HP CEO Meg Whitman

Hewlett-Packard’s acquisition of Autonomy has turned into one of the industry’s slowest motion train wrecks. Last week, HP execs sicced the feds (and UK’s Serious Fraud office) on former Autonomy management charging  that it had been misled about the state of Autonomy’s fiscal health and thus overpaid for the company. Cynics might contend that HP had to say something given the $8.8 billion write-off it’s taking — mostly related to the $11.1 billion purchase.  HP completed the deal in October, 2011.

There’s a ton of blame to go around. On HP’s earnings call last weeek, CEO Meg Whitman mentioned that Deloitte was Autonomy’s auditor and that HP hired KPMG to look at Deloitte’s work. Cue the lawsuits. Former Autonomy CEO Mike Lynch denied any wrong doing, As did Deloitte. As did former HP CEO Leo Apotheker (Autonomy was his idea.) Whitman said the two HP execs — Apotheker and former chief strategy officer Shane Robison — are both gone. Whitman and HP executive chairman Ray Lane were on HP’s board when the Autonomy buyout was launched.

Cisco ponies up $1.2B for Meraki

A week after buying Cloupia to bolster its cloud management reach, Cisco dug deep to pay $1.2 billion for Meraki, a company born out of MIT to make setting up and managing Wi-Fi networks easy and inexpensive for resource-stretched organizations. Meraki’s mesh networking software, that lets admins prioritize the types of devices or apps that can access the network, is a big strategic value add for Cisco, the world’s largest provider of networking hardware, but which has seen its share price languish over the past few years.

In a statement, Rob Soderbery, SVP of Cisco’s Enterprise Networking Group said:

“The acquisition of Meraki enables Cisco to make simple, secure, cloud managed networks available to our global customer base of mid-sized businesses and enterprises. These companies have the same IT needs as larger organizations, but without the resources to integrate complex IT solutions. Meraki’s solution was built from the ground up optimized for cloud, with tremendous scale, and is already in use by thousands of customers to manage hundreds of thousands of devices.”

As Om wrote last week, Meraki’s web-centric approach to software, is something a company like Cisco sorely needs.

For Amazon, sales taxes loom

Massachusetts and other states are getting closer to winning sales tax concessions from Amazon.com, you’ve got to wonder what the impact will be not only on Amazon’s booming online retail operations but Amazon Web Services as well.  As Philly.com  reported on Black Friday:

“For the first time since the dawn of e-commerce, residents in California, Texas and Pennsylvania will be automatically charged state sales tax at the checkout on Amazon and some other online retail websites. Next year, Virginia and New Jersey residents will join them, followed by residents of Nevada, Indiana and Tennessee in January 2014

(Actually, California started charging sales tax in September.) Brick-and-mortar retailers say this move will let them compete more with Amazon and other on-line resellers.

Asked on the most recent earnings call what impact Amazon has seen from the new tax in California, CFO Tom Szkutak said it was too early to tell. “The only thing I could point to is, we collect in over — either sales tax or equivalent value-added tax,” he said. “We collect in over 50 percent of our revenue today. We have very good businesses in those states and geographies that we do that in long ago. That’s all I can point to today.”

One huge question around Amazon Web Services is just how fat (or not) the margins are. One camp holds that profit those cloud services is razor thin. The flip side — and an opinion held by at least one of Amazon’s huge would-be public cloud competitors — is that Amazon turns a tidy profit on what appears to be a $2.2 billion-a-year-business.

If you believe that Amazon’s retail business pays the freight on cloud, the sales tax is an obvious issue. But even if you don’t, it’s hard to see how increased sales taxes won’t impact the company as a whole,  and thus its ability to keep rolling out tons of low-cost cloud services.

And this is probably just the beginning. Going forward, there is more pressure from cash-strapped governments to levy sales tax on cloud services as well. Stay tuned.  The AWS: Reinvent show kicks off in Las Vegas Tuesday.

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FaceTime is an app built for the Wi-Fi network. It’s hard to imagine the phone bill if all this data was streaming over the 3G networks. And the same goes for Netflix, Hulu, Spotify and Pandora, which are key parts of our new connected digital life. These services have blossomed, thanks in part to the increasing ubiquity of the Wi-Fi network.

Applications such as these, not to mention our desire to check out tweets, Facebook friends, watch YouTube videos and occasionally even do work, has doubled the network traffic on the wireless networks since last year. These networks use gear from companies such as San Francisco-based wireless gear maker, Meraki. That traffic is expected to double every year, according to Sanjit Biswas, CEO and co-founder of Meraki.

Multiple Device Wi-Fi World

“We used to have one device on Wi-Fi: our laptop,” says Biswas. “Then we had two devices — laptop and our phones using the Wi-Fi.” Soon, we will have multiple devices that are piggybacking off the Wi-Fi based network connections.

Biswas predicts that by 2012, we will have between four and five devices around us with Wi-Fi built into them. (I actually have more than that even now: a phone, a tablet, a computer; an Internet-connected set-top box (Apple TV) and a digital camera with Eye-Fi.) Tomorrow, it wouldn’t be preposterous to imagine your microwave communing with a server over a wireless connection.

It’s quite a remarkable change. I remember buying Lucent-made Orinoco PCMCIA cards for an early variant of Wi-Fi and networking hubs with limited coverage. I used to wonder when it would really be possible for me to sit on my couch and get a decent Internet connection. That of course was in the last century; today, Wi-Fi is ubiquitous, and we want continuous coverage of at least 10 Mbps from our Wi-Fi routers. Tomorrow, we’ll want 50 Mbps and soon 100 Mbps wireless connections.

iPhone Lifts All Boats

The demand for Wi-Fi networks is lifting the fortunes of many, including some with suspect business models. Take Martin Varsavsky’s FON for example. The company has been through some ups-and-downs, but now it has started to grow and is profitable: about €4.9 million ($6.83 million USD) in 2010.

Where is all the money coming from? Offloading of data from 3G to the Wi-Fi networks. For FON, the growth has come in the U.K. and in Japan. Nearly two million FON access routers with auto connectors to the Wi-Fi network are handed out to buyers of Android-based smartphones and the iPhones. In-Stat, a market research firm, recently predicted that by 2012, nearly half of the Wi-Fi connections from hot spots are going to come from handheld devices.

Martin said in an email that while the company is still making money selling Wi-Fi routers and Wi-Fi passes to travelers, the future growth for the company is going to come from other gadget makers who are going to auto-connect to the FON network for a year via Wi-Fi, then sell subscriptions. “For example certain multiplayer games will come with prepaid Wi-Fi access so people can play them everywhere,” says Varsavsky.

Five years ago, FON had no idea that this future would unfold, just as Biswas and Meraki had no idea the iPhone would one day be its savior. It started out as a company based on MIT’s Roofnet project, and its ambition was to sell its wireless mesh networking hardware to hotels and other establishments, particularly in non-western markets. It proved to be a tough proposition, to say the least.

In 2009, the company, which has raised over $40 million from the likes of Sequoia Capital and Google, went through a metamorphosis and shifted focus to the enterprise market. Being at the right place at the right time, the company has seen the total number of deployed networks hit 17,000 at the end of 2010. Its growth has followed the trajectory of the wireless LAN market; in 2010, WLAN sales were up 23 percent to $2.7 billion, according to Infonetics Research.

The Smartphone Boom and Network Effects

At my request to find out what devices were connecting to the networks, Meraki took a random selection of over 7 million devices (roughly a fifth of the total devices connecting to Meraki-based networks) and found the iPhone accounted for nearly a fourth of the total Wi-Fi connections.

In aggregate, Android, iPhone and iPad accounted for about 16.53 percent of the total connections in middle of March 2010. As of March 14, 2011, these three devices now account for about 33 percent of the total connections to network.

Why the growth? While laptops were used for wireless access, it’s difficult to walk around and use them as easily one can use a smartphone or an iPad. The smart devices encourage anywhere computing, which, in turn, puts a different load on the networks. Dominic Orr, CEO of Aruba Networks, put it best when he said, “The network model has shifted from hotspots to ubiquitous and uniform networks access.”

One of Meraki’s clients has data to show that. Westmont College, a liberal arts college campus in Santa Barbara, Calif., showed in a study that nearly 3137 distinct clients connected to the Meraki wireless network in February 2011, and about 10.12 terabytes of data wer transferred.

A year ago, the data transferred was about 5.06 TB and a total of 2458 distinct clients used the network in the month. Why? Because there was a sharp increase in the number of iPhones, iPod touches and yes, there were a few iPads too.

Where Do We Go From Here?

Biswas, who has been involved with Wi-Fi for a long time, believes a future version of Wi-Fi (IEEE 802.11 ac) is going to become an apt replacement for the gigabit Ethernet wired connections in a couple of years. Currently under development, we’re likely to see the earliest devices show up in late 2012.

But one thing he knows for sure: Wi-Fi is going to be the default network connection in our homes. Today, we might sit on the couch and be amazed at the novelty of FaceTime on an iPad, but in a few years, it will be as normal as life with Facebook.

With more devices connecting to this network, it’s only a matter of time before we see even faster wireless connections inside our homes.

This is good news for developers and innovators, who don’t have to wait for the carrier’s wireless infrastructure to catch up to their ingenuity. What are you waiting for? Time to get going!

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Most of Android’s browser share gain in Quantcast’s data appears in the past eight months — looking at the graph, you can see the Android trend really take off in October of last year. Not so coincidentally, that’s exactly when Verizon launched the Motorola Droid; the then-updated Android 2.0 operating system with later-added multitouch morphed Android from a platform for techies to one that most consumers could comfortably use. It also helps that U.S. Android handset sales outpaced those of Apple in the first quarter of this year and that Droid launched on the largest U.S. carrier with 92.8 million customers.

While Apple and Google aren’t the only players in the North American smartphone market, Quantcast’s data makes clear that for the moment, everyone else is an “also ran” when it comes to mobile browsing. Indeed, the numbers ought to act as a wake-up call; browsing can’t be seen as a supplemental handheld activity — mobile web usage is growing faster than desktop browsing did thanks to powerful handsets, efficient browsers, wireless broadband and Wi-Fi access. Odds are stacked against any new smartphone without a usable browser that supports multitouch capabilities, a fast JavaScript engine, simple bookmarking — perhaps even with synchronization of those bookmarks on the desktop — and support for current web standards.

Need proof? By most measures, there are more BlackBerry devices than iPhones or Android handsets in the U.S., yet such phones only account for around 10 percent of the mobile web consumption — easily explained by a last-generation and less capable browser. Research In Motion plans to change that with an improved browser based on WebKit, the same engine utilized by both Apple and Google for mobile web access. But until it does, the mobile browser market is a clash of the titans: Apple and Google. Microsoft’s Windows Mobile share is declining and Windows Phone 7 devices aren’t expected for at least another three months. Nokia is a worldwide leader, but isn’t competitive within the U.S. and Palm is treading water pending its sale to HP.

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Lost fans sent out a total of 437,613 tweets during the series finale, according to new data from Trendrr. Just as a quick frame of reference: Twitter darling Glee got less than 20,000 tweets when its most recent episode aired last week.

Of course, “lost” isn’t exactly the easiest term to track. People lose their keys, get lost on the way to a restaurant, and so on. In fact, there were a total of 643,000 tweets mentioning the word yesterday (note to networks: if you want to utilize social media, learn from Glee and don’t use generic show names). Trendrr excluded all mentions of the word itself except for the time the finale aired, which means that countless “can’t wait 4 Lost finale 2night” tweets didn’t even make it into these stats.

Also noteworthy: The tweets include some early morning participation from Europe, as the UK’s Sky1 aired final episode simultaneously with the U.S. West Coast. Brits got to see the finale today at 5 a.m. local time, according to a report from the Guardian. There were also simulcasts in Italy, Spain, Portugal, Israel, Turkey and Canada. From the Guardian story:

“The unprecedented scheduling move aims to prevent illegal Internet downloads of the finale – and save UK fans of the show from having to spend five days dodging web spoilers.”

I know exactly what they’re talking about. I didn’t catch the finale yesterday, and I’ve been on a Twitter diet all day…

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WiFi takeoff will encourage additional investment in this technology, which is cheap to roll out, and will tilt the competitive balance back toward fixed. Looking at the broader picture, if a good urban Wi-Fi network is thrown in for free with a fixed network rental, it’s hard at this stage to tell whether this will represent substitutional or additional telecoms spend.

Last week, I asked our readers what they most wanted as a perk from their ISP, and the most popular answer by far was Wi-Fi access while on the go. Wi-Fi access has become popular with users and with certain Internet Services Providers both as a way to reduce the data deluge on wireless networks but also to reduce churn among subscribers, as smartphones with Wi-Fi become more commonplace (see chart). But signing onto Wi-Fi is kind of  a pain for a consumer who may be obliviously surfing along on a 3G network.

So will ISPs take the consumer love of ubiquitous broadband and carriers’ need for offload to the next level and create the equivalent of roaming agreements for Wi-Fi? Greg Williams, the new SVP of corporate development at Bel Air Networks, thinks they might. Williams, a founder of Wayport, the hotspot aggregator purchased in 2008 by AT&T, recently joined BelAir, a company that builds carrier-grade Wi-Fi equipment for customers including Cablevision, Comcast  and AT&T.

He wonders if carriers will negotiate with each other and fixed-line ISPs to get access for their wireless subscribers, especially in congested cities such as New York or San Francisco. I’m kind of skeptical, simply because I think most carriers are not experiencing enough pain to want to cut into their data revenue inside big cities, but it’s an intriguing idea. Regardless, BelAir, Meraki, Tropos and Cisco will all likely continue to benefit from the buildout of carrier-quality Wi-Fi networks.

Another beneficiary of the iPad/Wi-Fi buildout could be the MiFi personal hotspot from Novatel, which offers users a Wi-Fi signal while using the cellular network for backhaul. I have gotten excited about  personal hot spots before, and Sharma namechecks the MiFi in his article as well. Either way, fixed broadband isn’t in danger of being subjugated by fixed-line broadband anytime soon. Few people will dump their wired networks for wireless given the high cost of mobile data. Rather we’ll demand more seamless coverage without caring what technology we’re using or who provides it.

Image courtesy Flickr user Adventures in Librarianship.

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Near as I can tell, there’s some sort of clip in the battery slot of the Apple keyboard. And apparently, I lost it. Or it was never there. I can’t be sure. I do know that several folks had the exact same symptoms, and not just with keyboards that sat around for year. Some folks got a low battery warning, replaced their batteries and the keyboard never turned on again. It’s as if the keyboard went into a coma.

As I continued to read through the support discussion, someone suggested a small wad of tin foil be placed in the battery housing. I snickered and continued down the thread. And then I saw someone say that the tin foil worked. Then more people chimed in with similar success. I stopped laughing after the first few reports.

So of course, I shuffled down to the kitchen for some tin foil. I created a small ball about the size of a pea using the aluminum foil and then dropped it into the empty battery slot of the keyboard. I followed the metallic spit ball with three batteries and sealed the housing — the green power light immediately lit up. O.M.G.!!!

Perhaps the metal contact spring was “de-sprung” by having immobile batteries for a year. Or maybe it slowly bends over time. I have no idea. All I know is that a pea-sized ball of aluminum foil saved me from making another trip to buy a new keyboard. Go figure!

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Devicescape is a popular application among iPhone and iPod Touch users because it eliminates the need to constantly log onto AT&T or other Wi-Fi networks using a password. As a result, the numbers in this survey might be slightly skewed, so take them with a grain of salt. And anyway, what can you expect from a survey that’s tied to three unabashed champions of Wi-Fi? But it is a good sign-post of the reality of Wi-Fi and its ubiquitous nature.

I can remember paying $350 for a Lucent Wi-Fi device many years ago, wondering when it would be possible to have a connected life without wires. Today, my entire apartment is wired with an Airport Extreme and a series of Airport Express devices for a seamless experience. Most of my other gadgets are wireless and, as I have shared previously, on-the-go Wi-Fi is part of my daily life. Looks like that dream is now a reality.

As shown through my earlier posts about Wi-Fi’s smartphone-driven renaissance, we are now assuming the wireless technology is part of our daily work flow. Nearly 98 percent of Wi-Fi consumers log onto Wi-Fi networks once daily, while nearly 57 percent log in every day, according to the Decipher’s survey of 8,000 users of the technology.

The availability of Wi-Fi on mobile phones is driving use of WiFi networks across the country. For instance, the Google network in Mountain View, Calif., has seen a big spike in Wi-Fi use, with smartphones contributing nearly 25 percent of the total usage, according to a press release from Tropos Networks, a municipal Wi-Fi networking gear maker.

And if that is not enough, nearly 90 percent of the survey respondents make hotel and travel decisions based on Wi-Fi availability, and nearly 96 percent expect it to be free. What’s more, many folks are musing about buying devices that have built-in Wi-Fi.

One of the more interesting findings of the survey was that a growing number of people are willing to share their wireless networks if there are appropriate systems in place. A good way to do so: Build a ratings system much like the one on eBay.

Does anyone else see the sweet irony in this? I mean, when municipal wireless debates were raging, phone companies couldn’t wait to get the Wi-Fi networks shut down. Today, the same technology is coming to the rescue of those  companies.

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Now comes word that by 2013, the San Francisco Municipal Transportation Agency will install 360 new bus stops powered by solar panels that will, in turn, power Wi-Fi routers and digital information panels, with any unused energy being pumped into the city’s grid. Popular Mechanics reports:

• San Francisco’s high-tech bus stops will channel an estimated 43,000 kilowatt-hours per year into the city’s grid. Built-in Wi-Fi routers will help the city create a comprehensive wireless Internet network.
• Each bus stop costs about $30,000. City officials say Clear Channel Outdoor has an installation and maintenance contract with the SFMTA. The company foots the bill and gets saleable ad space.
• The new shelters’ LED lights use 74.4 watts—four and a half times more efficient than the 336 watts used by the old shelters’ fluorescent lighting.

I checked with my colleagues over at Earth2Tech and they tell me the whole thing looks quite plausible and that the 43,000 kilowatt-hours being pushed back into the city grid isn’t too over the top. I wonder how much the fog and cloud cover will impact the actual performance of this system. (Hat tip, Kimo)

Photo courtesy of Popular Mechanics. Click on the image to be taken to the Popular Mechanics web site.

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But I quickly ran through my 5GB data transfer limit — thanks to watching Hulu and listening to Spotify, two services that have replaced television and radio in my life. My next best option was Free the Net SF, an open Wi-Fi network maintained in my neighborhood by San Francisco-based startup Meraki. It wasn’t the fastest, but it provided enough bandwidth for me to watch “The Daily Show with Jon Stewart.” The mesh wireless networking hardware maker has been a favorite of ours for years now — and it was the first time I really benefited from its Net SF experiment.

Since then, whenever I walk over for a coffee or want to sit in the park and catch up on my reading on my  iPhone, I hop on that network. I don’t use AT&T’s 3G network — I use my iPhone as an iPod. And so do others. Meraki recently conducted a wireless access census and found some amazing statistics.

This blog and I were here during the Wi-Fi boom, when the wireless networking technology was seen as a solution for world hunger. (OK, that was a joke.) It quickly went from being an in-home (and on-campus) technology to the cornerstone of municipal wireless efforts. By 2006, the hype cycle ended, and reality set in about the potential and economics of Wi-Fi. Many municipal Wi-Fi efforts started to stall, and companies such as EarthLink backed away from it.

And then smartphones happened. The current smartphone boom, led by Apple’s iPhone, has given Wi-Fi a much-needed boost, as Meraki data shows. First, some stats from the census that compared the devices that accessed Meraki access points in 2008 and 2009:

• The number of Apple devices observed, including laptops, iPhones and iPods grew by an impressive 221 percent.
• Apple now represents 32 percent vs. 14 percent in 2008 of all the devices seen by Meraki networks in North America.
• The number of smartphones (handheld devices) has quadrupled over the past year, with RIM showing a gain of 419 percent.
• The number of people using Intel-based devices declined 11 percent, which tells me that more people are using smartphones vs. laptops.

Now to be clear, Meraki has a big presence in the San Francisco Bay Area, which skews the usage patterns a little. But, as we have written in the past, Wi-Fi use has been going up across the U.S., as the data collected by AdMob shows. AdMob is a mobile advertising company. We also checked with enterprise Wi-Fi network provider iPass on the network usage, and a company spokesperson told us it had seen a 200 percent increase in enterprise smartphone use over its global Wi-Fi network from the first quarter to the second quarter of 2009. The U.S., UK and the Netherlands were the countries with the highest Wi-Fi growth, regardless of device, during that same period, according to iPass data.

The usage has grown as major 3G networks have choked under heavy mobile Internet use. There is no stopping smartphone sales, according to data collected by Infonetics Research, a market research company. (See chart.) With the growing availability of Google Android-based handsets, 2009 will prove to be a banner year for smartphones. (See a related research report from GigaOM Pro, “Google’s Mobile Strategy” (subscription required). We will also be discussing this topic as part of a free Research Roundtable Webinar on Aug. 27, 2009. Register here.)

In my opinion, the presence of PC-quality browsers, such as Safari, on smartphones and webkit-based browsers, as well as the growing popularity of social-networking services such as Twitter and Facebook as communication tools, have boosted the demand for wireless data. These tools demand data connectivity, and people want to check them while on the go. This spurt in usage has left the carriers that long saw themselves as Wi-Fi’s enemy coming around and embracing the insurgent technology.

AT&T’s $275 million acquisition of Wayport and the recent agreement between Verizon and Santa Monica, Calif., Wi-Fi aggregator Boingo Wireless are signs that despite the availability of faster 3G networks, the low-cost economics of the Wi-Fi ecosystem are alive and kicking.

Wi-Fi, which is based on a sliver of open wireless spectrum, is finally proving its disruptive qualities. The concurrent boom in demand for Wi-Fi-based connectivity shows that most networking technologies have to find a way to coexist in our increasingly bandwidth-hungry lives. As for me, I am enjoying the seamless Wi-Fi — in my apartment, my work and my home.

No wonder I don’t miss my 3G connection.

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However, this is Meraki’s second or possibly even third attempt at finding a market for its mesh networking technology. The company has pushed municipal Wi-Fi and is also trying to make a business selling access points to hotels, business districts and apartments interested in Wi-Fi.  It has some cool technology and ideas, but can it transition from selling to municipalities and folks trying to set up local networks, to the enterprise? If it does so, it would make its transition from an open-source, cheap hardware provider to money-making-business complete.

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