Category Archives: Internet and Online Business

Facebook to buy facial-recognition startup: sources

Facebook Inc is paying $US55 million to $US60 million to buy, according to people familiar with the matter, acquiring the company that provides the facial-recognition technology used by the world’s largest social network to help users identify and tag photos.

The deal bolsters one of Facebook’s most popular features – the sharing and handling of photos – but the use of the startup’s technology has spurred concerns about user privacy.

The No. 1 social network will pay cash and stock for, potentially paying as much as $US60 million, two sources with knowledge of the deal said. Media reports in past weeks have pegged the transaction at $US80 million to $US100 million.

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Neither Facebook nor disclosed terms of the deal, which is expected to close in coming weeks.

Facebook, which will acquire the technology and the employees of the 11-person Israeli company, said in a statement that the deal allows the company to bring a “long-time technology vendor in house”., which has raised nearly $US5 million from investors including Russian web search site Yandex, launched its first product in 2009. The company makes standalone applications that consumers can use to help them identify photos of themselves and of their friends on Facebook, as well as providing the technology that Facebook has integrated into its service.

Facebook uses the technology to scan a user’s newly uploaded photos, compares faces in the snapshots with previous pictures, then tries to match faces and suggest name tags. When a match is found, Facebook alerts the person uploading the photos and invites them to “tag”, or identify, the person in the photo.

Responding to inquiries from US and European privacy advocates, Facebook last year made it easier for users to opt out of its controversial facial-recognition technology for photographs posted on the website, an effort to address concerns that it had violated consumers’ privacy.

The deal is the latest in a string of acquisitions by Facebook in recent months, including the $US1 billion acquisition of mobile photo-sharing service Instagram. US antitrust regulators are undertaking an extended review of the Instagram deal, which Facebook expects to close by the end of the year.

Shares of Facebook, which continue to trade below the price at which they were offered during the initial public offering in May, closed Monday’s regular session up 4.7 per cent at $US31.41.

[This article was originally published on The Sydney Morning Herald on 19 Jun 2012]

The Social Network

** The statistics are from Pew Research Center’s Internet& American Life Social Network Site
Is reading Twitter one of the first things you do in the morning? Updating a Facebook status a “oh-so-very-important thing” in the to-do list of your day? Remember the last time you spent a day without these Social Networking Sites (SNS) being an essential element? No? Well you are not alone! Studies have shown that the number of the people who are using the SNS have doubled since 2008.Started as an easy way to communicate and “stay-in-touch”, these SNS have accelerated towards transmogrifying our lives. Social sites have had a great impact on not only the current generation but also anyone who feels the need to be in touch with his dearies and keep them updated. And when you are not chatting , you can pick from the plethora of games ! Communication eased, fun multiplied –these SNS come with a complete package! Facebook, Twitter, MySpace, LinkedIn are dominating our lives like nothing else before!
Facebook is the universal social networking site and I hs the highest share of user’s daily visit. Facebook dominates the SNS space in this survey**: 92% of SNS users are on Facebook; 29% use MySpace, 18% used LinkedIn and 13% use Twitter.
There is considerable variance in the way people use various social networking sites: 52% of Facebook users and 33% of Twitter users engage with the platform daily, while only 7% of MySpace and 6% of LinkedIn users do the same.
SNS provide an opportunity to the user of “friending” people. That friend might be a” traditional “ friend or an old acquaintance from school or very casual connection between people who have never really met in person. This sparks off the debate that whether these SNS have made the people more isolated from the “real world” and demeaned the social relations or are they helping in expanding and enriching a person’s social circle?
According to sources ** internet users average 14% more discussion confidants than non-users. Those who use instant messaging service average 12% more core confidants than other internet users or 25% more than non-internet users.
The use of SNS in general was not found to have a negative relationship with the number of overall close ties. However frequent users of Facebook have larger core networks . For eg, someone who uses Facebook a few times per day tend to have about 9% more strong ties.
The largest single group of Facebook friends consists of people from high school(22%) followed by extended family (12%) , coworkers(10%) ,college(9%),immediate family(8%). A very small no. of Facebook friends are people that we might refer to as strangers. The average Facebook user has never met in in person with 7% of their Facebook friends. Additional 3% are the ones they have only met once .
While most of the people only let a very small have a very small number of people in the list of their close social ties, a large section maintain these using SNS . 40% of SNS users have friended all of their core confidants ,an increase from 29% in 2008.
The numbers do tell us a story, but the story of this SNS experience is best told by “us” , who are the part of this phenomenon. It has affected our lives in more ways than one .Effortless communication and not just that remember the ecstasy of finding a long lost friend or the joy of sharing pictures and enjoying those sweet old memories!
SNS also provides a huge marketing platform. Be it celebs or social activists, everyone is hopping in the SNS bandwagon. More people are reached, more ideas conveyed, more messages delivered, more memories relived , more products marketed ! There is something for everyone !!! It is impossible to not come something interesting or informative on the social media. It has also steered the way for a newer revenue opportunities.
Social media has benefitted almost everyone who has been careful enough to walk on the safer paths of internet usage. These social networks have their own shades of white and grey, but our world would never be the same without them !!! 

Are luxury fashion products suitable for e-retailing?

The luxury fashion industry is a global multi-billion dollar sector comprising of a multitude of brands with high relevance. Among these are brands like Louis Vuitton, Hermès and Gucci. They are also among the most valuable and influential brands in the world. Despite the large size and income generation of the global luxury fashion industry, the sector has witnessed a slow growth in its strategic business direction. This is because for a long time luxury brands were managed through traditional business methods where decisions were made based on intuition and sometimes on a trial basis. These traditional methods also featured a strong focus on product development and publicity generation through conventional advertising methods. However, the rapid development and complexity of the global business environment currently requires modern and sophisticated business practices in luxury goods management.

Present Situation:

In December 2009 the journalist Marie-Louise Gumuchian, wrote that luxury consortiums are concentrating on winning clients as they arise from the worst economic crisis in decades.  According to the consulting agency Bain & Company and their annual study Luxury Goods

Worldwide Market, they expected sales to drop 8 % to € 153 billion, for the year of 2009.

The authors of the earlier mentioned report foresee that a full recovery of the luxury market will not take place until 2011, but then the growth will be 4.2 % for the whole year.

The demand for global luxury online sales is on the increase. Recent reports indicate that the wealthy are almost all online and are pleased with making online purchases. In most developed economies, Internet penetration is as high as 95% and the ratio of wealthy people who have bought products worth above $250 online versus the rest of the population is 3:1. This has given rise to the question of selling luxury goods online.

Brand integrity and brand dilution

The hardest part for a luxury fashion brand is to balance the sales volume, the profit and the brand integrity. If this balance is not upheld there are several risks; selling too few products minimizes profit opportunities, selling too many dilutes the brand. Another problem is that the changes occurring in brand integrity and image do not happen all at once, they occur over a long period of time, this is why brands are often tempted to over-supply and when doing so it is easy to fall in the trap.

Luxury branding online/brand integrity online

In later years the Internet has been given a fundamental part in the marketing and communication strategies of many luxury brands. For many luxury brands the Internet is a very good media for accessing, organizing and presenting information directed towards their suppliers and consumers. The websites of the luxury brands present online today  differs a  lot in interactivity, level of consumer service, personalization, style, design and experience giving. Many different tactics and ways of presenting information online are tested by luxury brands regularly, but few seem to have really found  the exceptional way of doing it.

Researchers Riley & Lacroix (2003) say  that  the  Internet can be very effective as a communication medium for luxury goods mostly due to these products having high costs, low purchase rates and high value with high differentiation characteristics. On the other hand, since luxury products often are products where the buying experience is a large part of the buying decision, the Internet might be better as a source of information than as a selling channel.


The Internet is an important factor for these brands in order to reach a global consumer group, as mentioned earlier. Since the fashion trends are becoming more global, the brands can to a greater extent offer the same products to a bigger market, therefore is the Internet a suitable and convenient tool. For the brands is the Internet also a tool to keep a high level of band equity and a way for creating many opportunities for developing deeper consumer relationships.

To sell luxury products online has been a subject of a varying discussion. There are those that who think that e-retailing has a negative impact on the core attributes of luxury brands, like prestige and exclusivity. Another argument is that luxury products heavily relies on aesthetics and sensory factors at their sale points and therefore questions the ability to recreate this on the Internet. Okonkwo (2007) indicates however that recent advancement in e-retailing, as tools and techniques, has made selling luxury products online practical. It is therefore now vital for luxury brands to be online to be able to compete on the global market. The Internet has also made it possible for consumers all over the world to get access of the same information at the same time, thereby have their desire for more information and purchase possibilities increased. The assortment for luxury consumers has expanded greatly through the Internet. Consumers are now used to have access to product in this way and have therefore become more demanding and impatient. Product accessibility has for that reason become one of the key decision factors when buying luxury products.

The Asian market for fashion and apparel is expected to perform well in 2010, posting demand growth of almost 5% over 2009 and surpassing demand in Western Europe. The sector will continue to experience healthy average annual demand growth of about 5% through 2014.Luxury consumer behavior online

The group of consumers that buy luxury products online is growing fast and steadily, according to Okonkwo (2007). They make recurrent purchases in those luxury web-shops that exist today. These consumers are also more willing to do continuous purchases online than offline. However, the consumers most likely to buy luxury products online are those with earlier contacts with the brands. This is due to consumers being affected by their earlier shopping experiences, both offline and online. If consumers already have a good brand experience it enhances their evaluation process whether or not to buy the product online.

As emerging markets mature, consumption of luxury goods is no longer restricted to upscale department stores and boutiques. Electronic sales of luxuries via computers and mobile devices are expanding and becoming very profitable. Luxury brands were challenged to develop long-term digital strategies by accommodating e-commerce and m-commerce demand. New electronic luxury retailers have successfully entered the elite markets and continue to succeed in shifting the business away from the luxury retail locations in urban brick-and-mortar stores. Competition has created the phenomenon of discounted luxury, escalated by the global recession in the Western world and strong demand in the emerging economies where consumers eager to celebrate their new wealth by buying designer labels. Though luxury goods are available there for a several years, they mostly have been distributed by the middlemen and are out-of-season.

Is Mozilla Punting on Web Apps for Linux?

From the ‘Mozilla Isn’t a Linux Vendor’ files:

While Mozilla is a leading light in the open source community, every so often I’m reminded that the same isn’t always true in the Linux community.

There has been an ongoing thread over the course of the last week about Mozilla’s lack of initial support for the Web Apps Marketplace on Linux.

That’s right folks, the same group that is now (rightly) attacking Microsoft over the initial lack of access for browsers on Windows RT, isn’t initially supporting Linux for Web Apps.

Mozillians have tried to defend, Mozilla lack of initial support for Linux.

“Linux support for apps is a nice to have because most of our users are not running Linux,” Mozilla staffer Dan Mills wrote. “I think we’re supportive and absolutely willing to accept patches to make something work on Linux, but it’s just not something that affects the 80% (I don’t think it’s even 10%, though I don’t have any data handy). By definition, this is a nice to have, not a stop-ship feature. Remember that we are making software for a lot of people, and staff and community are actually a tiny slice of the userbase. I know it’s hard, but we need to focus on the userbase at large, not on us.”

Thankfully, I’m not the only one that finds that view somewhat — distasteful. Mozilla community member Ruben Martin wrote:

Linux is not another platform, it’s the platform which shares our values about being open and the reason most people gets involved with mozilla, because they believe in libre software and in the open web. Not supporting linux is not supporting a big group of people that empowers mozilla, and not supporting them/us is not supporting mozilla.


The discussion led to an equally disturbing comment from Mozilla’s Asa Dotzler who seemed to imply it’s a resource issue that Mozilla (with its millions of Google dollars) doesn’t have the people to allocate for Linux development. Dotzler wrote:

What we need most, I suspect, is available Linux coders, people who know Gnome, Unity, GTK, etc. to do the platform integration work. I don’t know who those people are. Looking around the sub-set of community members employed by Mozilla who could help on this, I don’t see any available resources or even any resources I would move from their current work to this work.

Thankfully, Mozilla is not made up of people that share the same world view of Linux as Dotzler. Mozilla CTO, Brendan Eich knows how important Linux is to Mozilla’s wider efforts and in my view he has been the voice of reason on the subject of Linux support. Eich wrote:

Indeed the whole apps, marketplace and web runtime plan is too large to do at one step, or even with platform parity at the first step. That does not mean we give up our cross-platform commitments.

We support Linux as you say, because of our cross-platform principles first, and because of lead users in the Linux community and among our top Gecko hackers. There’s a nexus: B2G is based on Linuxand Gecko, but of course without any Linux desktop (and without X-Windows. This is a good thing!).

So what does this all mean?

It means that Linux is not the number one priority for Mozilla (today) and it’s likely a third class citizen behind Windows and Mac. That said, I know full well that Red Hat (and likely other Linux distros too) have some dedicated resources that are focused on Firefox as it is the primary browser in use by default on Linux today. I just wish that Mozilla, instead of focusing on the world as it is, also took aim at helping to advance Linux for the open desktop world that we want. Perhaps with B2G, that will happen…


Facebook’s Prospects May Rest on Trove of Data

SAN FRANCISCO — Mark ZuckerbergFacebook’s chief, has managed to amass more information about more people than anyone else in history.

Now what?

As Facebook turns to Wall Street in the biggest public offering ever by an Internet company, it faces a new, unenviable test: how to keep growing and enriching its hungry new shareholders.

The answer lies in what Facebook will be able to do — and how quickly — with its crown jewel: its status as an online directory for a good chunk of the human race, with the names, photos, tastes and desires of nearly a billion people.

Facebook’s shares are expected to begin trading as early as this week. Already, lots of investors are scrambling to buy those shares, with giddy hopes that it will become a big moneymaker like Google. Because of that high demand, Facebook is expected to increase its offering price from its initial range, giving the company a valuation possibly as high as $104 billion.

In the eight years since it sprang out of a Harvard dorm room, Facebook has signed up users at breakneck speed, kept them glued to the site for longer stretches of time and turned a profit by using their personal information to customize the ads they see.

Whether it can spin that data into enough gold to justify a valuation of as much as $104 billion remains unclear.

“We know Facebook has an awful lot of data, but what they have not worked out yet is the most effective means of using that data for advertising,” said Catherine Tucker, a professor of marketing at the Sloan School of Management at the Massachusetts Institute of Technology. “They are going to have to experiment a lot more.”

Analysts, investors and company executives can rattle off any number of challenges facing the company. As it works to better match ads to people, it has to avoid violating its users’ perceived sense of privacy or inviting regulatory scrutiny. It needs to find other ways to generate revenue, like allowing people to buy more goods and services with Facebook Credits, a kind of virtual currency. Most urgently it has to make money on mobile devices, the window to Facebook for more and more people.

All the while, its ability to innovate with new features and approaches — to “break things,” in the words of Mr. Zuckerberg — may be markedly constrained once it has investors to answer to.

“They are going to have to think about whether they can continue with the motto ‘Done is better than perfect,’ ” said Susan Etlinger, an industry analyst at the Altimeter Group. “When you’re operating as a public company, life is very different. We haven’t seen that play out yet. It’s going to take a few quarters to figure out what a public Facebook is going to look like.”

Skeptics point out that the company’s revenue growth showed signs of slowing in the first quarter of 2012. And a Bloomberg survey of 1,253 investors, analysts and traders found that a substantial majority were dubious about the eye-popping valuation Facebook was seeking. “It’s a risky asset. No doubt about that,” said Brian Wieser, of Pivotal Research Group. “Google was less risky.” No matter. Mr. Wieser says he thinks that Facebook is worth $83 billion and that its revenue will grow by at least 30 percent for the next five years.

The comparisons to Google are inevitable. When that company went public in 2004, there were so many doubters that the company lowered its offering price to $85 a share. It closed at just over $100 on the first day of trading, and now sells for more than $600. Facebook is farther along than Google was in terms of revenue, having brought in nearly $4 billion last year, or $5.11 a user, compared with Google’s $2 billion in 2003.

One Facebook investor, who spoke on the condition of anonymity because of market regulations as the offering draws near, noted that when Google went public it already had a clear business strategy. By contrast, he described Facebook this way: “They have built an incredibly valuable asset — as opposed to a business they have executed well.”

The most pressing issue for Facebook executives may be the mobile challenge. Already, over half of Facebook’s 901 million users access the site through mobile devices. In regulatory filings, the company says mobile use is growing fastest in some of Facebook’s largest markets, including the United States, India and Brazil. Facebook goes on to acknowledge that it makes little to no money on mobile and that “our ability to do so successfully is unproven.”

There is not much space on mobile screens to show advertisements. And Google and Apple, two of Facebook’s biggest rivals, control the basic software on most smartphones, which could make it harder for the company to make inroads there. Facebook’s response to this challenge so far has been to aggressively acquire companies focused on mobile, including Instagram, for which it paid $1 billion in April. But it warned in a revision to its offering documents last week that the mobile shift meant it was adding users faster than it was increasing the number of ads it displayed.

What Facebook already has — more than any other digital company — is a spectacularly rich vault of information about its users, who cannot seem to stay away from the site. Americans, on average, now spend 20 percent of their online time on Facebook alone, thanks to the ever-growing menu of activities the company has introduced, from playing games to sampling music to posting pictures of baby showers and drunken escapades. Some 300 million photos are uploaded to the site daily.

How Facebook exploits its users’ information — and how those users react — is the next reckoning. David Eastman, worldwide digital director for the advertising agency JWT, said Facebook would need to give marketers more data about what kinds of users click on what kinds of advertising, and about their travels on the Internet before and after they click on an ad. Most brands want to have a presence on Facebook, he said, but they do not quite understand who sees their pitches and whether they lead to greater sales.

“They need to make the data work more,” Mr. Eastman said. “They need to provide deeper data. Right now the value of Facebook advertising is largely unknown.”

While the bulk of Facebook’s revenue comes from North America, it is banking on international growth. The company has expanded its global footprint so rapidly that four out of five Facebook users are now outside the United States. It is the dominant social network in large emerging markets like Brazil and India, though it shows no signs of penetrating China — where it would face not only government censorship but stiff competition from homegrown social networks.

Mr. Zuckerberg, who has studied Mandarin, signaled his ambitions to crack the vast Chinese market as far back as 2010. He suggested that Facebook would first try to advance deeper into markets like Russia and Japan before it took on a country as “complex” as China.

With international growth comes international regulatory headaches. Facebook already faces audits in Europe on whether the company is living up to promises made to consumers about how it uses their data — and now, a stringent new data protection law. In India, it has been sued for spreading offensive content. And in the United States, it faces privacy audits by the Federal Trade Commission for the next 20 years. In its offering documents, Facebook repeatedly warns of legislative and regulatory scrutiny over user privacy, “which may adversely affect our reputation and brand.”

Maintaining brand loyalty is excruciatingly difficult in the Internet business. Across Silicon Valley, investors are plotting the next big thing in social networks. Already, the clock may be ticking for Facebook.

“There is no consumer-facing Internet brand or site that ever keeps consumers’ attention for more than 10 years,” said Tim Chang, a managing director at Mayfield Fund. “It is not hard to imagine that in 10 years, people are going to be off of Facebook even.”

Mr. Zuckerberg has an answer to that. In the video for investors released this month, Mr. Zuckerberg hinted at the ambitions he had for the company. Facebook, in his vision, will hook itself into the rest of the Web, making itself indispensable. Already Facebook serves as a de facto Internet passport, allowing users to log in with their Facebook identities and explore millions of other Web sites and applications.

“I think that we’re going to reach this point where almost every app that you use is going to be integrated with Facebook in some way,” Mr. Zuckerberg says in the video. “We make decisions at Facebook not optimizing for what is going to happen in the next year, but what’s going to set us up for this world where every product experience you have is social, and that’s all powered by Facebook.”