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January 31, 2011
Volume XXXIII, Issue 11

Verizon Boosts Cloud Computing with Terremark

In a move that will decisively reshape the rapidly evolving global business technology solutions market, Verizon Communications and Terremark Worldwide have entered into a definitive agreement under which Verizon will acquire Terremark, a global provider of managed IT infrastructure and cloud services in mid-February for a total equity value of $1.4 billion.

This transaction will accelerate Verizon's everything-as-a-service (EaaS) cloud strategy by delivering a powerful portfolio of highly secure, scalable, on-demand solutions to business and government customers globally through a unified enterprise information technology (IT) platform and unique business cloud offerings that leverage the companies' collective strengths.

Verizon plans to operate the new unit as a wholly owned subsidiary retaining the Terremark name and with Terremark's current management team continuing to manage the company.

"Cloud computing continues to fundamentally alter the way enterprises procure, deploy, and manage IT resources, and this combination helps create a tipping point for EaaS," said Lowell McAdam, President and Chief Operating Officer (COO) of Verizon. "Our collective vision will foster innovation, enhance business processes, and dynamically deliver business intelligence and collaboration services to anyone, anywhere, and on any device."

Manuel Medina, Chairman and CEO of Terremark, said, "This transaction, first and foremost, provides Terremark's stockholders with the opportunity for immediate, maximum value and liquidity for their investment in our common stock. We are very proud of all we've accomplished in building and developing a world-class business that delivers industry-leading services. This agreement represents an exciting opportunity to accelerate our strategy and serve our enterprise and government customers with even greater innovation on a global scale with Verizon's resources and extensive reach. We will continue to work with leading hardware, software, systems integrator and carrier partners to build on our unique business model."

Headquartered in Miami, FL, Terremark is a widely recognized infrastructure-as-a-service (IaaS) leader with a proven track record of delivering cloud-based resources with the highest levels of security and availability in the industry. Operating 13 data centers in the US, Europe, and Latin America, Terremark combines secure cloud computing, collocation, and managed hosting services into a seamless hybrid environment. Its Enterprise Cloud platform provides some of the world's largest companies and US government agencies with on-demand access to secure and reliable computing resources.

Verizon is a global leader in driving better business outcomes for mid-sized and large enterprises and government agencies. The company operates more than 220 data centers across 23 countries, including 19 premium centers and five smart centers. Verizon combines integrated communications and IT solutions, professional services expertise with high-IQ global IP and mobility networks to enable businesses to securely access information, share content, and communicate. Verizon is rapidly transforming to a cloud-based EaaS delivery model that will put the power of enterprise-grade solutions within the reach of every business, wherever and whenever needed.

Terremark Deal Drives Cloud Stocks Wild

Excerpted from Tech Trader Daily Report by Tiernan Ray

Shares of companies in data center hosting and cloud computing are zooming after Verizon said it would acquire a player in the business, Terremark, for $1.4 billion, a 35% premium to TMRK's closing price.

Hence, the scramble commences to figure out which targets could be next. Shares of Savvis (SVVS) are up $4.14, or 16%, at $30.65; Shares of Rackspace Hosting (RAX) are up $1.22, or 4%, at $33.43; NaviSite (NAVI) is up 23 cents, or 6.6%, at $3.86; Equinix (EQIX) is up $1.49, or 1.7%, at $89.17.

Savvis got at least one upgrade today, from Janco, with a "buy" and a $38 price target. But just about everyone writing on these stocks chimed in with an opinion today:

Jonathan Schildkraut with Evercore Partners, who follows Terremark and has an "overweight" rating on the stock, and a $19 price target, notes that Verizon and Terremark had relationships in place before the deal. Verizon was already leasing 25,000 square feet of equipment hosting space form Terremark. In addition, Verizon had negotiated to resell Terremark's hosting service. The deal is an "excellent read-through" for how to value the group of stocks, he writes: implied enterprise value to EBITDA multiple of of 19.6 times this year's estimate; and 14 times next year's earnings per share. He notes Terremark gets a higher multiple than some because it's effectively a REIT, with all its co-location real estate.

Clayton Moran, Benchmark Capital, raised his rating on Terremark to $19, to meet the deal price, and said he thinks it unlikely another suitor will emerge with a higher bid. Savvis is the closest public comparable to Terremark, he writes, and is therefore a likely target. He reiterated a "buy" rating on Savvis and raised his price target to $40 from $35. (He had just raised the stock's rating to "buy" from "hold" on January 14th - good call!) Moran argues the stock's been trading very cheaply relative to the group, at just 8 times projected EBITDA. His price target implies an 11 times multiple.

Moran also recommends shares of Rackspace. Rackspace is a less obvious target, because it serves small and medium businesses, rather than the enterprise customers Verizon is after. However, Amazon (AMZN) or Microsoft (MSFT) could be interested in a company like Rackspace given their focus on retail accounts for cloud services.

Equinix could also still be in play, he writes, and of interest to Verizon or AT&T. He maintains a $95 price target on Equinix.

In general, hosting and Internet infrastructure companies are going to become "more strategic" as more and more services move to the Web - or the cloud, if you will - in Moran's view.

Standard & Poor's analyst Scott Kessler upgraded shares of Akamai Technologies (AKAM) to "buy" from "hold" based on the Terremark news. He writes the shares have fallen 13% since Akamai's analyst day meeting last month, which was filled with compelling initiatives. The Terremark deal underscores Akamai's value, he writes. S&P maintains a $57 price target on Akamai shares.

Report from CEO Marty Lafferty

Photo of CEO Marty LaffertyWe joined Mark Ellison of Patton Boggs for Capital Thinking with host Kevin O'Neill on Voice America Talk Radio Network this week to discuss the Federal Communications Commission's (FCC) passing of the first set of net neutrality regulations in late December 2010.

These regulations have sparked intense debate over their necessity and are now facing legal challenges.

We opened by outlining the DCIA's mission as an international trade organization focused on commercial advancement of cloud computing, file sharing, and other streaming and downloading technologies, particularly with respect to the impact of such Internet-based distributed computing technologies on content delivery.

Our Member companies are organized into three groups among whom we believe collaboration is essential to achieve real commercial progress. These are the platform group, which includes Internet service providers (ISPs) and especially broadband network operators; the operations group, which includes the software developers and distributors of distributed computing applications; and the content group, which includes progressive media companies and rights holders representing video, music, and game properties.

In terms of impact of the FCC's action on our Member companies, it's too soon to tell, but we are very concerned that this unwarranted and awkward intervention by a federal agency will have a negative effect on innovation and investment in this space.

Our view is that what industry observers and legislators have characterized as "a power-grab by the Commission" should be overturned in the Courts, and this matter should be referred to Congress in the context of a major revision of the now seriously outdated Communications Act. Part of that effort in turn should be to clearly delineate the role of the FCC with respect to Internet regulation.

We cannot and do not speak for our individual Member companies, but as a trade association fostering economic growth in our sector, we oppose unnecessary government involvement in this area, where the interaction of technologies is so complex and innovation is moving so quickly as to make it very likely that regulatory intervention at this juncture will be unnecessarily burdensome, ineffective, and even irrelevant - often even before it can be enacted.

As I mentioned, we would like to see this matter addressed more strategically through a substantial redraft of the underlying law.

If you drill down to get the real story behind what happened following the public outcry over "bandwidth throttling" that in part helped to initiate the Commission's recent course of action, as a case study, the exercise can very instructive. And to give credit where it's due, the FCC did a tremendous job of shining a light on this now outdated network management practice that, at a moment in time, did raise concerns about fairness and transparency to subscribers and applications developers alike.

The DCIA had already identified the fundamental issue several months earlier - defined as the demands placed on network resources by active P2P applications and related performance latency in payload delivery - and had started a working group to address this as a joint optimization problem - how to improve performance for the benefit of consumers by networks' sharing certain topological information and by software applications' selecting the most efficient route to access data. Or to put it another way, how to make "bandwidth throttling" obsolete.

The group was started by two of our Member companies, ISP Verizon and software developer Pando Networks, based on very promising research coming out of Yale University. The group quickly grew from six founding companies to include both Comcast and BitTorrent among other leading broadband network operators and software developers from around the world.

After a relatively swift process involving simulations, proof-of-concept testing, and field trials, a technological solution called P4P emerged that improved the efficiency of P2P by 80% and increased the speed of payload delivery by 20%.

Along with that multi-disciplinary undertaking, which grew to enlist approximately 100 companies in the working group, individual firms, including BitTorrent, developed related technologies and techniques to further conserve bandwidth, and advanced those through testing to implementation.

To make a long story short, the conflicted parties "made peace" and today this significant technology innovation is included in commercial content delivery network (CDN) solutions. Members of the working group are also participating in an IETF standardization process to take related protocols even further.

As we have discussed in a number of public filings with the FCC, prematurely imposing regulations in such areas of rapid technological evolution is the wrong approach.

If the emphasis had been on rulemaking at the time when "bandwidth throttling" was an interim solution to what itself was a temporary dislocation in the development of Internet-based technologies, this would have drastically slowed down the technological progress made by the P4P Working Group, if not making it impossible for this work to have been undertaken in the US at all.

We have enormous faith in technological progress and the use of change-acceleration tools like private sector working groups that can be flexibly convened, comprised of directly affected parties, and very focused on developing a specific set of solutions in a relatively short time-frame.

So while there has been a lot of media coverage of the public outcry over "bandwidth throttling," the FCC's chastising of the ISP's methods, the Court's overturning of the FCC's action, then the FCC's report and order, and now the need for that to be overturned once again by the Court, to us the real story took place behind the scenes among the affected parties themselves - in the laboratory at Yale, in the proof-of-concept testing, in the field trials, and in the deployments that solved the problem through technological innovation. 

Please note that there was no talk of reverting to the use of the now outdated stopgap fix of "bandwidth throttling" after the FCC's actions were overturned in April 2010 by a Court ruling.

So, bottom line, meaningful "peace" was a by-product of technological progress - and we don't believe it's possible to permanently achieve it nor would that necessarily be a good thing, because it might suggest that the pace of innovation had been curtailed.

What's important is that there continue to be processes whereby, when a problem arises affecting the performance of web-based services on the Internet, the parties involved can work together on solutions that eliminate the problem - and meanwhile continue innovating. Then, when the next problem comes up, such procedures can be reactivated as necessary, and so on.

Right now, unleashing the innovative force or, more accurately, failing to leash the technology innovators working in cloud computing, content acceleration, caching, peer-assisted network optimization, and a myriad of other solutions will help solve the Internet's largest current challenge: making it viable for large-scale multicasting as well as video-on-demand (VoD) and similar solutions for games and other very large entertainment properties.

Investment in more bandwidth and innovation for improved efficiency and quality of service (QoS) are what are needed, not a freezing of the current technological status quo through a regulatory rubric. Share wisely, and take care.

Netflix Tops 20 Million Subscribers

Excerpted from Broadcasting & Cable Report by Todd Spangler

Netflix - seen by some as a growing threat to traditional pay TV services - blew past forecasts for subscriber growth, adding 3 million in the fourth quarter of 2010 to stand at just over 20 million at the end of December.

The company, which has been increasingly focused on delivering movies and TV shows over the Internet instead of by DVD through the mail, added 7.7 million net subscribers last year, up 63% from 12.3 million at the end of 2009.

"To summarize Q4, we would say that our huge subscriber growth, fueled by the excitement of watching instantly, impressed even us," Netflix CEO Reed Hastings wrote in a letter to shareholders.

"More subscriber growth enables us to spend more on streaming content, making the Netflix service even better in 2011."

Netflix Rates ISP Performance

Excerpted from Netflix Tech Blog Report by Ken Florance

As we continue to stream more and more great movies and TV shows, we find ourselves in the unique position of having insight into the performance of hundreds of millions of long duration, high-definition (HD) video streams delivered over the Internet.

The throughput we are able to achieve with these streams can tell us a great deal about the actual capacity our subscribers are able to sustain to their homes. We use a time-weighted bitrate metric to represent the effective data throughput our subscribers receive over many of the top Internet service providers (ISPs).

Currently, our top HD streams are about 4,800 kilobits per second (kbps). Clients may switch through a number of bitrates as they ramp up to the highest stream, or shift down from the highest stream if they cannot sustain play at that rate due to throughput constraints.

No client would sustain a 4,800 stream from start to finish (there would at least be a few smaller streams averaged in for start-up) but the higher the sustained average, the greater the throughput the client can achieve, and the greater the image quality over the duration of the play.

As we use a number of content delivery networks (CDNs), and our clients can adapt to changing network conditions by selecting the network path that's currently giving them the best throughput, Netflix streaming performance ends up being an interesting way to measure sustained throughput available from a given ISP over time, and therefore the quality of Netflix streaming that ISP is providing to our subscribers.

Obviously, this can vary by network technology (e.g., DSL, Cable), region, etc., but it's a great high-level view of Netflix performance across a large number of individual streaming sessions.

In our analysis, we filter for titles that have HD streams available, and for devices capable of playing HD streams (which also filters out mobile networks), to highlight what's achievable in terms of HD performance on the various ISP networks. Currently,

Charter is in the lead for US streams with an impressive 2,667 kbps average over the period. Rogers leads in Canada with a whopping 3,020 kbps average.

We'll update these charts monthly, and we welcome questions, comments and suggestions to help improve our understanding of Netflix performance on top ISP networks.

Hulu Faces Internal Strife; Nets May Pull Free Content

Excerpted from Digital Media Wire by Mark Hefflinger

The management of video portal Hulu and its corporate owners - NBC Universal, News Corp., and Disney - are reportedly at odds over the current service, and contemplating a new "online cable operator" business model, according to The Wall Street Journal.

Networks have complained that Hulu's free, ad-supported service is draining ad revenue from their own network websites, and News Corp. and Disney are considering pulling some free content from Hulu - or else delaying availability until two weeks or more after broadcast - sources told The Journal.

"It remains unclear what the business model is for Hulu," Bruce Rosenblum, head of the television unit at Warner Bros., told The Journal.

"At some point, if enough people turn off cable, then you've got a complete disruption of the business model." The company recently debuted a new subscription-based offering, "Hulu Plus."

The Journal cites sources who say Hulu CEO Jason Kilar reportedly threatened to quit if the owners didn't heed his recommendation to drop the price of Hulu Plus from $9.99 to $4.99 - to match the price of Netflix's similar video streaming service. A compromise of $7.99 was eventually reached.

The company's corporate owners are now reportedly considering management's plan to mold Hulu into a "virtual cable operator," which "would use the web to send live TV channels and video-on-demand content to subscribers."

Last summer, Hulu explored but eventually tabled the idea of an IPO; CEO Kilar is now reportedly seeking new capital elsewhere, including from the company's broadcast owners.

Adap.tv Strikes Flingo Deal To Better Monetize TV

Excerpted from Media Daily News Report by Wayne Friedman

Looking to capitalize on the big potential advertising marketplace of new Internet-connected TVs, digital video insertion/management platform Adap.tv has struck a deal with TV applications company Flingo.

The companies say the new partnership will enable publishers to reach and monetize from advertisers millions of Internet-connected devices including TVs, set-top boxes and Blu-ray players.

Toby Gabriner, President of Adap.tv, says: "We are the first to be working together on this - bringing some Internet-connected TV opportunities at scale. Flingo has got a lot of traction in the market. We are not talking about a couple of million video streams; we are talking about tens of millions."

Flingo, which says it is the largest publisher of TV apps for Internet-connected TVs, provides the application tools on many major TV platforms, such as Samsung, Sony, Vizio, and Google TV.

Among many applications Flingo has developed, for example, is one with Warner Bros. - where consumers with Internet-connected TVs can access many TV series, each with a pre-roll ad attached. Flingo owns and sells that advertising inventory and then shares it with the publisher.

Another application for TV Guide has videos, which are primarily supported by direct-response advertisers. Instead of having viewers memorize 1-800 numbers, with one click of a remote, Flingo can capture an e-mail address - a valuable sales-lead tool for marketers.

In the deal with Adap.tv, Flingo is looking to develop newer TV advertising formats/opportunities.

"These are very early days," says Ashwin Navin, CEO and Co-Founder of Flingo.tv. "The reason we exist as a company is that we think about programming in a non-traditional way and want to take advantage of the two-way nature of the connected TV platform. We wanted to have partners like Toby and Adapt.tv to push the envelope on the ad experience as well."

Interactive advertising will grow - but Adap.tv's Gabriner says, "It remains to be seen how interactive the consumers are with advertising."

In the existing digital video area, Adap.tv provides a number of video management products - one called Adap.tv for Publishers, which provides ad-serving, yield optimization and post media-buying analysis. Adap.tv also has video management/buying tools such as Adap.tv Marketplace, an advertising exchange for publishers and advertisers, consisting of 2,700 sites, 60 million monthly unique visitors, and "hundreds of campaigns running daily."

BitTorrent Keeps File Sharing Going Strong

Excerpted from The Straight Report by Emily Elias

Ellis Ly has amassed an eclectic catalog of movies and TV shows on his computer. Over the years, he's used dozens of file-sharing programs and systems to download content. The Simon Fraser University computing-science student says that over the years he's come to prefer BitTorrent.

"I do recommend people use it," Ly told The Straight. "There are good BitTorrent applications out there. And most of them are open-source, so they don't cost you anything."

The BitTorrent protocol arrived on the Internet in 2001, around the time that Napster, the pioneering file-sharing service, shut down after losing a legal battle with the music industry. According to an October report by Sandvine, an Ontario, Canada based network-equipment company, BitTorrent is now the dominant file-sharing protocol "everywhere except Latin America."

Using BitTorrent is relatively simple. Floating around the Internet are copies of myriad movies, TV episodes, and songs. Through a BitTorrent search engine, people find links to them and then use free software, like Vuze, to download the files. The more people "seed" a particular file from their computers onto the web, the faster the downloads.

Even though file-sharing systems offer copyrighted material, that hasn't stopped BitTorrent from flourishing.

"Since elementary school, even kindergarten, we were taught that sharing is caring. So what exactly is wrong with sharing what we have with others?" Ly said. "File sharing is something that everyone can get a hold of. It's just that there are a lot of people out there that are still not aware of it, but it's not that hard to use."

Although Ly favors BitTorrent for sharing files on the Internet, there are alternatives. Millions turn to file-sharing network Gnutella to share files through software like the now-defunct LimeWire.

LimeWire was one of the most popular file-sharing applications until it shut down in October. That's when more than a dozen record companies won a court injunction in the US ordering it to cease operations because copyrighted material was being shared on the service without their permission.

Soon after LimeWire's servers went dormant, clones like FrostWire began to fill the void.

Vancouver, Canada based isoHunt has had its share of legal woes. The site functions as a search engine that allows users to connect with each other and find torrents to download. In December 2009, a US court ruled that the site was infringing on copyright laws and demanded that it shut down.

"In the US, we are going to appeal," isoHunt founder Gary Fung told The Straight. "Right now, there is not much to say other than the appeal is getting started. In Canada, we are also fighting the Canadian record industry, and we are also starting legal action on that front."

Fung insists that his site operates as a search engine like Google and that the company can't control the nature of the content found through it. He believes information should flow freely online.

"File sharing gives people the freedom to share what they want," Fung said. "File sharing is logically the next step in the Internet's evolution, in the sense that it decentralizes distribution. Anyone that wants to distribute can distribute whatever they want."

According to Fung, although there has been bad blood between file-sharing services and the film, television, and music industries, in the end, everyone will have to kiss and make up.

"File sharing will become more mainstream and all the lawsuits being launched against users or people like us, the technologists, will have to end and we will have to find a way to reconcile our differences," Fung said. "And find a new means of distributing content not just for independents but for the big companies that are suing us."

While big companies are not on board with free access to their copyrighted material, they are cuddling up to the iTunes Store as a means of selling their content digitally. Since 2003, more than 10 billion songs have been sold through Apple's online media store.

Richard Rosenberg, Professor Emeritus of Computer Science at the University of British Columbia, told The Straight more and more people are willing to pay for content. He believes it will continue to get harder for people to share copyrighted content online.

If the Canadian government's Bill C-32 - which seeks extensions to Canada's Copyright Act that are favored by the music and film industries - becomes law, he would be right. In the future, Rosenberg said, file sharers will have to get used to the idea of buying content from online stores.

"The business world is not going to be sleeping," Rosenberg said by phone from his Vancouver home. "The bigger file sharing gets and the more of a threat it becomes to traditional marketplaces, the more effort is devoted to passing laws and creating structures which allow people who think they should or who created the material control it."

However, Fung maintained that every time one file-sharing service is killed, another will replace it.

"With any file-sharing site you try to shut down, a new file-sharing site is bound to pop up, and that has happened in the past - with Napster, then Kazaa, etc." Fung said. "There is no way you can shut file sharing down."

The Muhammad Ali of Cloud Computing

Excerpted from Business Week Report by Peter Burrows

Jerry Kennelly talks like a man who slept through the B-school class on managing investor expectations. Although shares of Riverbed Technology have risen 520% in the past two years and doubled since July, he scoffs at the idea that his company, with $5 billion in market capitalization, is in a bubble. "We're just reaching a reasonable valuation," says Riverbed's Co-Founder and Chief Executive Officer (CEO). "We're just reaching the floor of what we can be."

That may sound imprudent, but Kennelly - a CPA by training and former finance executive at tech highfliers Oracle and Inktomi - has reasons for optimism. Riverbed, along with others such as F5 Networks and Blue Coat Systems, sells networking technologies that let companies run software housed in far-off data centers more efficiently. While there's no catch-all name for the market - "application acceleration" is about the best of them - these products are emerging as one of the fastest-growing new tech sectors to come along in years. "These companies have not seen their best days," says Gleacher analyst Brian Marshall.

That's despite a sell-off that followed F5's January 19th earnings call, when the company predicted it would miss Wall Street's consensus sales forecast this quarter by 2% or less. By January 24th, shares had fallen 24%. Riverbed and Blue Coat also traded down. Yet analysts such as Marshall expect the application-acceleration market to grow more than 20% per year. He says the lower stock prices might make the companies attractive to the likes of Hewlett-Packard, Oracle, or IBM. F5's market cap now stands at $8.8 billion. "Nobody could afford F5 at $150 a share, but it might make sense at $100," says Marshall.

The main reason for the bullishness is cloud computing. Corporations can theoretically save big money by moving e-mail, accounting, and other applications off individual PCs and into data centers - that is, the cloud. Rather than requiring techies to swarm offices for the constant updating of applications such as Microsoft Office, updates can happen once at the data center. That only makes sense if the software in question works as fast in the cloud as it would on a PC. The expensive way to acquire that speed is by purchasing lots of bandwidth. Riverbed's software circumvents the problem by minimizing the information that needs to be transferred between a data center and a company's headquarters, branch offices, and other facilities.

The company makes devices costing up to $250,000 that businesses install in their data centers, and complementary ones costing as little as $5,000, which sit in the various offices that connect to the data center. Commonly used files - say, PowerPoint sales presentations - are sent only once and stored on the cheaper machines, so they're instantly accessible to employees. Riverbed's gear quickly compresses the rest of the traffic, stripping out unseen bits such as e-mail headers. If someone in headquarters updates that sales presentation, only the new numbers are sent to the other offices - not the entire document.

Joseph Fusco, head of application development at British Telecommunications' US services arm, says Riverbed's gear typically reduces the bandwidth necessary to run Office or Lotus Notes by more than 40%. "When people notice they can download a file in 20 seconds rather than 20 minutes, their eyes light up," says Fusco. The industry term for Riverbed's technology is wide-area network (WAN) optimization. F5, for its part, makes more expensive machines that route traffic within the data centers, assigning computing tasks to those servers best prepared to handle them. F5 says its customers can get by with fewer servers, since the system makes sure each one is more fully utilized.

Fewer than one-fifth of companies have deployed application-acceleration technology, says Kennelly, so there's plenty of room for growth. "Every global company in the world will need this technology," he says. Riverbed had sales of $499 million in the 12 months ended last September. That gives it a 40% share of the WAN optimization market, up from 28 percent in 2009.

What about Cisco Systems, the $40 billion-a-year king of the networking-gear business? Although Cisco recently started loading its own application-acceleration technology for free on some of its routers, analysts such as Erik Suppiger of investment bank Signal Hill say Riverbed's tech edge will keep it in front. Kennelly professes no fear of Cisco. "Routers are a Rust Belt industry. They're still necessary, but it's not where the excitement is," says Kennelly. "We'll be one of the great tech companies for the next 100 years."

Networking analysts have grown used to such Muhammad Ali-like pronouncements. "Jerry's a bit of a loose cannon," says Suppiger. Kennelly retorts: "I'm not a loose cannon. I'm ebullient about our business. And I've been right all along."

Gracenote Powers Leading Cloud-Based Music Services

The world's hottest cloud-based music services depend on Gracenote to drive and enrich their user experiences. Powerhouses including Sony, Omnifone, PANDORA, MOG, and Spotify are all bringing their music service customers more of the music they love by tapping into Gracenote's music data and technology.

Music Unlimited powered by Qriocity: Sony's new cloud-based music service, which gives music fans access to millions of songs from major and independent labels, leverages Gracenote's music metadata and MusicID and Discover technologies to allow subscribers to sync their existing songs and playlists on their PC into the service, as well as drive intelligent recommendations.

Omnifone: Gracenote's MusicID and Discover recommendation technology is utilized by Omnifone, the leading independent provider of cloud-based music services, across 21 countries worldwide. Omnifone provides its suite of MusicStation Platform APIs to partners to enable the rapid development and rollout of award winning Cloud-based music services across virtually any device type.

PANDORA: One of the world's most popular Internet radio services, with more than 75 million registered users, taps Gracenote Lyrics to enhance its award-winning music experience. The Gracenote Lyrics service - which is the largest catalog of authorized lyrics in the world - lets music fans sing along to their favorite beats.

MOG: The "all-you-can-eat," on-demand listening service also licenses Gracenote Lyrics for hundreds of thousands of tracks from more than 30,000 music publishing catalogs, including those from the four major publishers and dozens of prominent independent publishers.

Spotify: For London-based Spotify, Gracenote's MusicID advanced audio fingerprinting technology powers the service's Local File capabilities, which let its users mirror their existing songs into the Spotify service, allowing them to access and enjoy music they already own.

"The popularity and growth of cloud-based music services is undeniable, and it's clear that access to unlimited legal music is the future of the digital entertainment experience," said Craig Palmer, President, Gracenote.

"Our data and technology makes those experiences as fulfilling and exciting as possible, and we are pleased to be partnering with the services that are not only leading the way but setting the stage for what's next, and that see the tremendous potential for the entire music industry."

Former Salesforce Execs Launch Start-Up Okta

PC Magazine by Sara Yin

Former execs from Salesforce.com have launched a start-up in the enterprise cloud computing business, with initial clients PANDORA and Enterasys.

Based out of San Francisco, Ca, Okta provides an enterprise solution intended to make it easy for companies to manage cloud computing apps and users; particularly useful as a company grows in headcount and adopts more cloud-based apps like Salesforce.com and WebEx.

Eric Berg, Vice President of Products at Okta, said Okta targets mid-sized companies that increasingly use web-based apps such as Google Apps, Taleo, Salesforce.com, and WebEx.

Traditionally companies have to integrate each web app one by one, which can take weeks, but Okta already has hundreds of business and consumer Web apps in its catalog. So in a few clicks a company can deploy these apps to all of its employees, accessible through a single password.

For example PANDORA, which runs over 20 cloud-based apps, was one of Okta's first clients. Berg said one of PANDORA's biggest complaints about deploying cloud apps was simply human: its employees might forget the URL or password to log in each app. Okta's solution allowed PANDORA's employees to log into Okta and access all of its company web apps.

"We've tried to build an enterprise product with a very consumer-like ease of use. Most of our customers get up and running in a matter of hours. Traditionally solutions like this could take weeks or months," said Berg.

One unique aspect of Okta's offering is that it's on-demand: companies can automatically add or remove users as it expands and contracts.

Okta was formed six months ago by CEO Todd McKinnon, former head of engineering at Salesforce.com from 2003 to 2009, and Frederic Kerrest, a former business development exec at Salesforce.com. Last summer, the company received $11 million in financing from Foursquare and Zynga-backer, Andreessen Horowitz.

Rdio Gets an Influx of Cash

Excerpted from Mashable Report by Brenna Ehrlich

Rdio, a uniquely social music subscription service, reportedly just garnered financial support from Mangrove Capital Partners.

According to Paid Content, the news first surfaced via a tweet from Mangrove partner Mark Tluszcz to MC Hammer (awesome), reading: "@MCHammer check out the company I just financed - www.rdio.com. Hope to see you at our Jamboree this year in Florence."

Paid Content confirmed the news with Mangrove, but there's no word yet as to how much money Rdio received, or how it will use the cash. We've reached out to Rdio for comment.

Rdio - which launched this past summer - is a super social music subscription service that lets you follow friends and listen to their musical collections, as well as listen to music on-demand.

Lately, the service - which is currently only available in the US and Canada - has been on the up-and-up, partnering with Merlin, a licensing agency for indie acts - a move that helped make its library much more diverse. Rdio was also integrated into the MusicMapper, a mobile app launched as part of the Grammy Awards' Music Is Life Is Music campaign.

Wireless music system Sonos also recently introduced Rdio into its musical offerings, marking Rdio's first foray into consumer electronics (before it was only available on the desktop and on mobile devices).

More and more, music subscription services are gaining popularity - what with MOG's Fusion Program facilitating its integration into electronics and cars, and rising anticipation over Spotify launching in the US. This recent funding news just further indicates that the music subscription space is one to watch.

Playcast Lands $10 Million for Cloud Game Streaming Service

Excerpted from Digital Media Wire Report by Mark Hefflinger

Playcast, the developer of a cloud-based videogame streaming service, announced on Monday that it has raised $10 million in its second round of venture capital financing, led by MK Capital and JVP.

Previous backers Xenia Venture Capital and C.Mer Industries also participated in the investment round. Los Angeles, CA based Playcast launched its service in Europe last November, offering videogame streaming services to multi-system operators (MSOs) and telecom company ISPs.

Publisher partners providing titles for the service include Activision, THQ, Capcom, Atari, and Codemasters.

Hewlett-Packard Steps Up Cloud Lineup

Excerpted from Virtualization Review Report by Jeffrey Schwartz

Hewlett-Packard (HP) this week stepped up its cloud computing effort by launching a portfolio of private cloud services, hardware, and software and indicated plans to jump into public cloud hosting.

The company has lacked a strong cloud computing focus but now intends to move forward more aggressively, HP officials said. HP will do so by offering various private cloud services as well as on-premises hardware and software. Also, the company will offer hybrid clouds by bridging its on- and off-premises cloud offerings. And it will let its partners offer cloud services with its new hardware and software.

HP has trailed its rivals in the systems market such as Dell, IBM and the VCE Alliance consisting of VMware, Cisco, and EMC, said Pund-IT analyst Charles King. "This is a welcome shift toward a more integrated cloud strategy for HP," King said. "HP's cloud strategy has gone through a number of iterations over the last couple of years."

Officials at HP said that's about to change. "HP is now a full cloud services provider," said Patrick Harr, VP of Strategy and Solutions for the company's enterprise business.

This week's launch consists of the HP Enterprise Cloud Services-Compute and CloudSystem. ECS-Compute is a cloud services offering for enterprise applications and CloudSystem is a portfolio of converged systems consisting of servers, storage, and network interfaces. Those systems are loaded with software allowing customers and partners to run their own on-site clouds.

Specifically, ECS-Compute is an HP Services offering designed for those who want to put mission-critical applications into private clouds running in HP data centers. It's not intended for lightweight apps or for development, explained Harr. "We're bringing enterprise class capabilities with the benefits of cloud computing," he said.

The service is built on a common architecture such that customers can move core business apps into ECS-Compute, according to Harr. Customers can specify geographic locations where their data is hosted, he added, allowing them to address governance and compliance regulations.

Customers will have the option of provisioning their own bare-metal servers through ECS-Compute or buying their own virtualized Windows or Linux instances. By summer, the company will offer HP/UX. From an applications perspective, customers can run any software they would run in their own data center, said Kevin Karcher, Director of Product Marketing for IT outsourcing in HP's enterprise services business.

"From a pure applications point of view the client can run whatever they choose in that environment although they would most likely bring applications that they've been accustomed in running in a virtualized environment," Karcher said.

Moving forward, HP will offer public instances of sandboxed applications for development and testing such as SAP and various security apps, such as an incident management and response program, according to Karcher.

Meanwhile, for those who want to run their clouds on premise, CloudSystem consists of a turnkey appliance based on HP's converged BladeSystem server, storage and network based hardware and loaded with the company's Cloud Service Automation (CSA) software.

CSA, launched last year, lets customers provision, manage, secure and govern cloud services in private clouds, or they can bring public cloud services into that same environment. "The customer can now really integrate traditional IT services, private cloud services, and public cloud services into one single integrated services catalog," Harr said.

CloudSystem also supports HP's new Cloud Maps, a set of templates designed to launch specific cloud images, such as Microsoft Exchange, Oracle databases or SAP apps. "So as opposed to taking weeks or months to deploy that application in a highly optimized fashion, it can now be done in a matter of minutes," Harr said. Currently HP has 18 such templates, some for apps and some for infrastructure provided by Citrix, Microsoft, and VMware. Harr said HP is also working with other third-party ISVs to create additional Cloud Maps.

HP will be offering CloudSystem through its network of channel partners who can either sell them to customers or become service providers themselves. The company has launched the HP Cloud Enablement Program aimed at helping channel partners run their businesses as a service. The program includes financial incentives.

In addition to offering the complete hardware and software stack with CloudSystem, HP is offering its CSA software separately, allowing customers to run it on any hardware in their shops.

As for its foray into hosting, HP would only confirm that it intends to offer such a service, though officials declined to offer timing or specifics. The company has hired Emil Sayegh as VP of Marketing for Cloud Services. Sayegh was formerly VP and General Manager of Rackspace Hosting's Cloud Computing division. "You will see us launch public cloud services," Harr said.

Coming Events of Interest

Digital Music Conference East - February 24th in New York, NY. The 11th Annual DMCE is the only event in the United States that brings together the top music, technology and policy leaders for high-level discussions and debate, intimate meetings and unrivaled networking.

Cloud Connect Conference - March 8th-10th in Santa Clara, CA. Learn about all the latest cloud computing innovations in the Cloud Connect Conference - designed to serve the needs of cloud customers and operators - where you will see the latest cloud technologies and platforms and identify opportunities in the cloud.

Media Summit New York - March 9th-10th in New York, NY. This event is the premier international conference on media, broadband, advertising, television, publishing, cable, mobile, radio, magazines, news & print media, and marketing.

NAB Show - April 9th - 14th in Las Vegas, NV. For more than 85 years, the NAB Show has been the essential destination for "broader-casting" professionals who share a passion for bringing content to life on any platform - even if they have to invent it. From creation to consumption, this is the place where possibilities become realities.

CONTENT IN THE CLOUD at NAB - April 11th in Las Vegas, NV. What are the latest cloud computing offerings that will have the greatest impact on the broadcasting industry? How is cloud computing being harnessed to benefit the digital distribution of television programs, movies, music, and games?

1st International Conference on Cloud Computing - May 7th-9th in Noordwijkerhout, Netherlands. This first-ever event focuses on the emerging area of cloud computing, inspired by some latest advances that concern the infrastructure, operations, and available services through the global network.

Cloud Expo 2011 - June 6th-9th in New York, NY. Cloud Expo is returning to New York with more than 7,000 delegates and over 200 sponsors and exhibitors. "Cloud" has become synonymous with "computing" and "software" in two short years. Cloud Expo is the new PC Expo, Comdex, and InternetWorld of our decade.

Copyright 2008 Distributed Computing Industry Association
This page last updated February 6, 2011
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