Weekend news roundup: skepticism about the business model of social

5 Jun 2012

In our review of some of the top tech stories in the weekend newspapers, Facebook’s hollow IPO performance has left investors more unconvinced than ever about the business model of social media; the founder of Kapersky Labs describes cyberweapons as the most dangerous innovation of the 21st century, and telecoms operators have a long way to go to move away from the ‘dumb pipe’ label.

Skepticism about the business model of social

The San Jose Mercury News reported on renewed skepticism about Facebook’s business model in the aftermath of its much-hyped IPO.

What looked like a juggernaut when it first filed to go public is now besieged with questions about the effectiveness of its advertising and the impact of mobile computing, said writer Chris O’Brien.

“Many of those same doubts apply to the cluster of social media and networking companies that went public over the past year. As well as the host of still private, second-tier social companies that are growing fast but generating little or no revenue.

“That’s stunning, really, because a year ago it seemed like the pending run of IPOs by social media and networking companies was poised to put to rest all those doubts about this sector’s sustainability. Instead, they still face a fairly fundamental question: Can successful social media companies also be successful businesses?”

According to analysts O’Brien spoke to, investors are not convinced.

Beyond the dumb pipe

Writing in The Telegraph, Monty Munford says the voice-and-text business of operators is falling and the rise of mobile data services means their description as ‘dumb pipes’ has never been more apposite.

“As their voice-and-text business tapers away, disrupted by data and social networks, what are they going to do now? Will they redefine themselves as personal ad agencies to their customers? Ramp up their mobile payments services? Or are they, as Paul Carvill of digital agency LBi says, merely unsecured short-term loan providers because of the way they subsidise handsets?

“Probably all of the above. But there are ways to a future where operators begin to resemble the good guys, not the pantomime villains they often deserve to be seen as. Maybe they should have heeded those ‘look behind you’ calls earlier but that’s another issue.”

‘Cyberweapons are the most dangerous innovation of this century’

The New York Times featured a fascinating interview with the founder of Europe’s largest antivirus company, Euge Kaspersky of Kaspersky Labs.

He described the latest Flame virus afflicting computers in Iran and the Middle East as a technologically sophisticated virus that only a government could create.

He also recognised that the virus, which he compares to the Stuxnet virus built by programmers employed by the US and Israel, adds weight to his warnings of the grave dangers posed by governments that manufacture and release viruses on the internet.

“Cyberweapons are the most dangerous innovation of this century,” he told a gathering of technology company executives, called the CeBIT conference, last month in Sydney, Australia. While the US and Israel are using the weapons to slow the nuclear bomb-making abilities of Iran, they could also be used to disrupt power grids and financial systems or even wreak havoc with military defences.

Gingerbread still dominates Android ecosystem

According to The Guardian, Gingerbread and Froyo, released in 2010, still dominate the devices accessing the Google Play market over the past 14 days, according to Google’s statistics. Ice Cream Sandwich, the newest version of Android, accounts for only 7.1pc of devices accessing Google Play.

Gingerbread and Froyo (2.2) make up 84.1pc of the devices hitting Goggle Play. And devices hitting Google Play is indicative of people looking for apps. Gingerbread is 65pc on its own, though its growth has pretty much stopped; 18 months after its launch it’s probably headed for a downward path after this as existing Gingerbread devices get updates to Ice Cream Sandwich. Froyo hit 65.9pc in May last year, and then began heading down.

The Guardian also reported that there’s a tail of devices running Android 1.5 (‘Cupcake’) from April 2009, which keep on hitting Google Play; but they’re only 0.3pc of the total.

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John Kennedy is a journalist who served as editor of Silicon Republic for 17 years