CNBC Business | Business Watch January 2010

Business Watch January 2010

The next MTV and brain-powered PCs

WELCOME TO WALL STREET 2.0

As the New Year gets underway, Silicon Valley is primping itself for another Wall Street love-bomb as private tech companies rush to cash in on the first signs of stock market interest in initial public offerings for more than two years. Venture capitalists say financiers are talking of public stock sales by tech companies at a level not seen since the 1990s, led by Facebook and other internet and “greentech” companies. However, many of the smaller companies that have set their sights on Wall Street are likely to be forced to sell out to a larger company instead; in recent months, Zappos, the online retailer, was bought by Amazon for €575m, and AdMob, the leading mobile advertising network, was acquired by Google for €510m. Hopes for a revival have been spurred by the strong rebound in technology shares since last spring.

MUSIC BUSINESS WANTS NEW MTV

With music companies desperate to create new businesses, almost three decades after MTV’s launch, the music video is getting a makeover — or at least the business model is. Record labels used to provide videos for free, as promotional material to shift CDs, but now the videos themselves are being recast as potential revenue generators. Welcome to Vevo, the music version of Hulu, the TV-and-film streaming site owned by three broadcast networks. New York-based Vevo is a venture between Universal Music Group and Sony Music Entertainment. EMI Group is close to taking a stake as well, says Bloomberg News. Google’s YouTube is also a partner; Abu Dhabi Media is an investor. The service, from which the partners will share advertising revenues, will make its debut with 15,000 videos. The web is hardly bereft of music videos, with YouTube, Yahoo! Music, and MTV’s sites, but Vevo aims to become a hub for videos of a premium quality “that enhance the music experience for fans,” says Vevo CEO Rio Caraeff ,a former digital executive at Universal. Video streams of Sony and Universal artists alone top a billion hits a month on YouTube, says Caraeff .

ADVERTISERS SEE MAGIC NUMBERS

Mobile advertising and marketing expenditure will grow by more than 40% annually over the five years to 2014, when it will account for an 11.7% share of global digital revenues, a new report says. Berg Insight estimate that mobile ad-spend reached around €1bn in 2008, and is set to enjoy a compound annual growth rate of 43% over the next half-decade, to €8.7bn. The report says: “Advertisers are increasingly aware of the opportunities and seek new ways to exploit them. Just the simple fact that people are able to make a phone call or send a text message anywhere at any time has changed the conditions for marketing in general.” While mobile display has not entered the mainstream marketing mix at present, the rise of smartphones should lead to an increase in activity in this area, the report added. Similarly, the convergence between wireless devices and PCs will encourage consolidation among ad networks, which should ultimately come to cover both of these mediums. Google’s recent purchase of AdMob may be one example of this growing trend, but the search giant is likely to face significant competition from both from its traditional rivals such as Microsoft and Yahoo, and telecoms specialists like Nokia and Apple.

INTEL BACKS BRAIN POWER

Within 10 years, we may be able to operate computers and control TV sets and mobile phones using nothing more than brain waves harnessed by Intel-developed sensor implants. Intel Corp says that consumers will want the freedom they will gain by using the implants. “Human beings are remarkably adaptive,” Andrew Chien, director of future technologies research at Intel Labs told Computerworld magazine “If you told people 20 years ago that they would be carrying computers all the time, they would have said, ‘I don’t want that. I don’t need that.’ There are a lot of things that have to be done first but I think [implanting chips into human brains] is well within the scope of possibility.” Intel research scientist Dean Pomerleau believes users will soon tire of depending on a computer interface, having to fish a device out of their pocket or bag to access it, and manipulating an interface with their fingers. “Imagine being able to surf the web with the power of your thoughts.” Surely, for most men, that would be risky in the workplace.

VW REVEALS DRIVING AMBITION

Volkswagen Group is on its way to becoming the world’s number one automaker, having recently bought a €1.7bn, 20% stake in Japanese manufacturer Suzuki. The company also plans to invest €25.8bn over the next three years in eco-friendly vehicles, “innovative technologies” and new plants, as well as update its offerings in most classes, and move into fresh sectors — what it calls a “multi-brand modular matrix strategy”. Christian Klingler, Volkswagen Group board member for sales and marketing, says the European motor giant is aiming “not just to survive but to thrive”. It aims to take a leading position in its category in both production and sales and become “one of the most profitable manufacturers” in the sector. The Group also hopes to treble sales of its VW and Audi marques in the US — where they have a combined share of 2.8% — to around a million units.

FRANCE’S NEW MAN OF LETTERS

As part of continued celebrations for Lanvin’s 120th anniversary, the fashion house’s artistic director Alber Elbaz has designed two stamps for the French postal service, La Poste. The stamps, illustrated with his iconic doodles, will go on sale this month. In addition, other Lanvin anniversary products — including pencils, paper presses and notebooks — will be on offer later this month at the post office based on Rue des Mathurins in Paris. An online Lanvin store will also be created on the post office’s website to sell the commemorative items.

DORSEY UNVEILS THE SHAPE OF THINGS TO COME

Twitter co-founder Jack Dorsey announced his new company in appropriate fashion: with a tweet on the network he created in 2006. His latest venture, Square, allows merchants to accept secure payment from credit (and other) cards using a mobile phone. “The basic idea behind Square is that everyone has this little plastic device in their pocket, which is a credit card, debit card or pre-paid card, and they’re using them everywhere, they’re using them to buy anything,” explained Dorsey in a TechCrunch video demonstration. “We wanted to allow people to easily and quickly, within 10 seconds, be able to accept these plastic devices as payment.” According to Square’s website, payees can start accepting payments via Square in under 60 seconds, with “no contracts, monthly fees, or hidden costs.” The company donates one cent from every transaction to the charity of the payer’s choice. In order to streamline the process, payees can register for Square and upload a photo, so that payees can verify that you are who you say you are. In order to accept credit card payment using Square’s iPhone app, a merchant attaches a card-reading dongle to the smartphone’s audio input — or “any device with an audio input jack.” Once the customer signs the phone with their finger, the transaction is complete, after which the app can email a receipt to the customer.