During my tech days, I co-authored four software patents. Each cost my startup about $15,000—which seemed like a fortune in those days. I didn't really expect these to give me any advantage; after all if my competitors had half a brain, they would simply learn all they could from my patent filing and do things better. But I needed to raise financing, and VCs wouldn't give me the time of day unless I could tell a convincing story about how we, alone, owned the intellectual property for our secret sauce.   We got the financing, and the plaques of the patents looked great in our reception area, so the expense was worth it. But there was definitely no competitive advantage.

Patents make a lot of sense in many industries; they are needed to protect the designs of industrial equipment, pharmaceutical formulations, biotechnology products and methods, biomedical devices, consumer products (toothpaste, shampoo, contact lenses, etc.), advanced materials & composites, and of course, widgets (lighting fixtures & elements, batteries, toys, tools, etc.). But in software these are just nuclear weapons in an arms race. They don't foster innovation, they inhibit it. That's because things change rapidly in this industry. Speed and technological obsolescence are the only protections that matter. Fledgling startups have to worry more about some big player or patent troll pulling out a big gun and bankrupting them with a frivolous lawsuit than they do about someone stealing their ideas.

New research by Berkeley professors Stuart J.H. Graham, Robert P. Merges, Pam Samuelson, and Ted Sichelman highlights the extent of this problem. They surveyed 1332 early-stage technology companies founded since 1998, of which 700 were in the software/internet space. Here is what they found:

• In software, only 24% of startups even bothered to file a patent. In medical devices, this proportion was 76%; and in biotech, 75%.  Far more venture-backed companies file patents:  in software, 67%; in medical devices, 94%; and in biotech, 97%.
• Venture-backed companies also file more patents than others that file patents. They file, on average, 5.9 patents as against the all-company average of 1.7. In medical devices and biotech, this is 25.2 vs. 15.0 and 34.6 vs. 9.7, respectively.
• Software executives consider patents to be the least important factor for competitiveness. They perceive gaining first mover advantage to be the most important factor, followed by acquisition of complementary assets, copyrights, trademarks, secrecy, and making software difficult to reverse engineer.
• Companies file patents to prevent competitors from copying their products, to improve their chances of securing an investment or liquidity event (IPO, acquisition, etc.), improving the company's reputation, and to gain bargaining power against others. Surprisingly, companies that held patents—even venture backed—didn't believe that patents made them more likely to innovate. Even more surprising, a quarter of companies that licensed technology from others said they did this to avoid lawsuits—not to gain technology or knowledge. In other words, the patent constituted a weapon or a trophy rather than a way to obtain revenues from others’ commercial adoption of their technology.

Pam Samuelson, one of the co-authors of the report, says that her conclusion from the research is that the world may be better off without software patents; that the biggest beneficiaries of software patents are patent lawyers and patent trolls, not entrepreneurs.

Meanwhile, the U.S. patent system is clogged and dysfunctional. John Schmid, of the Milwaukee Journal Sentinel, analyzed U.S. Patent and Trademark Office data and found that as of 2009, there were more than 1.2 million patents awaiting approval—nearly triple the number a decade earlier.  In 2009, the patent agency took an average 3.5 years to deal with a patent request—more than twice the 18-month target. What is most alarming is that patent office automatically publishes applications online after the 18 months—outlining each innovation in detail regardless of whether an examiner has begun considering the application. Competitors anywhere in the world can steal ideas. This effectively undermines the entire purpose of the patent system: the patent office is charging the applicant serious money for giving it the privilege of giving away their commercial secrets.

To make matters worse, the patent office is rejecting applications at an unprecedented pace—with fewer than 50% being approved, compared to 70% a decade ago. One estimate is that this costs entrepreneurs at least $6.4 billion each year in “forgone innovation”–legitimate technologies that cannot get licensed and start-ups that cannot get funded. So the agency charged with protecting U.S. intellectual property and aiding innovation is often doing the exact opposite.

Brad Feld, managing director at Foundry Group, says that we should simply abolish software patents.  He believes that the system has spun completely out of control, with the vast majority of filings not passing the fundamental tests of a patent (that it be non-obvious, novel, and unique innovation).  Copyright and trade secrets have historically been the primary protection mechanisms for software intellectual property, and they are still the best solutions.  Feld notes that technology companies are now forced to divert huge resources to defend themselves from patent trolls rather than advance their innovations.

The founders of the United States considered intellectual property worthy of a special place in the Constitution—"To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." They had the concept right, but they surely never conceived of Amazon.com patenting clicks in an online shopping cart and methods for having an online discussion, or Microsoft patenting methods for activating double click applications with a single click. It's time to do as Brad Feld suggests: simply abolish these abominations.

Editor's note: Guest writer Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at the School of Information at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. You can follow him on Twitter at @vwadhwa and find his research at www.wadhwa.com.

Making predictions about the end of this or that technology or institution must be a fun hobby — so many seem to have taken it up. It’s probably because you can’t lose: not only do such predictions promote discussion and visibility of the issue, but they are rarely proven wrong. After all, predicting something happening five years in the future allows for enough change to happen along the way that one can say “well, it was a reasonable hypothesis at the time.” Negroponte’s recent remarks at Techonomy concerning the death of printed books have the usual amount of wiggle room in them — which is not to say that they’re false, only that they’re an example of the usual futurist prestidigitation.

The death of printed books (and, by extension, magazines and such) is, of course, merely an ongoing process — a given. What is in the air is the timing. Negroponte says not ten years, but five. Either he has more faith than I do in consumers’ plasticity, or he’s talking about something completely different.

Continue reading…

The sharing and tracking of torrents through Twitter just got a little easier with today’s release of BitTorrent’s Torrent Tweet, an app that you can add to torrent client uTorrent in order to organize the discussions surrounding individual torrents on Twitter. Through Torrent Tweet, tweets are published with an automatically generated hashtag unique to each torrent file, like this one.

From BitTorrent VP Simon Morris:

“The point of Torrent Tweet is to adapt the powerful referencing system built into BitTorrent to the incredible social interaction engine that Twitter has built such that people can have conversations about things they are downloading, and they can be sure that they are talking about the same thing.”

Morris also hopes that other torrent sites will follow suit and adopt the shortened #bt hashtag convention. However his ambition to centralize all torrenting discussion through Twitter is counter-intuitive. Because it is currently illegal to duplicate and share copyrighted content, file sharers doing so risk becoming the targets of Hurt Locker-esque lawsuits. The savvier ones usually cloak their activities in at least some semblance of anonymity which Twitter lacks, as users are tied to an account.

Despite this risk, torrenting activity on Twitter shows no signs of ceasing. Twitter search “Mad + Men + torrent+ S4 + Ep3″ shortly after 7pm PDT on Sunday and be amazed at how quickly people post torrent files. Or just search for “Arcade+Fire+the+ Suburbs + torrent” right now. The launch of a Twitter-specific torrent indexing system only further reinforces the fact that Twitter has now become a powerful locus for file-sharing.

Let me start off by saying that I don’t think this is going to happen. And a number of people I’ve spoken with today don’t think this is going to happen. But it’s something interesting to think about and discuss nonetheless. Following HP CEO Mark Hurd’s resignation today, what if the Board were to appoint former Palm CEO Jon Rubinstein to be their new leader?

Again, it seems a bit far-fetched simply because there are a range of other candidates out there who are probably more qualified to run the company as it is currently constituted. But that’s the thing. From what we’ve been hearing, HP is very interested in reinventing itself. From what we’re hearing, they’d like to be more like Apple. Only a bigger Apple. One with webOS at its core. And you know the funny thing? They may have acquired the perfect guy to do that when they bought Palm this past April: Rubinstein.

As a refresher, prior to Palm, Rubinstein was a long-time Apple executive who was in charge of the iPod division. When he left the company in 2006, the iPod was Apple’s most successful product (the iPhone didn’t exist yet — let alone the iPad). This guy knows Apple (or knew it).

Of course the main argument against Rubinstein may be that he was unable to turn Palm into Apple. As Executive Chairman and later CEO of Palm, he was clearly attempting to do that with the launch of the Palm Pre smartphone — a device which some initially viewed as the first real “iPhone killer.” Of course, it did not kill the iPhone. Nor did it even hurt the iPhone. But nevertheless, the phone was very impressive — particularly the webOS software. In fact, I would argue that it was really only the lackluster hardware that was holding it back. At the time of its launch, webOS was much better than other rivals (not named the iPhone) including the still-young Android platform.

But Palm was a relatively small company, and despite repeated cash infusions from Elevation Partners, they were unable to compete with Apple and the Google-backed Android platform in the smartphone market. But with HP’s billions and emphasis on hardware, Rubinstein would be getting dealt a pretty nice hand this time around. If he still couldn’t win the pot, it would be on him, obviously. But is HP willing to take that chance?

For the third time, probably not. Especially with people like Todd Bradley, the HP executive believed to be responsible for the Palm deal, on the bench. Interestingly enough, Bradly used to be the CEO of Palm as well back in the day (2001-2005). And his track record of growing HP’s core PC business speaks for itself.

But again, going forward, this may not be about the PC business. This is about a shift towards mobile (which Bradley also runs) and a complete ecosystem built around webOS. Does HP’s board (Board Director Marc Andreessen is leading the search) have the cojones to appoint Rubinstein? Or will they go with the safe bet: Bradley, perhaps with Rubinstein as his new right-hand man?

SEC filings say the darndest things. In a Friday 10-Q filing, AT&T assured investors that the termination of any handset exclusivity agreement (especially that itsy bitsy deal with Apple) will not have a “material negative impact” on earnings. I heartily welcome the injection of comedy in typically drab SEC filings, but if AT&T is being sincere, they’re in for a rude awakening when the sands run out.

As the WSJ points out, this is the first time AT&T has addressed this issue at length in a filing and it comes amid rumors that Apple is preparing to end its exclusivity agreement with AT&T  as early as next year. In recent months, speculation has intensified on reports that both Verizon and T-Mobile could get in on the action in 2011.

How does AT&T justify its claim? The wireless provider argues in the filing that 80% of its contract subscribers are on family or business plans. Thus, under their logic, the majority of subscribers will not switch because it will be too difficult to transfer an entire group and these “group” subscribers will be hesitant to relinquish certain AT&T perks like the rollover minutes they’ve accumulated.

Further, via its explanation, AT&T also points out that the iPhone was specifically designed to work with AT&T’s network and technology, and thus a different version may lose some of the functionality. See an excerpt of the filing below.

These are fairly strong arguments, I highly doubt that consumers on business plans will be able to switch. In May, Ron Spears, CEO of AT&T Business Solutions,  announced that four out of ten iphones sold were being sold to businesses. A sizable portion of the pie but what about the six out of ten sold?

The majority of that group will be, as AT&T pointed out,  users on family plans— but their hold on this demographic is less convincing. It’s far easier for a family to change carriers versus a business and it’s even easier for a few fed-up family members to just go rogue. In addition, there is that 20% chunk of individual users, who are highly mobile. If Verizon or T-Mobile, or whoever the next iPhone carrier is, attracts a large number of defectors from this slice, guess what AT&T, you have a material impact on earnings.

Furthermore, if recent surveys are to be believed, AT&T should not overestimate its hold on the market. According to a recent Changewave Research survey, among hundreds of iPhone 4 users surveyed, the top two complaints centered on AT&T. Twenty-seven percent complained about the exclusivity requirement and 24% complained about the quality of the network. Recently, Davenport & Co. analyst F. Drake Johnstone predicted that as many as 40%, or 6 million iPhone users, would ditch AT&T when Verizon enters the picture.

Typically, I don’t bet the ranch on analyst recommendations, but he brought up at least solid point: AT&T recently rose its early termination fee to $325 from $175. Thus while it’s all sunshine and puppies in AT&T’s SEC filings, the proof is in the termination fee. AT&T is worried, and it should be.

Full disclosure: I have been a loyal AT&T user since 2007, when the iPhone first debuted—- and I can’t wait to switch to Verizon (2011 please).

Pertinent excerpt from the filing:

We offer a large variety of handsets, including at least 18 smartphones (including Apple iPhones, our most popular models) with advanced operating systems from at least 7 manufacturers. As technology evolves, rapid changes are occurring in the handset and device industry, with the continual introduction of new models or significant revisions of existing models. We believe offering a wide variety of handsets reduces dependence on any single handset as these products evolve. In addition, offering a number of attractive handsets on an exclusive basis distinguishes us from our competitors. As these exclusivity arrangements end, we expect to continue to offer such handsets (based on historical industry practice), and we believe our service plan offerings will help to retain our customers by providing incentives not to move to a new carrier. As noted above, more than 80 percent of our postpaid subscribers are on Family Talk® Plans and business plans that would involve moving the whole group to a new carrier. Moreover, the vast majority of our postpaid subscribers (including Family Talk® Plan users) are allowed to accumulate unused minutes (known as rollover minutes), a feature that is currently not offered by other major post-paid carriers in the United States, and users would lose these minutes if they switched carriers. As is common in the industry, most of our phones are designed to work only with our wireless technology, requiring customers who desire to move to a new carrier with a different technology to purchase a new device. In addition, many of our handsets would not work or would lose some functionality if they were used on another carrier's network (even a carrier using GSM technology), requiring the customer to acquire another handset. Although exclusivity arrangements are important to us, such arrangements may not provide a competitive advantage over time, as the industry continues to introduce new devices and services. Also, while the expiration of any of our current exclusivity arrangements could increase churn and reduce postpaid customer additions, we do not expect any such terminations to have a material negative impact on our Wireless segment income, consolidated operating margin or our cash from operations.

Having just returned from a vacation, I’m in the midst of uploading videos and photos so I can send our visual memories of the trip to family and friends. But what if you could create an animated slideshow of sorts that would include an interactive map of your itinerary with photos, videos, Tweets, and even Foursquare check-ins from your trip? Tripline has launched to allow users tell a story of a trip by putting places, images and information on a map.

Tripline allows you to create an interactive, embeddable map detailing a trip using your destinations. You essentially create a timeline of your stops within a country or city and tag each stop with descriptions of your activities and include images as well. You can connect with Facebook to add any of your friends who went on the trip with you. And you can create maps from just your Foursquare checkins and or geo-enables Tweets.

The most obvious use is to be able to share itineraries and trips with anyone easily and visually. The map becomes an animated destination for not only seeing where a friend travelled, but also a way to find out what they did in a particular destination. You can also create trips from past historical events such as The Lewis and Clark Expedition.

Founded by ex-Yahoo employee Byron Dumbrill, who headed product development for video editing service Jumpcut (which was acquired by Yahoo in 2006); Tripline was created when Dumbrill and his fiancee were planning a lengthy trip to Costa Rica. He wanted a way to visualize his travels to different parts of the country on a map, complete with information about where he was going to stay, see etc. And when he returned, friends wanted to see Dumbrill’s itinerary and photos, which he incorporated into an interactive map. The idea for Tripline was born.

Tripline is also monetizing through sponsored trips from travel planning companies (such as GAP Adventures). GAP has created sample itineraries and Tripline users can book a trip through GAP on the site, allowing the startup collect an affiliate fee.

Of course, Tripline isn’t the first startup to try to meld social, recommendations and travel into a package. Nextstop, which was recently acquired by Facbook, allowed you to create interactive travel guides. Ruba, whose team left to work at Google, also aimed to create an in-depth platform for travel recommendations and itineraries. Where I’ve Been has a related offering for Facebook. And of course there’s online itinerary creators NileGuide and TripIt.

While the online travel space is filled with a number of worthy competitors, Tripline’s platform is actually compelling because it is fairly easy to use. Of course, Tripline’s main challenge will be attracting users to its platform. But the startup will be launching a companion Facebook app soon, which could help Tripline gain a larger following. And Dumbrill says that Tripline allows users to chart and record an itinerary both in the planning process and post-vacation, in the sharing process.

First came reports of how many more deals Ron Conway was doing in New York than he’s done in the past. Then, there was a report that showed the number of venture firms were predicted to decline in traditional markets, and grow in emerging markets like China, India and Brazil. Now, the latest Pepperdine Capital Markets Survey finds that Silicon Valley based VCs have wanderlust too.

According to the survey the number one location where VCs said they expected to invest in the next year was Southern California. Specifically, 17.4% named Southern California, 12% said they planned to invest in the Southwest and 10.5% said they planned to invest in the Southeast. Only 7.9% of VCs surveyed—most of whom live in Silicon Valley—said they intended to invest in Silicon Valley.

Wait.

What?

Look, we've been as big a proponent of the idea that VCs are expanding their scope as there is at TechCrunch, but last we checked Southern California wasn't an emerging market. We couldn't believe these results could be true, so we invited the study's author John Paglia on to this week’s episode of Too Long; Didn’t Watch to explain.

His survey can be found here and has a few other interesting take aways. 56% of investors said "gut feel" was the largest reason they do a deal, outranked only by "market analysis." Gut feel always ranks high, so Paglia decided to ask this time what "gut feel" means. Investors said it was based most on "nonanalytical impression" and "past experience and knowledge." Again, we would have thought that would favor Valley investors backing the networks they already have and know in the Valley, but maybe they have a good gut feel about oranges and beachballs. (We're kidding So. Cal., we know you have MySpace, biotech and clean tech innovation going on. And Disneyland!)

The survey also noted that 42.8% of venture firms said they were currently raising money or would be in the next six-to-twelve months. This will be the key period to watch to see what our venture capital ecosystem is going to look like in for the next decade or more. A lot of people are expecting a shake out in terms of who can raise money, as returns are generally horrible for the last ten years. But then again, we heard about a shakeout among venture funds in 2000 that never happened.

On the heels of the as of yet unprofitable Demand Media IPO filing, it looks like email software purveyor Xobni (that’s Inbox spelled backwards) has decided to spend money on a mural. And an elaborate one at that. While the rest of the country gears up for a second recession, the tech sector seems blissfully exempt with inflated billion dollar valuations being flung left and right. Will startup burn rates follow suit?

In accordance with the “Go big or go home” model, Xobni’s description of the mural project, which was undertaken in Twitter’s old office, is extremely detailed. If the Dr. Seuss references don’t set off the bubble alert I don’t know what will:

1) We were looking for a Seuss-ian feel to bring the sense of wonderment to our office (growing up in the 60′s/70′s/80′s leaves us all with a soft spot for Dr. Seuss).

2) We wanted to have a little fun with some popular Internet clichés and sensations over the years – i.e. "series of tubes" (Thank you former Senator Ted Stevens, formerly head of committee to regulate the Internet).

Xobni, which just raised $16.2 million in series C funding (32.1 million total), has been looking for ways to make money over the past year, most notably going retro and serving up their email management software Xobni Plus in boxed form a la Microsoft Office. Perhaps they’ve never heard of the well worn aphorism “spend less than you earn”?

I’ve contacted Xobni for details on how much exactly the mural (by San Francisco-based artist Jim Winters) cost, and will post updates when I hear back.

Update: Xobni’s Terra Carmichael responds, “Can’t say how much it cost, but will say it’s nice to have creative friends.”

“The Making Of” video, below:

Photo: Xobni

Anybody want to buy a content farm? Demand Media filed its IPO registration today.  It describes its business this way:

While traditional media companies create content based on anticipated consumer interest, we create content that responds to actual consumer demand. Our approach is driven by consumers’ desire to search for and discover increasingly specific information across the Internet.

It is also filled with all sorts of detailed financial data.

It turns out that Demand Media is not yet a very profitable business. Last year it reported $22 million in losses on $198 million in revenues. In the first six months of this year, however, it brought its net loss down to $6 million, on revenues of $108 million.

And while Demand Media has been pursuing a content and media strategy of creating search-friendly articles and videos for its network of sites including eHow and many niche sites, a full 44 percent of its revenues in the first half of 2010 ($47.7 million) still came from its domain registration business, eNom.

Some other juicy details from the prospectus (unless otherwise stated, stats are for the first half of 2010):

• 45 percent of revenues are from advertising
• 26 percent of revenues came from Google ads
• 21 percent of revenues come from eHow
• 60 percent of eHow’s page views come from Google searches
• In the third quarter of 2008, 100 percent of the articles an d other content Demand Media’s creates itself was published on eHow. That was down to 60 percent in the second quarter of 2010.

That is just from a quick scan. There is lots more in there.  Above and below are a couple of tables showing consolidated financial data and a breakdown of revenues along business lines. Click to enlarge

Today at the Techonomy conference in Lake Tahoe, CA host David Kirkpatrick sat down with Reid Hoffman and Sean Parker to talk about what comes after the social revolution. Both Parker and Hoffman made it clear that they don’t think social is going anywhere anytime soon. So Kirkpatrick asked what the most interesting social opportunity is that Facebook isn’t directly involved in?

Hoffman said that his answer was gaming, and that’s why he invested in Zynga. But going forward, he wasn’t sure yet. But Parker gave a more foward-looking answer. “I think the move to live is pretty interesting. No one has nailed live,” he said.

Specifically, Parker is thinking about live video. He notes that while Skype and some others are playing in this field, he thinks long-term there will be something along the lines the Internet hasn’t seen yet.

It shouldn’t be a huge surprise that Parker feels this way, he has recently been helping out the live-video startup Chatroulette along with his former Napster partner Shawn Fanning. Parker won’t say what his specific role is with the company, but it’s likely as an advisor like Fanning.

Parker said he sees the Chatroulette idea moving from a one-to-one to a one-to-many idea. He notes that the way to move it on from its dubious distinction as a penis showcase is to use algorithms, perhaps based around “nexting” — the mechanism you use in Chatroulette to go to the next video stream.

Later, he reiterated that live video is what he’s spending most of his time thinking about these days.

Watch Hoffman and Parker during their panel in the video below compliments of David Spark.

MSKYNET, a startup that provides an API that allows other companies to generate and perform analytics on 2D barcodes called SPARQCodes, has raised a $550,000 seed round led by Andy Liu (Buddy TV), with other participants including Chris DeVore (Founders Coop), and John Keister (Marchex).

Founder Jesse Chor says that SPARQCodes are similar to standard QR codes, but with a few key differences. For one, he says that most QR codes try to embed all of their payload data into the 2D barcode itself, which can result in barcodes that are visually complex and harder for phone cameras (which are generally low quality) to scan. SPARQCodes help solve this issue by storing the payload data on its servers — the code you scan is actually for a shortened URL rather than the data itself. This, Chor says, makes the codes easier to scan for phones with low-end cameras. Users can scan SPARQCodes using most standard QR reader apps.

SPARQCode’s shortened URls also come with a few other benefits. First, they allow the barcode’s creator to track analytics, the same way you would with a link shortening service like bit.ly. They also allow the publisher to detect what kind of phone the user has and serve up content that’s been tailored for that device’s capabilities accordingly. For example, if you wanted your SPARQCode to send the user a map, you could link iPhone users directly to the phone’s built-in mapping application, while sending less powerful phones a basic image of the map.

Chor also says that SPARQCodes are visually designed to grab the viewer’s attention better than standard QR codes, and claims that they get 300-1000% higher conversation rates than traditional QR codes for app downloads.

The startup’s customers have used SPARQCode’s APIs in a variety of ways. FlightStats presents users with a unique SPARQCode for every flight they want to track; other customers include the barcodes in magazine ads. SPARQCode’s monetization model varies depending on how its customers are using it — FlightStats pays based on how many codes it creates (a lot), while a customer running the codes in a magazine will likely pay based on how many people take a snapshot of the code.

I’ve never been a big fan of 2D barcodes, and while they’re huge in Asia I’m still skeptical about their acceptance in the US. To that point, Chor says that SPARQCode is definitely seeing traffic in the States pick up.

MSKYNET isn’t the only player in this space — competitors include Scanbuy and JagTag.

Update: The company is actually called MSKYNET, but their product is SPARQCode.

Well, this is unexpected, HP has just announced that CEO Mark Hurd is stepping down. CFO Cathie Lesjak has been appointed as interim CEO.

According to a press release, Hurd, 53, is resigning on the heels of sexual harassment charges by a former HP contractor. The company’s investigation concluded that there was no sexual harassment violation, however it did find that Hurd violated HP’s “Standards of Business Conduct.” On a conference call, HP’s General Counsel, Mike Holston elaborated further, explaining that the case centered around expense reports that were used to hide the true nature of Hurd’s close relationship with the contractor.

“Mark demonstrated a profound lack of judgment that seriously undermined his credibility and damaged his effectiveness in leading HP – and Mark agreed,” Holston said in a statement.

According to the details available, it seems like Hurd, who is married (at least for now), was entangled in a personal relationship with a hired contractor— an affair he tried to obfuscate with some fudged expense reports.

In a somewhat dejected tone, Hurd said stepping down was a “painful decision” and vaguely acknowledged that he displayed a lack of character.

"As the investigation progressed, I realized there were instances in which I did not live up to the standards and principles of trust, respect and integrity that I have espoused at HP and which have guided me throughout my career. After a number of discussions with members of the board, I will move aside and the board will search for new leadership,” Hurd said in the release. “This is a painful decision for me to make after five years at HP, but I believe it would be difficult for me to continue as an effective leader at HP and I believe this is the only decision the board and I could make at this time. I want to stress that this in no way reflects on the operating performance or financial integrity of HP."

In the wake of Hurd’s abrupt departure, HP is on the hunt for a new CEO. The board of directors has already cobbled together a search committee, led by Marc Andreessen, Lawrence Babbio, Jr., John Hammergren and Joel Hyatt, to find a proper replacement.

In a word, HP’s official press release (see below) was awkward. It was a jumble of half-disclosures and odd statements that raised more questions than answers. Meanwhile, intertwined among comments on ethics are adamant assertions of HP’s financial health. Investors can take comfort in the fact that HP is raising its full-year outlook for revenues, but I’m sure the vast majority are appropriately wondering, “What exactly is going on here and what will happen next?” The stock fell several points in after hours trading.

Holston’s comments certainly shed important light on the circumstances, but investors are no doubt feeling a little unsettled with the CEO search still in progress.

Thus, amid controversy and a whirl of questions, Mark Hurd abruptly wraps up his five year tenure at HP, a highly profitable time for the company. Over the last five years, the stock price has more than doubled with Hurd at the helm, aggressively pursuing profits. For his part Hurd has been paid handsomely. Last year, for instance, Hurd pulled in $24.2 million, which was actually a step down from 2008, when he made a whopping $42.5 million.

Press release below:

PALO ALTO, Calif.–(BUSINESS WIRE)–HP (NYSE: HPQ) today announced that Chairman, Chief Executive Officer and President Mark Hurd has decided with the Board of Directors to resign his positions effective immediately.

The Board has appointed CFO Cathie Lesjak, 51, as CEO on an interim basis. Lesjak is a 24-year veteran of the company who has served as HP's CFO and as a member of the company's Executive Council since January 2007. She oversees all company financial matters and will retain her CFO responsibilities during the interim period.

Hurd's decision was made following an investigation by outside legal counsel and the General Counsel's Office, overseen by the Board, of the facts and circumstances surrounding a claim of sexual harassment against Hurd and HP by a former contractor to HP. The investigation determined there was no violation of HP's sexual harassment policy, but did find violations of HP's Standards of Business Conduct.

A Search Committee of the Board of Directors has been created, consisting of Marc L. Andreessen, Lawrence T. Babbio, Jr., John H. Hammergren, and Joel Z. Hyatt, which will oversee the process for the identification and selection of a new CEO and Board Chair. HP's lead independent director, Robert Ryan, will continue in that position.

Hurd said: "As the investigation progressed, I realized there were instances in which I did not live up to the standards and principles of trust, respect and integrity that I have espoused at HP and which have guided me throughout my career. After a number of discussions with members of the board, I will move aside and the board will search for new leadership. This is a painful decision for me to make after five years at HP, but I believe it would be difficult for me to continue as an effective leader at HP and I believe this is the only decision the board and I could make at this time. I want to stress that this in no way reflects on the operating performance or financial integrity of HP."

"The corporation is exceptionally well positioned strategically," Hurd continued. "HP has an extremely talented executive team supported by a dedicated and customer focused work force. I expect that the company will continue to be successful in the future."

Robert Ryan, lead independent director of the Board, said: "The board deliberated extensively on this matter. It recognizes the considerable value that Mark has contributed to HP over the past five years in establishing us as a leader in the industry. He has worked tirelessly to improve the value of HP, and we greatly appreciate his efforts. He is leaving this company in the hands of a very talented team of executives. This departure was not related in any way to the company's operational performance or financial condition, both of which remain strong. The board recognizes that this change in leadership is unexpected news for everyone associated with HP, but we have strong leaders driving our businesses, and strong teams of employees driving performance."

"The scale, global reach, broad portfolio, financial strength and, very importantly, the depth and talent of the HP team are sustainable advantages that uniquely position the company for the future," said Lesjak. "I accept the position of interim CEO with the clear goal to move the company forward in executing HP's strategy for profitable growth. We have strong market momentum and our ability to execute is irrefutable as demonstrated by our Q3 preliminary results."

Lesjak has taken herself out of consideration as the permanent CEO but will serve as interim CEO until the selection process is complete. Candidates from both inside and outside the company will be considered. The selection of a new chairman will occur in conjunction with the CEO decision.

The company does not expect to make any additional structural changes or executive leadership changes in the near future.

HP announces preliminary third quarter results; raises full-year outlook for revenue and non-GAAP EPS

HP is announcing preliminary results for the third fiscal quarter 2010, with revenue of approximately $30.7 billion up 11% compared with the prior-year period.

In the third quarter, preliminary GAAP diluted earnings per share (EPS) were approximately $0.75 and non-GAAP diluted EPS were approximately $1.08. GAAP and non-GAAP EPS were negatively impacted by $0.02 pertaining to one-time charges relating to the previously announced U.S. Department of Justice settlement. Non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.33 per share, related primarily to restructuring, amortization of purchased intangible assets and acquisition-related charges.

For the fourth fiscal quarter of 2010, HP estimates revenue of approximately $32.5 billion to $32.7 billion, GAAP diluted EPS in the range of $1.03 to $1.05 and non-GAAP diluted EPS in the range of $1.25 to $1.27. Non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.22 per share, related primarily to restructuring, amortization of purchased intangible assets and acquisition-related charges.

For the full year, HP now expects revenue in the range of $125.3 billion to $125.5 billion. FY10 GAAP diluted EPS is expected to be in the range of $3.62 to $3.64 and non-GAAP diluted EPS in the ranged of $4.49 to $4.51. FY10 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.87 per share, related primarily to restructuring, amortization of purchased intangibles and acquisition-related charges.

HP plans to release its final results for the third fiscal quarter on Thursday, Aug. 19, 2010, with a conference call at 6 p.m. ET/3 p.m. PT to provide additional details.

Bill Gates thinks something is going to die too.

No, it’s not physical books like Nicholas Negroponte — instead, Gates thinks the idea of young adults having to go to universities in order to get an education is going to go away relatively soon. Well, provided they’re self-motivated learners.

“Five years from now on the web for free you’ll be able to find the best lectures in the world,” Gates said at the Techonomy conference in Lake Tahoe, CA today. “It will be better than any single university,” he continued.

He believes that no matter how you came about your knowledge, you should get credit for it. Whether it’s an MIT degree or if you got everything you know from lectures on the web, there needs to be a way to highlight that.

He made sure to say that educational institutions are still vital for children, K-12. He spoke glowingly about charter schools, where kids can spend up to 80% of their time deeply engaged with learning.

But college needs to be less “place-based,” according to Gates. Well, except for the parties, he joked.

But his overall point is that it’s just too expensive and too hard to get these upper-level educations. And soon place-based college educations will be five times less important than they are today.

One particular problem with the education system according to Gates is text books. Even in grade schools, they can be 300 pages for a book about math. “They’re giant, intimidating books,” he said. “I look at them and think: what on Earth is in there?“

According to Gates, our text books are three times longer than the equivalents in Asia. And yet they’re beating us in many ways with education. The problem is that these things are built by committee, and more things are simply added on top of what’s already in there.

Gates said that technology is the only way to bring education back under control and expand it.

See also: Bill Gates' Mind Is In The Gutter. Literally.

We know that Yahoo is integrating search with news, recently launching a news portal called the the Upshot, which uses search data to pick which stories to pursue. Today, Yahoo is integrating search into news content in yet another way—by suggesting search terms underneath news content on Yahoo News.

Called "Infinite Browse" internally at Yahoo, the new feature will include a box below Yahoo News articles that will suggest searches for specific terms. For example, news about Al Qaida will show links to searches for “Al-Qaida Camp” or “Al-Qaida Flags.” The idea is to allow readers to access related content they would search for without having to go to a separate search portal and type in the query.

The feature, which is only being tested for a limited group of users, apparently results in twice the amount of user engagement. An existing search feature "Trending Now" lists, which bring trending topics to your browsing experience on Yahoo sites, has been upgraded slightly with search. Now when you click on a Trending Topic, Yahoo will show you search results on Yahoo for the topic. Yahoo also are now suggesting newsworthy topics based on the type of Yahoo portal your are on (ie sports topics on Yahoo Sports.

Infinate Browsing and the search addition to Trending Topics are just additional examples of Yahoo pumping up search query volume through automated searches, like the company does with slideshows and other content. It’s designed to drive its search market share up.

To wrap up the Techonomy conference in Lake Tahoe, CA, Bill Gates took the stage to talk with host Brent Schiender. A big idea of the conference was the future of technology, especially as it related to the economy. Gates talked a lot about that, but perhaps in a way you wouldn’t imagine. His mind was in the gutter. Literally.

“Latrines are fascinating,” Gates said. The way he said it was in a bit of a joking manner, but he’s not kidding. He talked about how many books he reads on the subject these days. “No one wants to read about it — it’s one of the greatest under-investments,” Gates said.

“We’re gonna have a breakthrough in the latrines,” he continued. He said that while the flushable toilet is the gold standard, it isn’t efficient at all. Someone is going to fix that, according to Gates.

So what books is he reading on the subject? He named a few. One was Water and Sanitation. “It’s quite lurid,” Gates joked. “It’s a super-important topic,” Gates reiterated. “You can visit poor-world latrines and learn from that as well,” Gates joked.

Gates really does think about this topic a lot. Later in the conversation, he returned to it when talking about investing in certain types of education. ”When it comes to things like investing in new toilets, not much money goes into that,” Gates said.

“You end up with the low IQ guy on the toilets.”

Indeed.

My mom doesn’t know smartphones, but she wants Facetime. The same woman who used a Motorola RAZR for most of the last decade now wants to drop – or, more precisely, wants me to drop – $299 for a new iPhone 4 so she can see the grandkids. Why? Because it seems like magic to her that she can see live video of the grandkids without having to make my dad hobble over to the computer and fire up Skype.

Video chat is not new and to most geeks Facetime is an affornt to the hard work and patience they put into getting video chat to work over Wi-Fi and cellular networks over the past few years. The Euros all scream “But we had video chat on our Nokias during the Clinton administration!” while streaming zealots claim they were video chatting with each other for years before Apple barged in. But with rumors that the new iPod Touch will have a front facing camera and will be launched sometime in September, I think Apple is about to own the video chat space.

Read more…

It's been roughly a year since Jolicloud's alpha release and the company founded by Netvibes founder, Tariq Krim, has just launched Jolicloud 1.0 to the public. The iPhonesque open source OS oriented towards netbooks has more than just an incredibly sexy interface, with an App Store-like selection of over 700 apps (going on 1,000 before the end of the year) - giving users access to everything from Spotify to DropBox in a simple click. Jolicloud has also blended in a bit of social, allowing users a practical way to discover the best applications out there according to what their friends download and rate.

Well, look at that. A Rocketfish tablet. Can’t say we saw this coming, but Best Buy’s CTO and Geek Squad founder, Robert Stephens, just tweeted two pics of the surprisingly polished-looking tablet. We’re currently digging for more details but from what we can tell from the pics, the tablet looks remarkable similar to early HP Slate pics. Every seem and port seems to be the same right down to the (docking?) port on the bottom. Even if it’s not built on the same platform, the screen sizes look about the same, placing the Rocketfish tablet in the 9-inch range.

A new charger from Horizon Fuel Cell Technologies can help power your gadgets when there’s nowhere to plug into but the sun.

The Sunbox USB has a panel that can be attached outside of a house or tent that connects to a box with several charging ports. Horizon claims the unit can power an LED light included with the device for as long as 11 hours, so long as the panel sees the six to eight hours of sun it needs for a full charge.

A pair of USB ports help keep gadgets charged, and two other ports – one for charging cell phones and one that connects to a couple of AA batteries – could help you stay connected in remote areas.

The $79.99 two-part system might not be the most convenient thing to toss into a backpack for a camping trip, but it could provide power in remote areas or in an emergency. Other products like Lenmar’s Powerport for $69.95 and are more compact but don’t offer and LED light and the option to charge AA batteries.

Less expensive options like the $30 Scosche solBAT II we reviewed earlier this year are much smaller, but take a lot longer (four to five days!) to produce a full charge from solar alone. Charging while off the grid could be convenient, but whether or not a cell phone can find signal after it’s charged is another story.

“We were working 24/7, working in very, very rapid cycles, with very, very short deadlines and milestones. We were working in a very, very nimble hyper consumer focused way…all fused in this kind of maelstrom of pizza, Mountain Dew, and all nighters, and you know idealism.”

That may sound like the caffeine-fueled, sleep-deprived rant of a typical Silicon Valley entrepreneur. Except it’s not— try Todd Park, the buttoned-up CTO of the US Department of Health and Human Services (HHS).

He’s talking about his latest project, Healthcare.gov,  a consumer-friendly site that helps users find and compare private and public insurance options and learn about the new health reform law. According to Park, it’s the single largest online repository for public and private insurance information. (See video above.)

As President Obama demonstrates in a video walkthrough (see video below), a consumer can use the site’s finder to get tailored insurance options by answering a few basic questions about their location and status (i.e. age range, needs, etc.). Later this fall, the site will also include pricing information to help users compare plans by cost.

While Healthcare.gov is definitely not the first comprehensive online initiative spearheaded by the government, it does reflect the current administration’s serious commitment to online engagement and how they’re paying attention to  Silicon Valley.

Calling the site an Expedia for health insurance, the White House Director of New Media, Macon Phillips, says they borrowed ideas from other web companies to develop the site:

“It doesn’t look like your normal [government] website because I think the websites that have been coming out particularly during the Obama administration, but even more recently, look towards the private sector— look towards what’s happening everywhere else on the internet.”

Aside from the big fat “.Gov” domain name, the aesthetics of Healthcare.gov seem more akin to a young startup versus something borne out of a provision in the Affordable Care Act. Its clean, simple user interface features a row of big buttons on the top directing users to “find insurance options” or “understand the new law.” Considering how convoluted our health care system system is, Healthcare.gov manages to organize the information in logical buckets and push key concepts to the foreground. Here’s a look at the Healthcare.gov homepage and for comparison, the HHS site (which has more of a standard .gov website feel).

If Healthcare.gov seems like a welcome, fresh perspective, the government has Twitter to thank. The White House and the HHS were not only drawing inspiration from Silicon Valley, they were looking for talent.

Earlier this year, before the passage of the bill, Macon Phillips stumbled upon Edward Mullen on Twitter, who posted a mock web design of what the heavily debated insurance exchange marketplace could look like. Lesson here: the next time you tweet something random on Twitter, the government could be watching with a job offer in hand.

“There was a designer in Jersey City, NJ, who I connected with because he tweeted his design of what he thought the exchange…would look like because he thought it would be really helpful to show the public that this is a visual thing,” Phillips says. “It was one of many suggestions that we got, but I printed it out and I would show it to people and would say look, this is the sort of creativity that is out there…One thing let to another and he left Jersey City to come to DC and.. helped push us through an information architectural process, asking questions like someone out of government who doesn’t understand the acronyms, doesn’t understand the alphabet soup, [but] fully gets what it’s like to be running a small business, what it’s like to look for your own health care insurance, was asking some really great questions and I think had a really positive impact.”

Once the team was in place, it was crunch time, says Park. From the bill’s passage, the HHS had 90 days to get the site live, hence the “maelstrom of pizza, Mountain Dew and all nighters”— a familiar rite of passage for virtually any tech entrepreneur. The site officially launched on July 1 and a few weeks later President Obama released his video demo. While many blogs pointed out Obama’s Apple endorsement— the poorly hidden MacBook Pro — it was also notable as the first demo a sitting president has ever done for a website.

So how is the website doing? Not so bad. As of this morning, Healthcare.gov has racked up 1,015,148 visits and is fielding thousands of comments each week (there are several yellow buttons across the site where users can give feedback). Phillips says they are indeed listening: each week, the team holds a meeting to specifically discuss the comments of the week. Of course, one million is still far from reaching the 45 million or so who are uninsured, but I’m sure Phillips, Park and his team know there’s a lot more to learn from America’s tech entrepreneurs.

We got a chance to talk to Phillips, Park about the making of the website and President Obama’s reaction via Skype, see video above.

Today at the Techonomy conference in Lake Tahoe, CA, CNBC’s Maria Bartiromo sat down with a panel including Bill Joy, Kevin Kelly, Nicholas Negroponte, and 
Willie Smits. The topic was basically the future of technology. And Negroponte had the most interesting (or at least the most controversial) thing to say.

The physical book is dead, according to Negroponte. He said he realizes that’s going to be hard for a lot of people to accept. But you just have to think about film and music. In the 1980s, the writing was on the wall that physical film was going to die, even though companies like Kodak were in denial. He then asked people to think about their youth with music. It was all physical then. Now everything has changed.

By “dead,” he of course doesn’t mean completely dead. But he means that digital books are going to replace physical books as the dominant form. His argument is related to his One Laptop per Child Foundation. On those laptops, he can include hundreds or thousands of books. If you think about trying to ship that many physical books to the emerging world for each child, it would be impossible, he reasons.

“People will say ‘no, no, no’ — of course you like your libraries,” Negroponte said. But he cited the report that sales of books for the Kindle recently surpassed sales of hardcover books.

“It’s happening. It not happening in 10 years. It’s happening in 5 years,” he said.

Naturally, I love these type of predictions.

Today at the Techonomy conference in Lake Tahoe, CA host David Kirkpatrick sat down with Reid Hoffman and Sean Parker to talk about what follows social media. Specifically, Kirkpatrick asked the two what follows the social networks like Facebook?

Parker was quick to answer. “If I had an answer to that, I’d probably already be working on it,” he half-joked. But he elaborated to say that the idea there is one digital paradigm that exists at any moment is a fallacy. And the idea that something else is going to come along and kill it is largely created by the media.

He continued to say that obviously there will be different kinds of things in the digital world 10 years from now. But he said he doesn’t think the day-to-day engagement of Facebook will change significantly in that timeframe. He quickly caught himself to include the other social networks in that bucket too. He thinks there will be more things that augment these networks.

Hoffman also said that he doesn’t think social goes away 10 years from now. “We are social animals,” he said. He thinks that instead it will be about the evolution of social. Right now it’s largely about surfing, but soon it will be more purpose-driven, he believes.

“Social is the foundation on which things are built,” Hoffman said.

Clearly, both also don’t remember that we were all supposed to quit Facebook.

See also: Sean Parker: The Next Social Movement Is All About Live And Chatroulette Is There [Video]

Because it’s Friday; Brazilian ad agency Moma has created the above ’60s style ads for web services Facebook, YouTube and Skype. Part of the "Everything Ages Fast" campaign for Maximidia Seminars, the ads are visually stunning and the copy is eerily evocative (“Skype, The fabulous voice system able to put your family together”). Or maybe that’s just the quirky Portuguese to English translation?

In any case, I can’t wait to see what they cobble together for Twitter (“Twitter, sing like a bird with magical updating!”) . More Internet meets vintage below.

Images: Ads of the World via Laughing Squid

Google is finally officially confirming that it bought Slide, a deal we first reported two days ago. Google did not disclose a price, but according to a source close to the deal it was $182 million. (With earnouts, it might turn out to be a bit more, but you can never count on earnouts). Slide raised a total of $78 million and at one point had a $500 million valuation.

We also conveniently broke down what everybody made from the deal. Founder Max Levchin got $39 million (after investing $7 million of his own money), BlueRun Ventures pocketed $28 million, early investor Scott Bannister made $5 million, while later investors basically got their money back. (Thank you, Sarah Lacy).

Slide could never really figure out what it wanted to be. It constantly shifted its strategy, from a desktop photo app to widgets to Facebook apps to social games. Slide started strong out of the gates, quickly becoming one of the largest Facebook app developers with apps like Top Friends and SuperPoke. As it became obvious that it would be difficult to make money from standalone Facebook other than games, Slide tried to hunker down and regroup.

But it does have a deep, battle-scarred team that knows social. And Google is desperate to get social right. In the blog post announcing the deal, engineering director David Glazer spins:

For Google, the web is about people, and we're working to develop open, transparent and interesting (and fun!) ways to allow our users to take full advantage of how technology can bring them closer to friends and family and provide useful information just for them.

The truth is that Google is more about data than people. It could use some engineers who understand social interactions better, and Slide has a lot of them. Their mission will be to “make Google services socially aware,” and likely will be part of Google’s not-so-secret social network in the making, dubbed Google Me.

Google is gearing up for war with Facebook. But when it comes to social, they are the ones who might get slaughtered.