo of technology research firm IDC.

Apple was not immediately available for comment.

Apple was a divisive force in the mobile industry when it launched its first iPhone in 2007, releasing the coveted device only through selected partners and effectively forcing operators to offer unlimited data plans.

Bouverot said: “As long as it supports the requirements that we have for the SIM card, which is a very important asset for operators,

which we absolutely want to continue to support, then we’re happy that this is a development.”

“It’s certainly showing that they’re willing to work with the standardization bodies and with the operators, which we welcome,” Bouverot added. “We’re discussing how to improve our relationship.”

Apple shares were down 0.3 percent at

1724 GMt. France telecom shares closed down 0.4 percent.

(Additional reporting by Marie Mawad and tarmo Virki; editing by James Regan

and Jon Loades-Carter)

yes, but can it maKe a cuP oF tea?: An Apple iPhone 4 is displayed in an Apple store on the day of its British launch in London June 24, 2010. ReuteRs/Paul hacKett

“thIs proCess may take some tIme, up to

a year or more.”

Apple product launches, share reaction

Source: Thomson Reuters


13/05/11

Stock price – percent change

A look at the share impact of Apple product launches.

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by JenniFeR saba andnadia damounineW YORK, MAY 16

HeRe’S One DeAL AOL won’t do: go private.

AOL Chief executive tim Armstrong struck down the idea that it would pursue a deal with private equity firms similar to the deal contemplated last fall that would have combined it with Yahoo.

“We are not focused on a private equity deal now,” AOL Chief executive tim Armstrong said during the Reuters Global technology Summit in new York. “We are focused on a turnaround and we’re pretty excited about the business overall.”

Despite having been burned over the past

decade on a string of deals gone sour -- Bebo, purchased for $850 million, was sold for $10 million -- the now independent company has been on a shopping spree. It has snapped up the popular news site huffington Post and influential technology blog techCrunch.

“We would opportunistically add more assets to the platforms that we thought would be really successful,” Armstrong said.

Last fall, AOL was in talks with several private equity firms to acquire Yahoo, contingent on Yahoo selling its prized Asian assets, which include a 40 percent stake in China’s Alibaba Group.

Relations between Yahoo and the Alibaba Group strained further last week over the sequence of events involving the transfer of one of Alibaba Group’s main assets, its online e-commerce payment system similar to eBay’s PayPal, Alipay.

indePendent's dayAOL’S ARMStROnG said the company wants to remain independent.

Since taking the helm of the troubled AOL in April 2009 and overseeing a spin-out from time Warner, Armstrong has been trying to shape the company into an online media and entertainment destination.

AOL is investing heavily in Patch, a local news network launched in more than 830 communities in the United States, and rolled out a professional division to attract government, energy and defense executives.

“I hope you don’t think we have done any ‘hail Mary’s,’” Armstrong said, using a U.S. football phrase describing a last-ditch attempt to win a game. “Arianna’s company is the best social distributor of content, has some of the most addictive and obsessive content on the Internet.”

AOL bought the huffington Post, launched by Arianna huffington in 2005, for $315 million.

Dial-up access still represents roughly 40 percent of AOL’s revenue, and Armstrong said he has no plans to rid the company of that division.

“If we look at our vision of being highest quality, highest scale digital media player and brand advertising player, we have many of the components from a structural standpoint,” he said.

“We still have a rule of no ‘hail Marys.’”

(editing by Gary hill)

aol says no thanks to private equity

isn't that Right, tim?: Arianna huffington, president and editor-in-Chief of the huffington Post Media Group, speaks during the Reuters Global technology Summit in new York, May 16, 2011. ReuteRs/bRendan mcdeRmid

sounds Right to me, aRianna: tim Armstrong, AOL Chairman and Chief executive Officer, speaks during the Reuters Global technology Summit in new York, May 16, 2011. ReuteRs/bRendan mcdeRmid

“we are foCused on a turnaround and we’re pretty exCIted about

the busIness overall. ”


14

dell seeks acquisitions in $1 bln-$5 bln ranGe

by PooRnima guPta and nadia damounineW YORK, MAY 18

DeLL InC, which is seeing renewed investor optimism after blowout

quarterly profits, is on the hunt for companies with valuations in the $1 billion to $5 billion range that can help it be a one-stop shop for corporate It needs.

the no. 2 PC maker has been fairly active in the M&A space, snapping up about eight companies in its last fiscal year, including information-security company SecureWorks Inc.

the pace is a big change from a decade ago, when the company was absent from the M&A market.

Dave Johnson, Dell’s senior vice president of corporate strategy, told Reuters Global technology Summit in new York that Dell will continue to look at acquisitions -- particularly in the rapidly expanding area of cloud computing -- to grow and diversify its product offerings.

“We have the financial capacity to do many deals,” Johnson said. “SecureWorks is indicative of the type of companies that you will see Dell acquire.”

Dell, which spent around $2 billion for acquisitions last year, had $15.2 billion in cash and investments at the end of April. that compares with $12.8 billion at larger rival hewlett-Packard, which is also actively looking to shore up expertise in much of the same areas that Dell is targeting, including services, storage and security.

hP outbid Dell for Silicon Valley firm 3Par last September after a fierce bidding war, with a final offer that valued the small, data storage provider at $2.4 billion.

Among the technology giants that have aggressively acquired cloud-based companies last year, Dell has often been described as lagging behind its peers including hP, Oracle Corp and eMC.

In December, Dell bought smaller storage company Compellent technologies, after 3Par and Isilon were sold to hP and eMC respectively.

Johnson said Dell’s decision to let go of 3Par was a prudent one as the valuation of the company exceeded the assets at that point.

“Relative to 3PAR, that wasn’t a capital issue. that was a valuation issue,” Johnson said.

Some analysts have criticized hP for overpaying for 3Par, noting its $33-per-share offer valued the company at more than eight times sales. Dell’s first official offer in August was $18 per share.

(editing by Steve Orlofsky)

Tech M&A this year reaches $85.5 bln

Source: Thomson Reuters


10/05/11

Acquirer Value – $ billions Target

Skype

National Semiconductor

Varian Semiconductor

Viviti Technologies

SAVVIS

Atheros Communications

Terremark Worldwide

Lawson Software

Mentor Graphics

SRA International

The top 10 tech deals so far this year have contributed to the strongest annual start for M&Ainvolving tech companies since 2000.

0 2 4 6 8 10

Providence Equity Partners

Carl Icahn

Atlantis Merger Sub

Verizon Holdings

T Merger Sub

CenturyLink

Western Digital Ireland

Applied Materials

Texas Instruments

Microsoft 8.5

6.5

4.9

4.3

3.0

2.9

1.9

1.8

1.7

1.7

dell dealing: A customer looks at laptops at a Dell outlet in Beijing December 13, 2010. ReuteRs/chRistina hu


15

vcs wary of secondary market tradinG

ReuteRs videoby JenniFeR saba and nadia damounineW YORK, MAY 18

VentURe CAPItALIStS are wary of the secondary markets that have soared in

popularity with investors looking for a piece of action in private companies like Facebook, twitter and Groupon.

the secondary markets, which enable the exchange of shares in privately held companies, are a black hole because private companies are not required to disclose financial information.

“It is scary and I would be very careful before doing any such deals,” Axel Bichara, partner with Atlas Ventures said during Reuters Global technology Summit venture capital panel on Wednesday.

Bill Maris, managing partner at Google Ventures said secondary market trading creates all types of market forces that could be “confusing.”

Secondary markets have become a hive of activity among buyers and sellers seeking shares in hot Internet companies.

For instance, SecondMarket, which is a private exchange, reported more than $100 million in private stock transactions during the first quarter driven largely by demand of shares of consumer-friendly social media companies Facebook, twitter, Groupon, LinkedIn and Zynga.

On the flip slide, a group of Facebook shareholders is seeking to offload $1 billion worth of shares on the secondary market, representing one of the largest transactions of Facebook shares to date.

the risks however of working these private exchanges are high.

“I am a little bit skeptical of how some of these things are in the process of getting priced,” said Saad Khan, partner at CMeA Capital.

“I don’t know who the buyers are. I wonder sometimes how sophisticated they are. I also wonder what kind of disclosures these private companies have to make. how much transparency do we really have into the business?”

Valuations of social media companies in particular have rocketed in part because of trades on the secondary market signifying the pent up demand to own a piece of the next big thing.

Only a handful of these companies, such as LinkedIn, have filed for an IPO though Groupon and Facebook are expected to make their public debut in the next year.

“there may be a need for a new kind of regulation for those markets,” said Rob Glaser, a venture partner at Accel Partners and chairman of Realnetworks.

“hopefully people will come up with a sensible balance between something that adds transparency to that market segment without making it a completely

nightmarish process.”Khan described the current environment

as the “Wild West” with people on the hunt for future prospects -- the next Google for instance, which had a wildly successful public debut.

Yet in the world of venture capital liquidity is king. Bichara said that while the IPO markets are in better shape now, it’s nowhere near the heights scaled during the late 1990s.

“If those secondary private exchanges lead to a new kind of IPO market, a new kind of liquidity market would be highly interesting because the threshold of going public on nasdaq is so high,” Bichara said.

(editing by Bernard Orr)

Saad Khan, Partner at CMeA Capital, talks about investing in ''unsexy'' tech startups LiveOps and Pixazza:http://link.reuters.com/byp69r

a taRget oF secondaRy maRKets: An online coupon sent via email from Groupon is pictured on a laptop screen november 29, 2010 in Los Angeles. ReuteRs/FRed PRouseR


16

social network viadeo shelves ipo plan

by leila abboud and maRie maWadPARIS, MAY 16

VIADeO, the WORLD’S second-biggest social network for professionals behind

LinkedIn, is deferring a plan to go public, preferring instead to focus on growth in emerging markets, its chief executive said.

the French group had been mulling an initial public offering (IPO) in europe, the United States or hong Kong in a bid to surf on a wave of investor interest in technology start-ups that has sent valuations sky-rocketing in recent months.

Chief executive Dan Serfaty told the Reuters Global technology Summit that Viadeo could revisit the question of going public in about 18-24 months.

“We saw a tremendous level of interest by bankers, private equity investors and venture capitalists,” said Serfaty. “But we decided that our fundamentals were good enough that we could wait for a listing and instead focus on growing the business.”

LinkedIn will launch its IPO on thursday in what is widely seen as a test of investor hunger for shares in hot social media start-ups. It hopes to raise around $150 million to further its product expansion, hiring and acquisitions.

Last week, Renren Inc, one of China’s biggest social networking companies, rose

29 percent in its debut on the new York Stock exchange.

Viadeo’s decision not to do an IPO could bolster the view held by some investors that the valuations of Internet companies are hitting a ceiling.

they worry that social media sites like Facebook and twitter, group-buying site Groupon and social gaming company Zynga cannot grow fast enough to keep pace with their valuations, and that the frenzy is

another bubble akin to the late 1990s.Viadeo’s Serfaty said the “euphoria” among

investors was causing valuations to climb far more quickly than the fundamentals of the businesses often justified.

Serfaty added that bankers he had met with in the U.S. attributed much higher valuations than those of european investment houses.

“We are in an IPO frenzy in the U.S and at some point it will hit its limit,” he said.

After several months of examining its IPO

options, Serfaty decided against a flotation because he worried that such a move would hamper the company’s ability to invest heavily in emerging markets in Asia and Latin America in the coming years.

“We want to grow and not be faced with the pressure to deliver profitability right away,” he said. “there is a risk of going public too early.”

Viadeo, which says it has more than 35 million users, is seeking to position itself

as the more i n t e r n a t i o n a l cousin of LinkedIn, with its users coming from europe, China, India and Latin America.

Serfaty added that there was so much money available from private equity and venture capitalists that even if the company needed funds to fuel its expansion, it could collect them easily without going public.

LinkedIn, which says it has more than 100 million users, focused in the U.S., has set a price range for its

IPO that values it at $3 billion or around 12 times 2010 sales.

In comparison, search engine giants Google and Yahoo are valued at 6 and 3.5 times 2010 sales respectively.

Both LinkedIn and Viadeo have business models focused on free initial access for users to post their resumes, followed by paid access for premium users. the sites also sell advertisements to generate revenue.

(editing by James Regan)

looK out, linKedin: Dan Serfaty, CeO of Viadeo, speaks during the Reuters Global technology Summit in Paris May 18, 2010. ReuteRs/stRingeR


17

Rob glaseR Chairman tkCompany

heinz KundeRt President SeMI europe

FloRian seiche President, HTC Europe htC

alex bichaRa Partner Atlas Ventures

miKael hed Chief Executive Officer Rovio Mobile

bill maRis Managing Partner Google Ventures

FRan shammo Chief Financial Officer Verizon

anne bouveRot Head of Mobile Services, Orange France telecom

Jen-hsub huang Founder and Chief Executive Officer nvidia

oRen nissim Chief Executive Officer telmap

RichaRd clemmeR Chief Executive Officer nxP Semiconductors

aRianna huFFington President and Editor-In-Chief, Huffington Post Media AOL

tim o'shaughnessy Co-Founder and Chief Executive Officer LivingSocial

Jim hagemann snabeTkTitle tkCompany

dennis cRoWley Co-Founder and Chief Executive Officer Foursquare

dave Johnson Head Of Strategy Dell

oliveR Piou Chief Executive Officer Gemalto

timo sonninen Chief Executive Officer habbo hotel

alexandRe de RocheFoRt Chief Financial Officer Gameloft

saad Khan Partner CMeA Capital

neil RimeR Co-Founder and Chief Executive Officer Index Ventures

John stanKey Head Of Business SolutionsAt&t

WaRRen east Chief Executive Officer ARM

thomas KilRoy General Manager, Sales and Marketing Group Intel

enRique salem Chief Executive Officer Symantec

ben veRWaayen Chief Executive Officer Alcatel-Lucent

Jim FlaWs Chief Financial Officer Corning

mo KoyFman Principal Spark Capital

sheRyl sandbeRg Chief Operating Officer Facebook

Jon von tetzchneR Founder Opera

summit speakers

michael acton smith Founder and Chief Executive Officer Mind Candy

tim aRmstRong Chief Executive Officer AOL


coveR Photos (clockwise from upper left): A poster promoting Rovio's Angry Birds game. ReuteRs/comPany handout; employees of South Korean mobile carrier Kt hold an Apple Inc's iPhone 4 (L) smartphone and a Samsung electronics' Galaxy S smartphone on April 22, 2011. ReuteRs/tRuth leem; A twitter page shows an entry from european Council President herman Van Rompuy in Brussels March 11, 2011. ReuteRs/yves heRman; A page from the Facebook website is seen in Singapore May 11, 2011. ReuteRs/tan shung sin

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FOR MORe InFORMAtIOn COntACt:

kenneth li, editor in charge, technology media & telecommunications +1 646 223 6027 [email protected]

paul thomasch, deputy editor in charge, technology media & telecommunications+1 646 223 6092 [email protected]

tiziana barghinieditor in charge, global summits+1 646 223 6312 [email protected]

geneRation gaP: A commuter reads on a Kindle e-reader while riding the subway in Cambridge, Massachusetts March 18, 2011. ReuteRs/bRian snydeR

michael WoodFoRd Executive Managing Director Olympus europa

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