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NBC News compiled an interesting infographic detailing how people watched the Royal Wedding last week, including data about live video streams, tweets and Tumblr notes. Check it out:

For a closer look at the world-wide online video traffic and the protocols used to stream all that content, also check out our posts Royal Wedding Breaks Records, Not the Internet and Flash & Mobile Are Big Winners of the Royal Wedding.

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Turns out it was OK for me to be unwell last week. It gave me enough time to ponder some of the major stories of the moment without being compelled to write about them. Whether it was Amazon’s outage, Sony’s network breach or the drama around Apple’s location data collection policies (or lack thereof) — the hue and cry was quite astonishing. I mean, even South Park and Stephen Colbert had to weigh in on Apple’s location problems!

Not that it is the first time privacy, security and reliability have been the subject of hot debate. Skype outages, Gmail failures, Facebook going on the blink, and the brouhaha around Facebook’s dreaded Beacon project are some of the media explosions that crossed over from the realm of inward looking tech-media to mainstream media outlets. And I am pretty sure we will keep encountering more of these issues.

Stepping back, when you look at all these instances, you see that in all of them, the common thread was “we the people.” Our fears, our desires and our needs were behind the huge outcry around these problems that seemed to impact millions of us. This mainstreaming of technology has opened up new opportunities, but it has and will pose a brand new kind of challenge to companies in Silicon Valley.

If the hue and cry over Apple’s location data collection methodologies is any indication, then are we the people becoming the limiting factor in the evolution of technology and its adoption? Will the idea of what computing can do and what it will be in the future be limited by our collective ability to grok these changes? I mean, things aren’t exactly getting less complicated. Apple CEO Steve Jobs put it well when he said:

…as new technology comes into the society there is a period of adjustment and education. We haven’t as an industry done a very good job educating people, I think, as to some of the more subtle things going on here. As such, (people) jumped to a lot of wrong conclusions in the last week. I think the right time to educate people is when there is no problem. I think we will probably ask ourselves how we can do some of that, as an industry.

Jobs’ comments, in fact encapsulate the bigger issues at play.

The Tech Side Story

For the longest time, the future of technology has been determined by the building blocks that go into devices. The processors, memory and storage defined how software was written during the PC era. Of course, since big buyers of PCs were large companies, the average consumer didn’t have much say in the matter, though ironically the productivity-driven PC revolution was labeled the personal computer revolution.

The early days of the commercial Internet carried this grand tradition — ignoring the actual user of a product in favor of the commercial desires of a service provider. You, mom and I had little or no say in how the technologies were used to build a service. However, as the networks spread, the early years of the new century saw a massive consumerization of technology.

Corporations stopped buying, but consumers didn’t. Broadband connections grew. Sales of iPods and computers shot up and we all wanted digital cameras, video cameras and TiVos. As a result, the balance of power shifted away from companies and technology started to become more personal. However, the first five years of the 21st century were all about objects and how to make them simpler.

With the arrival of the social web, companies like Flickr, Plaxo and LinkedIn showed that it was time to think differently about how technologies (web applications) were built, used and, more importantly, adopted. The emergence of Facebook and Twitter has only amplified that effect.

The social web is about connecting people. On some networks it is real people (Facebook) and on some networks the web connects assumed identities (Twitter). If CPU, memory and storage defined the capabilities in the PC era, then in the Internet era, we saw software being defined by processors, memory, storage and bandwidth.

The Internet era eased the way to the social web. In the social web, the software and with it the frontiers of technology being defined by the marriage of network connectivity, PC-era staples and social identity.

There isn’t really social software, social media or even social networks. What social represents is a new way of thinking about what is as old as us –humans — relationships. Think of this way — the social web mimics the way we are in the real world.

Friends, families, tribes and teams that communicate, collaborate, consume and create together. There is no client, no server, just us. The CPU, memory, storage and the network are mere enablers. In this new kind of social web, the defining characteristic is us.

So when Facebook goes down, we cry bloody murder. If Facebook launches Beacon or tweaks how stuff shows up in our news streams or if we suddenly become shills to our friends — we all stomp our collective feet on the ground, till it starts to shake. In other words, it is not what Facebook can build or how it can use the technology resources. Instead the limiting factor for Facebook is how its 600 million (and growing) people adapt to the changes.

My Mobile, My Way

Over past four years, in parallel to this social web arranged around people and their networks, we have seen the emergence of a new kind of mobile Internet. Smartphones mean that technology that once was the domain of the office is now a constant accompaniment. Mobile phones of today might have innards of a PC, but they are not really computers. They are able to sense things, they react to touch and sound and location. Mobile phones are not computers, but they are an extension of us.

With this revolution, it has become easier to share our moments and other details of our life that have so far been less exposed. The sharing of location data becomes a cause of concern because it is the unknown. The situation is only going to get more complicated — we are after all entering a brave new world of sensor driven mobile experiences, as I wrote in an earlier newsletter. No, this is not science fiction stuff.

Today, I read about State Farm, the insurance company launching a new app that uses iPhone’s built in accelerometer technology in tandem with GPS-based location data to measure your ability to do three major tasks when driving — accelerate, brake and corner. You get a score at the end of the journey.

Of course, for now the results are private to the driver, but what if an insurance company started to keep records of your driving and decided your insurance rates based on your performance. It is great news if you are a good driver, not so good news if you are a horrible one. In other words, the perceived scariness is going to define how we adopt and adapt to this and more such technologies.

While Jobs’ idea of offering better explanations of complex technologies is a good step forward, companies also have to start thinking about the human aspect of their core products. In addition to the core building blocks, a product of tomorrow needs to know its human limits or its human capabilities.

Photo courtesy of Apple via its new iPad 2 clip. 

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May 3 is Press Freedom Day and to mark the occasion, New York-based campaign group the Committee to Protect Journalists is outlining some of the ways that free speech is restricted online. The results make important — and sobering — reading.

In a report published on the CPJ site, coordinator Danny O’Brien outlines “the 10 tools of online oppressors”.

Some of the techniques you probably know about: Iran’s predilection for blocking Web sites and services and Egypt’s decision to flip the Internet kill switch in the days when Hosni Mubarak’s rule was verging on collapse. And, of course, a number of different countries regularly imprison journalists, bloggers and others who dare to challenge political regimes.

But there are a few examples of less obvious restrictions that the report also points out. Take Cuba, which manages to keep a lid on online dissent by the simple method of not having Internet connectivity in the first place. It’s a similar situation in countries like North Korea and Burma, where only a tiny elite — who are totally invested in the status quo — are granted Internet access.

Even when infrastructure is in place, it can be manipulated in important ways. Ethiopia rarely makes headlines these days, but the government has gone to great lengths to expand the network as it tries to shake off a national history of extreme poverty. But in attempting to become a hypermodern nation, it has also discovered that there are new avenues of control: as the CPJ report explains, the government is exercising an astonishing amount of control over that connectivity. Political news is heavily filtered, and foreign information sources are shut down where possible.

As O’Brien states:

Many of the oppressors’ tactics show an increasing sophistication, from the state-supported email in China designed to take over journalists’ personal computers, to the carefully timed cyber-attacks on news websites in Belarus. Still other tools in the oppressor’s kit are as old as the press itself, including imprisonment of online writers in Syria, and the use of violence against bloggers in Russia.

And if none of that concerns you, then remember that these techniques may already apply to your own life in some way — a report issued by American NGO Freedom House last month suggests that “even in more democratic countries — such as Brazil India, Indonesia, South Korea, Turkey, and the United Kingdom — internet freedom is increasingly undermined by legal harassment, opaque censorship procedures, or expanding surveillance”. Curtailing freedom of speech isn’t something that just happens to other people– it could happen to you too.

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This week, tech insiders and observers joined in on a new round of the industry’s current favorite parlor game: bandying around estimates of how much Facebook is really worth.

What set off the latest buzz was a Sunday morning Wall Street Journal report that Facebook could hold its initial public offering at a valuation of $100 billion. The number came from unnamed company insiders, who arrived at it based on the $2 billion in annual earnings before interest, taxes, debt and amortization (EBITDA) they say Facebook is set to make in 2011.

There’s a lot being said about this, but to me, two particularly salient points stand out from the chatter:

• Consider the (potential) source.

Skeptics have noted that the WSJ report’s sources could well have some skin in the game. After all, the WSJ article comes just days after an April 27 Reuters report that a group of Facebook shareholders are attempting to sell $1 billion worth of company shares in a secondary market at a price that values the entire company at $70 billion. Those same shareholders had previously tried in vain to offload their Facebook holdings at a price that valued the company at $90 billion, according to the Reuters report, which cited five unnamed sources claiming direct knowledge of the situation.

Could it be that people who are reportedly shopping around their Facebook stock are the same ones talking up Facebook’s valuation to the press?

• That’s one ambitious valuation!

Even if the $2 billion EBITDA figure is completely accurate, does it make sense to extrapolate a $100 billion valuation from that?  As USA Today‘s Tim Mullaney points out, while a few firms like Salesforce and OpenTable are currently trading at around 50 times EBITDA, most tech industry players are traded at much lower EBITDA multiples. Google is currently valued at 9 times EBITDA, and Apple is valued at 10 times EBITDA. Part of the beauty of the stock market is the mystery of market capitalizations, but valuing Facebook at 50 times EBITDA would place it at the far end of the Bell curve.

From a revenue, talent, and a customer traction perspective, there is no doubt that Facebook is in the big leagues. But until the company pulls the trigger on an IPO or sale, whether it will all translate into a $100 billion valuation is up for debate.

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Social media tools like Twitter and Facebook have been around for several years now, but some media organizations are still just getting around to figuring out how to handle them — and in many cases, as we’ve written before, they spend a lot of time talking about what journalists should not do, and very little about what they should do. Bloomberg is the latest to come out with this kind of social-media policy, which spends most of its time telling staff all the things they should avoid doing.

The Bloomberg policy, which was sent to the Emedia Vitals blog by a source, starts off well enough, by saying that social networks and social-media platforms are “a powerful way to reach millions of new readers and expand the impact of our reporting,” and that social media “is a useful complement to our work so long as principles of fairness, accuracy and transparency are upheld.” So far, so good.

Then, however, the policy goes on to list all the things that reporters and editors with Bloomberg shouldn’t do. Staff “should not use social networks to express political opinions or to advocate on behalf of a particular issue or agenda,” and posts on any network or platform “should never express bias based on race, sex, religion, or nationality.” Reporters and editors “cannot use social media to express opinions related in any way to their professional assignment or beat.” Staff are also forbidden to join any groups or social networks that are dedicated to a particular political opinion or cause, are not allowed to “engage in arguments with those critical of our work,” and are not allowed to mention any internal discussions or meetings.

All of these restrictions and bans are very similar to the ones that the Toronto Star newspaper laid out in its new social-media policy, which I wrote about recently: never discuss stories in development, do not talk about newsroom issues, don’t express any opinions about the topics you cover, and don’t respond to readers.

These kinds of policies have a number of flaws — including the fact that much of what they are prohibiting is either common sense or impossible to police (or both). During a discussion of policies on Twitter on Tuesday, journalism professor Jeff Jarvis echoed a motto tweeted by Katie Rosman of the Wall Street Journal, who said that deputy managing editor Alan Murray told her the best policy was “Don’t be stupid.” And John Paton, CEO of the Journal-Register Co. newspaper chain and architect of its digital-first strategy, posted his own social-media policy recently, which told employees to consider three points — all of which were blank (the implication being that there are no explicit rules).

One of the biggest flaws of most policies is that they spend so much time talking about how bad social media is for the profession, and so little time talking about what makes it useful, or how to approach it as a positive tool for journalism. About the only positive thing that both the Bloomberg policy and the Toronto Star policy are willing to admit to is that social media such as Twitter and Facebook are really good for promoting your content (although Bloomberg does mention that it’s “good etiquette” to occasionally link to interesting work created by others, which is more than many policies do).

But social tools are good for so much more than just promoting content — not to mention that if all a journalist does is promote his or her content, people will quickly determine that their account is just self-promotional spam, and pay little attention. So what would a positive social-media policy recommend? Here are a few suggestions that I’ve come up with — feel free to add your own in the comments:

• Talk to people: this has nothing to do with promoting your own content. It means engaging in conversation about issues, and responding to and/or asking questions of others. It’s called a conversational medium for a reason. Unfortunately, most media outlets explicitly forbid this.
• Reply when you are spoken to: if you don’t respond when someone asks you a direct question or makes a point in reference to you, it’s like ignoring someone who is standing right beside you and talking to you. That doesn’t mean responding to every troll or flame.
• Re-tweet others: social media gets very boring if all you do is post links to your own things, or post your own thoughts. Lots of other people have interesting things to say — find some and re-tweet them. Maybe they will return the favor.
• Link to others: the same goes for links — social media is a tremendous tool for finding interesting content, and you should share it when you find it, not just keep it to yourself. If you do this, others are more likely to share your links when you post them.
• Admit when you are wrong: this is difficult for many journalists, since we like to pretend that we never get anything wrong — which everyone knows is untrue. So be transparent, as much as it pains you, and admit when you got something wrong. It builds trust.
• Be human, but not too human: it’s okay to show emotion — in fact, it’s good, because it shows that you are human, and people relate to other people. It’s called social media for a reason. But be the best version of yourself — and don’t ever tweet drunk :-)

Those are just some of the principles that make social media what it is, but I have yet to see a social-media policy — apart from possibly the blogging and commenting guidelines at The Guardian — that focuses on this kind of behavior, instead of spending all its time talking about what could go wrong, or telling reporters and editors things they shouldn’t do.

Thumbnail photo courtesy of Flickr user Rosaura Ochoa

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To solve the world’s energy problems and combat a rise in global warming, the solutions need to be dramatic and powerful. And definitely not cute. That’s the blunt assessment of Microsoft co-founder Bill Gates, who dismissed smaller scale technologies like residential solar installations as being “cute” but ineffective.

Speaking at the Wired Business Conference in New York, Gates sounded a now familiar call for innovation in clean energy production. But he said the challenge of meeting the world’s growing energy needs while reducing the rise of carbon emissions won’t be handled by smaller deployments of technology. For example, he said solar panels attached to homes and connected to smart grids is no match for the real impact of large remote solar installations.

“If you’re going for cuteness, the stuff on homes is where to go but if you’re interested in solving energy problems, it’s those big ones in the desert,” that matter, said Gates, who is tackling humanitarian causes with the Bill and Melinda Gates Foundation. Gates’ sentiments echo those of greentech investor Vinod Khosla, who often times has said if an energy technology can’t scale to sell to India and China it won’t make a difference. Gates is a limited partner investor in Khosla’s greentech fund Khosla Ventures.

Gates downplayed the significance of energy efficiency efforts to make a difference on a global scale. He said while cutting back on power use can provide a good economic benefit, he said it can’t keep pace with the growing energy demands of emerging nations. To make a difference, he said a 90 percent drop in CO2 is needed to be impactful.

“We should do the efficiency stuff. It’s a great thing. It has economic benefit. But we shouldn’t think of that as making much of a dent in the environmental challenge,” he said.

Gates’ envisions bigger energy solutions like nuclear, which he has a big interest in as an investor in TerraPower, a next generation nuclear reactor design start-up. Even with the recent disaster in Japan with the Fukushima plant, Gates said nuclear is still one of the most promising answers because it’s so clean and efficient compared to other energy options. While there are concerns about safety with nuclear plants, he said next generation reactor designs are capable of being much more safe and automated and don’t leave the same kind of nuclear waste. In fact, it’s a reliance on aging designs like the Fukushima plant that open the door for more innovation in nuclear power, said Gates.

“There’s hardly been any innovation in nuclear; the room to do things differently is pretty dramatic,” Gates said.

Gates said there’s still big opportunities for the U.S. to innovate in nuclear energy and battery technology. But it takes thinking on a large scale, similar to how China is throwing massive resources and engineers at large projects. Creating innovation also requires a smarter use of money by the government, with a shift from funding clean tech deployments to the bigger need of accelerating research and development. Gates said losing the clean energy innovation race is part of a larger problem in rich countries, which drop the ball on leadership at times in pursuit of distractions like ethanol that don’t reduce CO2 emissions instead of large-scale solutions.

“It’s great to have rich countries.  We can think about long-term problem but we get sloppy because we’re rich,” Gates said.

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There are more rumors making the rounds about Twitter acquiring the TweetDeck client, with TechCrunch and Reuters both saying they have confirmed a deal that is expected to be announced within days, a followup to an earlier report by the Wall Street Journal that the two were in talks. One of the big question marks, should such a deal actually occur, is whether Twitter will keep TweetDeck alive or euthanize it — but if it does decide to kill the app, the company could arguably do further damage to the already tense relationship it has with third-party developers.

One of the obvious motives for acquiring TweetDeck, as we’ve written before, is to keep it out of the hands of UberMedia — the Bill Gross startup that has had a contentious relationship with Twitter since it was first created last year, in part because the company made it clear that it wanted to set up a competing advertising model and possibly a complete alternative network to Twitter. UberMedia was also said to be in talks with TweetDeck, but those expired without any resolution. Preventing Gross from acquiring the company, and bringing those users into the Twitter family, could justify the $50 million that Twitter is reportedly offering.

One of the arguments for killing TweetDeck is that since Twitter just wants to keep it away from UberMedia, then shutting it down is a logical next step, since it isn’t really a strategic acquisition. Although the app is favored by a number of power users, some have argued that Twitter is really focused on its broad user base — most of whom either use the Twitter website or mobile apps — and therefore it doesn’t have any interest in TweetDeck.

While both of those things may be true, I think Twitter would be wrong to kill TweetDeck, for a number of reasons. One is pretty straightforward: if an app is used by your most hard-core power customers, including a bunch of large corporations and media outlets. Why risk irritating those users? It doesn’t make any sense. It would cost Twitter very little to simply keep TweetDeck running for those that want to use it, and try to migrate them to other clients over time if it decides to do that. And spending $50 million just to kill something seems like a pretty dumb use of the money Twitter has raised from VCs, especially for a company that isn’t even close to being profitable.

Then there’s the impact on Twitter’s relationship with third-party developers and its “ecosystem,” which I took a look at for a recent GigaOM Pro report (subscription required). At the moment, the information network is currently caught between its past — in which it encouraged anyone and everyone to develop apps using its API, with very few restrictions on what they could do — and its future, which involves controlling its network and access to that network, for business reasons. To put it bluntly, Twitter has to come up with a business that justifies the billions of dollars it is theoretically worth on the private market after raising $200 million in venture capital.

The problem is that many of the moves it has made — shutting down UberMedia’s apps, tightening its restrictions on the API, telling people not to bother making new clients, and so on — have not just ruffled feathers in the developer community but made some seriously question their relationship with the company. That isn’t something to be taken lightly. And while buying TweetDeck might look like a payoff for developer Iain Dodsworth and his team, shutting it down will make it look like Twitter is willing to bulldoze whatever it wants in order to maintain its control over the ecosystem.

Thumbnail photo courtesy of Flickr user Umberto Rotundo

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Y Combinator was already a popular accelerator program for young start-ups, but with Yuri Milner and Ron Conway offering $150,000 to all YC companies, it has boosted applications by 40 percent for the upcoming class, said Harj Taggar, the newest partner at Y Combinator during an interview at the Wired Business Conference in New York.

Taggar said the promise of more money has boosted applications and also brought in a more diverse mix of applicants. He said he’s seen a significant increase in older and more experienced entrepreneurs as well as non-technical MBAs, looking to give life to new ideas. He said Y Combinator just completed the final review process for the upcoming summer class and is in the process of notifying the start-ups about their inclusion in the new class, which starts later this month. YC doesn’t disclose how many submissions it gets but Taggar said the program is now becoming more attractive to a wider audience as its brand grows.

“People had this view of a YC company as a nerdy CS guy who just hacks away, but we’re now getting a lot of successful CEOs who have had good exits come back. It’s a very diverse group now. Y Combinator used to be the only funding source for a lot of companies but now a lot more people who have credible options are putting them off [in order] to work with YC,” Taggar said.

There were 43 companies in YC’s last class, which were unveiled at demo days in March. Taggar said the classes have been growing by 20 percent on average, and he said that will continue with this upcoming class, which means we’ll see about 50 companies this time. In addition to the $150,000 offered by Milner and Conway’s SV Angel fund, YC also offers about $15,000-$25,000 per startup. Taggar said the additional money, though bemoaned by some angel investors, has only provided positives to YC start-ups, providing them with a hedge that allows them to work on their products and strategy without having to worry about survival or taking more money immediately. If there’s one downside, it’s just meant more work for Taggar and the other YC partners reviewing applications; YC continues to select about 2.5-3 percent of all submissions. Taggar said YC has the capacity to handle many more companies in its program. And it’s bringing on more YC graduates as advisors such as Sam Altman of Loopt and Justin Kan of Justin.tv.

Taggar said he’s not worried about the impact of the extra money for YC start-ups. He said it’s still very hard for any start-up to get off the ground and fight through the challenges of funding, hiring and finding momentum with customers. But he said it’s still hardly a bubble for the tech world and if it is, it’s a self-correcting one. And it’s also mostly confined to the seed stage where it’s unlikely to hurt a lot of people, he said.

“I’m just a strong believer that pushing out a lot of start-ups is good for the world. This is not a pyramid scheme; these companies still have to get revenue, get users, hire people, all these problems still exist. And this is not huge amounts of money here. This won’t collapse anything. I generally believe that the market corrects itself so if valuations are too high now, it will correct itself. “

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An unlikely speaker took the stage Tuesday morning at Research In Motion’sBlackBerry World event in the form of Microsoft CEO Steve Ballmer. Following news and demonstrations of the latest BlackBerry Bold handsets, Ballmer was introduced and shared details on a new partnership between Microsoft and RIM. Bing will now be integrated into the BlackBerry operating system as the default engine for maps and search. Can you say BingBerry?

This strategy illustrates that the mobile market is entering a bit of a new phase that focuses on feature consolidation and “co-opetition.” From 2007 until recently, smartphone maturity centered around new platforms, user interfaces and the emergence of the mobile app economy. Apps will continue to see growth as 44 billion mobile app downloads are expected by 2016, and that economy is helping to drive which smartphones consumers are choosing. Hardware specifications and features are still important, but so too are platform usability and what apps are available. Both Microsoft and RIM are making strides in this area, but they’re still taking a back seat to the app stores for iOS and Android devices.

Platforms and user interfaces aren’t showing that much more room for growth when compared to the mobile app aspect, however, because most of the disruption has already taken place. Aside from RIM’s QNX platform for the PlayBook and HP’s refresh of webOS coming soon, there’s little need for another major mobile platform and ecosystem. That doesn’t mean there isn’t room for these two late-comers: I find quite a bit to like on the QNX-powered PlayBook tablet and HP’s TouchPad is looking fantastic as well. Had these two devices launched closer to the initial iPad debut last April, we might today be talking about a more even split of tablet market share. That didn’t happen and at this point, some may feel there isn’t a need for either of these in the market, although I think the landscape can bear four or five major players.

But all of these companies are playing catch-up to Apple and Google. And that leads to a consolidation phase where less popular platforms such as QNX, webOS and Windows Phone 7 have to find ways to attract consumers and enterprises alike. Here in the U.S., that window of opportunity is fast closing, as 54 percent of handsets sold in the last quarter were smartphones, according to the NPD Group. That means these folks have already picked their platform. Can they change from an iOS or Android device to something from Microsoft, RIM or HP? Of course they can, but the investment in mobile apps has a lock-in cost that can create a barrier to switching platforms.

As a hedge against weakness in native mobile platforms, a consolidation of services is underway. Need a recent example? Nokia’s decision in February to drop Symbian in favor of Windows Phone 7 may have kicked off this new phase. And today we have two of the biggest competitors in the mobile enterprise space forming a loose alliance. Bing fends off BlackBerry’s need for Google’s search and map features, while Microsoft gains a greater number of eyeballs on its mobile Bing property since BlackBerry phones handily outsell those that use Microsoft’s mobile operating system.

By banding together, these companies stand to gain quite a bit. Leveraging Bing, for example, means RIM doesn’t have to devote resources to search efforts and can instead leverage a solid service from Microsoft. That could lead to more R&D dollars for RIM to improve its devices and software, or perhaps even speed up the transition from BlackBerry OS to QNX on handsets. RIM could have used Google for search, but that only provides more revenue for Google to invest in making Android better. Besides, RIM is already leaning on Android to make up for a shortfall of apps for its PlayBook tablet: An app player will allow PlayBook owners to run Android software on RIM’s tablet.

Because of Apple’s and Google’s first mover advantage , I think we’ll see more loose alliances between the rest of the pack. After all, the concept that “the enemy of my enemy can be my friend” is a powerful tool when you’re outnumbered and running low on ammo.

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As one of the most successful brands in the history of the video games industry, Nintendo fiercely guards its intellectual property — whether it’s protecting Mario’s image, or safeguarding Wii software. As a result, it’s not often that you witness somebody taking them on. But Spanish computer store owner Alejandro Fernandez is doing precisely that as he attempts to win a two-year battle over accusations that he’s aiding piracy.

The 31-year-old is in court today in Spain, accused of breaking the law by selling memory cards that jailbreak the Nintendo DS handheld.

The “M3 DS Real” cards, which are widely available in China and online in other countries, allow users to run unofficial software on their Nintendo handhelds. So far there’s a lot of homebrewed code for the system, such as emulator software and PDA programs, and users can also use it to port their movies, TV shows and music onto their device. Users simply connect the card into their PC, transfer the chosen programs or files to it and then plug it into their DS.

But the crucial issue, argue Nintendo’s lawyers, is whether the cards can also be used to pirate games. They say that these cards deliberately break proprietary Nintendo systems in order to run stolen code — and that’s why Fernandez faces six counts in criminal court, including theft of intellectual property, theft of industrial property and disclosure of industrial secrets.

Although the charges carry a potential 23 years of jail time and fines of up to €840,000 ($1.24 million), the public prosecutor is arguing that — if found guilty — Fernandez should only receive up to three and a half in prison and be ordered to pay fines of €12,960 ($19,100).

Fernandez, for his part, has argued that he is not responsible for what his customers do with their cards, and that hardware hacking — not piracy — is the objective for buyers.

“What the company is doing in this case is to assume what my clients are going to do,” he told Spanish daily Le Nueva España. “I assume that people are responsible.”

“The device itself does nothing, it is hardware. We sell it completely empty. It’s a kind of memory where the user gets what he wants and the user has the choice to do what he wants. There are plenty of free applications… People have it in their heads that everything that you get off the Internet is pirated, and it is not.”

To win his fight Fernandez is doing more than employing rhetoric. Along with a number of other store owners in Spain, he is filing a countersuit against Nintendo, arguing that the design of its cartridges violates European law.

Specifically, they say that Nintendo’s argument that the only reason to copy its cartridge design would be to copy the software inside — the core of their accusations against him — is actually in breach of European trade harmonization laws. Those laws, used to ensure interoperability and prevent anti-competitive behavior, state that it’s illegal to use a physical design (such as a proprietary CD design or disk) to “gain a monopoly on technical solutions”.

It’s a bold gambit from the small guy. But the truth is that however you look at it, the legal status Fernandez’s case is tricky.

Spanish courts have previously ruled that non-commercial file sharing is legal, but modchips, the bits of hardware used to modify a games console, currently exist in a gray area. They are illegal in some countries, such as in the U.S., but legal in others (such as in Canada). Some countries ban modification in general, but allow specific instances: Australia, for example, allows modding to circumvent region encoding. Nintendo has won similar cases in the UK and the Netherlands.

But even where such actions are illegal, it’s proven incredibly hard for courts to actually find modders guilty. Last year Matthew Crippen, a student and hotel worker from southern California, stood trial for Xbox modding — but the case collapsed when it emerged there was no evidence of Crippen actually using pirated games.

Fernandez is taking a far more aggressive stance than most of those who have found themselves in a similar position, even accusing Nintendo of “blackmail”, in an interview with Spain’s El Pais newspaper. Certainly, if the lawsuit filed against Nintendo succeeds, then it could have ramifications across the continent — but in the meantime, his future is in the lap of the court — and right now, it could go either way.

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Venture capitalist William Quigley, managing director of Clearstone Venture Partners, will release his State of Venture Capital in America today. The 20-year-industry veteran details a VC community at a crossroads and poised for comeback after a rocky decade. But only the strongest firms survived the shakeout. While there were 712 active technology investors at the start of the decade, only 313 remained in 2009.

We caught up with Quigley at his Santa Monica office and asked the VC to explain to us just what the heck is going on in this cooky market and hand over some advice for internet-based startups looking to attract the remaining VC players.

Q. The U.S. economy has grown nearly 50 percent since 2000, yet there are half as many venture firms in existence today as there were in 2000. That’s pretty shocking. What’s the effect of that contraction on the market?

A. Well, our entire asset class was pretty much abandoned over the last decade. But it’s actually great for those of us left standing!  We have half as many firms as we did as ten years ago. We also have far fewer assets under management than we did ten years ago — $225 billion in 2000 versus $179 billion in 2009. What that tells me is the venture market is really poised for some really great returns. Whenever there is less capital it will generate a better return.

Plus, there are far fewer venture capitalists, and especially far fewer experienced venture capitalists around today. The angel markets have been deployed, but I don’t think there is a substitute for an experienced VC within your company who has weathered multiple IPOs and can assist when M&A heats up. The ones who are there are going to win big.

Q. Venture capital fundraising has been in long decline. Your report shows fundraising peaked at $83 billion in 2007. In 2010, that figure was down to only $12 billion. So there are fewer VCs and less capital floating around. But this is somehow a good environment for startups?

A. Its terrific environment for this reason! As a startup guy, if you are looking to raise capital with half as many VC’s, but these firms are hungry. If you have a good idea it will get funded. But because the market isn’t out of control, ten of your marginal competitors won’t get funded.  The entreprenuers with the best teams will win. The fact that there is adequate capital but its not overflowing means there is some discipline.

What the VC like in markets like this are companies with innovative ideas targeting new markets, with strong management teams. Of course, this isn’t true across the entire tech sector. If you wanted to get your optical networking company funded right now, you would have a real hard time. In cleantech, those companies are definitely facing uncertainty over federal funding possibly drying up and now those companies are finding it harder to get funded. But if you are in sectors like mobile, gaming or cloud, you are most certainly finding wind at your back.

Q. The 1990s were all about the IPO. Public offerings are finally on the upswing again after a long dry period. Traditionally, the market has turned its nose up at the historically less profitable Mergers and Acquisitions.  But that’s changing, right?

A. We are in a very strong M&A cycle and its going to be very profitable. The larger more established companies have finally convinced themselves that they need a footprint in these sectors, which is leading to a bidding up of the values of these businesses. We had a very narrow group of buyers in the middle part of this decade. But that’s all changing now that these very large private companies like Zynga and Facebook and Twitter are buying up startups. It’s  added a whole new group of buyers to the market. We are entering a cycle with all these private companies that almost act as public companies. Meanwhile, these sales produce a nice virtuous cycle where companies get acquired and capital is released back into the market for more startups.

Q. We’ve all heard mobile, social and cloud is where the next cycle is focused. And your report details all three categories. But where do you think the biggest opportunity for growth lies?

A. The gaming sector really excites me right now because it takes into account two giant dislocations. We as VC’s love when a market is undergrowing great change and that industry is shifting from packaged console-based gaming and going to a free-to-play model. We also need new monetization models. There are opportunities for startups offering new payment gateways. After all, if you’re a gaming company you can’t go to American Express and say can you manage the back end on this. There’s also opportunity on the virtual goods marken. Also, a lot of the dollars currently spent on traditional advertising are migrating to gaming. Businesses are beginning to understand keeping customers engaged on their website is easier if something entertaining is being offered.

Q. You predict the mobile, social, and cloud cycle will last for the next ten-year cycle. Do you see new catagories of funds arising from this trend?

A. Oh, definitely. One of the biggest changes will be the rising importance of sector-focused funds.  Partners can get so much smarter about an industry when you are hyper-focused.  We already have tasted this. Of course, we have dozens of clean tech funds. And the industry just saw its first iPhone fund and the first Android-only fund.  I think you have to move so quickly in today’s market you have to be sector-focused to exploit the trends.  While we don’t have them yet, I’d expect cloud and gaming funds to do very well.

Q. So where do you have any areas of concern?

A. Social Media is certainly getting out of hand. I get worried when the valuations people are assigning a company are based on an increasing number of assumptions. Investors have shifted to being more optimistic because of this shining icon called Facebook. If Facebook is worth this, than my company which is like Facebook is worth that. It’s the danger of the also-rans. And hopefully venture capital will not make the mistake of falling for it.

Q. Any closing advice for startups. What are the money people looking for now?

This is the time to think big. In the current climate where optimism is increasing, I would say to have as much ambition as you can. This is not the time to pull your punches. Look at the biggest markets and address as wide a piece of that market as possible. We have moved from the point where entrepreneurs were awarded for conservatism. This phenomenon where angels were rewarding companies for pulling in your ambition and bringing your company to profitability right away are over. There is ample funding now to go big.

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The check-in was big last year though people are now questioning its basic usefulness as many look to what’s next beyond the simple act. But the check-in still has a lot of value, something social travel site Gogobot is illustrating with its new Foursquare and Facebook check-in integration.

Gogobot is tapping APIs from Facebook and Foursquare to use check-in data for users, helping them fill out their travel history and using the information to share with friends and travelers. It’s an interesting use of check-in data, helping people create a digital journal or scrapbook of their travels that can be easily organized and shared in a structured way with other travelers and friends who can leverage a person’s experience.

“We’re trying to take the game of checking in and turning it into something more lasting than a fleeting post,” said Travis Katz, the CEO and founder of Gogobot. “I can remember all the places I’ve been to and people can discover where to go through me.”

It’s all part of Gogobot’s larger promise of helping make travel planning and discovery more social. The company, which launched its site in November, already leverages Facebook and Twitter by allowing people to query their social networks to find answers about travel tips. Gogobot ingests the answers, recommendations and reviews from friends, and organizes it into structured data that people can use to help plan their trips. The site aggregates reviews for a location into passports that you can browse and share. Now with check-in data, it will quickly fill out a user’s passport for different places, allowing them to create special “collections” of favorite restaurants, hotels and travel spots that can be shared with friends.

Gogobot uses an algorithm and some manual editing to help reconcile and organize check-in data. The company has curated its own location database that is a hybrid of sources and also includes about 110,000 travel images. The algorithm is designed to help filter out less valuable information for travelers such as check-in data for a work place, office cafeteria or home. Katz said Gogobot will be introducing its own mobile apps soon, but it’s happy to rely on Facebook and Foursquare for check-ins because they cover most of the check-in activity going on.

I like what Gogobot is doing; leveraging check-in data and turning it into more of a lasting resource. Gowalla also tries to do some of that with its own passports. But with many location-based services, check-in data isn’t as organized or designed to be used as a broad travel tool. By ingesting and organizing check-ins, Gogobot can make them meaningful and useful in new ways, specifically for travelers. Check-ins don’t have to be all about offering deals or powering local recommendation engines. They can used for more prosaic things like family safety, as I wrote about with Life360, or they can help create important enduring databases.

The company, which hasn’t released user numbers, raised $4 million in June from Battery Ventures. Founded by Katz, formerly Managing Director (International) at MySpace and Ori Zaltzman, former Chief Architect of Yahoo’s BOSS search, Gogobot is also backed by Eric Schmidt’s Innovation Endeavors.

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The brains inside your smartphone are getting more power with the latest application processors having two processing cores to help speed up the delivery of web site load times and mobile gameplay. That’s pretty awesome, but Adapteva, a Lexington, Mass.-based startup wants to take that number higher — a lot higher. The startup has created a design (and also the actual chip) for a 64-core accelerator that will sit inside a tablet or smartphone to help offload work from the application processor or graphics engine and do more computing on the device as opposed to sending it over a cellular or Wi-Fi network.

The concept of an accelerator is a familiar one in super computing, where the addition of a specialized massively multicore chip, such as a graphics processor or custom chip, is becoming more common. But unlike a GPU, the 64-core Adapteva chip only operates at one watt. To understand how powerful that is from an energy efficiency perspective, a four-to-eight-core server chip could operate at anywhere from 60-120 watts. And the challenge of building the next generation of supercomputers is constrained by the power demands such massive supercomputers would require.

But Andreas Olofsson, the founder and CEO of Adapteva, isn’t focusing on the HPC market at first–despite asserting that his design can scale to a 4,096-core design that would run at 64 watts. He said that while there is plenty of talk about low-power computing, “As long as you can plug something into a wall, the need for low power goes down significantly. It’s only a little bit painful.” However, in the mobile world where devices need to run all day, yet avoid bulky batteries, power consumption is at a premium. So that’s where Adapteva will focus for its big push (the company has some military applications as well).

The company began in 2008 and has managed to raise $2 million in funding from angels and boardmaker BittWare, its first customer. Amazingly, with that small amount of funding it has managed to have three versions of its chip built, making the startup incredibly capital efficient. However, the goal isn’t to build chips for the mobile market, but to license the technology, much like ARM, the firm behind the most common architecture in mobile phones, does. BittWare will manufacture the Adaptevea chip design — called the Epiphany– on its boards.

But in a highly competitive market, and especially on smarthphones, where space on the board is at such a premium, will device makers really embrace an unproven and as-yet-unneeded chip? Olofsson has two more difficult tasks to accomplish (since he’s apparently taken care of the hard task of building and designed a 64-core chip that runs at 1 watt for less than $2 million.) He must explain to board makers, chip firms and device makers why gadgets need this rather foreign accelerator chip, and he has to convince them that it makes sense to process data on the phone, rather than ship it over the cellular network.

The first task is made easier by the low-power envelope and by the fact that the full 64-core system on a system is fairly small — about 8mm square Olofsson said. Check out the model of the A5 system on a chip used inside Apple devices provided below to see how much space the Epiphany chip can take up. It would have to replace existing GPUs in this case.

The second task may be made easier by people’s desire to handle tasks such as speech or facial recognition or intense video games on their mobile devices. Olofsson argues that the latency inherent in sending even voice recognition to a server is problematic and that gameplay is impossible. Plus it costs more in terms of data charges and can drain the battery. “If you can keep the radio quiet and use the processing locally the battery life gets better,” he said.

Like many visionaries pushing a new technology he’s not entirely sure how the Epiphany could change mobile computing, but he’s certain that by boosting performance on smartphones to this degree it will. I’m eager to see if mobile device makers agree.

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Since word of the company’s gourmet cafeterias and bring-your-puppy-to-work atmosphere first began circulating in the national media way back in 2006, becoming a Google employee has held a special place in the American imagination, somewhere between graduating from space explorer school and winning the Power Ball lottery. The result: a lot of speculation — and hyperbole — surrounding the company’s hiring process.

While we’ve all heard rumors of mandatory 3.7 GPAs and the ability to answer math questions over the phone with no calculator, the world might sadly never know just exactly how Google makes its hiring decisions. But perhaps former CEO Eric Schmidt has a little more insight into the process. Schmidt discussed the company’s personnel philosophy and corporate culture with McKinsey director James Manyika at a McKinsey conference in mid-March.

• Be exceptional. Duh. We’ve all heard the company likes to stick interviewees with brain teasers to parse out their thought process and job candidates should always be prepared to explain how they’d stick an elephant in a refrigerator or figure out how many piano tuners work in New York. Says Schmidt: “We spent more time — and pretty ruthlessly — on academic qualifications, intelligence, intellectual creativity, passion and commitment. What bothers me about management books, they all say these things generically, but nobody does it.”
• Do your own thing. Schmidt believes the best employees are those who don’t need much managing. “People are going to do what they are going to do, and you’re there to assist them. They don’t need me, they are going to do it anyway. They are going to do it for their whole lives. Maybe they could use a little help from me,” he says. “At Google, we give the impression of not managing the company because we don’t really. It sort of has its own borg-like quality if you will. it sort of just moves forward.”
• Don’t necessarily have a winning personality. Schmidt emphasized the importance of getting the right people, but acknowledged the right people aren’t always the most personable. “You are going to have to deal with the odd people. Not every single one of these incredibly smart people is a team player… even if people don’t want them around, we still need them.”
•  Really love job interviews. Interviewees will be relieved to hear the company is streamlining its interview process. Schmidt said Google has brought poor saps in as many as 16 times before ultimately releasing them back to the wild. Now, he says, Google has analyzed the process and determined a decision should be able to be made in five interviews. (Well, that’s practically nothing.)

Ranked no. 4 on Fortune’s best companies to work for list in 2011 (it spent 2007 in the #1 spot), Google has taken hits to both its reputation and its personnel in recent years. Meanwhile, Facebook is fast emerging as the most highly desirable company for America’s college graduates to work for. But joining the ranks of Google’s 24,400-plus employees still sends many a techie salivating. Case in point, the company received 75,000 resumes within one week in February after announcing it would hire 6,000 new employees for the year in 2011. Maybe they all heard about the to die for reduced-calorie strawberry yogurt in the cafeteria?

Image courtesy of Flickr user bgottsab.

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Gap may be best known for selling a lot of khakis to an increasingly aging audience. But more and more, it’s staking its future marketing on social, mobile and local group-buying platforms to make it more relevant and hip with its customers. More than almost any other national brand, the Gap has been on the cutting edge with its marketing trials, working with Facebook, Groupon, Foursquare, Visa, JiWire and others to figure out how to craft its image and its message for a much more social savvy and mobile audience. It’s still unclear how well the combined efforts are faring but this is where the company says it needs to be.

Trying to Be Relevant

“We’re trying to be relevant to millennials, 25-35,” Ryan Kennedy, a senior marketing manager at Gap told me. ”They’re on Foursquare, Loopt, Facebook, Groupon; these are all new environments. It’s less about the deals we offer, but it’s about making sure we are top of mind with relevant things that are reaching millennial targets. I see us doing more and more of these going forward.”

Gap, like many retailers, is primarily interested in driving foot traffic into its stores, and so far it has used traditional marketing channels to do this. But increasingly, it’s getting visits from a parade of mobile, social and group-buying companies. Over the last year, Gap has been quick to jump on a number of trials and is increasingly looking at Facebook as its answer for outreach.

Testing All Options

Gap worked with location-based service Loopt last June to offer a 25 percent discount for users who checked in through Loopt Star, an offer program. It also launched a one-day 25-percent off deal with Foursquare in August, allowing people to redeem their discount by checking in. Twitter and Facebook users could also get the discount, but they had to either print out a coupon or produce a discount code.

Groupon last summer also worked with Gap on a popular offer for a $50 credit for members who paid $25, that resulted in 441,000 offers and more than $11 million, split between the two companies. At the time, Gap said the offer could bring in $30 million in total sales. That promotion showed off not only the power of Groupon but also how expensive it can be for retailers, who have to pay half the profits to the daily-deal service.

That didn’t deter Gap from trying other deals, including a well publicized promotion with budding Groupon rival Facebook. Gap gave away 10,000 pair of jeans across the country for people who checked-in through Facebook’s new Deals service. As my colleague Mathew pointed out, there was a lot of confusion around the Gap offer, with the unfamiliar check-in process and the shortage of jeans.

Kennedy said Gap is still very much in learning mode and is trying to understand what works and doesn’t. He said some of the problems early on have been trouble in tracking the redemption rates of certain promotions and tying discounts to a specific platform, which makes measuring efficacy a challenge.

“Our execution hasn’t been ideal in some cases, but our thing is to find the best way to test these platforms,” Kennedy said. “When it comes to the capabilities of speaking to a specific audience, talking to them through geo-fencing and mobile, it’s an opportunity that is just going to get bigger and bigger and we need to be a player in that.”

Targeting by Behavior, Location

Some of the Gap’s more recent efforts showcase how targeted it’s trying to be with consumers. It recently announced a deal with Visa to offer discounts and promotions via text message when users make certain transactions on their Visa card. Gap is able to work with Visa customers who opt in to the program. When these consumers make a purchase with their card, Gap may send them an offer tailored to the person’s shopping history, what time it is or how far they are from a nearby Gap store. Gap can even use the Visa transaction to offer up something complementary. You just bought a pair of jeans at a competitor’s store, so how about coming into Gap for a belt?

The retailer is also looking at targeting users by location. It ran a campaign late last year with local ad network JiWire to promote its 1969 line of jeans using JiWire’s Compass ad platform, which delivers rich media ads that are delivered according to a user’s location. Gap found that consumers spent an average of 62 seconds in the advertisement looking at a video and getting information about local Gap outlets. Kennedy said the click-through rate was three times what it normally sees online with banner ads.

“We definitely saw more engagement with the unit on mobile devices,” Kennedy said. “It’s rare for a customer to spend a minute with our ad unit.”

That’s the promise of the these new social, mobile and local products. They’re engaging users in very sticky ways and they’re hitting them where they are, in their social networks and on the mobile phones, which are always with them. Even as Gap still sorts out the long-term efficacy of these platforms, it’s these early results that keep the company interested.

Is Facebook the Answer?

Kennedy, however, said that the despite the proliferation of options, Gap is increasingly working with Facebook, which is well positioned to be an almost one-stop shop for brands and retailers. He said he sees a lot of different features migrating to Facebook. It’s also home to more than 1.4 million Gap fans, a relationship that the company hopes to expand on.

“I think as new opportunities arise outside of Facebook, Facebook has a way of taking it in and making it better and it has more scale than other newcomers,” said Kennedy.

I’m not convinced that Facebook has it all sewn up and I think there is a lot of room in this market. It’s not just big retailers like Gap but there’s a huge market for local merchants, who are looking to tap these new tools to drive traffic into their establishments. Gap, however, is showing that it’s not going to sit on the sidelines as others figure out what works. The company is actively testing each product to see what makes sense for its brand and its consumers. Maybe this is because the San Francisco-based company is down the street from many of these startups that are knocking on their door. Regardless, Gap is on the cutting edge here. It might not be producing big results yet or making the company cool overnight. But the experience is extremely beneficial and will help the company understand how to best use these new social, mobile and local tools to great effect as more people become familiar with them.

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Updated. We know that TV networks black out sporting events, but can you black out an entire election? In Canada you can — or at least the government there is trying to do that, for the national election on Monday. According to an ancient provision in the country’s Election Act, the results of the polls can’t be reported in any way until all of the polls across the entire nation are closed. That even extends to posting or re-posting results on blogs, Twitter and Facebook. If this strikes you as ridiculous and/or unachievable, then you know something Canadian officials are trying to ignore: information technology has moved far beyond the law’s ability to deter it.

Coincidentally, we’ve just had a powerful lesson in how news of all kinds is disseminated now, with the death Sunday night of Al Qaeda leader Osama bin Laden in a U.S. military strike in Pakistan. Within minutes of the announcement that President Barack Obama would be making an address to the American public, hundreds of people were retweeting the fact that bin Laden had been killed — and it wasn’t just a rumor, but a reliable report from the former chief of staff to Secretary of Defense Donald Rumsfeld. By the time it was confirmed by The New York Times and CNN, it seemed almost anti-climactic. That is what news is like now, as Emily Bell at the Columbia Journalism School notes.

The reality is that before social media came along, it was relatively easy to control the flow of information — about election results or pretty much anything else — because (in Canada at least) there were only a few major TV networks and a few major news entities. Tell them not to report something, and they would obey. Problem solved! But the tens of millions of people using Twitter and Facebook aren’t likely to bow to those kinds of constraints quite so easily, if they even know about them at all. Many of them may not even be located in Canada, and are therefore beyond the reach of the law (full disclosure: I am Canadian).

Some Twitter users have said they plan to defy the ban. There’s even a website called Tweet the Results, which plans to aggregate any tweets that use the hashtag #tweettheresults — regardless of whether those tweets contain early poll information or not. The site, created by social-media consultants Alexandra Samuel and Darren Barefoot, says that as far as it is concerned “We are not publishing the results ourselves, we’re just collecting what others have said.” It remains to be seen what Elections Canada thinks of this behavior.

Update: Tweet The Results has taken down the page where it was aggregating tweets, and replaced it with a notice that says it did so “rather than face a potential fine or protracted legal battle.” It also says:

We never imagined a day when Canadians would have to use a foreign website to participate in a conversation about our own country. We never imagined that we, Canadian citizens, would potentially face legal penalties for our role in supporting an online conversation.

The Canada Election Act provision in question has been around since 1938, when state-of-the-art communications technology consisted of the telephone, the telegraph and the carrier pigeon. But it’s not just some dusty sub-clause no one pays any attention to: in 2000, a blogger was charged with an offense for reporting early results on his blog in the Maritimes (the Atlantic time zone) before the polls had closed in the Pacific time zone, and fined $1,000. The case was fought all the way to the Supreme Court of Canada in 2007, at which point the blogger lost in a split decision (the clause in question actually provides for maximum fines of up to $25,000 and up to five years in prison).

Elections Canada, the department in charge of running the actual polls, has taken pains to warn bloggers and anyone using Twitter and Facebook that they could be liable for these penalties, even if all they do is re-tweet someone else who mentions the early poll results.

And how will they enforce this? Has Elections Canada set up a NASA-style command center with hawk-eyed operatives scanning dozens of screens and filtering the social media-sphere for illicit conversations? Well, no. The department says that it will be relying on complaints from the public in order to pursue any legal actions. But it does plan to pursue them. Meanwhile, the law is in the process of being challenged by several media outlets in Canada, and a number of experts have testified about how ludicrous it is — including law professor Michael Geist, whose affidavit to the court is here (PDF link).

Eventually, one hopes, the law will either be removed or simply never be enforced — like the one that requires every British male over the age of 14 to engage in two hours of long-bow practice every day.

Thumbnail photo courtesy of Flickr user Jennifer Moo

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For Silicon Valley startups, good timing can be just as crucial as good technology. Just ask Bunchball, a six-year-old, San Jose, Calif.-based, social gaming, software startup.

In 2005, when the company debuted its software platform for customized social gaming apps, the current industry buzzword “gamification” hadn’t even been coined yet. Nevertheless, Bunchball hit the ground running, with a $2 million Series A funding round and one big fish client in NBC.

But what followed was essentially “three years of suck,” Founder and Chief Product Officer Rajat Paharia told me in an interview last week. “We had to be very evangelical and educational, and it wasn’t very easy at all.” Paharia stepped aside as CEO to see another chief executive come and go. Bunchball worked desperately to sell to a skeptical potential client base, as media companies didn’t see the benefit of tying in social gaming with their existing websites.

And so it went until 2010. It wasn’t until last year, with the success of offerings from companies like Foursquare and Zynga’s FarmVille, that the larger industry grasped how social gaming could bring in real money. Suddenly, Bunchball started to see real traction. “FarmVille and Foursquare put gamification on the list, and we needed there to be a bellwether,” Paharia said. In the past 12 months, the company has doubled its customer base, and its clients now include ABC, CBS, NBC, Bravo, Warner Bros., and Twentieth Century Fox.

Bunchball, which is backed with $6 million in venture capital from Adobe Systems and Granite Ventures, is now in the process of raising another funding round.

Although Bunchball has competition from new companies like BigDoor Media and Badgeville, Paharia says its years in the trenches give the company an edge. “Internet time is like dog years,” he said. “We’ve had four years to build a really good platform that’s mature, robust and flexible. [Our competitors] are going through things we went through four years ago.”

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Among reports that it was having trouble unloading $1 billion worth of shares at a very rich valuation, Facebook last week tweaked an existing advertising service and started testing its first home-grown social commerce product: Facebook Deals. Will that be Facebook’s next billion-dollar business? Possibly. But it already faces stiff competition from Groupon and LivingSocial, not to mention a new Google entrant. More importantly, Facebook should consider exploring other growth- and revenue-generating opportunities.

Let’s examine each of these potential new revenue streams.

Facebook makes its money from low-priced display ads and the commission it takes from social gaming companies using Facebook Credits for virtual goods. Facebook’s three best new business opportunities are:

• Rich media brand advertising. To get beyond low-priced display ads, Facebook needs a big ad unit that supports rich interactive media and video. If the company is worried about user resistance, it can show the ad only once a day. Other than Yahoo, Microsoft and AOL, no other site has inventory with the audience reach for this kind of advertising, which commands $30+ cost per thousand pricing and is usually sold out. This one should be a slam dunk.
• Deals and social commerce. Facebook’s toe is barely in the social commerce water – it’s testing in only five cities, sourcing deals from partners, and not charging merchants yet. Facebook is focusing on more social, shared-experience deals like restaurant discounts or concert tickets. Local deals require an expensive local sales force that Facebook doesn’t have.
• Connect-based ad network. Facebook has access to ready-made, desirable space through Connect services such as its Like button, sign-on and comments. Facebook could show contextually relevant ads just like Google’s AdSense network. If publishers balked, and weren’t cowed by their need for the traffic Likes generate, Facebook could always share a piece of the revenue.

There are plenty of other potential revenue opportunities, but to capitalize on the ones above, Facebook will likely need to form strong partnerships. For more on the possibilities there, read my latest Weekly Update at GigaOM Pro.

Image courtesy of flickr user stevendepolo

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A few weeks ago I questioned whether France’s forthcoming G8 summit on Internet freedoms — organized by French president Nicolas Sarkozy — was actually a scheme to push his agenda on censorship, copyright and privacy. After all, heavy regulation of the Internet is a subject close to Sarkozy’s heart, since he’s the main backer of the controversial Hadopi laws that target alleged illegal file sharers.

My real concern was that by inviting established Web giants with very specific interests — companies such as Google, Facebook and Amazon — consumers could end up with a situation where governments and corporate interests had stitched up the future of the Web in plain sight.

It was pleasing, then, to see that a string of influential advocates of a free Internet seemed to be on the roster. American entrepreneur Nova Spivak, who will be attending, published details of his invitation; Geek broadcaster Leo Laporte said he was saying yes; a few other folk — all technologists I respect — also got invitations. The situation seemed to be improving.

Now, however, things may be back to square one after a new report from France. French outlet La Tribune is suggesting that many attendees are being asked to pay up for their chance to speak out. It says the event — which promises to deeply influence government leaders from the world’s most powerful nations — is, in fact, “a very private affair” in which getting a seat at the table is easy — if you can spare several hundred thousand dollars.

One source from an unspecific American e-commerce company says he was pleased to receive an invitation — only to be told later that the company he worked for would be expected to pay at least €100,000 ($148,000) for the privilege of sending a delegate.

It is the president who sends out invitations, but they are paying guests. The Elysee [France's equivalent of the White House] has limited its own financial contribution to the provision of the Tuileries Gardens and the Louvre, putting the load of financing the operation on the private sector. In return, the Elysee will see that those players are given “considerable freedom to organize the subjects” of the conference.

The article also points out that although on the surface it appears to be a government-organized event, this so-called “e-G8” is actually a private affair being put together on Sarkozy’s behalf by Maurice Levy, the media magnate who runs the world’s third-largest advertising group Publicis. Last year, coincidentally, Publicis bought a healthcare agency run by Sarkozy’s younger brother, Francois.

Now, all of these factors themselves in and of themselves may be entirely innocent. Sponsorship of events is nothing new, of course, and even international government boondoggles have to cover their costs somewhere along the line. Nor is it to say that all attendees are having to pay.

Still, it’s worrying. Something painted as an open exchange of ideas on the future of the online world is sounding more and more like a traditional opportunity for lobbying. And the concern I have is that those who are happily playing along are doing so either because they don’t have much knowledge of Sarkozy’s attitude towards the Internet, or because rubbing elbows with power suits their own agendas.

They probably don’t know, for example, that he gave a speech last year in which he suggested it was a “moral imperative” to attack the Web’s “total absence of rules”. They won’t realize that Sarkozy has been saying the same thing for years as part of a long-standing campaign which is overseen by trade minister Frédéric Lefebvre, who many see as his right-hand man.

Nor will they remember that in 2006, just as he was gearing up for his run at the French presidency, Sarkozy elbowed his way in as the surprise guest at the esteemed Le Web conference in Paris, complete with a retinue of media that quickly proclaimed his visit a hit with the entrepreneurs and investors gathered there. It was a controversial moment: organizer Loic Le Meur caught plenty of flack for what some said was a “political ambush” and a ”hijacking”. Many felt as if their attendance at a high profile international technology event had been manipulated to help boost Sarkozy’s claims to be a business-friendly, future-facing president. Sound familiar?

Maybe it’s the pessimist in me, but with a track record like Sarkozy’s, I still think it pays to be skeptical — and nothing about today’s revelations have changed that.

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Wi-Fi provider Boingo Wireless is set to go public Wednesday in what could be a good measure of how hot the wireless boom is. The company is seeking to raise some $75 million with its public offering, which is coming at a time when IPOs are growing hot again.

Boingo operates a global Wi-Fi network with more than 325,000 hotspots in more than 100 countries. According to its amended S-1, the company increased revenue from $56.7 million in 2008 to $65.7 million in 2009, a 16-percent increase. Revenue in 2010 grew by 22 percent to $80.4 million with adjusted earnings before interest, taxes, depreciation and amortization, growing from $13.5 million in 2009 to $18.2 million last year, a 35-percent increase. The Los Angeles company, which plans to list on the Nasdaq under the symbol WIFI, is offering 5.8 million shares at a price range of $12 to $14. Renaissance Capital said at the midpoint of the proposed range, Boingo will command a market value of $486 million

While Boingo’s financial outlook is solid (though not scintillating), the company is banking on riding the increased demand for wireless broadband. It cited Cisco’s  visual networking index, which forecasts mobile data consumption is expected to increase 26 times by 2015. The goal is for Boingo to help carriers offload their data needs on to Boingo’s network, helping them stay ahead of the crushing demand for wireless broadband. Even with the rollout of 4G services, Boingo is a good position to participate in the growing consumer appetite for wireless connectivity. The company believes its scalable and global network will provide a reliable way in which to increase capacity for operators.

Carrier offload will have to be a critical piece of Boingo’s success because its consumer business is pretty modest. It had 200,000 subscribers at the end of last year, though that number fell to 158,000 by March. The company has a churn rate of 9.2 percent.  That’s a lot of customers it needs to replace each quarter. Boingo also faces risks in negotiating with existing and new venue partners, where it seeks to install its networks. And discussions with carriers can be lengthy and unpredictable, Boingo said in its S-1, which can also cause uncertainty. Not to mention the fact that Wi-Fi is becoming free at more locations like Starbucks and McDonald’s.

Boingo will need to show that it can strike good deals with carriers and be a strong partner for them when it comes to handling their growing data needs. This is a serious concern for operators, so Boingo has a good chance to capitalize if it can execute on its game plan.

The Boingo IPO also highlights the resurgence of public offerings. According to the National Venture Capital Association, 14 venture-backed companies went public in the first quarter of 2011, raising $1.4 billion. That was the highest number to go public in a quarter since 2007. Chinese social network Renren and mobile security provider NetQin are among a handful of other companies preparing to go public this week. With Pandora, LinkedIn and Kayak also preparing for IPOs, this year is shaping up to be a big one for tech companies looking to go public.

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