OverMatter

The Google Computer

"Google is a company that has built a single very large, custom computer. It's running their own cluster operating system. They make their big computer even bigger and faster each month, while lowering the cost of CPU cycles. It's looking more like a general purpose platform than a cluster optimized for a single application. While competitors are targeting the individual applications Google has deployed, Google is building a massive, general purpose computing platform for web-scale programming." (Topix.net Weblog: The Secret Source of Google's Power)

Fortress Brands

"Fundamentally, there are two ways to increase sales: (1) Expand the brand, or (2) Expand the brand’s market share.

Most companies focus on the first way, expanding the brand. While this might seem to work in the short term, expanding the brand will eventually weaken the brand and leave it in worse shape than before the process began.

While it’s more difficult to expand a brand’s market share, this is the better way to to. The larger the market share, the more powerful a brand becomes. When a brand reaches 50 percent or more market share, it becomes so dominant that it is almost impossible for a competitor to overtake."

(Al Ries for Ad Age.com)

Winner-Take-All

"Google has won both the online search and advertising markets. They hold a considerable technological lead, both with algorithms as well as their astonishing web-scale computing platform. Beyond this, however, network effects around their industry position and brand will prevent any competitor from capturing market share from them -- even if it were possible to match their technology platform." (Google and the Third Age of Computing (Skrentablog))

Friendly Fire Distributed Denial of Service

"Last summer, MySpace's Windows 2003 servers shut down unexpectedly on multiple occasions. The culprit turned out to be a built-in feature of the operating system designed to prevent distributed denial of service attacks—a hacker tactic in which a Web site is subjected to so many connection requests from so many client computers that it crashes. MySpace is subject to those attacks just like many other top Web sites, but it defends against them at the network level rather than relying on this feature of Windows—which in this case was being triggered by hordes of legitimate connections from MySpace users.

"We were scratching our heads for about a month trying to figure out why our Windows 2003 servers kept shutting themselves off," Benedetto says. Finally, with help from Microsoft, his team figured out how to tell the server to "ignore distributed denial of service; this is friendly fire.""

(Inside MySpace.com)

How Yahoo Blew It

"Terry Semel was pissed. The Yahoo CEO had offered to buy Google for roughly $3 billion, but the young Internet search firm wasn't interested. Once upon a time, Google's founders had come to Yahoo for an infusion of cash; now they were turning up their noses at what Semel believed was a perfectly reasonable offer. Worse, Semel's lieutenants were telling him that, in fact, Google was probably worth at least $5 billion. This was way back in the summer of 2002, two years before Google went public. An age before Google's stock soared above $500 a share, giving the company a market value of $147 billion -- right behind Chevron and just ahead of Intel...

At the end of 2001, few people were saying that there were billions to be made by serving up text ads every time an Internet user ran a search. But Bill Gross, the indefatigable entrepreneur behind the business incubator IdeaLab, was all over the concept. In 1998, he had launched a search site called GoTo.com. Other search engines promised results based on human-built directories or computer-driven algorithms. Gross' search site auctioned its results to the highest bidder.

At the time, the idea seemed radical, even offensive. Who would want results driven by hordes of sellers hawking goods and services? Advertisers would, as it turned out. Although GoTo never became a top-tier search destination, Gross and CEO Ted Meisel quickly saw that the big Web portals and search engines like AltaVista, Yahoo, AOL, and MSN would pay big money for GoTo's auction-driven results. They changed the name to Overture in 2001, and by the end of that year Web surfers had clicked on Overture ads 1.4 billion times. Advertisers understood the value of being able to bid for juicy keywords. The ads would be laser targeted, and the results -- clicks -- could be measured precisely. The portals and search sites figured out that the sponsored links could be placed alongside a more objective set of search results. It was a brilliant way to turn searches into revenue.

Google saw the power of this approach and decided to grow its own. Engineers at Google took the concept of pay-per-click search results and in 2002 turned it into a smooth-running, money-printing machine called AdWords. The company developed an automated process for advertisers to bid on keywords. It also made the auctions more sophisticated so customers couldn't game the system. Crucially, Google determined ad prominence on a Web page not just by the price advertisers were willing to pay per click -- as Overture had done -- but also based on how many clickthroughs that ad generated. As a result, Google's system responded quickly to ineffective ads: They disappeared. Google also had a massive database that tracked which ads worked and which didn't, information it could pass on to its customers to help them create better ad campaigns. By the time Google published its financial statements for the first time in 2004, everyone knew that the company had harnessed one of the great innovations of the Internet age.

All this is what prompted Semel to make his bid for Google. When that failed, he pushed ahead with plan B. In late 2002, Yahoo acquired Inktomi, which many believed had the second-best search technology on the planet. (Google was still tops.) The price: a bargain $257 million. Then, in mid-2003, Semel's patient negotiations with Overture bore fruit. He paid $1.4 billion for the search-driven ad pioneer, roughly 25 percent less than the original asking price...

When Yahoo decided it was going to buy Overture in 2002, Overture dominated search-related advertising; its revenue was two times Google's. By the time the deal was actually announced in 2003, the two companies were neck and neck. Two years later, Google's revenue was 2.5 times Overture's."

(Wired News)

The Lost Google Tapes

"The Lost Google Tapes" is a series of recordings in which Google Co-Founders Sergey Brin and Larry Page speak with reporter John F. Ince. Check them out at PodTech.net

No-Flip Mattresses

"Manufacturers say to flip your mattress every three months. It's even in some warranties. Yet this year's Simmons Beautyrest 2000 boasts a "no flip" design. And it's selling like hotcakes (for which flipping, incidentally, remains compulsory). Why? People love work-saving innovations—we're too lazy to flip. But what does it really mean? It means there's block foam on one side instead of something you could sleep on. And it means if there's a stain or a rip on the sleeping side, you're SOL. They should have called it the "can't flip" design. It's like a "No Oil Change" car that's simply had the dipstick and cap soldered in place." (Going to the Mattresses - By Seth Stevenson - Slate Magazine)

Can’t Get a Plasma Rifle?

Wicked Lasers Nexus Model is the Next Best Thing

Rumsfeld At The Podium

The TCP/IP of Advertising

"As per the NY Times: “Google hopes to one day provide a place where advertisers can buy ads in all types of media, said Tim Armstrong, Google’s vice president for ad sales.” Or, as Robert Young of GigaOm put it:

"Simply put, Google is building what is essentially an operating system ("OS") for advertising… one that will work across all media. Just like Microsoft's Windows (or any other OS) manages all the hardware and software resources of a computer, Google's Ad/OS will similarly manage all the critical components of an ad campaign, regardless of media type."

Ultimately, we can safely assume that one or more of the internet giants will successfully create an integrated advertising O/S. When that happens, the more interesting question then becomes:

How would you compete with an Ad O/S, and disrupt that business model?

One potential answer: You disintegrate the network and open it up. If Google (or Yahoo) becomes the Windows of the Ad O/S world, then what would the Linux of ad networks look like? Can one commoditize the mediation of advertising and shift value to the service providers around the network? Or put another way: Can the “Ad Network” be less of an operating system, and more like a free and open communication protocol? What would it take to create the TCP/IP of advertising on the internet?"

(Salman's blog: The TCP/IP of Advertising?)