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Twitter's New Flight Plan

By Paul Hartsock
Apr 17, 2010 5:00 AM PT

To their credit, Twitter's executives are self-aware enough to know the company has been living sort of like a trust-fund child well past its metaphorical college days. Every startup needs some time in the cradle, of course, but when you're hosting 50 million messages per day and you still don't have a revenue plan, questions start getting kind of pointed. This is not lost on cofounder Biz Stone. He recently wrote on the company blog, "Believe me, when your name is Biz and you're a cofounder of Twitter, it also means putting yourself at the mercy of folks like Stephen Colbert who hit home runs with lines like, 'So, I assume that 'Biz' in 'Biz Stone' does not stand for 'Business Model.'"

Twitter's New Flight Plan

That particular blog post was the announcement of the first piece of what may indeed grow into a real business model for the microblogging service.

Any business in the world has long been able to take a free ride on Twitter -- just make an official profile for your company, and suddenly you can communicate directly with customers and shout your own message to anyone who cares to listen, just as long as you keep it brief. But now businesses will also have the option of buying Promoted Tweets. These are messages associated with a particular search term.

People search out subjects on Twitter all the time -- coffee, cough syrup, thread count, hydroelectricity, digeridoos, literally any word you can think of. If your company buys the rights to that word, your messages gets prime placement on the search results page. Organic results are up there too, but the Promoted Tweet gets the honeymoon suite.

There is a catch. Twitter has spent years getting a feel for the general garbage tolerance of its users, and the company knows that if it starts selling tweet placement, it could easily sell itself out if it isn't careful about it. So here's the rule for Promoted Tweets: They have to get some action. They have to be retweeted, responded to, or otherwise interacted with. If your Promoted Tweet is bland and uninteresting, it's no longer worthy of PT status, and it gets dropped. You can't just buy your way to the top of Twitter; you've got to buy and earn it, it seems.

Of course, this idea of selling search advertisements sounds a lot like what Google does, only on a much smaller scale. And right as Twitter started its own minor-league version of Google's game, Google announced plans for a new form of Twitter search. This is going to let people not only search what tweeters are saying about any search term; it'll also document how often a particular term was used in the past. So now we'll all have this graphical, hugely crowdsourced data stream to figure out, down to the minute, exactly when any given pop-culture term or phrase started getting overused and tiresome.

So, with Twitter playing the search ad game and Google doing a better job of cleaning out Twitter's closet than Twitter can do, will we soon have a new bitter rivalry to gawk at when Google/Microsoft, Google/Apple, Adobe/Apple, Microsoft/Apple and TiVo/Dish get boring?

Perhaps not -- if anything happens between the companies, it's more likely going to be some sort of cooperation. Google would probably love to buy Twitter if its founders ever decided to drop their ideals about corporate independence in favor of independent wealth. Barring that, perhaps some kind of limited partnership will eventually grow. Twitter's search utility is lame, but it's made a habit of letting other companies do all sorts of creative things with its feed; Google's just following that trend. And Google's own stab at social networking and messaging, Buzz, was the kind of mistake that only a company as strong as Google can afford to make now and then. Author Paul Gillin told us, "Both companies envy each other. Twitter would like to be a search engine and Google would like to be a social network. It makes sense for them to be together at some point."


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Fresh Bag o' Chips

Apple fans who've been holding out for a new MacBook Pro can finally start breathing again, if any of them are still alive at all after holding their breath so long. When PC laptop makers started shipping computers with Intel's new quad-core laptop processor line last year, everyone knew it was only a matter of time before MacBooks started flaunting some Core i5 and i7 specs as well. Yes, Macs are often a little late to these kinds of parties, but Apple is not about to let some sandblaster from across the Valley dictate its release schedule. Well, now Cupertino's good and ready, and the quad-core MacBook Pros are here.

All models get beefed-up graphics and battery technologies, but the little 13-incher does not get a quad-core option; it's staying with the Core 2 Duo. Call it the MacBook Semi-Pro. Its price stays put at $1,200. The 15-inch model can have a Core i5 or i7 chip (it starts now at $1,800), and the 17-inch Aluminum Lunch Tray sports only the i5. It starts at $2,300.

So why did MacBook users have to languish so long, staring at those hated HPs and Dells happily chugging along with their Core i5s? Perhaps because Apple knows it's going to sell a boatload. Yankee Group's Carl Howe told us, "Apple put quite a strain on Intel. If you're ordering only a few hundred thousand i5 and i7 processors, Intel has no problem filling your order, but Apple sells millions of PCs each quarter."

Compile This!

Apple has given its customers a lot to talk about over the last few weeks. Even after finally serving up the iPad, it didn't rest a whole lot. iPhone OS 4 came along, meaning a new hardware model is probably right around the corner, and then those new MacBooks showed up. Serious addicts are already talking about second mortgages.

But one decision Apple made recently really managed to grind the gears of a lot of the developers that create App Store wares -- the ones whose applications have played a big role in the success of the iPhone, iPad and iPod touch. In introducing iPhone OS 4, Apple decreed that from now on, all apps must be originally written in any of a handful of languages -- languages like Objective-C, C++ and other words that cause non-developers' eyes to glaze over. Apps that were originally written in other languages -- most notably Adobe Flash -- will not receive App Store approval and will not be allowed to go on sale there.

Granted, Flash applications have never gotten along well with the iPhone OS, but there are tools developers can use to translate an application that was originally written in Flash into an iPhone-friendly app. Now, those translations will no longer get the App Store nod. It's like telling Homer, "Look, I don't want my customers reading some other guy's translation of The Iliad. You're gonna have to learn some modern English and rewrite the thing yourself if you want me to put it in the store, OK?"

Some developers are livid over this, calling it a grab for a downright draconian level of control over a platform. What's next -- are developers also going to have to actually speak a particular language verbally if they want in on the App Store? Some have vowed never to write another iPhone app again, and I suppose the ones who have been writing apps in the accepted languages all along are sitting quietly and trying not to make any sudden movements.

There may be several reasons for this. One might be technical -- perhaps translated apps just don't work well with multitasking, one of the main features promised in iPhone OS 4. Another idea, one put forth by the blog InnerDaemon, is that Apple is getting back at Adobe for past slights. Apple had a rough adolescence -- in the '90s, it got picked on a lot, even by companies it wanted to be friends with. It was in with the art crowd, but the company that made some of the best art tools at the time, Adobe, decided it would use Windows as its main development platform. Even when Apple came up with OS X, arguably the company's turnaround point, Adobe still wasn't impressed.

And now that Apple's grown up to be this rich, powerful maker and breaker of worlds, perhaps it's payback time for that little snub. Gonna be a real interesting high school reunion.

Don't Call It a Sidekick

If you've noticed that Microsoft is starting to look a little big around the middle lately, it's because the company is just about ready to give birth to a huge litter of new mobile handsets. Windows Phone 7 Series is the new smartphone platform it's prepping, and for mercy's sake we're going to refer to that as "WinPho 7" from here on out. Lots of hardware manufacturers are climbing onboard, and it may represent the resurgence of Redmond's struggling mobile strategy.

But not all of the phones in the new brood are going to be all that smart. Some will do vicious battle with BlackBerries and Androids and iPhones, but the two in the Kin line aren't really built for all of that heavy app-lifting. The Kin One and Kin Two are basically dumbphones with comprehensive social networking features tied in. They look like they probably have a wide streak of Sidekick in their DNA, but when it unveiled the products, that wasn't something Microsoft was boasting about. Some branches of the family tree you just do not discuss. In fact, the only carrier named so far for the Kin is Verizon -- not T-Mobile, the company that carried the Sidekick back when that unfortunate data incident happened.

The Kin may not be able to handle the kind of apps that full-bodied WinPho 7 phones can take on, but they will be able to handle themselves socially. One feature is called the "Kin Loop" -- a constant, always up-to-date stream of status updates and messages from your various social networks. That requires a cellular data connection, of course, and that's the real clincher. As you can probably tell, the Kin is taking aim at a younger set of users -- teens and early 20-somethings -- and people in that group aren't as likely to have the kind of income that can comfortably afford a full-fledged data plan. So the monthly bills for the Kin will probably be lower than those for true smartphones, but pricing is as-yet undisclosed.

Sweatshops of the 21st Century

Chinese factories aren't usually known for their luxurious facilities and gratuitous employee perks. But conditions at one factory in particular were apparently bad enough to catch the eye of the U.S. National Labor Committee.

If the information coming from the NLC is accurate, then the KYE factory sounds more like a prison than a place of at-will employment. Workers are paid too little to eke out a living without putting in a great deal of overtime; they're banned from talking while on the job; using the bathroom or drinking water is not permitted outside of a 10-minute break they get every four hours of a 12-hour shift -- unless they get both supervisor permission and a stand-in. Break that rule, and they get bathroom duty. Make a mistake on the factory line, and their punishment is carried out in front of their coworkers for maximum embarrassment. During their few nonworking hours, they sleep in on-site dorms that pack 14 people into a 14-by-23-foot room that does not feature electrical outlets.

So what's actually manufactured at KYE? Well, it makes a lot of things, and it does some business with HP and Best Buy, but the factory's single biggest customer happens to be Microsoft. This place makes mice and webcams, and many Microsoft product boxes can be seen in the photos the NLC provided with its report.

Redmond expressed shock when it learned of the report -- its official policy states that its suppliers must treat their workers as Microsoft treats its own employees. Microsoft says it's already dispatched an independent investigation team to take a hard look at KYE.

Microsoft's policy on the matter isn't unique -- most U.S. companies with foreign suppliers have very similar policies; the problem is, they're not often enforced. Analyst Rob Enderle told us, "The companies can apply penalties, but they aren't in a position to do investigative enforcement of labor laws." In fact, he said, sometimes when they do manage to look into things and find a problem, they are likely to be criticized for the problem and not credited with actively trying to eliminate it.

One company that's been there before is Apple. It did a little foreign supplier housecleaning recently, and even severed relations with one factory it was doing business with. Here's a statement from one of its auditing reports: "During most of our audits, suppliers stated that Apple was the only company that had ever audited their facility for supplier responsibility."

Microsoft says its team is looking into the allegations. Perhaps while its investigators are over on that side of the world, they should also pop in unannounced to a few other suppliers in the area -- you know, just a friendly check-in.

High-Five, Anyone? Anyone?

Palm's dream to reclaim its seat as a major player in smartphones -- at least as an independent company -- seem to be a lost cause. It looked like it really was in the running in 2009, with its brand-new webOS and Pre handset. But the market moved too fast. Platforms that were able to grab on were ones like iPhone, Android, BlackBerry and perhaps WinPho 7 -- time will tell on that last one. WebOS couldn't get a grip, and now it looks like Palm's biggest concern isn't who wants to buy its smartphones; it's who's going to buy the company.

Maybe it'll be a PC maker that thinks it has what it takes to make its mark in handhelds. Dell, Lenovo and Asus are three standouts in the mind of Yankee Group's Andy Castonguay. Those first two especially have deep enough pockets to make a sale quick and painless, and they have a big manufacturing base to get plenty of products on the market quickly.

Or maybe some handset maker with deep roots in Asia wants a doorway to the U.S. market. On the other hand, maybe a smartphone maker that's already established itself stateside wouldn't mind buying off a has-been rival. Research In Motion still sells well, but its OS doesn't pack much excitement, and Palm's webOS was pretty well-received by critics, sales performance notwithstanding. Or maybe HTC wants in. It makes good handsets, but it doesn't have an OS of its very own -- instead it usually just puts its own spin on the open source Android OS.

Investors seem to be confident that somebody will step up to the plate soon. On Thursday, private equity firm Harbinger revealed it had snapped up an almost 10 percent passive stake in Palm, and smaller buyers were quick to jump on board too. Palm's shares spiked by more than 2.5 percent by mid-day.

Stay on Target

A few weeks ago, when a federal court sided with Comcast over the FCC -- effectively un-smackdowning the smackdown that the commission issued many months ago for the cable company's practice of throttling chronic BitTorrent users -- it threw a bucketful of doubt on the FCC's Great Big Broadband Plan. If the commission couldn't prove it had the authority to tell one ISP how it needed to handle a certain type of Internet traffic, what makes it think it has the power to pull off some of the much more ambitious plans it has to turn the U.S. into one big, happy, 4-million-square-mile gigabit hotspot?

But FCC Chairman Julius Genachowski has flown the black flag -- no surrender. His message to the U.S. Senate Commerce Committee: "Notwithstanding the decision last week in the Comcast case, I am confident that the Commission has the authority it needs to implement the Broadband Plan." He admitted that mistakes were made regarding specific actions and reasoning in the Comcast case specifically, but the overall plan stays in the picture.

How the FCC is going to pull it off remains unclear. In order to get where it wants to go, the FCC obviously needs to make some sort of change to the arguments and legal weapons it has at its disposal. It could wait for Congress to explicitly give it the power it needs, but even if that's successful, it could take years.

Another, possibly quicker, route would be to reclassify what broadband is. Right now, the FCC classifies broadband as an information service. If it was instead a telecom service, the FCC could exercise more power over it under existing rules.

So is that Genachowski's plan? He hedged his answers to that question, and reclassification is certainly not a move the FCC could make lightly. Even some pro-Net-neutrality lawmakers are hesitant about it, and to those who've been against Net neutrality from the get-go, the idea's downright obscene.


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