Posts Tagged ‘Google’

The Chinese Moto into Chicago

Monday, February 3rd, 2014

It’s a strange experience to attend a tech conference like I did last Thursday and have no one — not the audience or the speakers — mention the biggest tech story of the year. It’s a little like attending a family reunion and having nobody comment on your Aunt Mary’s 25-year old boyfriend.

Motorola Mobility is being sold by Google to Chinese computer powerhouse, Lenovo. You remember them — the company that bought IBM’s ThinkPad division in 2005. They paid $2.9 billion and it’s for one reason: to enter the smartphone war against Apple and Samsung. It’s the largest ever deal by a Chinese tech company (although a relative bargain when you consider that Google paid $12.5 billion for Motorola — primarily for its patent portfolio which it will license to Lenovo.)

For Chicago, the sale comes weeks away from the biggest real estate move of the last year: Motorola moving more than 2,000 workers into the Merchandise Mart and becoming the biggest tech employer downtown. Lenovo says it will all move ahead with no plans for layoffs.

The reason a Chinese tech behemoth with resources pays for an American company is twofold — brand and know how. “Motorola brings a strong brand, brilliant engineering and strong relationships with carriers and retailers.” said Lenovo CEO Yang Yuanqing.

In a blog for Crain’s Chicago Business, John Pletz spells out the challenges: Today, it (Motorola) has just 1 percent global market share, putting it in 16th place among the top cellphone vendors, according to research firm Strategy Analytics Inc. That’s down from No. 2, with 22 percent share, in 2006, when Motorola’s Razr phone was the must-have device.

After the acquisition, Lenovo will be No. 3, with 6 percent of the smartphone market, which accounts for most of the cellphone industry’s profit, according to Strategy Analytics. Samsung is No. 1 with 32 percent of shipments, followed by Apple, with 15 percent.

Chicago’s Tech Boom

Thursday, September 6th, 2012

Chicago’s high-tech community wants to lure the area’s start-up companies back to 1871 — the year that the Chicago Fire burned the city to the ground.  1871 is the name of a 50,000 SF space on the Merchandise Mart’s 12th floor designed to house entrepreneurs seeking a collaborative and flexible work environment.  The name reflects the spirit of innovation that rebuilt the city after the 1871 fire, said Kevin Willer, president of the Chicagoland Entrepreneurial Center (CEC).

The non-profit CEC operates the space with support from venture capitalist J.B. Pritzker and the State of Illinois, as well corporate sponsorship from companies such as Comcast and Cisco Systems, Inc.  Willer and Matt Moog, founder and chief executive of Viewpoints Network,  led efforts to create a focal point for Chicago digital technology start-ups.

Chicago is a national leader in start-up companies.  Writing in Forbes, Kelly Reid notes that a new start-up is formed in Chicago every 48 hours.  “It takes about 10 years for a first wave of start-ups to succeed or fail, and those that make successful exits begin investing their own money and mentoring the next generation.   According to Built in Chicago, it takes about two of these cycles — or 20 years — to build an entrepreneurship community.”  Chicago is “right at the beginning of the boom.  There were about as many digital start-ups founded in 2009 (72) as there were in the prior two years (73).  In 2010, the trend continued; 107 between 2008 and 2009 and 98 in 2010.   The 193 companies founded in 2011 buck the trend; there were only 170 companies founded in the prior two years, indicating very positive growth. 193 start-ups in a year amounts to a new company founded every two days.”

According to USA Today and the National Capital Venture Association,  San Francisco (not surprisingly) is the nation’s leading home of start-up tech firms, with Boston occupying second place.  These are followed by New York, Los Angeles, Washington, D.C., San Diego, Chicago, Boulder/Denver and Seattle.

Employment growth in the high-tech sector is fueling strong rental rate growth and declining vacancies in tech-oriented office markets of San Francisco, New York and Seattle, among others, according to CB Richard Ellis.   “The strengths of these tech-centric office sub-markets, with the strong rental rate growth and declining vacancies, are major factors supporting the overall office market recovery,” said Colin Yasukochi, CBRE’s director of research and analysis.  According to Yasukochi, “With the high-tech economy growing nearly six times faster than the national average, we expect that these sub-markets will continue to outperform.”

Willer points out that the CEC isn’’t an incubator, but a collaborative workspace where entrepreneurs can bounce ideas off each other.  Venture capital and angel investors also have a presence at the CEC.  “Economic development is about creating new enterprises as well as supporting corporations that are already here,” Willer said, noting that he hopes 1871 will become part of the Chicago’s tech “ecosystem”.  Chicago  start-ups raised $1.45 billion raised in 2010, the majority from Groupon  which is evidence that there is an energetic tech community in the city.

Demand for 1871 space exceeds the supply.   “On the first day we had 50 applications from companies come in,” said Steve Collens, senior vice president with The Pritzker Group. “They continue to pour in,” he said.  “The reality is that there are just very few co-working spaces here.  People are scattered from Ravenswood to River North to the West Loop.”

Chicago’s largest tech company lease in seven years was 572,000 SF, which Google leased for its Motorola Mobile subsidiary, also in the Merchandise Mart.

Large Firms Driving the Downtown Boom

Wednesday, August 1st, 2012

Here’s a little news to buck up the real estate mavens weathered by the daily diet of recessionary news: Google has signed the largest lease in downtown Chicago in 7 years.

It is a familiar story – a marquee firm relocating downtown because of the hip, cosmopolitan appeal and amenities of a CBD — but it does contradict the usual pattern of a recession. Nationally we’re seeing large firms (more than 500 employees) moving downtown to compete for young workers with the effect that the CBD is doing way better than the burbs. According to National RE Investor (NREI) Magazine, since the advent of the labor market recovery in the first quarter of 2010, large companies have created 1.06 million jobs while small companies have created 823,000 jobs. Talk to an economist or your cycle-tested real estate broker and they will tell you that it’s not how things usually work.

In every recession we’ve tracked, the small to medium-sized businesses (SMBs) have led hiring during the first stages of a recovery only to be surpassed by large firms ramping up during the latter stages of a comeback.  According to NREI, during the economic recovery in 1992 and 1993, hiring by small companies outpaced hiring by large companies—roughly 1.95 million jobs versus 1.52 million jobs. Over the next seven years before the economy entered another recession, the trends reversed. From 1994 through 2000, large firms created 11.23 million jobs while small firms created 7.36 million jobs.

The same thing happened in the economic recovery of the early 2000s: During 2003 and 2004 as the labor market began to recover, hiring by small firms of 1.44 million jobs outpaced hiring by large firms of 592,000 jobs. During this period suburban vacancy fell by 35 basis points while CBD vacancy rose by 130 basis points. But then it reversed. Once again, large companies generated more jobs than small companies —  3.09 million jobs versus 1.89 million jobs.

So, why is it different this time? The answer is credit. Small firms can’t tap the capital markets the way they used to because banks are still cautious. As a result, they need to keep their real estate costs low which means remaining in suburban space. Concurrently, large firms have gone through a huge cost-cutting period which has warranted the restacking, redesign and relocation of their workspaces to utilize space more productively with fewer but more highly skilled workers. And invariably, it means being downtown. Looking at the 10 largest leases of the last 12 years, we see the types of firms that rely on younger, highly educated workers who want to be downtown  — law firms, large financial consulting firms and tech giants.

Facebook IPO to Be Listed on Nasdaq

Tuesday, April 17th, 2012

Facebook is friending Nasdaq in one of the most-desirable deals among the Internet companies jockeying ahead in the race for social-media IPOs.  The addition of Facebook’s listing enhances Nasdaq’s reputation as the favored exchange among high-tech companies.  The exchange is home to several tech firms, including Apple and Google.  The stock will trade under the symbol FB, as Facebook prepares its initial public offering for May.

“This is a strong, substantial win for Nasdaq, and no doubt a momentum builder for future listings,” said Richard Repetto, an analyst at Sandler O’Neill & Partners.  Facebook’s IPO — which could raise as much as $10 billion — -is likely to be the biggest Internet IPO since Google’s in 2004.  “Winning Google further emboldened Nasdaq’s reputation as being the exchange of choice for the technology companies,” said Jay Frankl, senior managing director at FTI Consulting.  “The Facebook listing I’ve seen as being similar to the Google listing, which had a similar competition between the exchanges, and a similar win for Nasdaq.”

Companies pay an annual fee to list their stock, while exchanges receive listings-related income from the sale of market data and additional services offered to their listed companies.  A company can pay as much as $500,000 annually to be listed on the NYSE, while all Nasdaq fees are capped at approximately $100,000.

The decision is a big victory for Nasdaq, which competes intensely with NYSE Euronext, which operates the New York Stock Exchange.  The listing will give Facebook financial clout as it works to expand its global audience of about 845 million users.  It also might help Facebook avoid a challenge from Google, which wants to rival Facebook with its own social networking system.

Writing in Forbes, Robert Hof wonders if “Will Facebook’s sudden, outsized presence distort the Nasdaq index of 100 companies so that it becomes even more volatile than it already is?  It’s not a premature question by any means.  Already, just a few companies – Apple, Google, Microsoft, Intel, and Oracle – dominate the Nasdaq index, accounting for nearly half the value of the entire Nasdaq 100.  Thanks to its incredible run, Apple stock once again accounts for almost 20 percent of the index, after exchange operator Nasdaq OMX Group reduced its weighting to 12 percent a year ago.  It’s not clear yet, of course, what kind of presence Facebook will have in the index, since it obviously has to go public first and then get added by Nasdaq OMX.  But it seems a good bet that trading in its shares, like those of many new issues, will be anything but calm.  And given the huge interest in the company by investors and the press, and the relatively small float at the outset, every little announcement or hiccup seems sure to send the shares soaring or plummeting.  If Facebook becomes a significant portion of the Nasdaq index, as seems likely, that could make the famously dynamic index even more volatile.  This isn’t much of a problem for Facebook itself.  Its fate rests less with what the stock does in the short term than with how CEO Mark Zuckerberg and his business executives Sheryl Sandberg and others build out the company’s advertising, payments, and other potential businesses.”

CNBC’s Bob Pisani says that Nasdaq’s securing the Facebook listing is an important psychological victory. According to Pisani, “What does matter are the co-branding opportunities, and it here it gets down to a simple issue: what are you offering in the way of a partnership?  It’s not hard to imagine the pitch: the NYSE would certainly have argued that they have broader business-to-business connections with the biggest companies in the world, with whom they can partner to expand the brand name and co-venture with.  I have mentioned before that, as an example, if Groupon (which listed on Nasdaq) was doing something with Starbucks, Groupon might send out 65 million emails that references a deal with Starbucks and Groupon, with the solicitation noting that Groupon is listed on Nasdaq.  Nasdaq will pick up a portion of that cost.  Zillow, to take another company (also on Nasdaq), might have been very interested that Nasdaq has an enormous electronic sign in Times Square that is a virtual billboard for a company that wants to attract eyeballs to its website.  Get it?  What can you offer us?  And just what did Nasdaq offer to Facebook?”

Craig Wortmann on Being an Entrepreneur

Tuesday, January 10th, 2012

Virtually anyone can be an entrepreneur, although starting one’s own business is a giant leap.  Many people look at becoming an entrepreneur as a cause and effect – the academic term being “causal logic”.  That may not be the optimal way to view entrepreneurship, however.  Rather, the world’s most successful entrepreneurs use effectual logic.  According to Craig Wortmann, Clinical Associate Professor of Entrepreneurship at the University of Chicago Booth School of Business, “It goes like this:  I’m an entrepreneur, I’ve got this idea, I’ve got this limited set of resources and I’m just going to begin, and I’m not exactly sure what the effect will be.”  Wortmann has more than 20 years of experience in entrepreneurial sales and marketing strategy experience.

According to Wortmann, this is a powerful way to think about entrepreneurship because the concept has such an underlying vibe of optimism.  This notion of entrepreneurship is just start the business, anyone can do it.  They are all personality types; they don’t have to be deep in domain knowledge.  Anyone can start a business.  The research suggests that as long as people are not rigid about reaching a certain outcome, they will be successful.

Wortmann asks budding entrepreneurs to think about the idea they have and ask what is the relative value to the idea.  He believes that many people get stuck as entrepreneurs because they say “I can’t be an entrepreneur because I don’t have the next Google.  I’m not waking up in the middle of the night with the next idea for Facebook.”  Any idea that will change the focus of people or get them to do something better or a bit different – you have a potential business.

Would-be entrepreneurs need to begin taking action.  They need to talk to potential customers and partners, and start to formulate a product or service to offer to people.  Chances are the fledgling entrepreneur will be rejected; there is no question about that.  But if they keep embracing that chaos and making contact with the market, things will begin to take shape.  They need to get out there and realize that they are the structure and the process.

The challenge for entrepreneurs can be maintaining momentum.  If it’s the product, stay close to the product.  If it’s the people, get out into the market, meet people and maintain energy.  According to Wortmann, “One of the things I like to talk to students about:  is shutting down a business failure?  It is in a way, but we’re all on a journey and that’s just a chapter.  In a microcosm, it is a failure.  But is it really a failure if you take those lessons and start something new or go back to a big company and leverage all those things you learned?  That looks like success to me.”

To listen to Craig Wortmann’s full interview on entrepreneurship, click here.

Is the Motorola Mobility-Google Marriage Made in Heaven?

Tuesday, October 4th, 2011

Google’s recently announced $12.5 billion acquisition of Chicago-based mobile phone maker Motorola Mobility could be different if Google CEO Larry Page keeps his promise to run the acquisition as “an independent business.”  “If you believe what they say, they’re going to leave the company alone and let it do what it has been doing,” said Steven Kaplan, a professor at the University of Chicago’s Booth School of Business.  “If anything, maybe they would move resources here because the tech talent is less expensive and our taxes are lower (than California’s).”

There remains the question of the economic impact of the sale on Chicago’s economy, especially in northwest suburban Libertyville, IL, where Motorola Mobility has its sprawling campus.  If Google retains Motorola Mobility’s Illinois workforce, the move will represent a win for the state, giving it the bragging rights that come with being part of one of the world’s wealthiest and most entrepreneurial companies.  If Google moves Motorola Mobility to California, it will be a blow to Chicago’s northwest suburbs, where many of Mobility’s employees live.

Motorola Mobility has deep roots in the Chicago area, which go back to the 1928 founding of Galvin Manufacturing Corp. in Chicago.  The company, which was rechristened Motorola, pioneered early televisions and two-way radios during the World War II years.  Motorola helped lay the foundation for the mobile-phone industry, and demonstrated its original handset in 1973.  “Motorola was a pioneer in this business,” said Will Strauss, an analyst at Tempe, AZ-based Forward Concepts Co.  “They certainly have a lot of intellectual property.  It will certainly level the playing ground quite a bit. It’s going to give them an awful lot to defend Android with.” 

One reason for the purchase is the patents that Google will acquire as part of the acquisition.  Google pointed to patent disputes as important in its agreement to buy Motorola Mobility.  Apple, the iPhone’s manufacturer, and Microsoft, which created Windows Phone software, have targeted phones that run on Google’s Android system.  Lacking its own trove of patents to vie with Apple, Microsoft and other companies, Google and its hardware partners were targeted by suits aimed at slowing the adoption of Android smart phones.  Adding Motorola Mobility, with 17,000 patents, which has been inventing mobile-phone technology since the industry began, may help Google stanch the onslaught.

“The analogy to a nuclear arms race and mutually assured destruction is compelling,” said Ron Laurie, managing director of Inflexion Point Strategy LLC, which counsels companies on purchasing intellectual property.  Google and its rivals “look pretty evenly matched at the moment.  Google may have become a patent superpower.”

Google plans to continue to license its Android system to other smart phone makers, such as HTC, Samsung and LG. ”Many hardware partners have contributed to Android’s success and we look forward to continuing to work with all of them,” according to Page.  According to analysts, the Motorola deal is likely to help Google expedite its innovation in smart phones and tablets.

Bernstein Research analyst Pierre Ferragu believes the acquisition was “solely driven by the ongoing patent war and is an unambiguous positive for the Android ecosystem.  It is in the interest of Google to continue to offer a fully open Android platform with equal access to all manufacturers.  For Google, there is much more value in securing a major market share for Android than favoring Motorola against HTC and Samsung,” Ferragu wrote.

 Writing in The Business Insider, Henry Blodget predicts that the deal will be a “colossal disaster.”  According to Blodget, there are multiple reasons why this venture will fail.  “Google is a massive global software company with huge profit margins, genius engineers, extraordinarily high pay scales, and a near-monopoly on the most amazing advertising business the world has ever seen.  Motorola is a has-been, low-margin, global hardware-manufacturing business that operates at break-even, has 19,000 employees — 19,000!  Motorola, in other words, is a VAST company, one that will increase the size of Google by a staggering 60+ percent.  Mergers of this size rarely work well (or smoothly), even when managed by companies that are very experienced at making huge acquisitions (which Google isn’t).  Motorola does not have dominant share of the key businesses Google is buying: smart phones, tablets, and TV gadgets.  This means it does not have the weight necessary to push anyone around.  For example, Motorola only has a small slice of market share (10 percent) in its key business (smart-phones).   It’s nowhere in tablets.  The only way to make decent money in the hardware business is to have real leverage, and Motorola doesn’t have it.  The only thing that Google and Motorola have in common is that they are loosely considered ‘technology’ businesses.  This is not enough commonality for a massive merger like this to be a success without heroic integration efforts.  (Think AOL-Time Warner).”

Google+ Off to a Good Start – Will It Last?

Tuesday, August 9th, 2011

Just one month into its launch, Google+ has seen extraordinary growth, netting some 20 million unique visitors.  Still, it faces several key challenges before it can become the dominant force in social media.  Online metrics company ComScore said that of the 20 million users, five million of those are from the United States.  “Google+ is on an unprecedented growth trajectory over its first three weeks, reaching 20 million visitors faster than any site in recent memory,” Comscore Vice President Andrew Lipsman said.  The estimate comes a week after Google CEO Larry Page said that the company already had accumulated 10 million registered users. While registered users and unique visitors are not necessarily the same thing, that growth has been nothing short of impressive.

While the rate of growth is unparalleled, the social network is still small when compared with its rivals such as Facebook and Twitter, which have 750 million and 200 million registered users, respectively.  Google+’s success will depend on how Google “converts this strong trial base into regular users,” Lipsman warned.  While competitors Facebook and Twitter have become online destinations in themselves; more than 50 percent of traffic coming to Google+ is initiated by visits to Google or Gmail, according to Experian HitWise.  YouTube is a significant referrer.

Writing on the DVice website, Raymond Wong says that “Google+, the new guy on the social networking scene isn’t doing too bad.  After Google CEO Larry Page announced last week that Google+ had 10 million users in a mere two weeks, it appears they’ve added another 10 million users.  Talk about being the hottest thing in town.  People said that Google couldn’t build a social network that anybody would give two cents about, but somehow they’ve managed to do just that.  According to an independent comScore report, the new Google+ social network has hit 20 million unique visitors in three weeks.  Some have called Google+ a Facebook rip-off.  Some have joined simply to see what the buzz is all about, much like how everybody started Google and for a brief moment in time and then disappeared into oblivion. For now, none of that matters.  Google+ is gaining more users everyday, and Google is sure to be super excited by all the signups.”

So while we have a lot of work still to do, we are really excited about our progress with Google+,” Page said, noting that Google will re-focus on its core products and on new innovations.  “Google+ is also a great example of another focus of mine — beautiful products that are simple and intuitive to use and was actually was one of the first products to contain our new visual redesign.”  Google+ isn’t Google’s first expedition into the world of social media and its excitement over having 20 million Google+ users may be early.  Google introduced Google Buzz in February 2010 and immediately saw user numbers swell; it was later panned.

Reports are that Google will, unlike Facebook, host games on its own servers — this could make them faster and less prone to glitches.  The Google+ code mentions a gaming platform, and the company has reportedly invested as much as $200 million in the leading social gaming company Zynga.  There has been no official announcement about if and when the Google game platform will launch or how it will be designed.

Facebook is still beating Google+ in time spent on a social network.  HitWise research director Heather Dougherty said the average visit time for Google+ is five minutes and 50 seconds, compared with almost 22 minutes on Facebook.  Dougherty also examined how users arrived at Google+.  Google.com (at 34 percent) and Gmail (at 26 percent) account for 50 percent of all traffic to Google+; another six percent come from YouTube and Google Profiles.  Facebook ranked third among websites visited immediately prior to Google+, an indication that many social-network users have multiple accounts.  Google+ ranks as the 42nd most visited social networking site in the United States, and was the 638th most visited website.  Broken down by region, most of Google+ visitors are from Los Angeles, New York City and San Francisco (in descending order).

Facebook Is Worth $50 Billion? Anyone Remember the Dotcom Bubble?

Tuesday, July 12th, 2011

Could social media be the victim of the next dot.com bubble? Although Facebook has been valued at $50 billion – more than Yahoo!, eBay, and Time Warner and butting heads with such giants as Amazon and Google, there is some question about what the valuation is based on.  According to Newsweek, “Some media experts have compared Facebook with Disney, valued at about $70 billion.  But Disney has real, tangible assets – parks, hotels, cruise ships, iconic images to market on everything from T-shirts to tableware, and a massive library of classic animated films – to back its assessed value.  Facebook has a virtual network that, according to Time, links one-twelfth of the world’s population.  However, according to The Wall Street Journal, Facebook still has enormous infrastructure costs that include as much as $700 million for two data centers, and its profits have yet to be publicly disclosed.  When an investor buys a piece of Facebook, what exactly does that investor get?  The sudden, meteoric explosion in value of online social media sites like Facebook and Twitter is eerily reminiscent of the rise about 15 years ago of the online businesses that created the ‘dotcom bubble.’”

On the PBS Newshour,  Ray Suarez interviewed Josh Bernoff, a senior vice president of Forrester Research, who has written two books on social media.  According to Bernoff, “I certainly think that there’s no rational way to understand these valuations.  I want to be clear here.  Social is very exciting.  There’s a lot of business perspective, a lot of optimism that goes along with it.  But I think these valuations are based on where people think the next buyer will come from and not on where the actual revenues of these companies are going.”  Earlier this year, Microsoft bought Skype for $6.5 billion, although its revenues are less than $1 billion a year.  When LinkedIn went public, it was valued at $9 billion.  Its profits are just $12 million annually.

According to Experience:  The Blog “The dot-com crash of 2000 was devastating.  Even now, 11 years later, the NASDAQ Composite is just a hair over half of where it stood in March 2000.  The crash caused the loss of $5 trillion in market value, huge numbers of people lost their jobs, and the facade of most of those dot-com millionaires crumbled as their paper wealth evaporated.  (To me, the insanity of the dot-com craze is demonstrated by a single story told to me by a now-successful exec in a social enterprise company.  Back in 2000, he ran a tiny startup that got caught up in the dot-com hysteria; at one point it hit a market cap of $1 billion but was generating just $60,000 of revenue.)  I am taking you on this trip down Memory Lane for a reason:  It’s happening again.  Investors in social media startups are looking to cash in, and valuations are soaring despite modest to no profits.  Recently, Airbnb, a site that allows people to arrange short-term vacation rentals of rooms, homes and apartments, received a round of funding based on a $1 billion valuation.  While the company has not released financials, best guess estimates are that Airbnb only generates around $10 million of revenue.  To put this into perspective, Marriott has $12 billion in revenue and a market cap of $14 billion.”

The Next Web disagrees with predictions of a second dotcom bubble.  “Dotcom 2.0 is much stronger than its predecessor.  People are more technologically savvy and, crucially, broadband and smart phones are approaching ubiquity.  The world is switched-on, tuned-in and can’t get enough Internet.  Technological advances aside, the one thing that will ensure we don’t see another dotcom disaster is social media marketing.  The key to success this time lies in finding ways to monetize the many ventures – it’s understood that driving traffic isn’t enough, which is why Twitter is actively seeking ways to drive its revenue.  In fact, Twitter may make as much as $150 million this year, according to some reports.  There’s no question there are a lot of over-valued companies out there at the moment; some will undoubtedly crumble and some will flourish. But Dotcom 2.0 isn’t a bubble, and it won’t burst.”

Google Goes Green

Wednesday, July 6th, 2011

Google and SolarCity,  a rooftop solar-panel company announced a $280 million investment deal,  the largest such deal for home-based solar power systems in the United States.  The investment gives San Mateo, CA-based SolarCity the funding to build and lease solar power systems to as many as 7,000 to 9,000 homeowners in the 10 states in which it operates.

Established in 2006, SolarCity currently has 15,000 solar projects around the nation completed or under way.  Customers who want to have the firm’s solar system installed at their homes can pay for it up front; however, the majority let SolarCity retain ownership of the equipment and rent back the use of it through monthly solar lease payments.  By financing SolarCity, Google will recoup its investment through those lease payments.  “We hope to be seen as a model,”said Rick Needham, Google’s director of green business operations.  Needham didn’t discuss the deal’s terms, but said “these investments are designed to earn us a good return on our capital.”

“It allows us to put our capital to work in a way that is very important to the founders and to Google, and we found a good business model to support,” said Google’s Joel Conkling.  Google CEO Larry Page wants the firm’s operations to eventually produce no-net greenhouse gas emissions.  To achieve this, Google has invested in wind farms in North Dakota, California and Oregon, solar projects in California and Germany, and the beginning stages of a transmission system off the East coast to encourage the construction of offshore wind farms.  The SolarCity deal is Google’s seventh green energy investment, totaling more than $680 million.

Typically, a rooftop solar system costs $25,000 to $30,000, which is beyond the means of many homeowners.  Instead, solar providers like SolarCity, SunRun and Sungevity pay for the system with money borrowed from a bank or a specially-designed fund similar to the one that Google has created.  The resident then pays a set rate for the power generated which is lower than or approximately the same as local electricity.  Typically, s 5-kilowatt system will generate 7,000 kilowatt-hours of power annually, or about 60 percent of the household’s annual use.  The homeowner buys remaining electric power from the local utility, typically enjoys lower overall power bills and has some protection against potentially higher traditional electricity prices.  Electricity prices have not risen in recent months, but are expected to rise in coming years as the cost of increasingly stringent clean-air regulations are passed on to customers.  If the solar company is to make money and the homeowner save money, there must be a combination of high local electric rates, state and local subsidies, as well as low installation costs.  Then there is the matter of sunshine.  A house with solar panels should have a roof that faces South that is not shaded by trees or other buildings.

You have full flexibility in what you want to pay on a monthly basis,” said SolarCity CEO Lyndon Rive, who pointed out that homeowners are charged only for the electricity the company’s solar panels generate at or below market rates.  If the panels produce more power than the home uses, the consumer gets a credit.  “It’s actually a win-win,” Rive said.  “This industry is going gangbusters despite the economy,” said Danny Kennedy, founder of Oakland-based Sungevity.  According to Kennedy, the lease option his company started offering in March 2010 has pushed sales “through the roof.”  He expects to complete 30,000 leases in 2011, up from 10,000 in 2010.

California and Colorado accounted for more than a third of the residential solar market leases in the 1st quarter of 2011, according to a report from the Solar Energy Industries Association (SEIA).  The growth reflects that of the overall solar panel market, which expanded at an average annual rate of 69 percent since 2000, including 100 percent in 2010, according to SEIA, which expects the market to double this year.

Google has chosen to invest in clean energy projects because of the potential returns and the potential to impact the industry.   “We hope that Google’s leadership in the space will encourage other corporate investors,” Rive said.  There definitely is room for other investors to get involved: Fewer than 0.1 percent of American homes currently have rooftop solar panels, but that number is expected to grow to 2.4 percent by 2020, according to Bloomberg New Energy Finance. It’s highly likely that Google-financed companies like SolarCity will have a role in that growth.

The SolarCity project is not Google’s first venture into the clean energy market.  The firm has invested $168 million in California’s Ivanpah solar farm and another $100 million in the world’s biggest wind farm.  That is the $2 billion Shepherds Flat project,  near Arlington, OR, that will stretch over 77 square kilometers of north-central Oregon and generate enough energy for 235,000 homes.  The project, which will go into operation in 2012, is being developed by Caithness Energy.

Is a Dot.Berlin Internet Domain In Our Future?

Tuesday, June 28th, 2011

The dot.com era is moving on.  Websites will soon be able to end with anything from “.shop” to “.canon” after the group that manages Internet addresses approved the historic change.  The Internet Corporation for Assigned Names and Numbers (ICANN), which until previously allowed just 22 suffixes including “.com” and “.org,” will accept almost any word in any language.  The move could prevent cybersquatting, the practice of registering domain names and selling them to trademark owners, often for big bucks.  Big business may have to buy addresses to prevent their brands from being hijacked, which costs $500,000 per company, according to an estimate from the Coalition Against Domain Name Abuse.

“Today’s decision will usher in a new Internet age,” Peter Dengate Thrush, chairman of ICANN’s Board of Directors, said in the statement.  “We have provided a platform for the next generation of creativity and inspiration.”  Applications for custom suffixes, which will cost $185,000, are not inexpensive and the first of these “top level domain names” won’t go live until the end of next year, said Adrian Kinderis, a member of Icann’s advisory council.  Canon, Deloitte and Hitachi Ltd., are some of the companies that are interested in company domain names, while generic names will be auctioned to the highest bidders, Kinderis said.

Icann has opened the internet’s addressing system to the limitless possibilities of the human imagination,” said Rod Beckstrom, president and chief executive officer for ICANN.  “No one can predict where this historic decision will take us.”  There is the possibility that several hundred new generic top-level domain names (gTLDs) will be created, which could include such addresses as .google, .coke, or even .BBC.  At present, there are just 22 gTLDs, as well as approximately 250 country-level domain names such as .uk or .de.  According to industry analysts, it’s a price that global giants might be willing to pay to maximize their internet presence.  The money will cover costs incurred by ICANN in developing the new gTLDs and using experts to scrutinize the thousands of expected applications.

Companies and organizations that want one of the new gTLDs will have to meet high technical standards, according to Bruce Tonkin, chief strategy officer at Melbourne IT, a domain registry service.  “You need IT robustness and you need intellectual property protections beyond what is available in the dot com space.  You have to have 24/7 abuse team.  You have to have mechanisms where a trademark holder has first right to get their name,” he said.  The higher standards, Tonkin said, translate to an extremely rigorous application process.  “Using a real estate analogy, it would be roughly the equivalent of getting approval to build a skyscraper.”

Japanese electronics giant, Canon, plans to apply for rights to use domain names ending with dot-canon.  Berlin, Germany, has expressed interest in a dot.berlin suffix.  Other suffixes could organize the Internet by language, geography or industry.  According to Brad White, ICANN’s director of global media affairs, opening the Internet address system will have far-reaching social and commercial impact.  “It will afford a possibility for innovation, creativity, branding and marketing.  We can’t fully predict the impact that this change will have, but we know it will have tremendous impact, in much the same way that nobody could predict social media.  Nobody could predict the popularity of Skype.  No one could predict the popularity of Facebook or Twitter. What we have done is removed a barrier to innovation,” White said.  “One of the biggest changes that this will mean to the Internet is an expansion of the use of non-Latin characters.  So, people who speak Cyrillic, or Arabic or Chinese can now use their own generic top-level domains at the end of an Internet address.  It will vastly, we believe, increase the number of Internet users.”

Brands need to act now if they want to apply for one of these new domain names as it is not as simple as registering a .com address. ICANN’s application fee is $185,000 USD and the application process is complex, requiring a submission which will run into hundreds of pages. Many companies will engage with a specialist to help them apply and manage their new TLD,” said Theo Harakis, chief executive of Melbourne IT Digital Brand Services.  Sebastian Bachollet, an ICANN board member, expresses confidence with the decision.  “Some people feel that the new gTLDs will cause confusion…I trust we have the tools to ensure the phase of stress will be brief,” Bachollet said.

ICANN’s announcement that it is setting aside $2 million to help developing countries is little consolation for the pay-to-play nature of the process.  According to ICANN, it expects as many as a thousand applications, mostly from recognized companies and brands.  Eric Mack in PC World says that “It appears that the greatest expansion of the domain name system is a big win for big business, amounting to the digital codification of today’s corporate giants.  But won’t it seem a little silly if, in five years, Canon, is part of a merger or undergoes a name change, or disappears from our lexicon for some other reason — and one of the world’s newest domain endings becomes worthless overnight?”