E-shoppers go mobile on Thanksgiving, Black Friday

Apple's iPhone and iPad helped make mobile devices a key driver of Thanksgiving and Black Friday e-commerce this year, according to a report from IBM Coremetrics.

Online Thanksgiving shopping grew by 39.3 percent year over year, creating momentum that continued into Black Friday, where online sales grew by 24.3 percent compared with the same period last year, said the report (PDF).And Black Friday witnessed the arrival of the mobile deal seeker,

 who embraced his or her mobile device as a research tool for in-store and online bargains. Mobile traffic came close to tripling year over year, to 14.3 percent on Black Friday 2011 from 5.6 percent last year.

The iPhone and the iPad accounted for 10.2 percent of all Black Friday online traffic. The iPhone and the iPad ranked 1 and 2 for mobile device retail traffic (5.4 percent and 4.8 percent, respectively). Android-based devices came in third at 4.1 percent.

But it's not all about mobile browsing. The value of individual orders also increased, while the number of items purchased decreased. Home goods, for example, saw an average order-value increase of nearly 16 percent, while the number of items per order dropped by more than 6 percent.

Here's a rundown of the report's other key findings:

    Sales on mobile devices surged year over year, to 9.8 percent from 3.2 percent.

    Shoppers using the iPad accounted for more actual purchases per visit than shoppers using other mobile devices, with conversion rates reaching 4.6 percent for the Apple device versus 2.8 percent for overall mobile devices.

    Mobile shoppers demonstrated a laser focus that surpassed that of other online shoppers, with a 41.3 percent bounce rate on mobile devices versus a rate of 33.1 percent for shoppers on other computing gadgets. The bounce rate records how often people jump from one site to another looking for the best deal on a particular item, rather than browsing around through various items in a more leisurely fashion.

    Shoppers referred from social networks generated 0.53 percent of all online sales on Black Friday. Facebook led the pack, accounting for 75 percent of all traffic from social networks.

The gains in online shopping come amid a push from traditional brick-and-mortar stores to offer better online experiences.

And while stores like Macys offered "doorbuster" sales to bring more customers into its brick-and-mortar locations (and ostensibly spend more money in them), a greater number of people appear to be splitting their purchasing between online and retail.

The National Retail Federation estimates that as many as 152 million Americans are expected to shop this weekend, up from last year's 138 million.

IBM Unveils Chip Prototypes That Mimic Human Brain

IBM researchers have created prototype computing chips that mirror the human brain, enabling them to not only collect and analyze information, but essentially learn from their mistakes, understand the data they're seeing and react accordingly.

The "cognitive computing" chips are able to recognize patterns and make predictions based on data, learn

through experiences, find correlations among the information and remember outcomes, according to IBM officials.

The chips represent a significant departure from how computers are traditionally programmed and operated, and open opportunities in a wide range of fields, they said.

"Future applications of computing will increasingly demand functionality that is not efficiently delivered by the traditional architecture," Dharmendra Modha, project leader for IBM Research, said in a statement. "These chips are another significant step in the evolution of computers from calculators to learning systems, signaling the beginning of a new generation of computers and their applications in business, science and government."

IBM has been pushing efforts to drive more intelligence into an increasingly wider range of devices, and to create ways to more quickly and intelligently collect, analyze, process and respond to data. Those efforts were on public display in January when IBM's "Watson" supercomputer beat human contestants on the game show "Jeopardy."

Watson, like many projects at IBM Research Labs, is focused on analytics, or the ability to process and analyze data to arrive at the most optimal decision. Watson was a revelation because of its ability to think in a humanlike fashion and answer questions posed in natural language—with puns, riddles and nuances, etc.—by quickly running through its vast database of information, making the necessary connections and returning not with a list of possible correct answers, but the correct answer itself.

The cognitive computing chips echo those efforts. IBM officials are calling the prototypes the company's first neurosynaptic computing chips, which they said work in a fashion similar to the brain's neurons and synapses. It's done through advanced algorithms and silicon circuitry, they said.

It's through this mimicking of the brain's functionality that the chips are expected to understand, learn, predict and find correlations, according to IBM. Digital silicon circuits create what IBM is calling the chips' neurosynaptic cores, which include integrated memory (replicating synapses), computation (replicating neurons) and communication (replicating axons).

With those capabilities, computing can move away from the current if-then programming scenario and toward one where computers dynamically react, learn and problem-solve on the go.

The two working prototypes offer 45-nanometer SOI-CMOS cores that contain 256 neurons. One core contains 262,144 programmable synapses while the other holds 65,536 learning synapses. The chips are undergoing testing and have worked with simple applications such as navigation, machine vision, pattern recognition, associative memory and classification.

The effort is getting $21 million in new funding through DARPA (the Defense Advanced Research Projects Agency) for phase 2 of what IBM is calling the SyNAPSE (Systems of Neuromorphic Adaptive Plastic Scalable Electronics) project. The project's goal is to create a computing system that not only collects and analyzes complex information gathered simultaneously from multiple sensors, but can dynamically rewire itself as it goes, and to do this in a compact, energy-efficient form factor.

IBM officials see countless applications for cognitive computing systems. In one, such a system that is used to monitor the world's water supply—collecting and analyzing such data as temperature, pressure, wave height, acoustics and ocean tides—could determine the threat of a tsunami and decide to issue a warning based on its findings. Another cognitive system could monitor sights, smells, texture and temperatures to warn grocers of bad or contaminated produce.

"Imagine traffic lights that can integrate sights, sounds and smells and flag unsafe intersections before disaster happens or imagine cognitive coprocessors that turn servers, laptops, tablets and phones into machines that can interact better with their environments," IBM's Modha said. 

How Google can do more than beef about patents

Google kicked up a dust storm this week, publicly whining about Microsoft, Apple, and others ganging up against it to pursue patent violations by its Android mobile operating system.

It's hard to be too sympathetic to Google. While there are few who don't believe that patent reform is

desperately needed, Google is a giant company with deep pockets that has tried to play the same patent acquisition game as the companies it criticized. It just hasn't played the game as well.

The problem for Google is that it has few alternatives to carping about competitors. Android has had remarkable success since debuting in 2007, becoming the most widely used smartphone operating system in the United States. But because Google entered the smartphone market so late, its patent portfolio, relative to rivals, is thin.

Just look at the numbers: According to MDB Capital Group, an investment banking firm that focuses on intellectual property, Google has applied for or been granted 317 mobile device patents in the United States. Microsoft, which is something of a patent factory, has 2,594 patents or patent applications for mobile device technology. Microsoft's new partner, Nokia, has applied for or been granted 2,655 patents.

That's left Google vulnerable to the current state of patent litigation. Typically, a company with a patent threatens to sue, or actually sues, another company that it believes has infringed on its innovation. The common defense is for the accused company to find one of its own patents that the accusing company has infringed upon and threaten a counter-suit. That gives it the ammunition to propose cross-licensing deals that keep both companies out of court.

But with so few mobile device patents, Google is hard-pressed to do that kabuki dance. Its senior management is clearly frustrated to have to play the patent game in a system that so many--even some of the companies that are playing--believe is broken.

"That's why they're crying," said MDB chief executive Christopher A. Marlett. "Google is really in a bad position. They're going to have to fight like hell."

That frustration led its chief legal officer David Drummond to blog on Wednesday about "a hostile, organized campaign against Android by Microsoft, Oracle, Apple and other companies, waged through bogus patents." That post sparked a tit-for-tat between the company and Microsoft, each denying the other's claims and raising new charges.

An accusatory missive from Google's chief legal officer isn't going to alter those dynamics. But Drummond did hint at other options.

"We're also looking at other ways to reduce the anti-competitive threats against Android by strengthening our own patent portfolio," Drummond wrote.

CNET has learned that the company is exploring ways to create incentives for employees to add patents to its portfolio from work done internally. But that only helps so much.

Google also seems likely to become more aggressive in buying up patents, much the same way its rivals have. As much as Google appears to loathe playing the patent game, spending money to prevent litigation rather than innovating, it may have come to realize that it has no other alternative. And with $39.1 billion in cash as of June 30, it certainly has the financial wherewithal to bid against Microsoft, which has $52.8 billion in cash, and Apple, which has $75.9 billion in cash.

Already, the company has dipped into its coffers. Late last month, Google bought 1,000 patents from IBM, covering a broad swath of innovation from Web-based querying to servers and routers. And the company bid earlier in the year for some 6,000 patents and patent applications held by Nortel Networks. It ultimately lost that battle to a $4.5 billion offer from a consortium that included Apple and Microsoft.

Sources say that Google is now eyeing wireless technology developer InterDigital, after the King of Prussia, Pa., company hired investment banks in July to consider bids. But so are Apple, Samsung and others, according to reports. Even as the stock market has tanked, InterDigital's shares have climbed 62 percent since it put itself on the block, giving the company a market capitalization north of $3 billion.

MDB's Marlett thinks that Google may need to act more boldly. Eastman Kodak recently said it's considering selling some 1,100 patents related to digital imaging, important technology for mobile phones. He expects Google to bid aggressively for those, competing against Apple, among others.

Marlett thinks it might even make sense for Google to bid for BlackBerry-maker Research In Motion, which holds 3,134 patents and patent applications for mobile devices. The company's stock has soured since the beginning of the year as it's struggled to compete with Android and the iPhone, so much so that it now has a $12.3 billion market cap.

"Google has got to make a strike," Marlett said. "They need to fortify their defense."

Google Apps Vs. Office 365: Prepare For Battle

Software giant Microsoft is playing coy. The company on Monday announced that its Office Division will be making an announcement on Tuesday, June 28. What about? Microsoft's event invitation says only that the news has something to do with Office 365, the long-awaited cloud-based version of its Office software.
Microsoft seems determined to pretend that VP Jon Roskill hasn't already eliminated the possibility of surprise. In a Twitter post in early June, Roskill revealed that Office 365 will move

from beta testing to general availability on June 28.
Google and the other companies involved in the cloud productivity competition--IBM, Novell, ThinkFree, Zoho--have been preparing for this day, the moment when the battle of the cloud productivity suites is joined in earnest.
Taking a few last shots at its approaching foe before it has to grapple with Office 365 at every sales call, Google on Tuesday revealed that the State of Wyoming has finished moving all 10,000 state government employees to Google Apps for Government.
One day earlier, Google presented a testimonial from Terry Geiger, director of corporate IT at The McClatchy Company, about how his company has "gone Google."
And amid these customer-win stories, Google just released an enhancement to Google Cloud Connect for Microsoft Office that allows users to open any Office file stored in Google Docs directly from within Microsoft Office.
Google has been spending a lot of time thinking about Microsoft recently. So have its business customers.
McClatchy has decided to ditch Microsoft Exchange and adopt Google Apps for email, collaboration, calendars, chat, and website creation for its 8,400 employees. The company plans to stop upgrading Microsoft Office licenses en masse and to encourage the organic adoption of Google Docs.
Geiger's "Dear Steve" letter, in which he breaks up with Microsoft, derides Microsoft Exchange as complex, expensive, and cumbersome. He says that his company weighed Google Apps against Office 365 and its predecessor, BPOS, and found Microsoft's products wanting. As Geiger sees it, Microsoft fails to understand the "service" part of software-as-a-service.
"Microsoft may still be the personal productivity leader, but Google is the team productivity leader," he wrote. "Google Apps and its collaborative nature are really where we want to go. Google has a better service strategy, better collaborative strategy, and a better cost structure."
Geiger in a phone interview clarified that his company primarily evaluated BPOS and considered Office 365 based on the descriptions provided by Microsoft sales representatives, since 365 was not yet available. He said that while price was a significant factor, it was not a deciding one, adding that the pricing structure of Microsoft's offerings is "very complicated."
Geiger said his company's decision focused on functionality and service. In contrast to Google, which pursues a strategy of rapid iteration, releasing ongoing updates every few days or weeks, he found Microsoft's approach antiquated. "As we talked to Microsoft about it, they still seemed stuck in the old model of a software company with a normal development and release cycle," he said. Microsoft, he suggested, seems to be committed to business-as-usual, developing its traditional product line, with long release cycles, and then pushing updates to the hosted versions of the applications.
With regard to service, Geiger said the inquiries he made to other Microsoft BPOS customers were not promising. "I didn't speak to a single satisfied customer with BPOS," he said, noting that they cited issues like long and frequent outages. (In fact, one such outage was reported on Wednesday.) "Microsoft still isn't a service-minded company," he said. "They're still a software development company that's trying to understand the service model."
The biggest hurdle to going Google, said Geiger, involved issues of data privacy and legal discovery. As a news organization, McClatchy was concerned that governments might try to obtain access to its confidential information by sending subpoenas to Google rather than challenging McClatchy in court.
Geiger said that his organization came away satisfied with Google's representations about privacy and security policies, though he also said that Google made minor adjustments to its agreement with McClatchy to assure that Google's response to subpoenas aligned with McClatchy's interests. He declined to elaborate on the specifics of those contractual terms.
Yet for all its bravado and first-mover advantage, Google is worried and Phil Karcher, an analyst with Forrester Research, suggests the company should be. In a phone interview, he said that the availability of Office 365 will have a negative impact on Google, though that won't necessarily lead to a surge in Office 365 usage.
Karcher said that a lot of large companies piloted Google Apps "as leverage to extract concessions" from Microsoft when it came time to renegotiate software licenses. That gambit may become less necessary now that Microsoft has a competitive cloud offering.
Office 365 also includes collaboration features--one of the main selling points of Google Apps--so Google Apps will be less able to claim collaboration as a point of differentiation.
"The main obstacle to folks moving to Google Apps overall has been the ability to bridge on-premises deployments to the cloud," he said. "Microsoft has a major advantage because it's so entrenched in IT departments, it can take customers on that long journey with ease."
A measure of that entrenchment: Forrester's Q1 2011 Global Desktop Innovation Online Survey, answered by 150 IT respondents, found that while many IT departments support Microsoft Office 2003 or earlier (74%), Office 2007 (72%), and Office 2010 (52%), few support Google Docs (8%). IBM Lotus Symphony was even less well represented (4%). And Karcher noted that actual deployments are probably even lower than that because many respondents described their use of Office alternatives as pilot tests rather than active implementations.
Karcher expects that Google will retain the advantages of cost and affection--based on Forrester's research, he said, "Google Gmail and Docs, in terms of popularity, just blows Office Web apps out of the water."
Geiger echoed that assessment, noting that people at McClatchy were very excited about the move to Google Apps and that among the hundred or so email messages he has received about the decision, the overwhelming number expressed support and only a few voiced concerns.
Unfortunately for Google, corporate IT buying decisions tend not to be decided by popular vote.

Apple Brand Value at $153 Billion Overtakes Google for Top Spot

Apple Inc. (AAPL), maker of the iPhone, iPad and iMac, overtook search-engine giant Google Inc. (GOOG) to become the world’s most valuable brand, WPP Plc said in a report today.

Apple’s brand value climbed 84 percent in the past year to $153.3 billion, WPP’s Millward Brown unit said. Google’s brand lost 2 percent to $111.5 billion, ending four years atop the rankings, while International Business Machines Corp. (IBM) climbed 17 percent to be the No. 3, ahead of McDonald’s Corp.(MCD)

New versions of the iPhone and iMac, and the introduction of the iPad tablet, helped Cupertino, California-based Apple almost double sales and profit for the latest quarter. Apple, which overtook Redmond, Washington-based Microsoft Corp. (MSFT), as the most-valuable technology company by market value in May 2010, boosted its share of the global phone market and is the leading seller of tablet computers.

“It’s clear that every single Apple employee, from Steve Jobs and Tim Cook to the summer interns, see protecting and nurturing that brand as a top priority,” Millward Brown Chief Executive Officer Eileen Campbell wrote in the report. “Tablet computing also drove value growth not just for Apple, but also for the providers who support yet another networked device.”

Facebook Inc., operator of the world’s largest social- networking site, had a 246 percent climb in brand value, the fastest, to become the No. 35 brand at $19.1 billion, according to the report. Baidu Inc., Google’s Chinese rival, posted the second-fastest climb at 141 percent, to be the No. 29 brand at $22.6 billion.

Twelve of the top 100 global brands were from China, led by China Mobile Ltd. (941) at No. 9 and Industrial & Commercial Bank of China Ltd. at No. 11. Amazon.com Inc. (AMZN), which ranked 14th, overtook Wal-Mart Stores Inc. (WMT), which ranked 15th, to become the most-valuable retail brand.

Cisco Refocuses on Switch Business as It Scraps Flip Camera(video)

Cisco Systems Inc. (CSCO)’s shutdown of the Flip video division lets Chief Executive Officer John Chambers get started on a bigger challenge: shoring up the main business of routers and switches.

The largest maker of networking gear faces a threat from lower-priced rivals, such as Juniper Networks Inc. (JNPR) and Hewlett- Packard Co. Routers and switches, which help businesses and carriers handle Internet traffic, account for about half of the company’s revenue.

Cisco, which said yesterday it will cut 550 jobs as part of the Flip closure, faces a trade-off between profit and market share. Its traditional networking gear has been its highest- margin source of revenue, propelling its dominance in the industry. As new competitors introduce cheaper alternatives, Cisco is struggling to maintain its lead without matching rivals’ price cuts, said Sean Conner, an analyst with Nuveen Asset Management in Minneapolis.

“If a customer only needed a Chevrolet, Cisco would sell them a Porsche even if they didn’t need the extra speed,” said Conner, whose firm sold its Cisco stake in January after holding the shares for more than five years. “Now they can’t because HP and Juniper came in and said to consumers, ‘Why are you paying for all that extra stuff?’”

Hewlett-Packard, the world’s largest computer maker, is selling more networking gear to capitalize on the growth of data centers -- the vast server facilities that power the Internet. Juniper, meanwhile, entered the switching market in 2008, building on its routing business.

Karen Tillman, a spokeswoman for San Jose, California-based Cisco, declined to comment.

‘Tough Market’

Chambers said last week that Cisco is taking a hard look at the switching business, where it has more than 80 percent global market share. Cisco is seeking ways to bring new products to profitability more quickly, he said.

“Switching is our challenge,” Chambers said last week at an investor conference in San Francisco, singling out International Business Machines Corp. (IBM), Oracle Corp. (ORCL) and Hewlett- Packard as rivals. “It’s going to be a tough market for us.”

Sales of switches rose 12 percent to $13.6 billion in the fiscal year ended in July, accounting for about a third of total revenue. In the subsequent six months, year-over-year growth has slowed to 7.2 percent.

Some networking rivals are willing to accept 40 percent gross margins on switches, while Cisco has typically seen 70 percent to 80 percent margins, Chambers said at the investor conference. Gross margin measures the percentage of sales remaining after deducting product costs.

Time to Choose?

“Cisco needs to choose between protecting share or preserving margins,” John Slack, an analyst at Citigroup Inc. in San Francisco, said yesterday in a note to clients. “It simply can’t do both.”

Chambers said in an April 4 memo to staff that he would make several “targeted moves” to restore lost credibility and sharpen the company’s focus. Shutting Flip, which Cisco bought for $590 million in 2009, isn’t enough to compensate for the declining profitability of its broader consumer business, said Alex Henderson, an analyst at New York-based Miller Tabak & Co. The company should exit that area entirely, he said.

“They’ve got a lot of work to do, and this is just a drop in the bucket,” Henderson said of the Flip decision.

The job cuts yesterday represent less than 1 percent of total employees and will take place by the end of the fiscal year, the company said. Cisco’s consumer division also includes Linksys home networking, and audio and media-storage products.

Home Video

Cisco bought Flip to expand its expertise in home-video networking, a bid that never paid off. Flip posted about $325 million in revenue last year, less than 1 percent of total sales, Citigroup’s Slack said.

Cisco’s gross margin narrowed to 64 percent last fiscal year from 70 percent in 2003, in part a reflection of the push into consumer products and pressure from rivals on prices of its corporate products.

The slump has taken its toll on Cisco’s shares, which have declined 34 percent in the past year. That’s wiped out about $50 billion in market value. The stock fell 3 cents to $17.44 yesterday in Nasdaq Stock Market trading.

Competition continues to mount. As Cisco was pushing into new areas, smaller companies such as Riverbed Technology Inc., F5 Networks Inc. and Aruba Networks Inc. have been able to gain an edge, according to Mizuho Securities USA Inc.

While these competitive pressures may have caught Cisco by surprise, they’re unlikely to keep the company down for long, said Rohit Mehra, an analyst at IDC in Framingham, Massachusetts.

“I don’t see a lot of these challenges as Herculean,” Mehra said. “We can call these small missteps. You will lose some market share when you’re the 800-pound gorilla.”