Where Portals and Social Networks Collide

At first, Facebook was on board with the experiment. Google (GOOG) was testing a new tool that would let Web sites add a host of new social networking features. Using Google Friend Connect, for example, fans of indie pop musician Ingrid Michaelson could invite their friends, via their Facebook accounts, to join her Web site. Google's tool would let them import their Facebook contacts and then send out the invites to their friends' Facebook feeds. But just days after the trial began on May 12, Facebook "suspended" access for Google Friend Connect, saying it violated privacy terms in its user agreement.

Though Facebook says it has "reached out to Google several times about this issue" to work out a solution, the abrupt about-face underscores some of the growing tensions—and blurring lines—between social networks and traditional Web portals, both of which are angling to capitalize on the presumed advertising riches that will come from social media.

Enabling the Web's Social Butterflies

Indeed, it's been nearly three years since News Corp. (NWS) acquired MySpace, and still no one's answered that $64 gazillion question about who's going to make the real money from the social networking phenomenon. Uncovering the answer will only get harder as sites across the Web add social features, making the definition of social networking ever fuzzier. "In two to three years, the entire Internet is going to be more social," says Brad Garlinghouse, senior vice-president for communications and communities at Yahoo! (YHOO).

MySpace and Facebook have, in fact, taken steps that would have you think they're cool with this widening of social media beyond their network walls. In the coming months, both may be aiding and abetting the likes of Google and Yahoo in allowing users to access their profiles, friend lists, and other data for purposes that would steer their ad-viewing eyeballs elsewhere on the Internet.

The reasoning behind this apparent openness is simple: Just as AOL's and Prodigy's subscribers ultimately stormed beyond those gated online communities, social network users may not care to confine their socializing to one service. "I think the days of owning users are over," says Ning CEO Gina Bianchini, whose Web site enables users to create their own customized social networks. Ning was a charter member of OpenSocial, an initiative led by Google that was launched in late 2007 to help programmers create applications that can work on multiple Web sites.

Flocking to Share Data

But even if social network users want the freedom to spread their wings, they're not as keen about retyping all their personal information and contacts on every site. And so, as TechCrunch blogger Michael Arrington noted in a recent post, it's a tricky balancing act: The social networks "know that to keep users happy, and to stop them from entering in all that friend data into other sites, they need to make their data at least somewhat portable. Not too portable, mind you. That means they'd lose control. But just portable enough."

To facilitate this demand, MySpace and Facebook both introduced partnership programs within days of one another in early May. But while they may be cooperating some with other Internet players, the companies have yet to detail what business arrangements they may require to release their members' data to use on other sites.

The Escalator Pitch

The Escalator Pitch

Why So Long to Call a Recession?

Editor's note: This is the first in a series of stories that will look at how the economic downturn is affecting individuals throughout the country.

PALO ALTO, CALIF. — Robert E. Hall doesn't make predictions, at least not about the state of the economy. Hall is the Stanford University economist who chairs the committee charged with identifying when recessions begin and end. Over lunch at a sunny caf on the school's Mediterranean-style campus in Palo Alto, Calif., he explains it's much too early to determine whether the current slump merits the "R" word. "All the members of the committee agree we're far from a decision point," he says. Until much more evidence comes in, he prefers to call this an "experience."

It certainly is an experience for most Americans. Home prices tumble month after month. Food prices surge. Gas prices are approaching $4 a gallon. And the job market is getting rough. Given the evidence they see with their own eyes, most Americans believe the downturn is plenty clear. A recent survey by CNN (TWX) and polling firm Opinion Research found that 4 in 5 people think the economy is already in recession.

But the recession won't be official until Hall and his colleagues at the National Bureau of Economic Research say so. The NBER has been the recognized authority on dating downturns since 1961, when the U.S. Commerce Dept. began including the bureau's business cycle data in government publications. Today the NBER's business cycle dating committee has seven members, including Hall and Harvard economics professor and NBER President Martin Feldstein. The NBER is a nonprofit research group that operates independent of the government.

Ivory Tower Pace

Many people think the definition of a recession is two consecutive quarters of decline in the gross domestic product. But that's a misperception. Hall and his colleagues will look beyond such simple metrics, weighing monthly GDP estimates, employment data, income, industrial production, and other factors. To call a recession, they'll look for clear signs of "a significant decline in economic activity spread across the economy, lasting more than a few months."

Any call, if it comes, is going to take a while. The NBER usually takes 6 to 18 months to decide when a recession starts or ends. Hall's committee didn't announce the end of the 2001 recession until a full 20 months after the fact.

Should they move faster? Some critics think so. This measured, academic approach is in sharp contrast to the daily lives of most Americans. While Hall and his colleagues pore over spreadsheets and statistics, most people see the economy's troubles every day, in the cost of a tank of gas, the drop in home prices, or the layoffs of a friend, neighbor, or spouse.

Members of the business cycle dating committee hail from prestigious academic institutions, from Stanford to Northwestern to Harvard. Their worlds are well-insulated from the worst of the economic troubles. On such exclusive campuses, there aren't homes foreclosed, businesses shuttered, or people homeless.

Waiting for Reliable Data

Hall has heard all of the questions before. He's 64 and has chaired the dating committee since it was formed in 1978. After lunch, as a soft breeze tousles his gray hair and the midday sun glints off his metal-frame glasses, he explains there are good reasons for his group's deliberate pace. First, the committee exists to identify periods of economic expansion and contraction for the historical record, not to comment on them while they're taking place. They're also not involved in policymaking, so whether they call a recession or not has nothing to do with the actions Washington may take to address problems in housing or gas prices.

Oil’s Murky Math

The Escalator Pitch

Microsoft Joins One Laptop per Child

Oil’s Murky Math

The Escalator Pitch

Microsoft Joins One Laptop per Child

Closing the Door to Microsoft Vista

General Motors (GM) may take a detour around Vista, the latest computer operating system from Microsoft (MSFT). The automaker has encountered so many speed bumps getting Vista to work on its machines that it may just wait for the next version of Windows, due in 2010 or 2011. "We're considering bypassing Vista and going straight to Windows 7," says GM's Chief Systems & Technology Officer Fred Killeen.

Vista taxes all but the most modern PCs with hefty processing and memory requirements. Many of GM's PCs can't even run the system. "By the time we'd replace them, Windows 7 might be ready anyway," Killeen says. Then there are compatibility problems with all the software that needs to run on Windows. GM's software vendors still haven't ensured all their programs will run on Vista trouble-free. So the company is sticking with Windows XP for now. Killeen figures GM could install Windows 7 in three or four years.

Equal Parts Rejection and Acceptance

Many of Killeen's counterparts across Corporate America are finding themselves similarly vexed by Vista. The resulting delay or rejection of Microsoft's flagship product is stepping up pressure on the company to expand other areas of its business, including online software. Vista was first released in late 2006, but the dismay with it has come into sharper focus as slower-than-expected uptake affects Microsoft's bottom line, Google (GOOG) spiffs up its own free versions of competing software, and corporate tech managers move to put more Apple Macs on employee desks (BusinessWeek, 5/1/08).

Microsoft says it has sold 140 million copies of Vista as of Mar. 31, about the same percentage of all PCs as ran Windows XP at this point in its lifetime. The 140 million includes consumers who have to take the latest version when they buy a new PC as well as businesses that are entitled to Vista rights under licensing agreements, regardless of whether they end up using the system widely.

Among corporate users, it's nothing new for companies like GM to skip releases of Windows, says Mike Nash, a corporate vice-president at Microsoft. He points to customers including Continental Airlines (CAL), Bank of America (BAC), Cerner (CERN), and Royal Dutch Shell, which are installing Vista on thousands of machines, as evidence of the system's acceptance. For their part, consumers are warming to the improved performance and availability of popular software such as Apple's (AAPL) iTunes and Intuit's (INTU) QuickBooks on Vista PCs. "We're seeing tremendous transition to Vista, particularly in the consumer space," Nash says.

Vista vs. Web-Delivered Software

Even as Vista catches on with some users, Microsoft recognizes the need to streamline Windows development as computer users increasingly turn to Web-delivered software, instead of regularly upgrading PCs to run the latest power-hungry programs. "The rush to get into a new product doesn't really exist like it used to," says Al Gillen, an analyst at market researcher IDC. "Killer applications that pull you forward are becoming fewer and further between."

Microsoft Joins One Laptop per Child

Microsoft Joins One Laptop per Child

Just four months after a messy breakup with tech giant Intel (INTC), the One Laptop per Child organization on May 15 announced an alliance with another tech behemoth—Microsoft (MSFT). The two will make Microsoft's Windows XP operating system available on OLPC's XO laptop, which was designed to help educate the world's poorest children.

The tieup was no surprise. OLPC has long talked about putting a Microsoft operating system on its little green-and-white machine. But the announcement comes at a critical time, bolstering the viability of the nonprofit organization in the wake of Intel's departure and high-profile resignations by key employees.

With Microsoft on board, tens of thousands of educational software applications designed to run on Windows can now be used on the XO, making it more useful in schools and acceptable to government ministries. "This will have a huge impact on the psychology of OLPC. It brings us more into the mainstream of people's minds," says Nicholas Negroponte, OLPC's founder and chairman.

Microsoft says it got involved in the project partly at the urging of education officials in several countries. "A lot of people would like to see Windows running on that cute little green-and-white laptop," says James Utzschneider, general manager of marketing at the Microsoft division that promotes affordable computing in developing nations. He listed Egypt, Guatemala, Romania, and Russia.

Wider Dominance?

While the alliance improves the XO's chances for mass acceptance, it also drew the ire of long-time OLPC supporters who saw the machine as a counterweight in the developing world to Microsoft's dominance of computer operating systems. Walter Bender, the longtime president of OLPC who resigned last month, says Linux, the open-source operating system now on the XO, is a better choice because it is constantly being improved, whereas Windows XP, first introduced in 2001, is no longer being updated by Microsoft. Also, he says, "I believe that the culture of freedom and self-determinism that comes part-and-parcel with free and open-source systems is synergistic with the culture of learning that OLPC is trying to espouse."

OLPC is the brainchild of Negroponte, the long-time head of the Massachusetts Institute of Technology Media Lab. He launched the high-profile initiative three years ago to provide millions of inexpensive laptops for use in schools in developing nations. The idea was to provide a laptop that students could use at school and at home, experimenting and collaborating all the while. Negroponte's goal was a $100 price tag, but the current version of the machine costs just under $200.

Negroponte had originally predicted that 150 million of the laptops would be distributed in schools by the end of this year. So far, only a few tens of thousands have been ordered. Some countries have balked at the price, and others chose low-cost alternatives from commercial PC companies. Bender departed amid philosophical differences with OLPC officials who he says steered the organization from its early emphasis on learning by doing. In his view, OLPC became overly focused on shipping computers in large volumes. Negroponte says the organization hasn't lost sight of its educational philosophy.

Adapting the Operating System

Microsoft has spent more than a year adapting Windows XP for the XO laptop. Preparations include adding software that supports some of the features of the XO, including its electronic books, a writing pad, camera, and a display screen that is easily readable outdoors. Trials of the laptop running Windows are supposed to begin in June in a half-dozen developing countries. Adding Windows boosts the laptop price by about $3.

The first version of the OLPC's XO laptop was launched last November with the Linux operating system paired with a new graphical user interface called Sugar. Initially, Windows XP will be loaded on the computer via a 2-gigabyte flash card, the type used in most digital cameras. In the future, OLPC plans to create a version that will be preloaded with both Linux and Windows, so users can easily choose the operating system they want. OLPC also plans to create a version of Sugar to work with Windows.

Ever since Negroponte launched the laptop initiative, he has had on-again, off-again relations with Microsoft and Intel, with top executives of the two companies at times questioning the usefulness of the XO. Intel joined the OLPC organization last year, only to quit a few months later. It said it was pressured by OLPC to stop pushing its own Classmate PC device, aimed at students in poor nations. OLPC accused Intel of denigrating the XO laptop to leaders of governments. Intel denied the allegations.

Rebuilding Confidence

Since then, the nonprofit has been in tumult. Bender and two other top contributors left, and in March, Negroponte revealed that the organization was looking for a chief executive to handle day-to-day management. The former chief financial officer, Charles Kane, was promoted to president on May 2.

The OLPC plans an informational event in Cambridge, Mass., on May 20 that appears to be aimed at reestablishing confidence in its prospects. Negroponte and Kane plan to outline the operational strategy. Government officials from Peru and Uruguay, the first countries to begin large-scale deployments of the laptops, will share their experiences with counterparts from other countries.

The Microsoft deal gives Negroponte a major selling point to use as he addresses this group and others like it the world over to persuade more countries to adopt his laptop.

Closing the Door to Microsoft Vista

The Escalator Pitch

Forget the elevator pitch. Forget the press release. Forget the PowerPoint deck. If you were making a "Twitpitch" about your business, it would be over by now.

A what? A Twitpitch forces you to tell your company's story in 140 characters (about 20 words), the maximum length of a message on Twitter, a microblogging platform that is gaining popularity (BusinessWeek.com, 5/15/08). Social media pioneer Stowe Boyd experimented with the idea and coined the term on his blog last month when, overwhelmed by e-mails, he decided to take appointments at the Web 2.0 Expo only via Twitter.

Boyd's experiment offers a lesson for small companies that want the attention of potential investors, clients, and press: Get to the point. And it applies in almost any business setting, not just on Twitter. It's no secret that less is more in the age of information overload, no matter how you're trying to reach people. That's why Boyd also calls it the escalator pitch. "It's something you can say in 10 seconds while he's going up the escalator and you're going down the escalator," he says.

Google's Eight-Word Pitch

Veteran entrepreneurs and financiers understand the need for brevity when pitching any business. In a previous column (BusinessWeek.com, 10/19/07) BusinessWeek.com communications columnist Carmine Gallo writes: "I was once told by an investor at Sequoia Capital that when the "Google (GOOG) guys" (Sergey Brin and Larry Page) first approached the firm, the two young Stanford students had no track record or experience running companies. But Brin and Page had passion for digital information and a concise vision: Google would provide "access to the world's information in one click" (eight words). The investor said when his team heard this, they understood the vision immediately and were eager to hear more."

So what makes a good escalator pitch? "Brevity and relevance," says Brian Solis, principal of FutureWorks PR and author of the blog PR 2.0. "It's about focus and precision, and it needs to be aligned and presented in a way that reflects who you write to and why it's beneficial to your readers," Solis says in an e-mail.

That means tailoring your message to your audience, he says. Tell investors how you're going to make money, tell customers how you're going to solve their problems, and tell bloggers why their readers should care.

The Foundation of Your Brand

How do you condense your message to escalator-pitch length? Profy co-founder Svetlana Gladkova, who took part in Boyd's experiment last month at the conference and trade show, suggests the message should start with the people behind the product, rather than an outside public relations or marketing firm. "When you're actually talking about your own product, it's your idea," she says. "You will find the words." If you can't, it may be a sign that your product is not distinct from competitors, she says. The Twitpitch that won Boyd over? "Profy is a new blogging platform focused on social aspects of blogging and providing a blogger with all the tools in one place."

Unknown startups should also think of escalator pitches as the foundations for their brands, says Vinnie Lauria, co-founder of online forum company Lefora. To pitch Boyd, he started with Lefora's tagline, then he added a comparison to a familiar service. The result: "lefora.com is forums made easy—it's like blogger for forums."

Lauria, whose seven-person San Francisco company launched the service in April, takes the same approach when presenting to venture capitalists, beginning and ending his slide show with "forums made easy." "If you have to take more than a sentence to explain your service, people aren't going to wrap their heads around it," he says.

The Fortune-Cookie Message

Boyd and Solis are working together to encourage what they call micro PR, where short messages compete for attention in an open forum, rather than the current system, where long e-mails land in private in-boxes. But using Twitter, let alone pitching on it, is still a big leap for most companies, PR firms, and reporters. In the month since Boyd began Twitpitch, just about 150 messages have been tagged with the "#twitpitch" label, according to a search on Twitter search tool Summize.

Boyd, who now takes pitches only via Twitter, acknowledges some companies may resist the idea. But he also says some PR people have told him they favor the process. "The real value isn't how many commas you put into an e-mail. It's really about how effective you are about getting people who are interested to take a call or a meeting," he says.

And with your audience drowning in more noise than ever, cutting your message to fortune-cookie length may be the best chance you have at getting their attention.

Can you pitch your company in 140 characters? Try it in the comments section below.

Closing the Door to Microsoft Vista

Microsoft Joins One Laptop per Child