Google AdSense: Can It Be Rigged?

I read Tim Bray’s post on how putting up ads from Google’s AdSense is starting to make him money. This made me think about the program.

Can Google’s AdSense be rigged by bloggers? Just as bloggers blogroll each other and (supposedly) ramp up each other’s PageRank, can a similar ring be set up with these ads. Now, there is a commercial interest too. Say, there are 20 of us. All of us agree to carry the Google Ads. (Cavaet: Google is filtering out personal pages from sites which are authorised to carry the ads, but that may not be too difficult a rule to circumvent.) Then, we each agree to click on the ads on each of the 20 sites. Assuming each ad makes 15 cents or so, 20 clicks can make me USD 3. Imagine doing this daily. Does Google keep histories of IP addresses to filter? Do the advertisers? I don’t know. But I can imagine outsourcing the clicking business to people in India, and splitting the money with them! Is there really a free lunch?

The reason I am speculating about this is for the first time the individual site owners now have a vested interest in gettings ads on their site clicked on. They make money directly for each click. I cannot imagine the advertisers being too thrilled about this. Let’s wait and watch.

On the same toopic, Don Park has an interesting comment: “popularity of RSS feed usage is on the upswing and will eventually lead to majority of blog news being consumed via news aggregators. This means Google will have to get into the news aggregator business (?) eventually. Sure, they can do this with from the server side, but to cover all the bases, Google will need a client-side aggregator as well.”

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The Sentient Office

The Economist writes about a coming world of sensors.

By adding sensors to today’s computing and communications technology, sentient computing seeks to take account of a machine’s environment in order to make it more responsive and useful. Sentient computing systems are always on, ubiquitously available, and can adapt to their users. In short, they seek to become real help-mates. To quote a European Commission report, the aim is to create convivial technologies that are easy to live with.

So, instead of having to turn the television on, the TV will know what you want by combining an understanding of what you say, your expression, your gestures and even how you walk. Ideally, the television set will also be aware of the contextsay, turning the sound down if you are on the telephone. And it can recognise you personally, remember what your favourite channels are, and which programmes to record. All this will happen in an environment where computing and communications are as invisibly available as electricity or water.

RSS and Echo

Jon Udell has an imaginary conversation between himself and Mr. Safe to explain all the ongoing developments in the RSS world (the effort to try and come up with an alternative to it called Echo). Udell makes a few compelling points about RSS, which is what I “echo”:

The magic is in knowing how to use RSS. Knowing what to read and write, and how, and when. Absorbing and transmitting awareness.

It’s not about the format, and it’s not about the tools. It’s about a new way of communicating, one that’s defined by personal publishing and subscribing, and that empowers writers and readers as never before.

It’s true that vast numbers of yet-to-be-written RSS applications need no more than what RSS already does, or can be extended to do using the mechanisms it sanctions. It’s also true that vast numbers of yet-to-be-written RSS applications will require RSS to evolve.

RSS is the real revolution – I’ve been saying it for some time. There’s a lot that can be done with it around the publish-subscribe concept without the need for any change. The change is required not in the standard, but in how we think about it. The need is to shift the focus from blogs to RSS.

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Agriculture and Development

Atanu Dey provides a tutorial on the role of agriculture in development: “What I maintain is that agriculture’s share in the GDP had better decline (but not a decline in the absolute value of the agriculture sector) if India is to ever develop. It is only very severely underdeveloped economies have high ag sector share of GDP…For India to develop, its share of the ag sector has to decline rapidly (with an increase in the absolute size of the sector). ”

Capitalism and Democracy

The Economist celebrates its 160 years of publishing with an editorial and survey on Capitalism and Democracy. Some excerpts:

In the 1840s the main task, amid the mania, was to try to get the doors of liberty open in the first place. Now the doors have at last swung thankfully wide. The task is to keep them open…Pressure is growing to push them closed againor, at least, to stop them from opening any wider. That pressure has many causes. Economic crises in the poor world have reminded people of capitalism’s inherent instability. Unemployment in the rich world has reminded people of its inherent tendency to create inequality and of the disruptive effect on existing jobs when poor countries such as China or India succeed in growing richer. Political tensions between America and Europe as well as between the few rich countries and the many poor, especially (though not only) in Muslim countries, lead many to doubt whether further international integration is viable. Some blame globalisation, some a lack of democratic control; others hope and pray that liberal capitalism has had its time in the sun and that now something else will be tried.

The main dangers to the success of capitalism are the very people who would consider themselves its most ardent advocates: the bosses of companies, the owners of companies, and the politicians who tirelessly insist that they are pro-business. At the intersection of these groups lies most of what is wrong with capitalism, and the best opportunties to make that system even more successful than it has been thus far.

TECH TALK: An Affordable Alternative Technology Architecture for Indias BFSI Industry

[This article was written for Dataquest.]

At least one of the top-selling banking software solutions works only on the MS-Windows platform. This means that banks considering the solution have to necessarily use an infrastructure which comprises of thick, new desktops and MS-Windows as the OS. Built into this assumption is the need for its customers to upgrade desktops every 3-4 years. Are there alternatives?

One of the large banks in India recently had a tender for a messaging solution. The tender was open only for IBM (Lotus Notes), Microsoft (Exchange) and Novell (Groupwise). Are there alternatives?

A large financial services organization is considering upgrades of its desktops all running the MS-Windows and MS-Office organisation. The total cost of ownership over a four-year period per user will work out to Rs 1,00,000 (USD 2,000), by no means a pittance. Are there alternatives?

Indias banking, financial services and insurance (BFSI) industry is the new cash guzzler. Technology is rapidly becoming the oil of the 21st century for India. Investments in hardware and software are being made in large quantities as organizations modernize and want to us IT as both the foundation for their business and for competitive differentiation. But in doing so, we do not realize the cost at which this is happening.

Given infinite (or large) resources, there is no question that organisations in India would want to use the best technology available in the world. Price is often used as an indicator of the bestness of a technology solution. So, the desire by Indian banking institutions to spend on putting a world-class IT infrastructure is understandable.

Unfortunately, this is not an ideal world and resources are not infinite. Indian banks earn in rupees and spend in dollars for technology. Most technology happens to be dollar-denominated, with the result that the Indian price points can appear seemingly quite expensive. Organisations are then faced with two options: either to go ahead with the spend without the corresponding dollar-denominated earning capability, or to limit technology investments.

If it was just a single bank, then it may not matter because customers would not have a choice. But there are multiple banks competing for business. So, as one starts spend on the best dollar-denominated technology, so does the other, and then the next, and so on. Who wins? The technology vendors. Who loses? The non-spenders. The IT-spending banks end up neutralising each others technology impact, and customers get lower returns on their monies in the bank since a portion of that is being used in an IT arms race.

No bank would like to compromise on the technology architecture that it builds, but are there alternatives which can create a comparable technology base but at more affordable price points?

The solution does not lie in not adopting technology. In no way do we want Indian banks to be behind or technologically inferior to their global counterparts. So, what then is the alternative?

The Indian BFSI players are of two types: the ones at the top of the pyramid that are big enough to be able to easily afford the dollar-denominated tech spends, and the ones who are not able to but have to spend to match up to the competition. The alternatives are needed more for the second category than the first.

Tomorrow: Part 2

Intuit and SMEs

Business 2.0 calls Intuit’s CEO Steve Bennett as “the hottest CEO in tech”.

“When Steve came in, he said the QuickBooks group was a slow-growing unit and a giant opportunity, and we should be growing much faster,” Cook recalls. The evidence, as it happened, had been staring Intuit in its customer-focused face: The standard version of QuickBooks is designed for companies with fewer than 20 employees, yet 5 to 10 percent of its most loyal users were larger — some had as many as 200 employees. In fact, more of them used QuickBooks than brands of software intended for companies their size.

As Bennett looked closer, he realized there was room for more than just an expanded version of QuickBooks. Many small businesses still run with pencil and paper, and of those that embrace PCs, few have moved beyond spreadsheets or simple accounting programs. Intuit estimates that North American small businesses, which it defines as companies with fewer than 250 employees, will buy $7 billion in business software and $11 billion in related services this year. Analysts expect double-digit growth for years to come. In an era when corporate IT budgets have been squeezed dry, this was a rare thing: an expanding market for business software.

Bennett went looking for a replacement to run the group. He soon found one in a former colleague, 20-year GE veteran Lorrie Norrington, whom he lured away with the help of a $750,000 signing bonus and a $5 million interest-free relocation loan.

In her new job, Norrington took all of a month to announce, essentially, that Intuit intended to become the SAP or Oracle of small business. The company would offer software and services for a wide variety of enterprises, from the smallest shops to those with a couple hundred employees. Intuit would help not just with accounting but also with payroll and benefits, keeping track of customers, and managing computer systems. It would also customize its software for specific kinds of businesses, like accountancies or construction firms. The initiative, she explained, would be called “Right for My Business.”

Norrington first turned her attention to QuickBooks. With nearly 3 million users, the accounting program was the obvious beachhead for a push deeper into the small-business market. Bennett had already ordered up a new version — QuickBooks Enterprise Solutions — for businesses with more than 20 employees. Within 18 months, Norrington added 13 more “flavors,” and by the end of this year, QuickBooks will have sliced the accounting market 25 ways, with special editions for the smallest small companies and larger small companies, and specific versions for retailers, distributors, contractors, and nonprofits.

In another example of bullet-train thought, Intuit agreed to open QuickBooks’s source code to independent software developers. The developers write highly specialized applications for specific businesses; with an open interface, they can easily tie their programs into QuickBooks and other Intuit software, creating a kind of small-business enterprise-resource-planning package. To recruit developers, Bennett, Norrington, and Cook have been stumping conferences, including Intuit’s first-ever QuickBooks developers conference, held in November near San Francisco. One of the roughly 6,500 companies actively developing applications is Clip Software in Ijamsville, Md. Some 8,000 landscape maintenance outfits use Clip to streamline tasks such as scheduling fertilizing and making estimates on new jobs. CEO Dave Tucker explains his partnership with Intuit this way: “We don’t want to write general ledger or payroll applications. Intuit can do that.”

To serve the largest and richest companies in their target audience, Bennett and Norrington have begun acquiring small companies that make fully integrated suites of business applications for specific industries. The packages, which Intuit sells for as much as $100,000 per customer, now cover property management, the public sector, construction, and distribution, and there are plans to buy as many as six more in different industries.

Intuit is worth a close study because we too want to be the “SAP or Oracle of small businesses” – only, that out focus is on the emerging markets.

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Contextual Advertising

Business 2.0 writes about what is becoming a growing and effective component of the online advertising business – ads that match what one is reading. This is almost the Holy Grail of advertising, where ads are not really ads, but relevant editorial.

The breakthrough, which I’ll call “contextual advertising,” involves commercial links that appear adjacent to relevant content on websites. Say you’re at Caranddriver.com, reading a review of the Acura MDX. In place of banners for everything from cell phones to cars you don’t care about, you would see paid text links advertising the Acura website, the Edmunds auto comparison site, and leasing companies vying for your business. These are the same links you’d see if you typed “Acura MDX” into Overture’s client portals, like MSN or Yahoo.

Google also plays in this new market with an offering called “content-targeted advertising.” The beauty of both is their ease of use for publishers: Overture and Google automatically analyze the publishers’ pages and insert relevant links on the fly. All the publishers have to do is collect a check. It’s close to manna from heaven.

This natural evolution of the search engine business closes the loop linking search, content, and ad dollars. In the past few years, marketers of all stripes (about 175,000, at last count) have learned to buy paid listings, or sponsored links placed next to “pure” search results. This phenomenon has created billions in annual revenues and a growth rate approaching triple digits. The reason is simple: Paid search is an incredibly efficient way to bring in sales leads — it’s the Yellow Pages, classifieds, and direct mail rolled into a single just-in-time pitch.

This is a new revenue source for the entire Web, one that not only is unobtrusive but, because it’s based on relevance, might even be useful to readers. Contextual advertising “could be much larger than the paid search market,” claims Bill Demas, senior vice president at Overture. Google’s Wojcicki seconds his assertion.

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WiFi in Developing Countries

BBC News writes:

Advocates of wi-fi, in both developed and developing countries, argue that they need to have unregulated, unlicensed and uncontrolled access to the radio spectrum so that they can be innovative and make money.

They believe that the existing model, where governments issue licenses to radio and TV stations or to other users of radio spectrum, partly to ensure that services do not interfere with each other and partly to make some money out of a natural resource, is wrong and out-dated.

The advocates of free spectrum are loud and getting louder. They speak out on weblogs, they lobby politicians and they have the ear of the United Nations.

There is, therefore, a real danger that they will drive a model of development, in this case based around wi-fi hotspots and unlicensed radio spectrum, that fits their own commercial interests and ideological position, instead of being what developing countries really need.

Speakers at the UN conference took turns criticising governments for being unable to manage the growth of wireless, while ignoring the massive success of GSM mobile phone rollout, where the radio spectrum is closely regulated but private companies provide the service.

Bridging the digital divide requires more than a commitment to deregulation and a desire to make money from potential new markets. It requires attention to the real needs and the real interests of the people living in countries without proper network infrastructure.

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Smart Cards

News.com has an interview with ActivCard’s CEO Steven Humphreys. ActivCard is an identity-management software maker. Some excerpts:

You have cards to get into your building; you have passwords; you have tokens. Now some people have biometrics. It’s all about managing identities.

On one card I have all of my passwords. With a card in a laptop with valid serial numbers, whenever I go to one of my sites whose password I’ve saved, it pulls the user ID and password off, and I don’t even need to deal with it. So password consolidation is there. The security is there. The physical access as well as the logical access and local encryption and security are there. And when I go remotely, the one-time use passwords are there. People are already doing all these things.

Companies are finding that they are already managing identity–but in a fragmented way. When they integrate it, then they actually get cost reductions. That is why this is taking off in the enterprise space.

The big thing was to get the external readers to drop in price. A smart card reader used to cost about $100 per user; it now costs $10. And the cost of goods is under $5. That’s made a big difference.

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Sony’s Portable File Server

Joi Ito writes about a device which I’d like to have: “I just got my Sony FSV-PGX1 Portable File Server. It’s an interesting device. It a little linux box that can run on batteries. It has nfs, samba, telnet, http and ftp. It has a 20G HD. There is a web interface or you can set it up with the little lcd display and arrow buttons on the box. If you get the cradle, there is an ethernet connector. The box has 802.11b built in. It’s basically a file server. It can be set up as a DHCP access point, DHCP client or fixed IP address on both the ethernet and/or the wireless ports.” See the picture of the device.

Microsoft and Google’s Coming Search Battle

The next warfront is Search. As Google has all but conquered the new territory, Microsoft is readying an assault not unlike the one it did against Netscape. News.com has more:

Microsoft may use some familiar tactics in the search market, most notably by integrating and distributing the technology throughout its many products and services. The company could, for example, embed connections to related Microsoft search and mapping functions directly into Word documents or Web sites built with Windows development tools.

The goal is vintage Microsoft: Keep customers within the Windows universe; build demand through popular functions such as search; and bypass the need for services from competitors. This strategy, in theory, will give consumers more incentive to buy Windows software and use Microsoft services, while taking away revenue that Google receives for search results.

If Microsoft holds true to form, signs of its custom search engine will soon proliferate. As the company proved with browsers, media players and so many other products, it has myriad distribution points at its disposal and can exploit them at will to increase usage and market share. Already, sources close to the company say that it plans to incorporate a search toolbar into the Internet Explorer browser that will use MSN’s new engine.

It is not going to an easy battle for Microsoft. Google is a smart competitor, and seemingly has a very strong position in the search business. Interesting to see how this shapes up.

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On Demand Business

John Patrick (an ex-IBM-er) writes:

I believe now is the time for the reincarnation of the ASP as a valid and important business model. Tens of millions of people, either at home with their cable modem or DSL or at work with a high speed wired or wireless (WiFi) connection, now have access to always on, reliable, and fast Internet connectivity. There is no need for an ASP to provide an “office” desktop from a server via the Internet – it is already on the PC. The new generation of ASP (the name will probably not reemerge) will focus on the delivery of high value applications some classical and some new. The new generation of ASPs will provide applications that can not be done on a PC. They will also be e-businesses on demand a term we will be hearing more and more about.

On demand e-businesses share important characteristics, the most basic of which is delivering value-added results to their customers — whenever their customers need it. Twenty-four by seven is jacks or better that in itself does not make an e-business an on demand e-business. Not that 24×7 is that easy to achieve; especially as an e-business scales up to a very large one. 24×7 means not just always on but also everywhere. WiFi enabled e-businesses will make their services available to all their constituencies whenever they want and wherever they are.

There are two other very important elements to being an on demand business. First and foremost is integration. An on demand e-business has integrated all of its processes so that the e-business presents one face to the customer. Buy it online and return it to the store. But at the store and return it via an online request and then ship to a centralized location. Download support materials or place a service call on line regardless of how you made the purchase. On demand e-businesses are not just click here to buy. They also enable click here to initiate a chat session or video window with a real live person. If you call an on demand e-business by phone and ask them something about the web site they dont say thats a different department. On demand e-businesses do not have the words fax this form or call Monday Friday, 9 to 5. They dont pretend to be a global business and then say to call a 1-800 number 9-5 Central Standard Time. They dont say click here or call our inside sales desk for the location of a store near you. On demand e-businesses offer a people-oriented and user-friendly integrated and comprehensive experience for all their constituencies employees on the intranet, suppliers, customers, partners, analysts, and prospective constituents.

In the months and years ahead, successful on demand e-businesses will share another attribute competitiveness. The on demand channel will need to be competitive versus any channel of any competitor. On demand e-businesses will not have achieved 24×7 by making everything redundant but rather will use autonomic computing capabilities to allow their system to achieve the effect of redundancy by virtualization of their resources and intelligent and automatic sharing of those resources. It will gain cost advantage by creating an on demand operating environment that allows them to expand capacity on the fly to meet unexpected needs of customers. Ultimately most on demand e-businesses will either become a computing utility or use one.

Semantic Weblog

Phil Wolff writes: “You should be able to define your own structure. The most common use of Microsoft Excel is making lists of things. No reason blogs can’t give similar freedom to define a new package. Build from scratch or on the shoulders of other package definitions.”

The way to do what Phil talks about is to focus on RSS publishing with blogging as an optional by-product.

Building a Buyer-Seller Relationship

HBS Working Knowledge writes about research done by HBS professor Narakesari Narayandas about how “buyers and sellers in mature industrial markets can turn single transactions into long-term beneficial relationships by a deeper understanding of the complex connection between the two.” Three questions addressed are:

1) From the suppliers viewpoint, does it pay off to be in long-term customer relationships?

2) If yes, how do you as the supplier get started?

3) If you the supplier are in an arms-length transactional relationship, how do you move it into a fuller relationship?

A few pointers:

  • Suppliers increased sales over time. If you get in with fewer customers for a long time, you get a greater share of wallet from the fewer customers (as opposed to more mass market customers), he said. Manufacturing costs went down. Even in long-term relationships, opportunism is always shown. Customers still are opportunistic, customers still look out for themselves.

  • To explain how he came to answer question twoabout starting a customer relationship from scratchNarayandas first told his audience about the classic vendor-customer standoff. The vendor wants money first; the customer sits back with arms folded and replies, Prove to me that you can do what you say….Rather than going after the entire volume, break up the needs into different parts, and try to initiate a relationship using one component, selling only this one component, he advised.

  • Winning Value Proposition

    Fortune writes about six steps to boost business – by focussing on what customers want. Simple lessons that we tend to overlook many times.

    Step 1: Figure out the needs of your most profitable customers
    Step 2: Get creative
    Step 3: Test and verify your hypotheses
    Step 4: Tell customers how great your value propositions are
    Step 5: Apply the best value propositions on a large scale
    Step 6: Begin anew

    SAP’s Strength

    Fortune writes about SAP and how it has grown to be in a strong position in the business applications business with nearly 20,000 customers. Here’s a brief on how SAP turned things around:

    First SAP paid $574 million for a 20% stake in Commerce One, a California startup that wrote software for Internet-based B2B marketplaces. Then it spent $400 million for Top Tier, an Israeli software company that had developed a portal compatible with SAP business applications. With Top Tier came its precocious CEO, Shai Agassi, 34, who has become Plattner’s heir apparent as SAP’s tech visionary.

    Bolstered by its acquisitions, SAP has developed Net-based applications that have moved it from the back office to the front. To compete with Siebel, which pioneered customer-relationship-management software, SAP began selling its own CRM products in 2000. It moved into supply-chain software, competing with i2. One by one, SAP took on startups, which were writing software that used Net standards to bring new computer and communications power to corporate tasks. As customers increasingly demanded one-stop shopping, SAP gained market share. “Two years ago SAP’s product wasn’t there,” says Mohammed Moawalla, a software analyst at Goldman Sachs in London. “Now they’ve got it.”

    Agassi is pushing SAP further on the technology front. He has insisted that SAP make its applications compatible with the underlying web-services software produced by Microsoft, IBM, and others. He has also mapped out new products called xApps, meant to combine bits of software from a human-resources application, say, with those from a financial application. Such a package could, for instance, make it easier to plan how many people to lay off in an acquisitionsomething Ellison might find handy should he succeed in buying PeopleSoft. “Because of the Internet, we can do things we never could do before,” says Agassi. “Before we spanned a sliver of the enterprise. Now I can span the entire enterprise.”

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    TECH TALK: The PubSubWeb: Information Marketplace

    One of the applications of the PubSubWeb will be in enabling the creation of vertical information marketplaces. Let us take one example of how these marketplaces can make a potentially huge difference by seeing how an information marketplace for small and medium enterprises (SMEs) would work.

    One of the biggest challenges that SMEs face is growth. The larger enterprises can easily locate business partners given their resources. They can also be located by other enterprises small or large seeking to do business with them. What is very hard to do is for SMEs to locate other SMEs to do business with. This is where everything from classifieds to yellow page listings to search engine listings to spam is used.

    SMEs do not have enough money to spend on marketing (or decide not to). Either way, the smaller marketing spend limits the awareness of the SMEs solutions in the marketplace. This results in lesser business, which in turn results in keeping the SME small. This is the marketing trap. Most SMEs are stuck in this and find it difficult to get out of this.

    A big business can be reached by an SME (the knowledge is available of the big buyers) while a big business also has the resources and network to locate SMEs relevant for its business, though this is much harder. On the other hand, it is quite hard for SMEs to sell to other SMEs. The two have no way of connecting with each other. Technology has done very little to change the way SMEs trade with each other, especially in a local marketplace.

    I speak from experience. I run a small messaging company (Netcore Solutions) which has about 200+ customers. It has taken us over 4 years to build this customer base. Over 90% of our customers are SMEs. We could easily handle many times our existing customer base if only we could find them! Finding these SMEs is tough we do direct marketing and work with channel partners, but they too are other SMEs we work with and we all end up facing the same problem. Whether it is a marketing failure or an information gap, most SMEs like us end up staying small.

    Why need a separate page from the website? Because it is hard to update most websites! Even after nearly a decade of the Internet, the design elements which make up the website and permissions required make it difficult for an SME to update its website on its own. This is where an SME Information Marketplace based on the publish-subscribe ideas can make a difference.

    Imagine if every SME can publish an RSS stream (via a weblog) about who they are, their products and services, the new developments at their organisation, their take on industry events, and what they are interested in purchasing. In addition, each of the SMEs should also set up subscriptions based on what they are looking to buy or sell (by keyword or category) or by a company they would like to track.

    So, SMEs do what they would anyways do in search of new business opportunities. By making it easier for them to both publish information and subscribe to relevant information, the PubSubWeb works as a connector, an information market maker. The product in this marketplace is information; the currency is attention.

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    WSJ on RSS

    RSS is beginning to hit mainstream consciousness – you that when the Wall Street Journal writes about it! Jeremy Wagstaff writes:

    what if all that automated stuff was somewhere else, delivered through a different mechanism you could tweak, search through easily, and which wasn’t laced with spam? Your inbox would just be what is e-mail, from your boss or Auntie Lola…Enter the RSS feed.

    This also makes sense for those folk who may not subscribe to e-mail alerts, but who regularly visit any number of Web sites for news, weather, movies, village jamborees, books, garden furniture, or whatever. Instead of having to trawl through those Web sites each morning, or each week, or whenever you remember, you can add their RSS feeds to your list and monitor them all from one place.

    RSS feeds aren’t just another way to deliver traditional information. RSS feeds have become popular in part because of blogs.

    RSS’s strengths are simplicity and versatility: It can be added on to other programs — the browser, Outlook, or be delivered to your hand-phone, hand-held device, or even as audio on your MP3 player. It’s a lot more powerful than e-mail, and — we hope — will be guaranteed spam-free.

    Was a little disappointed that there was no mention of BlogStreet (we have plenty of RSS-related stuff: RSS Directory, RSS Discovery and RSS Generator) or the Info Aggregator. Not to worry – our time will come.

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    Alsop on Longhorn

    Stewart Also, writing in Fortune, says that Microsoft has become uninteresting, as many of its recent forays outside of the PC business have not yet yielded positive results. Why does Microsoft need to look beyond? “Microsoft can’t make itself much bigger on the desktop because it already provides the operating system (and virtually all the word processors, spreadsheets, e-mail programs, and other key applications) for some 95% of the PCs sold around the world. The market for PCs isn’t growing very fast simply because it’s already so big.”

    The big bet is Microsoft’s next-generation OS, Longhorn. Its prospects:

    Microsoft’s greatest hope for growth is the next version of Windows, called Longhorn, which the company sees as its competitive response to Linux. More than that, Gates, who is pouring his soul and the bulk of his worktime into Longhorn, sees it as a revolution: an easy-to-use operating system for normal (i.e., non-computer geek) people. There’s a lot about Longhorn that Microsoft isn’t telling yet, but the company’s most ambitious goal is to build into the software a kind of universal file system that organizes all digital informationspreadsheets, e-mails, digital pictures, home videos, MP3s, all of itinto one big, user-friendly database.

    Will Longhorn rock the world? I don’t think so. For one thing, the computer industry has dreamed of universal file systems since the days of the Nixon administration or even earlier. Microsoft won’t be any better at achieving that dream than IBM, Digital, Xerox, Hewlett-Packard, Sun Microsystems, or any other company that has attempted the same thing.

    Even if Longhorn is a big improvement over Windows, it still won’t ignite a revolution. Why? Becauseand believe me, I never thought I’d say this in a million yearsMicrosoft’s software is good enough. We all bitch and moan about one shortcoming or another, as I’ve often done in these pages over the years. But there’s not a whole lot Microsoft can do to make its programs so much better that they justify the suffering we have to endure any time we upgrade to something new. Longhorn might get geeks all sweaty with desire, but to the rest of us, it’s still just an operating system.