Powerset sold to Microsoft

Powerset, the semantic search engine that created a lot of buzz is sold for a reported $100 million, according to Venture Beat.

Facebook turns to gearing to buy more gear

The joke among scalability professionals is that Facebook runs on Rails because of its need to keep throwing money at its scalability issues. There are some rumors about Facebook's poorly chosen network based partitioning (sharding) strategy. Facebook has now announced
that it will be borrowing $100 million to buy approximately 50,000 servers. This will significantly raise Facebook's gearing ratio bringing it closer to being a high geared company.

Facebook is not the only one with massive need for servers. Business Week quotes Forrester Research's Frank E. Gillet who estimates that Google is consuming as much as half a million servers each year whereas Microsoft is buying close to 200,000 servers a year.

As several media sites have reported, capital expenditure like this is an ideal reason for not diluting equity. Jim Labe, CEO of Triple Point, a company that specializes in lending venture money to start ups, tells Business Week:

“ The last thing the entrepreneur wants to do is see those precious equity dollars flowing into equipment purchases. It's a very unproductive use of equity to plow it into fixed assets.”
However, many industry pundits ponder whether this indicates Facebook's trouble in raising more venture capital. Some even wonder whether Microsoft over-valued Facebook with its $240 million investment for a 1.6% stake in the company. CNN raises a similar question as to why Microsoft isn't buying Facebook.

The Strategy Chronicles #1

This is the first edition of a new series of blog posts that I will try to write regularly (no hardcore promises though). I will be calling it, for the lack of better imagination and because it's 3:09 in the morning, The Strategy Chronicles, or TSC. The primary purpose of this series is to help me keep track of what's happening each week. So whether you liked it or hated it, please let me know. So, let's get started.

Microsoft makes Yahoo! investors very unhappy: At least some of the Yahoo! investors are now worried about an increased Microsoft bid to acquire Yahoo!. The primary reason being that there are several Yahoo! investors who are also Microsoft investors. Separately, several share holders are blasting Yahoo! for rejecting Microsoft's bid.

Yahoo! losing another ground: Opera has now decided to dump Yahoo! in favor of Google for its mobile browser.
- "every month, Opera Mini users browse more than 1.7 billion pages"
- most of the page views were related to search. Yahoo! has a serious relevancy problem in addition to the problem of effectively monetizing its search traffic. I can see how easy it was for Opera decision makers to ditch Yahoo! in favor of Google.
- Google has been Opera's choice for desktop browser for 7 years.

Even more troubles for Yahoo!: Remember the time when Yahoo! handed over the information about its Chinese users to the authorities? Well, that issue continues to haunt Yahoo! as yet another lawsuit was filed against the company by its Chinese dissidents. Yahoo!'s submitted evidence lead to one year imprisonment of a plaintiff.

Finally!: Meanwhile, Google has finally re-launched JotSpot as Google Sites. Exactly how that will hurt Microsoft's similar initiatives is yet to be seen, however the outlook according to the media, doesn't look so promising as far as Microsoft is concerned.

Clean console!: Consumerist reports about an incident where a passionate Xbox user lost his beloved collection of autographs and custom artwork drawn on the console by prominent members of the gaming community. Perhaps, the Microsoft employee responsible for this thought the collectible autographs were making the Xbox unit look dirty.

Bill Gates now LinkedIn!: Facebook's loss is LinkedIn's gain. Bill Gates recently quit Facebook despite Microsoft's recent investment in the social networking powerhouse, and decided to start a profile on LinkedIn. Once his profile was created, Gates then asked a question that received more than 1,000 answers. Interestingly enough the same day I noticed the featured question, Facebook changed their site's theme.

Sliding the Social way!: Slide, the media and gadget distribution powerhouse announced recently that it will create new applications to for MySpace users using MySpace Developer Platform. This could increase Slide.com's profile and reach significantly. Earlier this year, Slide announced that it raised $50 million in its latest funding round.

Microsoft's hostile bid now jeopardizing Yahoo!'s future?

A lot of chatter in the news about the negative effects Yahoo! is experiencing because of Microsoft's hostile bid earlier this year. The bid left a lot of uncertainty as far as employees of Yahoo! are concerned.

In Yahoo!'s SEC filing, the company is not shy of explaining what Microsoft's bid is doing to the company. The filing

Microsoft’s unsolicited acquisition proposal has created a distraction for our management and uncertainty that may adversely affect our business.

Microsoft’s unsolicited acquisition proposal has also created uncertainty for our employees and this uncertainty may adversely affect our ability to retain key employees and to hire new talent. Microsoft’s unsolicited acquisition proposal may also create uncertainty for current and potential publishers, advertisers and other business partners, which may cause them to terminate, or not to renew or enter into, arrangements with us. Additionally, we and members of our Board of Directors have been named in seven purported stockholder class action complaints relating to the Microsoft proposal as more fully described in Part I, Item 3 “Legal Proceedings” of this Annual Report on Form 10-K. These lawsuits or any future lawsuits may become time consuming and expensive. These consequences, alone or in combination, may harm our business.

Regarding the volatility of Yahoo!'s stock:

We further believe that, as a result of Microsoft’s unsolicited acquisition proposal, and speculation concerning a potential acquisition, the future trading price of our common stock is likely to be volatile and could be subject to wide price fluctuations. There can be no assurance whether a transaction will occur or at what price. If a transaction does not occur, or the market perceives a transaction as unlikely to happen, our stock price may decline.

Yahoo!'s brain drain problem may have also intensified due to the company's planned layoffs announced earlier this year.

Secret Backdoor in Dual_EC_DRBG (New Encryption Standard)

In an eye-opening post, Bruce Schneier describes the very scary back door that exists in a New Encryption Standard being put forward by NSA. Equally interesting is this PDF presentation that explains the back door in detail.

Even if no one knows the secret numbers, the fact that the backdoor is present makes Dual_EC_DRBG very fragile. If someone were to solve just one instance of the algorithm's elliptic-curve problem, he would effectively have the keys to the kingdom. He could then use it for whatever nefarious purpose he wanted. Or he could publish his result, and render every implementation of the random-number generator completely insecure.

So what do you have to worry about? Microsoft is adding this standard of random number generator in Windows Vista SP1. Here's Bruce's post.

Mi8 charging $20 per spam filter request?

I just found out recently that Mi8 charges around $20 per spam filter request submitted to them for Microsoft Exchange hosting. I am sure they have their reasons but why don't they equip their customers with an API so they can do it themselves?

Vista DRM: Security Researcher claims he "cracked" Vista DRM

I thought that tag was pretty funny. Don't you just love Slashdot?

Read the full story "Vista DRM Cracked by Security Researcher" on Slashdot.

On a serious note: that's not a very good news for Microsoft.