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I have been a skeptic of the mobile platform for quite some time — specifically, mobile advertising and how effective it really is. But recently after watching Robert Scoble’s interview with Omar Hamoui, founder and CEO of AdMob, I’m convinced the platform will be a significant contender of ad dollars and perhaps the most effective/helpful/useful advertising platform in the future. There’s something huge happening here — and I’ve only just caught on to it.

Why Search Advertising Works
First, let’s back up a few steps and see why Google’s bread and butter — contextual search ads — is so effective. In one word, the reason is intent. When people search for something, they are essentially looking for something. More specifically, amidst their quest, they’re granting their search engine to guide them there. Notice that this is much, much different from “Just put Lost back already!” or “Oh, that’s nice. Nike has a new pair of shoes out and it syncs with iPod” or worse still, “Ok, random and annoying Win iPods Instantly site, I just want to Super Wall my friend“.

The intent is most of the times connected to monetary potential, in that the searcher is looking to buy something, or for a service they need, or a guide to something. Connect that with an online shoe store or a digital camera repair service that gives upto a 30% discount — and bingo. You have a clickthrough 5% of the time, you have a purchase 5% of the time, and the advertiser is happy, giving Google another 5 months more access into their knee-deep pockets. And that’s why Sergey Brin can afford to have a marriage in the Bahamas.

Why Mobile Advertising Could Work Better
So, what do you get when you take intent — the core of search advertising
— a step further? Need. And in one word, that is why mobile advertising may prove to be more valuable, effective, useful, and helpful than search advertising.

When I’m visiting San Francisco next time, and I’m in town, hungry for some Pizza, finding a good Pizza place is not going to be my intent, it’s going to be my need. And when I’m doing some hunting on the iPhone and come across an ad that says “Best Pizza in San Francisco — 3 Blocks Away! Click here to pinpoint location,” you can assume a happy $30 customer in the next 15 minutes at that very moment.

Similarly, one of the AdMob ad demos that is shown in the Scoble interview is that of Starbucks on the iPhone (embedded below). Arguably, this is better than my example above. In an ordinary mobile portal page, an ad on the top says “I see Starbucks in your future.” The user clicks the ad, which drops down to a textbox asking for a zipcode. The user enters one (in the future, GPS could very well replace this), and up pops the iPhone Google Maps application showing all Starbucks locations in the entered zip code. BINGO! Advertising, usefulness, and intuitiveness to its best — Starbucks has a new customer.

Conclusion
Certainly I’m no genius, and the possibilities here seem very clear even to me. If not clear, certain. Advertising works best where there is intent, desire, and need — and all three are more than present here. Obviously, not everywhere, and not on every single impression delivered, but watching the Scoble interview where CEO Omar Hamoui sets up a simple ad for a photo sharing website and gets 100 clicks and thousands of impressions within a couple of minutes time, it certainly seems more effective that what we’ve seen on the web.

To sum up, keep your eyes out for players like AdMob and the mobile landscape in general, because the emergence of local, mobile, and advertising is going to bring together a wholly new, different, and effective platform for advertising — and shake up some markets no doubt — to create the most effective advertising platform ever. The question is, when?

The blogosphere’s been abuzz lately about Twitter — everyday, it seems a Twitter disaster makes its way to the blogs of its very users, leaving them with nothing more than a cringe and a hope. Whether it was the weekend downtime where users’ Twitter streams looked more than half empty, or fellow Web 2.0 enthusiast Orli Yakuel’s privacy disaster where her direct messages made their way into the very public Twitter stream, or, most recently, the firing/resignation of Twitter Chief Architect Blaine cook, Twitter has been very much in the public eye.

As I Twittered yesterday (how’s that for irony?): “Does anyone else notice the Facebook hype/meme/craziness is dying? If Twitter can hold itself, it’s TNBT. Problem is, it can’t and hasn’t.” And I beleive that. If MySpace was 2005, YouTube 2006, and Facebook 2007, I have a feeling Twitter has the potential to be the talk of the year for 2008. But the problem is — when you can’t merely stay alive for half the time, there’s very little chance everyone is going to talk about anything other than the fact that you can’t merely stay alive.

As Michael Arrington suggests in his post, it doesn’t matter if Blaine Cook was fired or resigned — what matters is that things can only get better from here. Cook semi-famously gave a talk at the Silicon Valley Ruby conference about scaling Rails and Twitter. In one of the slides (pictured right), he’s quoted as calling the scaling issue “Really Easy” and has a six-step secret sauce as to how to go about doing it, which very obviously hasn’t worked. Infact, I question whether he even went past Step 1 — it seems that lately, it’s been only the users complaining.

That said, there’s still some time left for Twitter. If things are, indeed, only going to get better from at from this point — with their new infrastructure, new hirees (Cook’s replacements — among which — an expert who was involved in scaling Blogger), then Twitter still has a chance to win back the hearts of its cringing users. And I have to say, I’m one of them. It’s clear that its users very much care about the service, and as a result, whenever Twitter has an outage (both literally and figuratively), we go through the same cringing/loving feeling as someone watching their sibling perform badly at stage. It’s not nice, and we want it to get better, but we’re powerless when it comes to it.

For the last couple of days, I’ve been vigorously trying out a range of productivity tools. Given that I’m going to be at home for the next couple of weeks — I figured it wouldn’t be such a bad idea to get some work done. So when a couple of friends Twittered about RescueTime, I was immediately curious. With buzz words like “web-based time management” lurking their homepage I anticipated another project management web app with the to-do list and time tracker and the usual feature-full things that are supposed to make me more productivity, but it’s something completely different.

Founded by Tony Wright after selling his AJAXy job search engine Jobby to Jobster in May 2006, the project has raised funding from Y Combinator and goes after the idea of “ridiculously easy time management.” We wrote last year about Wakoopa, a service that tracks your software usage a la Last.fm for music, and while similar, RescueTime takes the concept a step further: instead of just telling you, it wants to make your more productive with this data.

The way that the service works is that users sign up, and install the RescueTime tracker utility for their OS (Windows and Mac both supported.) RescueTime then sits silently in your system bar (or taskbar in Windows), watches, and reports back to its servers as you spend countless hours answering e-mail and watching stupid funny videos on YouTube.

Let it do its thing for a day or so, and you get this in your RescueTime dashboard:

Perfect! Now the whole world knows how much time I spend watching useless celebrity gossip channels on Slingplayer.

But of course, the tool doesn’t end there. Once you’ve collected a slew of data, RescueTime lets you tag particular applications and categorize them in this way (i.e. work, personal, media, useless, etc.) And here’s the cool part — you can then use these tags to set up special goals and alerts for yourself when you’re spending more time than you need to on them. For example, I set up a goal stating, “I want to spend less than 3 hours per day on entertainment.” Now I can subscribe to an RSS feed or get RescueTime to SMS my phone everytime I’m over my goal limit.

Undoubtedly, RescueTime is one of the coolest and most intuitive time management utilities I’ve tried out. What makes it so is its core idea of “ridiciously easy” and “no data entry needed.” Additionally, for the first time, computer users can finally measure their real productivity and act on them — as opposed to constantly training their mind to “watch less YouTube videos” or “stay out of Facebook.” For the value it provides, I’d definitely pay for such a tool, too, if that’s the direction they want to take for the future.

A few months ago I wrote my first article for another blog about Google Apps and its potential to change the way small businesses address their technology needs. Google released Google Sites a month or so ago, so for my first article for Rev2, I thought I’d revisit the topic and take a look at the impact it could have.

After spending the weekend playing with the capabilities and building a Site to address a specific problem my wife is dealing with at work, I can say without a doubt that this is another watershed moment in the evolution of web based applications. In a few hours I was able to assemble a series of spreadsheets, calendars, forms and gadgets to create a completely customized application that solved a problem that she has been struggling with for years. It isn’t quite as functional as we would like, but I’m sure that as the features evolve with time we’ll get all the capabilities needed.

So, why is this so significant? Their are several reasons, but I’ll touch on just a few. First and foremost, Google is again giving away something that we have been accustomed to paying for. Google may know better than anyone exactly what Chris Anderson means when he talks about ‘economics of free‘. They are letting anyone use the applications for basic domain services, alleviating a major strain on small business infrastructure.

With Google Sites, they are letting the users tie their applications together to create custom interfaces for their data and collaborate more effectively. In my simple Site I hooked up multiple spreadsheet and calendars to create a simple call log and staff schedule tracker. By combining the information in them with the functionality of gadgets you open up endless possibilities for using the data.

This functionality, while not the same currently, could one day mimic that of companies like LongJump and Coghead. What’s more interesting is that some small business owners might be much more comfortable with the idea of setting up Sites with spreadsheets and documents than trying to create a ‘database driven web application’ for one simple reason - they have already been doing it for years. All of sudden taking those things online and creating a dynamic application doesn’t seem that complicated anymore.

Google is allowing people working together to address process issues and apply custom solutions using tools they are already comfortables with. This is a very liberating concept for a lot of businesses, especially if it means that a smart team doesn’t need a developer to get the features they need.

But I’m getting ahead of myself. There is still a lot left to add before this is truly a competitor to online application service providers, but Google could close the gap fast. One major missing point is interactivity with embedded page elements. This will come with a more robust permissions system, but not being able to enter data on a spreadsheet (without a corresponding form) or add events to an embedded calendar certainly hold the overall functionality back. When they enable this, and if they’re able to integrate things like email processing and dynamic data mash-ups, we’ll have a whole new way to process business information.

If there’s such a thing as a Google fanboy, I probably fit the mold, but Domain Apps is worth the praise. I think it’s hard to argue with free applications that are powerful enough to run a business on. It’s time to take a close look at how to incorporate this new capability in your work.

Back in April last year, we did a list titled the “10 Most Successful Startups to Date.” The list outlined what were, at the time, the most successful startups by perseverance. When we looked to doing a version 2.0, we noticed a funny thing: most of those startups — at least the ones that haven’t been sold yet, and a bunch of new ones — now had actual estimated valuations surrounding them.

Call it thin-air, call it bubble, call it hype — here are the current 7 hottest unacquired web startups, as ranked by the thin-air that surrounds them.

1. Facebook

ESTIMATED VALUATION: $15 billion
REASONING: $240 million investment from Microsoft at $15 billion valuation (see our coverage)

Launched: February 2004
Founded by: Mark Zuckerberg
Type: Social Network

Traffic: 15 billion pageviews/month
Funding: $338 million

2. Slide

ESTIMATED VALUATION: $550 million
REASONING: Rumored valuation of last funding round (see VentureBeat).

Launched: August 2005
Founded by: Max Levchin
Type: Widgets

Traffic: 200 million+ widget installations, 20 million+ uniques/month (QuantCast)
Funding: $58 million

3. RockYou

ESTIMATED VALUATION: $400 million
REASONING: Rumoured valuation of rumoured Morgan Stanley investment (see BoomTown).

Launched: 2006
Founded by: Jia Chien & Lance Tokuda
Type: Widgets

Traffic: 180 million widget views, 7.5 million+ uniques/month (QuantCast)
Funding: $16.5 million

4. Digg

ESTIMATED VALUATION: $300 million
REASONING: Rumoured “asking” price (see our post, TechCrunch, and Valleywag)

Launched: December 2004
Founded by: Kevin Rose
Type: Social Bookmarking/Content Discovery

Traffic: 208 million pageviews/month (September 2007, Compete)
Funding: $11.3 million (Series A + Series B)

5. Twitter

ESTIMATED VALUATION: $100 million
REASONING: $20 million pre-money as of July 2007, inflating with market valuations and Twitter’s growth spurts since April 2007.

Launched: July 2006
Founded by: Obvious Inc.
Type: Micro-blogging/Social Network

Approximate Traffic: 1.2 million uniques/month (Comscore)
Funding: $4.8 million (Series B)

6. Mahalo

ESTIMATED VALUATION: $100 million
REASONING: Rumoured pre-valuation of last funding round (see PaidContent).

Launched: March 2007
Founded by: Jason Calacanis
Type: Search Engine

Traffic: 4.1 million uniques/month
Funding: $16 million

7. Technorati

ESTIMATED VALUATION: < $100 million
REASONING: Market position, traffic, growth, future prospects — and the fact that no blog player has yet exceeded a $100 million valuation.

Launched: January 2005
Founded by: Dave Sifry
Type: Blog Search Engine/Content Discovery

Traffic: 2.8 million unique visitors/month (Comscore)
Funding: $21.6 million (Series A, B, & C)

In the midst of covering cool startup upon cool startup, it’s been a while I’ve done an opinion piece directly from the heart on Rev2, so here it goes. For the last couple of months, I’ve been trying Twitter (follow me pahleez!). This is partly because of having recently been a Mac switcher and being acquainted with the wonderful Twitterific client and partly to join the conversation, break myself from the skeptic image, and to do what the cool kids are doing. And I’ve come to a conclusion: Twitter will never reach the mainstream demographic. But it’ll be hip with us — the Internet crowd — and in the end, that’s all that will matter.

Here’s the thing. Twitter is based around the idea of informing others what you’re doing at a particular moment. By doing so, you’re joining a conversation, interacting with a community (people who you follow), and participating in a global discussion. But there’s a slight detail that that’s left out when someone attempts to describe Twitter: you need connectivity. A laptop, a phone, e-mail, IM, SMS, a client — you need some form of a connection to the Internet.

Now, for us cool, hip, and tech-savvy folks, it’s a given. Either we’re working all day on our laptop, or carrying an iPhone, or visiting an Internet Kiosk at the airport. We’re connected — we’re totally in it. But that 90% of the rest of the world? Err… not so much. A few minutes a day, an hour, two if they’re lucky, is all the tube-time they get. For the rest, they’re either travelling or working (not at or around a computer) or socializing. Of course, this is changing as more people get high-tech phones and phones have Internet connectivity, but generally not a lot of txting is done even now with our early adopter niche (5% is an estimated figure — see the fantastic ReadWriteWeb data survey on the many ways people Twitter.)

So Twitter faces a problem. It’s not like any other website where you can check e-mail or catch up/add new friends and pimp up your profile or watch the five videos grandma sent you. For the idea to work on a mainstream scale, it needs community, it needs conversation — it needs its userbase to be atuned to what’s happening, and add to it. Of course, right now, that’s exactly what’s happening, and as someone who is online at least six hours a day, I found it useful and interesting and exciting to catch up on stuff that my peers have been twittering and say stuff back, occasionally blurting out random thoughts that come to my mind. People like me is whom Twitter is made for — and it’s a great utility for us. But for that mainstream? I’m not so sure.

So let me make a bold prediction. The tipping point graphs that you’ve seen with Wikipedia and YouTube and Facebook and MySpace? Not gonna happen with Twitter. You can argue that it already has — but I think it corresponds to the early adopter/techie/hip crowd, not the mainstream — and hence has been at a much smaller scale than your regular “tipping point.” Instead, what’s going to happen is Twitter is going to continue to see slow growth over its new users and its current ones are going to participate more, in turn making it into a 1/10 of the usual giant Internet website. Anyone who spends their life on the Internet being connected to tubes most of the day is going to use it and love it. And for anyone who doesn’t, it won’t matter.

Ed Note: Apologies for the delay in getting this up — we’re scheduled for every Wednesday but it was completely my fault. Also, apologies for being post silent for the last three days. I’ll be back tomorrow for sure. Thanks!

The Rev2 Cabinet is a weekly investigative series at Rev2 where we take an in-depth look into some of the leading companies, startups, and services. Along with a podcast interview with our associate editor Zach Sims (embedded below and in the RSS feed), leading executives and CEOs offer insights into their startups and services which we analyze with an in-depth writeup. If you’re interested in being profiled, please contact Zach.

[Download MP3] [24:36]

Online advertising is no joke. Recent estimates peg interactive ad revenues in 2007 at $25.5 billion, a 27% increase over 2006’s approximate revenues. The quick moving segment currently makes up approximately 6.1% of the global ad market. An IDC report sees a general pattern that “companies are redistributing advertising dollars from traditional media to online media.” That trend is visible almost everywhere, and what really excites analysts are the prospects of the future. Kelsey Group analysts predict that interactive ad revenues will grow to $147 billion in 2012, and that interactive media will comprise 21% of the global media market.

As companies rush to get in on what is veritably the internet’s own gold rush, there have been winners and losers. Early on, it’s clear that Google is the commanding leader of search advertising, and the company’s AdWords and AdSense dominate contextual advertising. With control of more than 60% of the search market, Google has begun to assert their dominance over other areas, like video. Their $1.6 billion purchase of YouTube has brought them deeper into the video market and introduced a new advertising product for video. As the company grows, so do its ad initiatives. Despite its best efforts, the company’s market share of the advertising market dropped half a percentage point between 2007’s third and fourth quarter to 23.7%.

Google’s Famous Sponsored Links Beside a Search for “Digital Media”

Other companies, seeing unfilled niches and opportunities for innovation, have jumped to fill the void left by Google and its competitors. MixerCast was one of the first companies to fuse together the interactivity of the internet with advertising to create an entirely new field. I spoke with CEO Jen Cooper to learn more about the company.

Social Marketing Solutions

MixerCast has its hands in several different areas of media production, with tools for both the consumer and the enterprise client. In attempting to define the company’s aim to me, CEO Jen Cooper said that MixerCast was meant to help “publishers of digital content” in new innovative ways. She calls the new creations social marketing solutions. In a way, some of MixerCast’s consumer offerings compete with other slideshow creators like Slide and the previously interviewed RockYou. MixerCast’s core product is a widget canvas, allowing users to easily include media from dozens of websites in one easily embeddable object. For example, one could make a MixerCast pulling in photos from Flickr, videos from YouTube, and additional photos from MixerCast partner Getty Images, all synched to music from Pump Audio, another one of the company’s many partners.

Scores of Options Are Offered for Sharing MixerCasts

The partnerships the company has truly set them apart from other widget producers. Their CEO, formerly of Yahoo! and a variety of other web companies, brought previous connections aboard to participate in MixerCast. Some of the more famous participating companies include National Geographic, Universal Music Group, Virgin Records, Warner Music, Warner Home Video, and more. These key partnerships allow consumer users to mix commercial content into something completely new. It’s not quite remixing the songs or pictures themselves, but it’s compiling them in new and different ways.

Starting Small

As with most companies, use cases determined the path of MixerCast. After a while, they discovered that it wasn’t just consumers using their terrific mashup tools. Instead, larger media companies had been using the tool to form interactive advertising campaigns. Noticing this, Cooper changed the company’s focus and began targeting larger advertising projects. The company is currently working with New Line Cinemas on Will Ferrell’s new movie, Semi-Pro. The MixerCast Semi-Pro widget, shown below, is an excellent example of the company’s future. It pulls together promotional content, like the official music video, with a new contest. Users download the music they need to make their own remixes from within the widget and then can re-upload their modified music video back through the widget. Those that interact with the widget can then view the submissions of others. All of this is contained within a large widget that can be easily embedded on dozens of different websites, all to promote the movie.

MixerCast’s New Semi-Pro Widget, Produced in Coordination with New Line Cinemas

For this particular project, MixerCast worked together with New Line’s ad agency, who created the concept. MixerCast helped the agency to make the vision a reality, and the widget is now embedded on dozens of different social networks. As soon as a new video is uploaded, each of the widgets have access to the new content as well.

New Directions

A successful experience with New Line has provoked MixerCast to look into targeting “social marketing solutions” for the enterprise market as their number one area of business. They currently have “projects with every huge movie studio,” said their CEO. The widgets to come, promised Cooper, will be more advanced than what was seen early on with the Semi-Pro widget. Real time interaction is only the first step. She imagines MixerCast used with political campaigns as well as with the entertainment industry. A partnership with Entertainment Tonight has taken their widgets in another direction. The ET news widget brings the latest photos, text stories, and videos together in one cohesive widget experience that can be embedded on any website. The possibilities, emphasized Cooper, are endless. Users are often given the option to “remix” some of the established widgets to their own liking as well.

Entertainment Tonight’s MixerCast, Incorporating Photos, News, and Video

The company’s initial experiences have led them to place more effort into building the creative and advertising areas of the company. A new branch for creative engineers is being established during the first quarter in order to respond to the creative needs of the media companies working with MixerCast. The company’s current focus is on supplying solutions to these new enterprise clients. Normal consumers can still use the tools provided by MixerCast, and can insert advertisements into mixers in order to revenue share. The big change, however, will come with MixerCast’s redesign at the end of the first quarter. The goal of the project is to “make the experience easy to use” for every customer, and to make it “more distributable,” with new ways of tracking interactivity.

A Onetime Pioneer Prepares to Blaze Trails Again

Down the line, the company plans to have a fleshed out pipeline for new widgets and lots of deployments. Their virtual team, located around the world in India, Belarus, Minsk, and elsewhere, will continue to work on the product. The company’s CEO, Jen Cooper, was one of the first evangelizers of streaming media at VXtreme, a company later acquired by Microsoft and made part of Windows Media Player. With time as Yahoo’s Executive Director of Business Development, Cooper brings a wealth of experience to MixerCast. She’s been part of the first online video revolution, and I’m confident that MixerCast will be an integral part of the burgeoning field of interactive marketing and social marketing solutions.

Mobile is the future. As we move closer to the much-hyped era of cloud computing, everything will be online. Desktops will serve little purpose but as gateways to the internet that holds our data and the bulk of our interactions. Mobile, however, will still remain an important platform front in the face of a new generation of Web 2.0 applications. As recent announcements by Apple and Google show, the war for control of your mobile phone is serious.

State of the Handset

As technology becomes more sophisticated, users are carrying more and more in their hands. Years ago, it would have been unfathomable for users to carry what amounts to a music player, a digital camera, and a PDA in their pockets. Now that’s possible, and there’s a whole lot more being done with the mobile platform. While much of it is still relegated to expensive phones like Nokia’s N95 and the Apple iPhone, technological advances are slowly seeping their way into the lower-class line of telephones that most consumers use. Bigger processors and batteries are needed to work with all of this equipment, and the processors in these phones are increasing in speed as well.

The new hardware has prompted a deluge of new, sophisticated software for mobile phones that helps users take advantage of the new technological power of their phone and increasingly widespread access to the internet. Truly sophisticated internet applications are run best with 3G data plans, which are just appearing on phones that top the lines of American carriers. It will be a little while before full adoption of 3G is achieved on the majority of mobile phones.

Presently, there are four players in the phone OS market, the Symbian OS, Windows Mobile, Blackberry OS, and Palm OS. Symbian is a variant of Linux available on many Nokia, LG, and Sony Ericsson phones, and the functionality that it gives users is hard to find elsewhere. Oftentimes, however, it proves very difficult for the average user to interact with. Additionally, most Symbian phones are expensive and several must be purchased through the phone manufacturer and not through a carrier. Windows Mobile is spread out on a wide variety of phones on a multitude of carriers. It grants users a traditional experience and tight integration with both the desktop Windows and enterprise-level mail, calendar, etc. RIM’s Blackberry OS, limited to devices manufactured by the company, is in most widespread usage throughout the enterprise level. With incredible tools for the business market, they’ve seen rapid adoption in that field. Palm, who used to be the market’s heavyweight, has now been reduced to a small player.

Google

Noticing an opportunity to jump ahead of the competition, Google launched its own attempt at capturing the mobile platform several months ago with the launch of Android, an open source mobile platform designed to be distributed across a wide variety of phones. While open source endeavors have targeted the mobile phone, none have had much success. OpenMoko’s Neo1973 phone has been popular among hackers and programmers but hasn’t seen widespread adoption by other groups. Google’s Android platform launched with the support of industry veterans and companies that can truly help the company to make a change in the mobile industry. Carriers, hardware creators, and software creators have all joined the effort to make Android the predominant mobile operating system.

Demonstrations by Google show a smooth user interface and tons of capabilities that take advantage of new technology. Android finally makes an attractive, easy to use operating system available to the masses. That, at least, is Google’s hope. Google has stimulated development by creating a seed fund of money to invest in companies that develop for the Android OS. Winning control of the mobile phone is obviously a very important priority for Google, and they’re not playing games with Android. Scheduled to be released towards the end of 2008, it’s shaping up to make a huge splash in the mobile industry. The company is still in talks with many US carriers about becoming part of the project, and there’s no reason to suspect that the plan won’t be rejected. Mobile carriers have enjoyed control over the software installed on distributed phones for years, and ceding that control would change their business model, which currently places lots of weight on mobile downloads like ringtones, movies, etc.

Apple

The iPhone is without a doubt one of the most revolutionary mobile phones on the market (disclaimer: I’m a proud owner.). While other phones provide similar capabilities, none have been able to put everything together in a package as easily accessible and usable as the iPhone. Critics gripe about the iPhone’s poor camera and the EDGE connection, but it’s seen incredible sales and has received tons of praise from industry insiders. The Safari browser, perhaps the hallmark feature of the device, is the first mobile browser to allow users to peruse full websites, rendered nearly without any alterations. It’s not a pocket-sized version of the internet; it’s the whole thing.

Today, Apple took another step in an attempt to accelerate the iPhone’s sales and growth. Steve Jobs’ emphasis on web applications at the device’s launch have created a market of more than 1,000 of them, each created to fit on the iPhone’s gorgeous screen. Yet Steve Jobs acknowledged in October that the phone needed native applications. The announcement came today at an Apple event, where Jobs unveiled both a Software Development Kit, new enterprise features, and a roadmap for iPhone firmware 2.0. The enterprise features bring the iPhone up to the level of a Blackberry or a Windows Mobile phone for corporations. No longer is the phone just for consumers. That, however, wasn’t the biggest news. The new SDK allows developers to finally take advantage of the iPhone’s dozens of innovations - including the accelerometer and the multitouch technology - to build their own applications. Examples of applications included games by SEGA (Super Monkey Ball), a CRM application by Salesforce.com, medical information, and games by Apple and EA.

Perhaps the biggest news to come out of Steve Jobs’ event today was the iFund, a new venture capital fund designed to invest $100 million in development of iPhone applications. The fund, managed by venture capital legends Kleiner Perkins Caufield & Byers, seeks to capitalize on what partner John Doerr claims is a “revolutionary new platform,” something that is “a rare and prized opportunity for entrepreneurs.” Kleiner Perkins claims the focus will be on “location based services, social networking, mCommerce, communication, and entertainment.” I wonder if the fund will be used strictly to pay for native apps, or if it can be applied to web apps that have an iPhone front as well. This new strategy, putting tons of money out there for potential developers, may lure more talent to the iPhone. With a great group of third party applications, Apple’s iPhone may truly become the “must have” device for the sophisticated mobile user.

A New Financial Trend

The establishment of the venture funds by both Apple (KPCB) and Google signals a new and different trend in financing for companies. Company-specific venture funds help to propel growth and encourage intense development. The interesting distinguishing factor of the two funds - other than the fact that Apple’s ($100 million) is ten times larger than Google’s ($10 million) - is the fact that Google’s has no strings attached. Apple’s, meanwhile, is a venture capital fund, meant to bankroll companies that have a shot at success in becoming a public company. Google simply is paying developers that create great products. It will be interesting to see if that leads to a difference in the types of developers attracted to both platforms. Regardless, the tremendous amount of money available to developers will no doubt help to spur further innovation for both of these mobile platforms.

The Big Question

So, at the end of this, who comes out on top? There are endless examples of how money doesn’t always solve problems (looking at Mitt Romney’s failed presidential bid is a great example). Apple, despite all the money they have thrown at this iPhone SDK, still have only one device on which the software will run. If Google continues recruiting operators, handset makers, and other companies, they could have their software on dozens, or even hundreds, of different phones. If all a developer is looking for is sheer volume for their application, they would have to go with Google at this point.

The potential advantage Apple has is the quality of their hardware. The demonstrations given onstage showed sophisticated games that really took advantage of key iPhone features like the accelerometer. One game, made by Apple itself, had the

user steering a ship by using the accelerometer. It’ll be hard to do something like that for Android phones, when developers can’t be sure that the user will have a built-in accelerometer. Engadget has a great chart that compares the recently announced SDK with some other mobile operating systems.

The iPhone could be the impetus that gets mobile social networking started. If the SDK ships in June as it’s expected to, then it’ll beat Android to the market by several months (it’s projected to come around late 2008). The location-aware feature of the iPhone makes it one of the most widely deployed phones that is apt for location-based social networking. While it’s been available on phones like Nokia’s previously, the iPhone is the first to bring very sophisticated technology to a demographic that’s not always so technologically advanced.

Conclusion

Mobile is becoming more important each day, and a look at today’s kids show how important it will be for our future. Walking down the street, it’s impossible not to notice the number of young people with their heads buried in their phone, either texting or on the internet. When they mature, they’ll want to own a phone that does social networking, mapping, games, and more. The phone that will provide that is being developed now, and a battle is on for talented developers between Apple and Google, with countless others sure to join the battle.

The Rev2 Cabinet is a weekly investigative series at Rev2 where we take an in-depth look into some of the leading companies, startups, and services. Along with a podcast interview with our associate editor Zach Sims (embedded below and in the RSS feed), leading executives and CEOs offer insights into their startups and services which we analyze with an in-depth writeup. If you’re interested in being profiled, please contact Zach.

Most of the companies that get the most publicity are for personal use only. Yet others, whether they appeal to the commercial market or something else, help to form the very backbone of the internet. Idée Inc. is one of these companies. Idée is a pioneer in the field of image recognition and visual search. The company’s two hallmark products, PixID and Piximilar, target different areas of the market while utilizing much of the same technology. Products still in Idée Labs are also intriguing. I spoke with Idée’s CEO and Co-Founder, Leila Boujnane, about the company.

A New Field

In 1999, Leila Boujnane and Paul Bloore founded Idée with a flagship product called Espion, a framework that still serves as the base technology for the company’s flagship products. At the time, watermarking by Digimarc was the common standard. The technology added a watermark to the image in the form of film grain or noise, and then allowed the image to be identified with that watermark. At the time, most other companies were preoccupied with the process of digitizing their photographs and did not think of tracking them. The founders of Idée saw an opportunity and eagerly sought to create a product that could track clients’ images both in print and online. They proposed a completely new system, utilizing a form of image recognition that’s vastly different from the watermarking used by Digimarc. The technology enabled the company to track pieces of the image, images that have had their color changed, and images with various other changes. Idée Co-Founder and CTO Paul Bloore has an excellent overview of the technology and its immense depth at the Idée website.

In our conversation, Leila emphasized that the key difference between Idée and its competitors was Idée’s ability to scale. The technology, she noted, is “quite simple,” but it’s the index speed that makes Idée superior to its rivals. Faster processing, indexing, and searching speeds have helped the company garner high profile clients. The visual search system, which by most accounts is extremely accurate, “can scale tremendously.” Leila noted that it’s designed “for millions of images,” which she sees as the “future of image searching scale.” Paul Bloore has claimed that Idée indexes millions of images throughout the internet to monitor for clients’ photos. Scalability becomes extremely important with numbers like that.

After perfecting the original Espion technology, Idée formed the PixID product, used by many corporations around the world to track the use of their photos both in print and online. Leila sees image tracking as a field with “great potential,” and Idée has approached the market aggressively. Their largest clients, the Associated Press, Agence France-Presse, and Adobe, are some of the biggest names in their respective industries. After the rights holders upload their images to Idée, patterns are extracted from the image. Then, the patterns are compared to roughly 5000 publications and 200 million internet images. Finally, the company sends out automated reports to the Idée account each day to recount where the image has been spotted. The original and modified image are shown together, and the portion taken from the original image is highlighted. Additionally, PixID takes a screenshot of the webpage with the infringing photograph to preserve it.

A Match Found by PixID

Reports generated by PixID have a wide variety of uses, and allow users to track their images for billing, to track infringement, or for a variety of other purposes. Digg, the social news powerhouse, launched Digg Images with a partnership with Idée. Idée helps the company to identify duplicate images when they’re submitted. Just as with the company’s other visual search initiatives, it identifies images even if they’ve been modified.

Piximilar targets a different section of the market, providing “similar” images as opposed to finding those that are identical. If you’ve seen “Find similar images” buttons on websites, chances are Idée’s powering one of them. The service proves especially useful for stock photo sites. Masterfile, one such site, has integrated Idée’s Piximilar as SimSearch, allowing users to search their immense stock photo library for images similar in color, shape, theme, or a variety of other criteria. Fotofinder.net uses the idea as well, allowing users to mesh both “more like this” and textual search. Idée Labs hosts a bunch of other consumer oriented searches based on the Piximilar technology. The Multicolr app lets users search for Flickr pictures by clicking on a variety of colors they’d like to be included. Their visual search lab, meanwhile, lets you click a picture and find something similar, just as it’s implemented on stock photo sites. The best part, however, is the BYO Image Search Lab, which lets users upload their own photos and find pictures similar to it.

Similar Images Found With Piximilar

Fresh Ideas for a New Market

Idée is one of the industry leaders in the fields it currently is involved in with Piximilar and PixID. Those products, however, are aimed at a mainly enterprise-level audience. Idée Labs products like the BYO Image Search Lab mentioned above seem prime for the consumer market. Leila noted that Idée was exploring their options in the consumer field and would probably release a variation on their enterprise solutions for aspiring photographers. A hybrid between the BYO Image Search Lab and PixID would be perfect for semi-professional photographers and smaller companies who wanted to protect and license their images.

Leila also confirmed that Idée will be moving into the video market in the first quarter of 2008. As a logical expansion of their activities in the image realm, video features will operate in a similar manner to their image counterparts. “We have to continue to innovate,” said Leila, noting that there are “streams and streams of video” that Idée can be used with. The scale Idée currently can manage with photos will come in handy with video, a field which requires far more processing. Pilots are currently in progress with some of the company’s established clients.

Sound and text, meanwhile, are off limits to Idée. Those areas are “very different problems,” said Leila.

Unique

Idée’s comprehensive suite of photo tracking tools [and soon, video tracking tools] have not been matched by any competing product. I quizzed Leila on a bunch of potential competitors, including heavyweights like Google and Yahoo!. Those companies, she thought, were not threats because they “work in a specialized niche,” text searching. PicScout, meanwhile, tracks images like Idée but only in online mediums. It’s neither as comprehensive as Idée nor as well established. Attributor offers a service like Idée’s, but for text.

Refining Watch Choice by Visual at Riya’s Like.com

Riya launched to a lot of fanfare, and was called “the first true visual image search.” Originally centered around uploading photographs and autotagging faces, etc. the service has now transitioned most of its efforts to Like.com, a visual search engine for shopping. The service basically does what Idée’s Piximilar does, but for shoppers. Users can search using text, color, shape, pattern, and more to find the clothing item they desire. Leila saw a few critical disparities between Idée and Riya. Although they started with facial recognition, they have just moved into image search, and their searches do not, according to Leila, produce enough similar images. The issue Riya tackles with Like is a “very specific problem,” whereas Idée exists more as a software company for images. Idée licenses their technology to companies who themselves could, theoretically, create mashups similar to Like.com.

What’s Next?

Idée was a trailblazer in the field of image recognition, and they’d like to be recognized as such. They were the first to image tracking, and they’re racing to prepare for video tracking as well. Their entry into the consumer market will also be a big change for the company, but they have a solid platform to build upon. Leila told me that Idée strives to sit between “where content is produced and how it ends up being used.” The platform enables companies to collect sophisticated metrics as well, helping them to better target content production. Their roadmap for the future ensures that Idée will continue to be a pioneer in whatever field they choose, whether it’s video or images.

We all have bad days.  Facebook, meanwhile, had a bad month.  So, while it may be the first time in Facebook’s history that their traffic plateaued and declined, it’s not a sign that the company’s headed for bankruptcy.  The company has managed, in a few short years, to become one of the most popular sites on the internet.  To bearish commentators, the visitor drop is a harbinger of the company’s fall.  Yet Facebook, Silicon Valley’s darling, has nothing to fear.

The Shine’s Worn Off
Facebook grew in a field that was crowded predominantly by established players, including Friendster and News Corporation’s MySpace.  With its clean user interface and Harvard dropout founder Mark Zuckerberg, the company posted astounding growth numbers and quickly became one of the big players in the social networking industry.  Facebook became the “it” company, and they began competing with industry powerhouses like Google for engineers and executives, fueling a rise in the average engineering salary.  Executives flocked from Google and Yahoo to Facebook, leaving cushy jobs at the internet giants for a stake in a company that should be, by all indications, IPO-bound in 2009.  Now, Facebook’s established and, following a $15 billion valuation from Microsoft, doesn’t really qualify as a startup any longer.  Google and Yahoo both went through the same thing as they lost the shine of “newness.”  Both have suffered ups and downs in their histories as well.

Openness Prevails
Facebook’s greatest success, the launch of the Facebook platform, set off a field of commentators who believed that Facebook would become an operating system of sorts for the future.  While those predictions were perhaps a little optimistic, the application market on Facebook has rapidly become one of the most lucrative internet businesses.  Startups like RockYou and Slide that once relied on embeds on MySpace and blogs now see Facebook as one of their central traffic sources.  In mere months, an economy has grown around the Facebook platform, and dozens of new applications are created and added each day.  The platform has served as a model for a bunch of other social networking companies, and even has been the underlying platform for similar systems on networks like Bebo.  Google OpenSocial, launched shortly afterwards, is an attempt to bring the social network application market pioneered by Facebook to a wider range of sites.

The Weakest Link
While increasing openness in some areas, the company has kept an increasingly tight grip on the information of their users.  Mark Zuckerberg attempted to incorporate information fro mother websites into Facebook with the Beacon advertising program.  The initiative, originally opt-out instead of opt-in, culled actions from a wide variety of websites like Yelp and Amazon.  User reaction was stiffly against the program, as many users quickly found information they’d like to to keep private snet throughout Facebook to all of their friends.  Initial advertising partners like Coca-Cola pulled out of the program and left Facebook to completely revamp the program.  Articles in the New York Times highlighted privacy concerns as well with the program, and Zuckerberg quickly jumped to defend his pet advertising initiative.

The uproar over Beacon was somewhat similar to the users’ revolt when Facebook initially launched the News Feed and Mini Feed, both of which are now central to the Facebook experience.  Originally launched with little privacy controls, the Feeds report users’ activities to their friends.  After an apology to the Facebook community, Zuckerberg added fixes to the new features and they are now crucial parts of the social network.  Recently, Facebook has taken flak from the web from various media outlets for the difficulty of account deletion.  The controversy, which started after a New York Times piece, revolved around the difficulty of account deletion.  Originally, users could only deactivate accounts, with their information stored in case they would like to reactivate them.  After the outcry, the company has added new tools to faciliate easier and more complete deletion.

It’s a Utility
What the majority of Facebook users don’t realize is that the network isn’t a toy; it’s a utility.  Zuckerberg has managed to harness something real, our interpersonal connections, and give us a forum to digitally display and enhance them.  He’s using technology to seize our real life social network and put it on the internet, forming a “social graph” of sorts.  Facebook can be immensely uesful to those who use it productively.  While the “Hug Me” application may not do much for your business, the ability to collaborate on documents with applications like Zoho inside of Facebook with friends make it an indispensable tool.

For young people, it’s another extension to their digital lives.  While instant messaging and text messaging remain the centerpieces of teen communication, Facebook has rapidly replaced e-mail and other forms of contact.  Every year, with a new crop of high school and college students, Facebook will see lots of new users.  After they discover the benefits of using Facebook, they will most likely stick around.  As the BBC suggests, while adults may quickly tire of the site, teens are picking it up at a quick clip.

The Future is Mobile
The youth of today are more attached to their cell phones than Crackberry addicts.  The continual stream of texting and communication is beneficial to Facebook’s growth, and the company’s mobile strategy seems to recognize this.  Their iPhone site, for exampole, provides users with a clean interface (what Facebook is known for) and can also serve as an on-the-go phonebook.  Need a number, or need to remember what one of your friends looks like?  The place to go is Facebook Mobile.  As this generation grows up, it’s hard to imagine they will lose touch with Facebook until the “next big thing” comes along.

It’s Here to Stay
Facebook became famous as the anti-MySpace, with most people using their real name, clean backgrounds, and more.  Years later, those features remain and serve to make Facebook one of the internet’s most popular destinations.  Facebook isn’t going to stop innovating.  TechCrunch revealed yesterday thta the site planned to incorporate external information in the News Feed, making it a direct competitor to sites like FriendFeed and Plaxo’s Pulse.  Features like these could make Facebook the homepage and aggregator for the next generation.  Web 2.0 icons like Robert Scoble, always eager to make a mountain out of a molehill, make the situation sound dire with headlines like “Is Facebook doomed?”

The answer is simple. While pundits continue to analyze the latest traffic numbers, Facebook is focused on the future, where it should be.  Years down the line, traffic numbers from January 2008 won’t matter much to the company.  Its features, and its ability to respond to customer concerns, will.  The company’s failure to react to the buzz surrounding the release of the new metrics should symbolize their internal outlook.  Sure, Facebook’s traffic may have momentarily dropped.  Just wait, however, for the rise you’ll see in the coming years.