NeoMedia Technologies, Inc (NEOM): Microsoft should be worried now! Cour...

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JPetroInc

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Thursday, 08/12/2004 12:32:22 PM

Thursday, August 12, 2004 12:32:22 PM

Microsoft should be worried now!

Courtesy of a fellow Long...

http://www.pcworld.com/news/article/0,aid,116910,00.asp

What MSFT squashed years ago, by the ability to “lose control”, stands to now bite them in the butt today.
With Google now introducing keywords into their toolbar, they stand to generate more revenues by charging the owners of these keywords. In a sense, Google will now control your browser even more and pose even more of a threat to MSFT… and yes MSFT should be worried.

This was all tried years ago by a company named RealNames (formerly Centraal). Originally financed by Network Solutions (SAIC was the parent company at the time)idealab! Capital partners, Goldman Sachs, Hambrecht&Quist, Draper Fisher Jurvetson (just to name a few)..to the tune of $87m. What started out as an add-on to search engines, is now becoming the way search engines focus their revenue models.

RealNames was in the business of selling keywords that allowed users to travel the Web by typing in a keyword instead of a URL. RealNames substitutes keywords for complicated Internet addresses. Owners of URL’s would pay RealNames for the rights to keywords ($500/yr). The difference in this is people would be navigating instead of searching.. If you are searching you would type in books, if youre navigating (know where you want go ) you would type in Amazon. The reason Google is so good is because it navigates so well. They can understand what youre trying to look for better than most search engines. Search engines try to do both now. You will soon see how this differs and how corporations differentiate the two in their ad spending.

In June of ’99 Microsoft announced a 2 year licensing and marketing agreement with Centraal (RealNames). Owners of URL’s would pay RealNames for the rights to keywords ($500/yr). RealNames would then pay MSFT to enable that keyword-to-URL translation in Internet Explorer. “With over 200m URL’s, the RealNames service is a major step in making it easier for consumers to navigate the Web andd for businesses to leverage their brands online using common language”..Keith Teare, Pres of Centraal (RealNames).
From Rob Bennett, group product manager for Consumer and Commerce Group at MSFT…”MSN advertisers can now extend the power of their brands online using product names and advertising slogans, while consumers will be able to use familiar names instead of complex URL’s to quickly locate exactly what they are looking for”.

October ’99 RealNames files to go public by raising $80.5m.

December ‘’ Google announces they will integrate RealNames keywords in their search ability. A keyword would put the keyword owners site at the top of their search results list….(could this be how their AdSense was started?)

March ’00 Microsoft takes a page from AOL’s “keyword” system and announces they are taking a 20% stake in RealNames. Their logic is they want to make surfing the Web as easy as typing a single word. Microsoft also announces they will begin working with the Internet Engineering Task Force (IETF) to develop an Internet Keywords standard..

Interesting that MSFT in int’d in creating a “standard” after they have ownership of RealNames now. Also after Google announced a deal w/ RN, MSFT decides to take a stake in the company.

Oct ’01 Versign (now owner of NSOL), signed a deal w/ RealNames to sell keywords through the company’s network of domain names. At the time VRSN had 32m domain names in their registries and manages the naming registry for nearly 90 global registrars.

According to Keith Teare, VRSN committed to a plan to give every .com, .net and .org customer 5 free promotional Keywords for 30 days. This would have resulted in widespread awareness and great revenue boost. Verisign’s registrar channel would have a virtual limitless number of Keywords to sell worldwide.

May ’02 RealNames shuts down. Microsoft chooses not to renew their agreement. After 3 consecutive growing quarters and dramatic keyword growth, MSFT decided to end agreement.

Some prominent cos had taken a liking to RealNames. Ebay had hundreds of the companys keywords for individual pages within its site. Sony, which registered the keywords for all of its 10,000 pdts with RealNames. So you can see one company can offer a tremendous amout of keywords being registered.

Keith Teare, CEO of RealNames gave his explanation to the termination. MSFT’s chief motivation in not renewing with RealNames seems to be a desire for complete control over the user experience, especially to help it direct users to MSFT-owned content. He also suggests that a MSFT patent for “Flexible Keyword Searching” indicates that the company is planning a rival keywords system that it can completely control.

The “revocation rate” of sold RealNames by MSFT was a tiny 0.14% between July 01 and March 02, suggesting the user experience was good otherwise MSFT would have had more names cancelled.

Teare goes on to explain the reasons MSFT gave to him why they terminated their relationship. It wasn’t about the money, even if RN paid their obligations , MSFT wouldn’t renew. MSFT doesn’t believe in “naming” they believe in search. MSFT controls search 100% (although I think the Google gang would laugh at that), and they could never CONTROL naming. The URL and DNS are broken, but to fix would be a big job and their would never be a clear reward for MSFT. The plan to put 120m keywords out there would be their worst nightmare. It would be out of their CONTROL.

RealNames had a great idea but failed because they didn’t leverage the keyword and they were too dependant on MSFT.They failed because they stayed in the “electronic world”. Phase 1 of the Internet, is the ability for electronic devices to communicate w/ other electronic devices. Phase 2, is when everything gets connected to the Internet and becomes ubiquitous (thanks Howard Rheingold and his Smart Mobs book). PC’s and cellphones wont be the only way to retrieve info from the Internet, but every barcode, phone number, RfiD tag will offer a hyperlink to the owners site.

No longer is MSFT Explorer the only game in town. No longer is the PC the only way to surf. Google, Linux, Symbian, Palm are all offering ways to avoid the dependance on MSFT products.
RealNames sold a keyword (1 application) to one method of information retrieval (MSFT browser). Instead of selling Nike a keyword to a website, what if Nike registered the word NIKE, all of its barcodes, the spoken word NIKE and eventually the RfiD tags Nike has? So Nike could turn on every box of shoes, every Nike poster, direct the user to www.nike.com if they typed in “Nike” in their pc, cellphone or said “NIKE” and let the user be directed to wherever Nike wanted them to go.

Instead of limiting the user to the computer for info, you can now go to the physical world and retrieve data. Imagine every Sony Camcorder, in every retail store is in a sense a keyword now. If Sony was willing to register all 10,000 products to just direct a pc user to their site, how much would they pay “turn on” every one of those 10,000 products in the world? How much is this worth?? Instead of being limited to retrieving this info from a MSFT browser, every cellphone now becomes a portable dynamic information retriever..

What will happen is …PRODUCTS/OBJECTS CONTROL THE BROWSER, not browser control the products/objects..Think about that, marketing guys will have a field day with this. What brand mgr wont register their brandname or Trade Mark to have this power.

Now this looks like deja-vous all over again. A recent marketing alliance w/ SAIC (former owner of NSOL) http://www.neom.com/corporate/press/2004/20040518.jsp
and the latest “Go-Window” product launch http://www.neom.com/corporate/press/2004/20040708.jsp
appears to be the development of a keyword/barcode/word type offering from NeoMedia Technologies www.neom.com and www.paperclick.com . One of NeoMedia’s patents allows any machine-readable identifier (barcode, RfiD tag, word, number, voice) to be directly linked to targeted Web-based information sources.

From ChangeWave MicroCap Research report..

ANOTHER INTERNET LAND RUSH?

Remember Network Solutions, who operated the Internet domain registration system? They were owned by SAIC -- a billion-dollar, privately held technology company. They sold Network Solutions to VeriSign for $12 BILLION.
Well, guess what? We think SAIC and NEOM are working together to form the NEXT Network Solutions -- a place where you can register your bar codes to connect to a URL you own. This keyword ownership business is THE REASON to own as much NEOM as you can.

ALL consumer marketing companies with half a brain will want to do the same because -- and this is the big part -- owning your barcode URL takes you exactly to where the marketer wants. NOT to Google or a search site that has 10-12 different options.
NEOM/SAIC will be selling the process of typing or scanning in the keyword ChangeWave, allowing us to determine where that keyword takes the customer. This system will compete directly with Google’s AdSense keywords.

Now with Google’s new feature to its toolbar, the stakes get higher. If Google does elect to charge owners of these keywords more, for directing traffic to their sites, what happens if NeoMedia starts to offer a “word/barcode/RfiD/voice” registry to all owners of these keywords?

For example, if youre Nike and Google wants to charge you more for the word Nike and the direction of the user, wouldn’t you be thrilled with the idea of having a Nike barcode, typing “N-I_K-E, or saying “Nike” be an option for you instead? Every box of Nike shoes, every Nike poster, Nike T-shirt, Nike logo in any magazine, the word Nike is a Nike website and becomes a way to direct your potential customer to your site. Doesn’t that seem like a lot more effective advertising?

With Google I can direct every PC user w/ the word Nike…or with NeoMedia I can direct every PC and cellphone user with the word Nike or with every one of my products everywhere in the world at any time.

I think every brand manager will want to register barcodes, words, Trade Marks, Rfid tags for the ability to “turn-on” their products and make them interactive.

In an interview w/ a German newspaper, Bill Gates said “With cell phones, we will be able to read bar codes to retrieve information about a certain product” Was Bill Gates reading Smart Mobs? He should listen to the guys in the trenches like Robert Scoble.

Is NeoMedia ready to launch a registry for this ability?

All the Best, JP