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The Microsoft is evil meme is alive and well this week as many digest Microsoft’s $44.6 billion takeover offer for Yahoo. There’s Flickr users protesting, talk of Yahoo teaming up with Google to block Microsoft’s bid, and general Microsoft is bad sentiment everywhere, even from Google itself. While Microsoft acquiring Yahoo may not provide the ultimate in happy endings to many, it’s really not as bad as some would have you believe.

Google is Afraid.

Google’s response to the acquisition over the weekend was amazing in its veracity. Google and Microsoft have never been friends, but for Google to come out and attack the acquisition as it did can only mean one thing: Google is afraid, and that’s a very good thing. Internally Google believes that a combined Microsoft/ Yahoo will provide real competition to its dominant market position in search and text advertising, the very same position it has depended on to build its until recently huge share price and market cap. Google can preach about open access and open markets all it wants, but Google’s idea of open is only where users access it from one of its many web properties.

More Competition

One argument against the acquisition is that it lessens competition. While in terms of major players it does, a combined Microsoft/ Yahoo will actually increase competition in spaces where Google is dominant, and in some countries all but a monopolist provider. Scale is the key here: Google has it, and Yahoo and Microsoft need more of it. The combined Microsoft/ Yahoo would still have less than half of Google’s market share in text ads for example, but the combined companies would be able to provide a much more appealing product in terms of reach when competing against Google, ie: the increased reach would become more appealing to ad buyers looking to maximize their exposure.

A Stronger Tail

One argument against the deal is that there will be less opportunities for startups to be bought out with Yahoo out of the picture. That is true, but only in the short term. There always has to be a Number 3 player and positions below that, and with Microsoft/ Yahoo coming in at second, the space is now there for smaller players to step into this place. Ask comes to mind, but there’s no reason why we couldn’t see newer players step up. Essentially there will be now one less big player to compete with. The strengthening of smaller players who want to break into the top tier may well see increased flows and acquisitions. In lessening numerical competition at the top, it creates further opportunities below. This naturally rests on the presumption that there won’t be a duopoly in areas such as search, but this is unlikely: there has always been smaller players, always has been, always will be, and the dream of being the next Google will continue to live on.

Yahoo Lives On

Microsoft will actually be a great boost for the Yahoo brand and its many services. The alternatives are nearly bleak in comparison: a hedge fund or similar investment would gut Yahoo to a core rump of (hopefully profitable) services, and sell off areas such as Yahoo News. Google as a partner (either in ads or the unlikely scenario as an investor) would leave Yahoo doomed to be forever a second class player to Google. One of Yahoo’s biggest strengths is still its brand, and Microsoft will work tirelessly towards building that Yahoo brand back to its glory days as the front page of the internet. That goes for the sub-brands as well: Flickr will likely replace Microsoft’s photo sharing suite for example.

Better Service

Someone wrote in the last couple of days the days of building the best product and expecting people to use it has passed, and that’s the problem with Microsoft’s online endeavors today in the age of Google dominance. Microsoft has some great internet products; from Popfly and Silverlight, through to a solid ad platform (that is powering Digg and Facebook) and decent search. A combined Microsoft/ Yahoo would offer the best from both companies in what in theory would be a better all over package. Some may argue that getting to this stage might be difficult, but even Wired notes that merging the two corporate cultures wouldn’t be that hard. Ultimately to compete with Google you must have a strong across the board multi-faceted package, and Microsoft/ Yahoo would have just that.

Conclusion

None of this is meant as Google bashing. Google has done much good and as Google loves to argue, people choose to use Google, nobody is forced to use their services. However markets where one company dominates usually end up seeing stagnation and/ or inefficient pricing and service in the long term. We need a combined Microsoft/ Yahoo if only to keep Google on its toes, to keep Google innovating and providing the best service that it can, to keep Google honest.

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Yahoo is said to be in talks with record labels on offering DRM free music to customers.

The options discussed by Yahoo are to sell DRM free music, or offer it ad supported and free to.

According to an AP report, the talks took place last month, but are still at a preliminary stage with Yahoo still working out details. Yahoo has confirmed the talks, but not the details of them.

Yahoo offering DRM free music isn’t ground shaking given Amazon already does and others are headed in this direction. Offering that DRM free music for free however is a big step forward towards the inevitable march to free. It will be interesting to see how Yahoo implements monetization strategies if they go down this path, and how it will be received. For example, will users tolerate advertising in the download itself?

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John Donahoe wasted little time as the new chief executive of Internet giant eBay before announcing big changes.

Less than an hour after being named to the top spot at eBay by the departing chief executive Meg Whitman, Mr. Donahoe said in a conference call with analysts that the company must move more quickly and aggressively to make eBay more appealing to buyers and sellers.

In an effort to reinvigorate growth of the core eBay site, Mr. Donahoe said he would shift eBay’s emphasis from auctions to fixed priced listing, which could make the experience of buying on eBay more like the one customers have come to expect from sites like Amazon.com.

He has been president of eBay’s marketplaces division for the last three years after Ms. Whitman recruited him from Bain & Company, the consulting firm. He assumes the new job on March 31.

“Auctions will always be the core of the core of eBay, it’s what makes eBay unique,” Mr. Donahoe said in a joint interview with Ms. Whitman on Wednesday afternoon. But he noted that fixed priced sales now account for 40 percent of eBay’s marketplace revenue. “We are following our users. They like convenience so what we are simply doing is putting a more explicit focus on that.”

Mr. Donahoe also said the company would announce a new fee structure next week, lowering upfront listing fees and raising the final sale fees that sellers pay only when they have successfully sold an item. Such a move could increase the number of listings on the site but it could also depress revenue in the short term.

In anticipation of the changes, eBay issued lower earnings guidance for the quarter and year ahead than Wall Street had been expecting. The company said revenue in the current quarter would grow as much as 15.8 percent from the same quarter last year and projected revenue for all of 2008 could be as high as $8.75 billion, a 13.6 percent jump. But analysts were expecting a 21.5 percent increase for the quarter and a 17.1 percent increase for the year.

EBay’s shares fell about 5 percent in extended trading after gaining 6.7 percent in the regular session to close at $28.94, a gain of $1.81.

News of slower growth detracted from a generally rosy earnings report. For the fourth quarter of 2007, eBay reported net income of $611 million, or 45 cents a share, up 42 percent from a year earlier. Revenue was $2.18 billion, up 27 percent from the same period last year and ahead of Wall Street’s forecast of $2.14 billion.

Ms. Whitman, 51. one of the most prominent female chief executives in the business world, will have served as chief executive for 10 years, having been hired before the company went public. “In many ways it is bittersweet,” Ms. Whitman said. “I have loved this company and could not be prouder of the work of our employees and community. I will miss it.”

She said she does not envision becoming chief executive of another company. “I think this is my last business job, and I have loved it and can’t imagine a more fun company than eBay,” she said.

She said she will continue to campaign for her friend and former colleague at Bain, Mitt Romney, the Republican presidential candidate, but will generally be “powering down” from a grueling work schedule. She will remain on eBay’s board.

Ms. Whitman said she did not think she was leaving at a time of greater-than-usual turmoil at the company. She said the company had always faced challenges— such as when it struggled after the dot-com bubble burst in 2000, when rivals like Amazon and Yahoo entered the auctions business and when its international expansion faltered earlier in the decade.

Mr. Donahoe will be facing some formidable challenges in his new role. EBay is losing market share to rivals, has failed to attract new users and has struggled to combat widespread fraud and counterfeit items for sale on the site.

One critical measure of his success will be how the typically vocal and sometimes irascible members of the eBay community handle the coming changes. EBay observers said the community is likely, at least, to embrace new leadership.

“If you look at Meg Whitman’s tenure through the appropriate lens, it was an incredible success,” said Scott Devitt, a managing director at Stifel, Nicolaus & Company. “But as the business matured, there have been significant requests for change on the site and the constituents have not been satisfied. Getting a fresh face and a different perspective will be viewed positively I think.”

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Apple® today announced financial results for its fiscal 2008 first quarter ended December 29, 2007. The Company posted revenue of $9.6 billion and net quarterly profit of $1.58 billion, or $1.76 per diluted share. These results compare to revenue of $7.1 billion and net quarterly profit of $1 billion, or $1.14 per diluted share, in the year-ago quarter. Gross margin was 34.7 percent, up from 31.2 percent in the year-ago quarter. International sales accounted for 45 percent of the quarter’s revenue.

Apple shipped 2,319,000 Macintosh® computers, representing 44 percent unit growth and 47 percent revenue growth over the year-ago quarter. The Company sold 22,121,000 iPods during the quarter, representing five percent unit growth and 17 percent revenue growth over the year-ago quarter. Quarterly iPhone(TM) sales were 2,315,000.

“We’re thrilled to report our best quarter ever, with the highest revenue and earnings in Apple’s history,” said Steve Jobs, Apple’s CEO. “We have an incredibly strong new product pipeline for 2008, starting with MacBook Air, Mac Pro and iTunes Movie Rentals in the first two weeks.”

“Apple’s revenue grew 35 percent year-over-year to $9.6 billion, an increase of almost $2.5 billion over the previous December quarter’s record-breaking results,” said Peter Oppenheimer, Apple’s CFO. “Our strong results produced cash flow from operations of over $2.7 billion during the quarter, yielding an ending cash balance of over $18.4 billion. Looking ahead to the second quarter of fiscal 2008, we expect revenue of about $6.8 billion and earnings per diluted share of about $.94.”

Apple will provide live streaming of its Q1 2008 financial results conference call utilizing QuickTime®, Apple’s standards-based technology for live and on-demand audio and video streaming. The live webcast will begin at 2:00 p.m. PST on Tuesday, January 22, 2008 at http://www.apple.com/quicktime/qtv/earningsq108/ and will also be available for replay.

This press release contains forward-looking statements about the Company’s estimated revenue and earnings per share. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include potential litigation and government enforcement actions that may result from the matters investigated by the special committee of the board of directors and the restatement of the Company’s consolidated financial statements; unfavorable results of legal proceedings; the effect of competitive and economic factors, and the Company’s reaction to those factors, on consumer and business buying decisions with respect to the Company’s products; war, terrorism, public health issues, and other circumstances that could disrupt supply, delivery, or demand of products; continued competitive pressures in the marketplace; the Company’s reliance on sole service providers for iPhone in the US, UK, Germany and France; the continued availability on acceptable terms of certain components and services essential to the Company’s business currently obtained by the Company from sole or limited sources; the ability of the Company to deliver to the marketplace and stimulate customer demand for new programs, products, and technological innovations on a timely basis; the effect that product transitions, changes in product pricing or mix, and/or increases in component costs could have on the Company’s gross margin; the effect that product quality problems could have on the Company’s sales and operating profits; the inventory risk associated with the Company’s need to order or commit to order product components in advance of customer orders; the effect that the Company’s dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured or services rendered; the Company’s dependency on the performance of distributors and other resellers of the Company’s products; the Company’s reliance on the availability of third-party digital content; and the potential impact of a finding that the Company has infringed on the intellectual property rights of others. More information on potential factors that could affect the Company’s financial results is included from time to time in the Company’s public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended September 29, 2007 and its Form 10-Q for the quarter ended December 29, 2007 to be filed with the SEC. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning computers, OS X operating system and iLife and professional applications. Apple is also spearheading the digital media revolution with its iPod portable music and video players and iTunes online store, and has entered the mobile phone market with its revolutionary iPhone.

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The writing is on the wall for Joost: The company just fired its CTO under what can only be described as puzzling circumstances. Then there are all those rumors about disappointing user numbers, funding issues and staffers looking for new jobs. It’s hard to tell whether these are true, but it’s clear that Joost is getting beat left and right by its competitors. Just take a look at Hulu, and you know that the Joost team has good reason to be worried.

But all is not lost for Joost. The company has built some interesting technology that could be leveraged into a great online video platform, it just has to break down the walls to its deserted garden. Here’s some unsolicited advice on how to save Joost.

Integrate Hulu. Almost ever single comment made on our recent articles about Joost involves a complaint about the lack of quality content. Joost has Tropical Honeys, Hulu’s got Heroes. Go figure. But Joost can make use of Hulu because its application is built on Mozilla XUL-Code, making it basically a browser that is specialized for video. Hulu, on the other hand, allows its clips to be embedded into any web page. Veoh and formal partners like MSN already make use of it, so why not Joost? Sure, the interface will need some tweaking, but that’s a small price to pay if you get instant access to tons of quality programming in return.

Turn Joost into a podcasting client. There are literally hundreds of great video podcasts out there, and tens of thousands that, although questionable to some, still manage to tickle the fancy of others. So why can’t I watch any of them with Joost? Give me the ability to chat with users who watch the same content, just as it’s now possible with Joost shows, and I’ll even tolerate the occasional layer ad. There have been fairly reliable rumors about Joost working on this feature for quite a while now, so where the heck is it?

Build a web version. This is pretty much a no-brainer. Sure, P2P won’t work on the web, and there are plenty of competitors out there. But it’s about offering your users the convenience of being able to watch your content where they want and how they want. Joost’s advantage over platforms like Hulu will never be some software with lots of bells and whistles, but its potential to have a social dimension. Users that interact with each other and help each other find content. Build this community in your client, give it a home on the web and allow them to occasionally stream a clip there as well.

Build a Firefox plug-in. Consider it the next step in merging the web with the Joost app. A plug-in could make use of Joost’s P2P network, its widgets and its community and at the same time allow access to any other content online. Wouldn’t it be great if users could mash a single playlist out of YouTube videos, Joost clips and Hulu scenes and then send it to their Joost IM buddies?

Get Joost on the Wii. Forget about Apple TV. The real home entertainment powerhouse is Nintendo. The company has sold more than seven million consoles in the U.S. alone, but hasn’t shown any ambitions to get into the online video market. Joost could fill this gap by offering a Wii-optimized web app that’s accessible through the console’s Opera browser. Give me the ability to control my videos with some wild Wiimote gestures, and I’ll chose Joost over Hulu any day.

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The last 12 months have seen plenty of talking points around technology - from the iPhone, to Facebook, the launch of Vista and the XO laptop - but what were the developments, stories or gadgets which had the biggest impact?

JANE WAKEFIELD

My technology of the year is, somewhat predictably, Facebook.

I know it isn’t the most original of picks and ever since logging on back in the summer, I have had a nagging suspicion that it is little more than a glorified form of instant messaging - only slower, but I still find it addictive.

And that comes from someone who has never updated their status and rarely uploads pictures or does anything with the various applications I sign up for.

So why do I love it? Essentially it is about communication and people which, for me, is what technology should be all about. It also appeals to my innate sense of curiosity and allows me to people-watch on a grand scale, on my own terms and without getting accused of staring.

On a personal level I have found it if not life-changing then definitely life-enhancing. It reunited me with a long-lost university friend, as well as being the first place I learned of another friend’s pregnancy and saw yet more friends’ baby pics for the first time.

On a professional level it has allowed me to ‘get’ social networking which, up until that point, was a vague umbrella term for something I didn’t entirely understand.

I have one concern. When instant messaging was in its infancy I was rarely disconnected but these days my account languishes. The interesting thing for me will be to see whether the same happens for my Facebook profile once the novelty wears off.

JONATHAN FILDES

In January Apple Boss Steve Jobs launched the iPhone, a device he said would “revolutionise the industry”. And the phone certainly lived up to expectations, for some.

But, for me, the highlight of the year was a technology that has the potential to have a far greater transformative impact.

In July, US researchers showed-off a relatively simple system that could deliver energy to devices, such as laptop computers, without the need for wires. The setup, called Witricity, was able to make a 60W light bulb glow from a distance of 2m (7ft).

The bulb was even made to glow when obstructions such as wood and metal were placed between the transmitter and receiver.

The reason it is my technology of the year is threefold. Firstly, if the system can be refined it has the potential to banish the annoying and ever-growing tangle of wires needed to recharge today’s electronic gadgets to the past.

There are already systems on the market that use recharging pads - similar to electric toothbrush chargers - or highly directional lasers, but none that are able to flood a room with useful energy in the same way as the Witricity setup.

Secondly, the MIT researchers were able to build and test a workable system at breakneck speed.

Although the basic physics underpinning the system were well understood, the first results from their working prototype were presented to the public just eight months after the researchers had presented a paper outlining their theoretical design.

And finally, the experiment also vindicates the work of the nineteenth-century physics and engineering heavyweight Nikola Tesla.

He experimented with long-range wireless energy transfer, but his most ambitious attempt - a 29m high aerial known as Wardenclyffe Tower, in New York - failed when he ran out of money.

Witricity shows that Tesla was right to pursue a world without wires.

RORY CELLAN-JONES

2007 - the year of the iPhone and Vista and Leopard, and of more victories for the Nintendo Wii over the PlayStation3 in the console wars.

For me, though, one technology has made a bigger personal impact than any other - social networking, or to be more precise, Facebook.

In the first flush of my romance with Facebook, I added everyone in sight - students from American universities, forty-somethings who wanted to reassure me that I was not alone , someone masquerading as Patrick Moore, even, God help me, PR people.

Quickly I sobered up and began to ration my friendship to people I actually knew - or at least friends of friends.

And it worked. I developed a “virtual” social life, rediscovering old contacts, hooking up with other technology journalists, even talking more to my old friends.

News arrived on my computer each morning - one colleague announced his engagement, others the end of relationships. I felt better connected, part of a loose community where I could share as much or as little of my life as I wanted.

But in recent weeks, I have begun to wonder if Facebook has peaked. One friend - younger than me - became the first to leave, telling us it was encroaching too much on his time. Then I began to find aspects of the network increasingly irksome.

Back in May, the decision to open Facebook up to outside developers seemed brilliant, promising to change a simple pared-down site into a platform for your entire online life.

Now, I’m beginning to yearn for that early simplicity. I do not want to be bitten by vampires, or stock a virtual aquarium with fish, or watch another daft YouTube video sent to my FunWall.

Facebook’s other strategic move - the Beacon advertising system - also promises to make it less attractive to users.

So are we falling out of love with Facebook? I posed that question to my “friends” the other day. “The novelty is wearing off.. ” “Suffering seasonal Facebook fatigue..” were two comments.

Another had found that all her thirty-something friends had gone. But most reported that, while their early passion had faded, they were still enjoying running their social lives online. So here’s my prediction - Facebook will not fade away in 2008. But don’t expect to hear quite as much about it as you have this year.

DARREN WATERS

I’ve been impressed with the iPhone, seen Facebook become an extension of my social life, suffered disappointed at the hands of Leopard and looked on in fascination as Microsoft struggled to make the best of Vista.

But the technology that has had the biggest impact on me personally is rich web applications. I know that’s more of a range of technologies - but web apps like Google Calendar, Docs, and Reader and the new photo-editing tools on Flickr have made my life simpler.

I live a hybrid existence - using Macs at home, and on the road, but PCs at work. As such I have lots of issues around accessing information across two different platforms.

The programs I use for my e-mail, diary, RSS feeds and photos have always been different across the two systems. But the rise of web apps that are flexible, platform-neutral and accessible from anywhere I have a net connection has made my life almost pain-free.

The technology team plans its workload via Google calendar, we have collaborated on stories and scripts using a web-based word processor and I can now get access to the latest stories via RSS on my Mac, PC or mobile phone and it is always synchronised.

As technologies like Adobe Air and Google Gears allow richer and richer experiences to move to the cloud, and to merge the offline and online worlds, 2008 should be even more interesting.

MARK WARD

My pick of the year is a pretty geeky one - but in a good way. In late November Nominet, which looks after the .uk domain, started work on a British Enum directory.

Enum, or Telephone Number Mapping, does a couple of hugely important things. It makes it possible to map net domains to telephone numbers. This means you can look up a number just like you do a net domain.

This is important as it promises to start unifying the still, largely, separate worlds of phones and the net. For a start this means that firms who route calls over the net, like Skype, will be able to interconnect much more easily. But that’s just the start.

Given that eventually all communication could travel via the net it marks the start of a grand conjunction.

Ultimately it could mean that when you have one way to contact someone you have all the ways they can be contacted. All you will have to do is look them up like you do a website now.

The net will know.

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The Federal Trade Commission (FTC) will rule in favor of Google’s acquisition of DoubleClick, possibly as soon as this week, according to sources quoted by Bloomberg.

The FTC has been investigating the acquisition on competition grounds since it was first announced in April. A number of high profile respondents argued against the acquisition, including AT&T and Microsoft, and in July Scott Cleland of telecom research group Prescursor presented a strong case arguing against the merger.

The acquisition has already been cleared by authorities in Australia, but still faces regulatory review in Europe.

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