Carlos Domingo - Un poco de todo

When news broke on Friday that Microsoft was doing an unsolicited $44,6 billion takeover bid for Yahoo!, first I was not surprise because this rumor has been around for a while but what I was surprise about was the price they were willing to pay, $31 a share, half in cash and a premium of 60% to the current trading price. I thought that it was a very desperate move to be willing to pay that much premium and that it was a very large acquisition even for Microsoft. After looking at initial projections of synergies and size of combined business, it even made less financial sense. Strategically, it does make sense. The Internet business is a scale business, so the larger you are in terms of properties and eyeballs, the larger your inventory is, the larger the advertisement network you can create (see how happy Madison Avenue is about this) and the more efficient your R&D and infrastructure investments are. This is the power of network effects that Microsoft has mastered in the desktop and office applications space. Also, there are interesting, less obvious synergies in domains like Web email and instant messaging (with the possibilities that a social networking spin can add to those applications) where the combined company is going to have a very large market share. I think that people is very focused on search these days but they are underestimating that a large share of online advertisement is going to come from other non search properties and the combined Microhoo is going to be the market leader in most of them. Also, there are interesting regional synergies since Yahoo! is stronger in Asia and Microsoft in Europe and Latam so when the online advertisement market takes off in those countries to the level of the US, Microhoo will be better prepared to capture that revenue (again, except in search even though in China and Japan Yahoo! has a good position there as well). So back to the financials, why the huge premium? Apparently, Ballmer had made a friendly offer for Yahoo! few months ago that was reject by the board so looking at Yahoo! stock price, you can see that it has significantly drop in the recent months. In other words, Microsoft was ready to pay something around this price few months ago. Also, being this an unsolicited bid, they need to convinced a large amount of shareholders to go along and therefore, you need to pay a premium not only above the current price but above the average price for the recent period. Yahoo! stock has been trading between $35 and $25 during the last two years. So $31 is probably the price they have calculated to get a sufficient number of shareholders happy to go along the bid. As for how to pay this, Microsoft has no long term debt, generates close to $20 billion in cash flow from operating activities a year, and has a market cap of $280 billion (after a 6% drop on the news on Friday) so they will be paying less than 10% of that in shares. Summarizing, they can easily afford it. The other interesting financial point is that the revenue of the combined company will be less 10% of Microsoft total revenue so this shows their understanding that the future is the Internet and even if they manage to keep a decent cash flow generating business (actually, a great one in fact) from Windows, Office, enterprise apps and Xbox, they still need to be a leader on the Internet to protect the future of the company. So in my opinion, a great, bold, forward looking move from Microsoft.

CD

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El proyecto CP Labs acaba de anunciarse públicamente hoy (post de David anunciándolo aquí). En el pasado Campus Party de Valencia algunos os preguntaríais que de donde salía una area como de chill out con tiras negras que estaba en uno de los pabellones donde ponía CP Labs (ver foto). Pues bueno, era el primer teaser de un proyecto con el que llevábamos tiempo discutiendo con el verdadero artífice de todo esto, Paco Ragageles, fundador y alma mater de la Campus Party. Al poco de entrar en Telefónica, hacia finales del 2006 dos personas con las que sintonicé inmediatamente (Patxi y Alejandro, los insiders de Telefónica ya sabéis a quien me refiero) me comentaron que tenia que conocer a Paco cuanto antes. Nos pusieron en contacto y al poco lo visitaba en sus oficinas de Madrid y me ametralló con su visión de Internet, ideas, propuestas, y mil cosas para hacer conjuntamente y lo que me quedó claro desde el primer momento es que la comunidad de campuseros con Paco al frente (y Beli, Alejandro, David, Richard, y los otros miles de asistentes, no nos olvidemos del resto) eran una comunidad super innovadora, llena de ideas, de energía y de ganas de hacer cosas con la que nosotros, como representantes del área de Internet y Multimedia de Telefonica I+D y cheer leaders de la innovación en Telefónica, nos teníamos que relacionar mas profundamente. Nuestra primera colaboración surgió ya en la Campus del 2007 (modesta, sacada adelante gracias a la iniciativa personal de algunos de mis compañeros) y este año haremos mas cosas y mejor (Alberto y demás compañeros, es vuestro reto). Poco antes ya discutimos el proyecto que ahora se anuncia de CP Labs, la creación de una plataforma que una a la comunidad de campuseros mas allá del evento de cada verano en Valencia y que les permita articular las muchas iniciativas innovadoras relacionadas con las nuevas tecnologías para ver cuales se pueden sacar adelante. Vamos, open innovation en estado puro. Arrancar esto no ha sido fácil pero se ha conseguido convencer a las personas adecuadas y el que Telefonica I+D este oficialmente apoyando esta iniciativa me alegra muchísimo y demuestra los cambios que se están realizando en la compañía. Felicidades a toda la gente que ha hecho de este proyecto una realidad y ahora, a hacer de esto un éxito. De momento se empieza con unos concursos para animar a la comunidad a empezar a participar con ideas sobre temas concretos, unos foros, los open labs para testear productos (espero pronto meter alguno de los nuestros) pero vendrán mas cosas así que apuntaros cuanto antes. Esta semana he estado cenando con Paco y a parte de los CP Labs está llevando el concepto de Campus Party por el mundo, este año ya arranca en Brasil, Colombia, Grecia y por supuesto sin olvidarnos de Valencia así que a ver si el CP Labs tiene el éxito que ha tenido Campus y se extiende también por otros países, en las manos de vosotros, la comunidad de innovadores, está el hacer de esto una realidad.

CD

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One of the most interesting events from last year 3GSM conference in Barcelona (now renamed Mobile World Congress) is back in the city. The Mobile Monday Awards are going to be held on Monday 11th of February at 2:30pm in the brand new Espacio Movistar. Many thanks to my colleagues from Telefónica Móviles for sponsoring and providing the venue and to Rudy and the team for putting together an excited program, I hope that this becomes a tradition. This year the format will be slightly different but I do not want to steal the thunder from Rudy so just say that Mr. Pekka Ala-Pietila, former president at Nokia Corporation and currently chief executive officer of Blyk Corporation, a virtual mobile operator in the UK, will be one of the keynote speakers together with Luis Jorge Romero, the director of Innovation and Standard at Telefónica Spain. Like last year, I will be at the jury of the awards so if you want to get to know the hottest mobile startups (finalist are now being picked in each city) please drop by and say hello.

CD

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In the web, there is something known as a the "digg effect". It means that one of your blog posts gets  lots of diggs and makes it to the digg home page, suddenly you see a huge increase in traffic. I was having dinner with Pablo and both have just experience what I now call the "Ciberpais" effect. We got  featured in an article in El Pais section El Ciberpais and we have both experience a huge growth in traffic since the article mentioned our blogs and web sites and provided the URLs. I am in the middle of migration my blog from carlosdomingo.blogs.com to www.unpocodetodo.com (the article mentions the title of my blog and provides the new URL at the end). Since a vanity Google search on my name provides my old blog as the first hit (my new one comes 6th at the moment, I see this changing quickly), I have actually experience large traffic growth in both URLs. So an interesting new local phenomenon.

Anyway, since I am talking about the article, let me self quote me (in Spanish) since I love this sentence that Tomas picked for the article: " Telefónica es una multinacional que no puede contentarse con ser una fast-follower, un segundón que hace seguidismo diligente de lo que inventan otros. Tiene que liderar la innovación y sabe que ha de contar con gente nueva que se ha enfrentado a otras culturas, mezclar perfiles, que haya nuevas ideas, que no castigue el fracaso cuando se toman riesgos…"

Another funny anecdote that happened tonight with Pablo is that after dinner we went to a bar and had a very heated discussion about whether in Imagenio you should move more processing and intelligence to the network or you should enhance the processing and storage power of the set top boxes. This is a very interesting discussion that I should write about when I get some time. While having this discussion, a guy approached us and asked why we were talking about Imagenio and we said that we work at Telefónica R&D and were involved with the product so we were having a discussion about their future (yes, Pablo and I are true weeks that go out drinking on a Friday night and ignore all the girls around and discuss about the future of Imagenio). Then the guy recognized Pablo and mentioned his name so I asked him why he knew Pablo. "Because I work at Telefónica R&D Barcelona" he said so I asked whether he also knew me. He first said no and then it took him a while to realize who I was and recognize me. Apparently because I was wearing jeans and a jumper and not a suit and a shirt like at work he just did not recognize at first….

CD

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As part of my visit to San Francisco yesterday we went down to MountainView to spend some time with Google. I was in the Googleplex several years ago and first thing you notice it how many new buildings are in the campus and how complicated is to find your way around. After reaching building 44 where our meeting was being held (no, there aren´t 44 buildings but apparently the numbering is not consecutive and does not start with one), you could see all the stereotypes that you have heard so many times about Googleplex. The lava lamps, the motor boards for employees to move around campus, the massage chairs, the free drinks, the casual and cool atmosphere, etc. The meeting was very good and insightful, I am excited about what they are doing in mobility, specially Android and their view of how the mobile Web will converge with the Web and there will be only one in the near future. We were told about the recently published statistics of huge iPhone traffic in Google properties which reinforces the notion that people with a good phone that provide a good navigation experience with a reasonable flat rate will use the Internet on the go. I am a living proof of that in spite of having a really poor EDGE connection with my iPhone. Another cool thing that I saw was a display with the earth rotating that was displaying in near real time all the mobile searches that Google was receiving in each part of the word, each color representing a different language and the density and high of dots representing the amount of queries being received. It was weird as the part from Spain had most of the dot columns in Madrid and somewhere in the North near Galicia…(see picture below).

Then we headed to MacWorld, it was a short visit but I had to see the MacBook Air and the booth of my former company Extensis (their new booth is really cool and they were finally showcasing the new version of their server product, codename Mystique, and I got a demo, good work!!). MacWorld looks bigger than before, the registration is now in a separate building at the Moscone Center but the booths of the companies traditionally targeting the creative professional space and exhibiting there like Adobe or Quark are getting a lot smaller than they used to, lots of consumer oriented companies there, a trend that has been happening since the iPod took off and that now has gone further with products like the iPhone or Apple TV. Talking of which, I saw the upgrade announced at MacWorld has a gorgeous interface and if they continue improving that product is going to be a killer. At $229 (150€) I am actually thinking about taking one back to home if I have some time for shopping before leaving. The Macbook Air is also very cool, extremely thin, with a large mouse pad that does some of the multitouch tricks that the iPhone does and is very, very light. I uploaded more pictures here. Btw, is anyone having problems uploading pictures to Flickr? I am trying with both the Flickr uploader and Windows Live Picture Gallery (I am starting to really like that product) but with both products my pictures get rotated when uploaded and then I have to manually fix them in Flickr, a very painful procedure. Need some help here.

CD

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Yesterday while I was checking Facebook I got an advertisement in the News Feed that was announcing a new application created by Facebook to help with the translation of Facebook in Spanish. I closed the browser tab before taking a screen shot but after searching a bit around I found other users that have received the same notification, below is a screen shot from a blog post from a Facebook user that got the same invitation.

While it is pretty cool that Facebook is finally being localized in Spanish, I think that considering the amount of money that they have, how little text there is in Facebook compared to other apps and how much upside in users (and therefore, advertisement revenue) they can get from having a properly localized version in Spanish, it is pretty lame that Facebook will use crowdsourcing for getting this work done. Crowdsourcing should be left for tasks where you really need a lot of people doing small tasks and that require continues refinement and contribution (Wikipedia, Flickr or delicious tags, etc.).

Facebook has only a bit over 200K people in the Spanish network and Facebook Insight (the app that helps prepare your target advertisement in Facebook) lists 270K people in Spain older than 18 years old, so very low numbers. And this is just Spain, I guess in all the Latinamerican countries the situation is similar and therefore, the potential upside even higher. Also, I do not see any potential local competition at least in Spain. So I think that they could have well spent money on hiring a professional translator and do this important task in house and in a timely manner and not using Facebook users for that. They are also running the risk of alienating users if they feel used improperly, they already did that with Beacon but it seems that they have not learn from their mistakes.

CD

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Not that long ago, few years ago, when I was very much involved in data analysis and data mining, talking about terabytes was talking about a lot of data and most people did not even know what a petabyte was. Now, you can buy a terabyte of storage in consumer stores (just saw it in Bic Camera in Tokyo) and Google is processing 20 petabytes of data per day!!! Think that from one terabyte to a petabyte is one order of magnitude bigger, which means a lot bigger. No matter how long I am in this industry, the pace of change and evolution will never stop amazing me….

CD

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Hola, mi amigo Vicente del11822 me pasa por Facebook esta iniciativa que me ha parecido suficientemente buena y original como para diseminarla aquí. Están construyendo un coro para felicitar la Navidad cantando juntos La Marimorena y recaudar 11822 euros para el Proyecto Proniño de la Fundación Telefónica que lucha para erradicar el trabajo infantil en Latinoamérica y lograr que estos niños además se puedan educar. En Latinoamerica, más de 17 millones de niños y niñas trabajan en lugar de ir a la escuela y ante esta situación, Fundación Telefónica ha puesto en marcha Proniño y esta iniciativa se une para ayudar al proyecto. La idea es que se tiene que conseguir que 11822 personas suban su foto al coro que se ha creado en la URL www.elcorodelas11822voces.com y cuando se consiga donara 11822€ al proyecto. 

Yo ya me he unido así que haz lo mismo  y nos vemos en el coro de las 11822  voces!!!!

Felices fiestas

Carlos

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Time to write a business plan so I can be like those guys!!!

Very funny, certainly there is a bubble when you see this.

CD

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The Open Research Day that we organized this week at the Telefonica R&D center in Barcelona was a huge success, here you have the Expansion article (I could not find the online link) and two links to the El Pais article and to the TV3 Telenoticies news story on TV. Enjoy and make sure next year you are coming to see us!!!

El Pais news story about ORD

TV3 Telenoticies video clip

CD

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