Logitech Breaks Into Videoconferencing

NY Times

In a move to break into the videoconferencing market, Logitech International has agreed to buy LifeSize Communications, a start-up that makes high-definition videoconferencing equipment, for $405 million in cash.

LifeSize, which is based in Austin, Tex., sells videoconferencing tools that cost less than most other products on the market. The high-definition video is so clear that viewers can see scribbles on Post-it notes.

Logitech, a maker of desktops and personal computer equipment that is based in Fremont, Calif., and Switzerland, will be competing against Cisco Systems, Polycom, Microsoft, Hewlett-Packard and I.B.M, which have all made investments in the industry.

With LifeSize’s technology, Logitech aims to “make lifelike, HD-quality video communication as mainstream and seamless as a telephone,” said Gerald P. Quindlen, Logitech’s chief executive.

For a long time, videoconferencing was limited to big businesses that could afford to build expensive systems for business VoIP and video in their conference rooms. But videoconferencing has become more accessible because Internet connections are commonplace, video has become more efficient and the price has dropped for high-definition cameras and displays. Now, many companies are trying to reach small businesses and individuals that previously used low-quality webcams on PCs.

Cisco, for instance, sells its high-end TelePresence system to big businesses that install it in conference rooms. Last month, Cisco said it planned to buy Tandberg, a Norwegian video communications company, for $3 billion. Tandberg makes smaller and less expensive videoconferencing tools that can sit on desks. Cisco has said it hopes to use Tandberg’s technology to sell equipment to small businesses and individuals.

The LifeSize Passport, a high-definition videoconferencing system for use with televisions or computers, was introduced in October. The device, which weighs less than a pound and is priced under $2,500, works with Skype business VoIP services and is aimed at workers who travel or telecommute.

Andrew W. Davis, senior partner at the consulting firm Wainhouse Research, said the deal surprised many in the industry because Logitech made products for consumers while LifeSize made products for businesses. “But that wall, like the Berlin Wall, will come down,” he said. “Logitech has been aggressive in this space across a variety of fronts, and that’s who you’ll see in your living room, not Cisco.”

Free Airport Wi-Fi -- What's In It For Google?

from Channel Web

Travelers slogging their way through the nation's airports this holiday season are sure to benefit from the free Wi-Fi service Google will be making available in 47 airports between now and January 15.

But maybe not as much as Google, which is subsidizing the Wi-Fi service.

Google Tuesday said that it would provide the free Wi-Fi access through a partnership with Boingo Wireless. Consumers can donate to one of several charities when they log on, and Google will match the donations up to $250,000. Google is already providing free Wi-Fi on Virgin America flights in a promotion that also lasts through January 15.

Google's seemingly altruistic offer should pay big dividends at a time the company could use some goodwill. Here's why:

1. The move will help Google build political capital. Google has long been a big proponent of high-speed, wireless Internet access, lobbying in Washington D.C. to open up a government auction of licenses to provide wireless services to other companies (possibly even Google itself) beyond the mainstream broadband service companies. Google also backs efforts to develop new Net neutrality rules.

2. Providing free airport Wi-Fi also will help Google build up some goodwill among consumers at a time when its reputation could use a little burnishing. Google has been stung in recent months by several highly-publicized failures of its Gmail e-mail service and the controversy over its efforts to digitize millions of out-of-print books. The former has raised questions about Google's reliability and the latter about whether the company is living up to its informal "Don't Be Evil" corporate motto.

3. Subsidizing airport Wi-Fi for travelers will help with Google's brand-building efforts. While one might think Google doesn't need to work on its brand -- "Google" has become a verb to search for something online, after all -- it can't afford to become complacent. Archrival Microsoft has been offering free Wi-Fi at hotspots around the country since September, and Yahoo is now giving away free Wi-Fi in New York City's Times Square.

Google SEO is in no immediate danger of losing its dominant position in the Internet search market: Microsoft's Bing hasn't cracked the 10 percent market share barrier yet, compared to Google's 65 percent share. But you have to wonder whether all those Microsoft TV advertisements showing dazed Google users spouting useless search terms are making people consider alternatives.

New Access To Getty For Flickr Photographers

from cNet

Yahoo's Flickr site has deepened its relationship with photo-licensing power Getty Images so photographers can nominate their own photos for inclusion in Getty's Flickr Collection.

Previously, Getty decided which images it believed were commercially viable, and since the program launched in July 2008, it has put together a collection of more than 60,000 commercial images. Now photographers, instead of just being able to indicate that they're willing to be contacted by Getty, can actively submit a portfolio of images.

"A submission should include exactly 10 images that represent what you consider to be the best of your work. The Getty Images creative team will evaluate submissions based on style, subject matter, and technical skill," Andy Saunders, Getty's vice president of creative imagery, said in a statement. "If some or all of the photos--or other images from your photostream--are selected for the Flickr Collection on Getty Images, you will receive an invitation via FlickrMail. This invitation will clearly show Getty Images' initial selection of images and introduce the enrollment process."

The partnership is an interesting confluence between the old-school world of stock photography and the nouveau era of digital photography and the Internet. With digital SLRs and the Internet, high-quality photos are easier to come by, leading to the arrival of several "microstock" companies that sell photos on a royalty-free and relatively inexpensive basis. It's hurt professional stock photographers, but it's provided extra income to any number of enthusiasts and amateurs.

Flickr never launched its own microstock site, despite an abundance of enthusiasts contributing photos, but the Getty partnership does mix a commercial ingredient into the Yahoo photo-sharing site's operations.

The easy availability of photos at Flickr and other sites can lead to copyright infringement troubles. On Tuesday, Toyota USA apologized for using Flickr photos without permission:

Toyota apologizes for pulling images from Flickr without photographer permission. Images from a handful of photographers appeared on a Toyota site for five days. We're working quickly to reach out to the individual photographers involved. Until then, the images have been removed, and corrections have been made to the process of pulling images from Flickr.

So it's clear that some Flickr photos have business value, whether for their professional quality or their everyman snapshot flavor.

Getty and Flickr won't disclose any details about their business relationship, but here's what Flickr has to say about how the finances work for photographers:

Flickr has a business relationship with Getty Images, though we've never publicly discussed the specifics of the deal. Regarding the photographers, Getty Images will be the exclusive distributor of select Flickr members' content, and in turn, Getty Images will facilitate the license of such photography and will pay the royalties directly to the members. This will be a direct relationship between Getty Images and each Flickr contributor.

Flickr photographers will be asked to sign a Getty Images contributor contract, if they agree to have their images licensed for commercial use, that will specify rates for rights-managed and royalty-free royalties, as applicable. Rates for royalty-free imagery are 20 percent; rates for rights-managed (images) are 30 percent. These are directly in line with royalty rates that (Getty's) existing contributors receive.

Net Neutrality: Two Senators Voice Their Concerns

Opinion: Senators Orrin Hatch and Jim DeMint

from the Wall Street Journal

Chairman Julius Genachowski sees the 

need for Internet Regulation

Last week, Chairman Julius Genachowski and his Democratic colleagues on the Federal Communications Commission (FCC) began rewriting federal regulations governing the Internet and broadband communications. According to Mr. Genachowski, the Internet today is a failed market in which neither entrepreneurs nor consumers are treated fairly.

If this is news to you (especially if you're reading this on a Web site while simultaneously uploading photos to your family blog and streaming music from an online radio station), you're not alone.

The Internet is one of the only aspects of our economy and national life free from government regulation. Mr. Genachowski and his colleagues see this as a bad thing. We disagree.

If there is a perfect encapsulation of the success of Washington's current hands-off approach to the Internet, it's the popular "There's an app for that" advertising campaign. Since the latest introduction of smart phones like Apple's iPhone and Blackberry's Curve, independent software developers have created tens of thousands of applications for mobile devices. There are apps for gamers, bloggers, couch potatoes, foodies, health-care providers and every other niche market you can imagine. These applications have improved people's lives and satisfied consumer demand.

And it has all happened without a Washington politician or bureaucrat moving a muscle.

This isn't a coincidence. If the Internet were invented by a politician or worse, managed by bureaucrats, cell phones would still look like bricks and the information superhighway would still be a dirt road. If there is any sector of our economy where competition is so fierce and where the pace of innovation is so rapid that government interference would only get in the way, it is the Internet and telecommunications market.

The Internet has grown because of a virtuous and mutually beneficial circle: network operators provide ever-increasing speed and bandwidth; content providers one-up each other with game-changing innovations; and consumers adapt and adopt at lightning speed.

Ten years ago, we effectively had no broadband marketplace. Dial-up Internet was common, but not ubiquitous. Consumers had a choice of service providers, but they were typically confined to walled gardens of preselected or preferred content. The broadband revolution led us out of that desert. Instead of dog-paddling, we could surf the net, choosing between broadband service offered by traditional phone and cable companies and, now, wireless companies as well.

Compare that to the last decade of success at government dominated companies like Fannie Mae, Freddie Mac, GM or Chrysler.

Yet despite an overwhelming record of innovation, and customer satisfaction, Washington wants to replace the judgment of consumers with that of politicians and bureaucrats.

Net neutrality may sound like fairness but it is actually the opposite. Bandwidth is finite—like the finite number of lanes on a highway—and network providers must innovate in order to accommodate the burgeoning traffic. As they invest billions of private dollars in new and improved networks to accomodate demand for such net tools as business VoIP service, they should rightly expect to set prices and manage those networks as they see fit.

If the FCC takes control of the Internet, they will in effect be regulating how consumers use their computers, and we'll have the inevitable result of all poorly designed regulations: business decisions prejudiced by politicians and political decisions prejudiced by corporations. Keep in mind, we're talking about the most competitive, efficient and consumer-driven industry in the global economy.

Is it reasonable to believe committees of suits in Washington—with hearings and markup meetings and regulatory comment periods—can keep up with the competitive pressures of Google SEO and the Internet economy?

To ask the question is to answer it. There is a time and place for federal economic regulation, but the middle of a recession is not the time, and the Internet is certainly not the place.

Mr. DeMint is a Republican senator from South Carolina.

Mr. Hatch is a Republican senator from Utah.

John Malone Deals Himself Out At DirecTV

from Business Week

Sometimes even a wheeler-dealer like John Malone outsmarts himself. That’s seems to be the situation at DirectTV. (DTV), where the razor sharp media baron seems to have dealt himself out of installing his own choice as CEO of the satellite TV giant despite once owning 57% of the company’s stock. Instead, he controls 24% of the company’s votes, but seems to have been bottled up by a very independent DirecTV board.

Those are the details that are emerging from a recent SEC filing by DirecTV. The satellite company clearly wanted to stop Malone, who buys and sells companies faster than most people change socks, from exerting too much control over the company. So in what has to have been a wing ding of negotiations, the DirecTV board swapped the DirecTV stake that Malone’s Liberty Media (LMDIA) once held for shares in DirecTV that Liberty will distribute to its shareholders. In addition, DirecTV took a $2 billion loan off Liberty’s hands that it used to buy those shares in the first place, but took Liberty’s 65% stake in the Game Show network and three Fox Sports regional networks. Malone got super-voting shares that are capped at 24% of the company’s voting shares.

What motivated DirecTV’s board to do the deal? They were angling for “the elimination of a single shareholder …with the ability to veto change of control provisions,” the company said in its SEC filing. More important, the board wanted to “reduce the level of influence that Malone could exert,” they added. Anyone need more of a roadmap than that?


Why’d Malone do the deal? Mostly for tax reasons, which seem to drive much of what the media baron does. The stock-for-stock swap allows him to avoid a ton of taxes on the appreciation in DirecTV’s stock in 2006. DirecTV sweetened the deal by giving Liberty shareholders a 5.6% premium on top of that tax-free treatment. DirecTV’s shareholders will vote on the transaction on Nov. 12.

But in doing the deal Malone seems to have also dealt himself out of a potentially richer prize. He tried for months – and seems to have given up – the idea of installing his top lieutenant, Liberty CEO Greg Maffei, as DirecTV’s CEO. Maffei is a sharp operator, and a great dealmaker, and more than likely Malone would have wanted him to begin peddling DirecTV to AT&T (T) or some other buyer. I'm figuring the board wanted to keep Malone's imagination in check.

Instead, the DirecTV board, which has eight independent members (Malone is the company’s chairman and Maffei is a board members,) blocked Maffei, who now tells folks he is no longer interested. In August, the board created a search committee, which Malone heads. But the board has clearly no intention of allowing him to railroad them into taking his choice as CEO. “They gave him what he wanted with the stock swap,” says one source close to the dealmaker.” “And that’s about all they intend to give him.”

More than likely DirecTV will name its CEO sometime in late November or early December. The candidates include Bruce Churchill, who heads DirecTV’s Latin American unit, and Cablevision president Tom Rutledge. The search committee was created after DirecTV CEO Chase Carey’s resignation in June to become News Corp(NWS)president and chief operating officer. Larry Hunter, the satellite opeator’s excecutive vice-president for legal, human resources and administration, has been serving as interim CEO since Carey’s departure.

Viacom Up, Sees TV Advertising Demand Rising

from the Wall Street Journal

Viacom Inc. executives said Tuesday that they were seeing increased demand and strong prices for television advertising heading into the holiday season, adding to an up-tempo chorus from media executives after a brutal year in which advertisers have slashed budgets.

The comments came as Viacom reported a 15% increase in second-quarter income, with cost cutting boosting brisk ticket sales for summer blockbuster movies.

Viacom, which owns a suite of cable networks including MTV, Nickelodeon and Comedy Central, saw its U.S. ad revenue decline 4% in the third quarter from the year-earlier period. But that was an improvement from a 6% decline in the third quarter.

"There is demand out there at the moment," Philippe Dauman, Viacom's chief executive, said of the advertising market. He said prices in the fourth quarter for last-minute ads, known as "scatter," are up "double-digit" percentages above ads sold in advance, in what is called the "upfront" market.

But Mr. Dauman added that many commercials remain unsold for the fourth quarter, because both cable and broadcast networks received fewer advance commitments in the upfront season.

"The next several weeks going forward will really tell the tale, as companies in different industries evaluate their own condition," Mr. Dauman added during a conference call to discuss results.

There are some signs that advertisers are spending more money, however, after months of cutting commitments and tightening purse strings. Some cable-TV networks are running out of spots to sell in November and early December, driving prices for last-minute ads well above prices for those sold in advance, ad buyers say.

"Inventory's very tight on some networks, especially in November or early December," said Chris Boothe, president and chief operating officer of Publicis Groupe SA's Starcom USA in an interview.

In part, TV ad spending appears increased because it comes against easier comparisons to last year's historic economic collapse. Increased prices for ads sold close to airdate also face easier comparisons to the lower prices TV networks were forced to accept over the summer in the upfront market. It was the first time since 2001 that many major network groups were forced to take across-the-board rate cuts.

Executives at major advertising holding companies have said recently that it's too early to call an ad recovery. While the tone of conversations with advertisers about the economy is improving, advertisers "generally remain cautious about committing to new marketing expenditures or increasing spending behind existing efforts," Michael I. Roth, chief executive of Interpublic Group of Cos., said last week on a conference call to discuss third-quarter results.

But ad buyers say some advertisers that cut money earlier in the year are putting that money back into the ad market in time for the holidays. Viacom's Mr. Dauman said he sees potential growth in some categories of advertisers, including technology companies and even car manufacturers.

"You see some categories that suffered a lot in the recession, such as automotive, who are coming back in," Mr. Dauman said.

Viacom reported a profit of $463 million, or 76 cents a share, up from $401 million, or 65 cents a share, a year earlier. Excluding a tax benefit as well as an after-tax loss related to paying off debt in the latest quarter, earnings rose to 69 cents a share from 55 cents a share. Analysts polled by Thomson Reuters expected earnings of 57 cents a share on revenue of $3.3 billion.

Revenue dropped 2.7% to $3.32 billion, as Viacom's Paramount movie studio saw revenue decline 6.5% to $1.2 billion. Paramount's results were dragged down by enduring weakness in DVD sales, more than offsetting an 16% increase in world-wide theatrical revenue from big summer blockbusters like "G.I. Joe: The Rise of Cobra."

The home-video picture could improve somewhat in the fourth quarter because of DVD releases of its summer popcorn films, Viacom executives said. "Transformers: Revenge of the Fallen" has sold 8.3 million DVDs since its release on Oct. 20, Mr. Dauman said.

For the last year, Viacom's results have also been dragged down by the poor performance of its flagship MTV cable channel. In the third quarter, viewership in its target audience of people between 12 and 34 years old declined 2.8%, compared with the year-earlier period, according to Nielsen Co. The company has shifted executives and increased the number of programs on the air, helping slow the decline in recent quarters.

"We are continuing to adjust MTV's content mix and schedule, bringing in more original shows, as well as targeted acquisitions that are being used to help lift daytime and afternoon ratings," Mr. Dauman said, adding that MTV will have a "bigger marketing presence" off the channel.

Viacom's new version of the "Rock Band" game, which features songs from the Beatles, helped boost the company's revenue, selling 595,000 copies in September, according to tracking firm NPD Group. Because of the expensive hardware sold with the game, "Rock Band" is a drag on Viacom's profit margin. But Tom Dooley, Viacom's chief financial officer, said the company expects the game to break even or become "slightly profitable" in the fourth quarter, depending on how many copies sell in the holiday period.

"It really depends literally on the next three to six weeks," Mr. Dooley said.