broadstuff

Just seen this on the WSJ:

Hewlett-Packard Co. was close to a deal to acquire Electronic Data Systems Corp. for between $12 billion and $13 billion, according to people familiar with the situation.

The terms of the deal were not immediately clear but an announcement was expected soon, the people said. EDS, which provides consulting and technology outsourcing services, had a market value of about $9.5 billion, based on Friday's closing price of $18.86

Why would HP do this?

A deal would bolster Hewlett-Packard's competitive position versus rival International Business Machines Corp. (IBM) as a provider of services such as tech consulting and customer support. The transaction could spark further large deals in the technology sector as cash rich, mature companies such as Hewlett-Packard look to acquisitions for growth.

Hmm...the system integration and outsourcing industry is a low margin game and gettiing worse as they all chase each other to the bottom line of each big contract. I can see why EDS would want it (27% jump in share price) but does HP really need to buy into even more of a commodity business, and look more like IBM? (EDS makes c 3.5% margin on $20bn, HP makes c 7% margin on $100bn). Isn't the really shape changing play to do something different to the way the rest of the industry is structured, go for growth industries in comms and media instead?

Or is it the only way HP will get anyone to buy their tins

Update - FT reports HP R&D is now going more "D" side, reducing range of projects to the more rapidly commercialised - more signs that current management thinks future success comes from looking exactly the same as the rest of the industry?

Reading a number of blogs in the last few days, it became clear to a number of us chatting this morning that in fact quite a few Social Media commentators have only a limited knowledge of the information theory behind Social Networking, and that it may be useful to look at some of the theory to understand some of the issues. (Apologies if this sounds a bit lectur-ey, its the frustration factor).

Here is a quick guide to Metcalfe's Law:

Metcalfe's Law states that (From Wikipedia)

the value of a network is proportional to the square of the number of users of the system (n²). First formulated by Robert Metcalfe in regard to Ethernet, Metcalfe's law explains many of the network effects of communication technologies and networks such as the Internet, social networking, and the World Wide Web. It is related to the fact that the number of unique connections in a network of a number of nodes (n) can be expressed mathematically as n(n-1)/2.

Note - Reed's Law (a variant of Metcalfe's Law) says that (Wikipedia again) the utility of large networks, particularly social networks, can scale exponentially with the size of the network. Sarnoff's law (another variant) states that the value of a broadcast network is proportional to the number of viewers.

In fact, we find it more useful to count every connection between 2 users (nodes) as having 2 links, to model a me-to-you link, and a you-to-me link, because they may be asymmetric and have different values (eg bandwidth usage in XDSL systems), ie the formula is n(n-1). This is what is graphed below.



The red line shows utility, i.e. as the number of nodes increases linearly the number of links increases geometrically, increasing the the value of the connections.

So far, so wonderful.

However, what is usually left out is that the capacity of each node to process all this wonderful utility is limited, so at some point the utility hits a barrier where its capacity is 100% consumed - in the graph above it assumes that every new link takes 1% - just 1% - of the utility's transaction capacity, so it hits 100% capacity at just over 10 nodes - 90 links. (This is in effect the theory behind the Dunbar Number, ie the view that a human just cannot manage the transactions required for more than c 150 nodes - thats 22,350 links)

There are ways around this. One way is to lower the per-node Transaction costs, maybe by simplifying the conversation, or by displaying information upfront to reduce explanation, or new technology or whatever. This is the Coasian line above (in honour of Ronald Coase who first discussed the impact of transaction costs in networked structures - firms - in the 1930's - but that is for another post ) and it assumes we can halve transaction costs, and thus double the point of overcapacity to 200%

The other option is to split and define - you don't have to talk to everyone all the time - the third line, the "chain of command" line assumes the structure will split, amoeba like, into subnetworks every time it hits 100% capacity per node. In many human endeavours this is done via a hierarchical chain of command structure.

Incidentally, because each link's communication level varies over time, rather than being a constant 1%, then typically capacity at peak times - when all nodes are communicating more on average - can be less than the theoretical 10 nodes - and unless you want delays to occur, you have to plan for peak capacity in a network - in fact a general rule of any data network is you will hit start to hit peak at roughly 2/3 theoretical maximum capacity - more if the variation of all nodes' comms is high, less if they are lower.

The takeaway here for a Social Network designer?

The transaction costs of a social network will come and bite you at some point - not just with traffic growth (Facebook uses a high transaction cost per interaction between nodes via having to access multiple pages, hence the server issues, we suspect), but also with usefulness - which is why users of Aggregators are increasingly finding that just increasing the number of people communicating , without any increased transaction efficiency (read faster, dammit), or filtering (a form of chain-of-command structure), just overwhelms one with so much data that it becomes noise.

It also shows that although all markets may be conversations, there is a limit to the value of a solely conversational market (high transaction cost per link reduces throughput) so there is a strong incentive to reduce the cost of the conversation by one or both of the transacting parties, especially where the value of the transaction is low

One of the interesting questions we have been kicking around is whether electronic social networks will increase the Dunbar Number, ie the transaction cost is in the logistics of each transaction (meeting and greeting physically) rather than the sheer complexity of managing a large number of transactions - ie is Robert Scoble, with 5,000 friends merely an efficient reducer of tranasction costs, or is each transaction not really a "conversation" as such, but something less?

Comments?

Ironically enough, I heard this one first on Twitter (Twitter is very good for Technology news and comment)

MOUNTAIN VIEW, Calif. (May 12, 2008) – Tonight at Campfire One at the Googleplex (http://code.google.com/campfire/), Google Inc. (NASDAQ: GOOG) will announce a preview release of Google Friend Connect, a service that helps website owners grow traffic by enabling any site on the web to easily provide social features for its visitors.

Websites that are not social networks may still want to be social -- and now they can be, easily. With Google Friend Connect (see http://www.google.com/friendconnect following this evening's Campfire One), any website owner can add a snippet of code to his or her site and get social features up and running immediately without programming -- picking and choosing from built-in functionality like user registration, invitations, members gallery, message posting, and reviews, as well as third-party applications built by the OpenSocial developer community.

Visitors to any site using Google Friend Connect will be able to see, invite, and interact with new friends, or, using secure authorization APIs, with existing friends from social sites on the web, including Facebook, Google Talk, hi5, orkut, Plaxo, and more.

Not that this is replacing one walled garden for another, you understand....nor even that its unexpected. Anyway;

Google Friend Connect has been developed to lower two barriers to the spread of social features across the web. First, many website owners want to add features that enable their visitors to do things with their friends, but the technology and resource hurdles have been too high. Second, people are tiring of needing to create new logins and profiles and recreate their friends lists wherever they go on the web. Google Friend Connect offers a solution to both these issues.

It was ever thus - last year's new tech is this years new big thing is next years infrastructure. Its a pity that Google has done it, rather than it being executed in a truly neutral Open Source mode, but it is better than what there is now by a long way, though I do think the collective "we" need to scrutinise the data mined by Google is reasonable for the use of the system, and not excessive. Longer term I'd really prefer this sort of system to be truly open like the 'Web.

I opined last year that Marc "Netscape" Andreesen could have done the open version, but he's no fool and built a niche closed system, Ning. I argued that Yahoo should have done this too, but no. I guess Facebook is the Netscape of this Fin de Cycle

(Hat tip to Jof Arnold)

Rory Cellan Jones reports on the BBC about Twitter breaking the China Earthquake first:

When I logged on to my desktop Twitter application (sad, I know) it was alive with Tweets about the earthquake in China. Most of them were from the celebrated technology blogger Robert Scoble, who is famous, perhaps notorious, for receiving a Twitter message every second of the day.

Another year, another shiny new platform capable of truly wondrous things far greater than its true ability Last year 'twas Facebook, but as we noted in late 2007 the Chatterati had moved on to Twitter, and now the Beeb's early MSM adopters are onto it! (Do keep up chaps, Scoble's mainly off on Friendfeed these days anyway )

Anyway, on with the show....

He is based in California, but thousands of miles away from the quake he was providing breaking news about it, linking to sites like the BBC and the New York Times, even providing a first picture - though how authentic that is remains to be seen. He now claims that Twitter had the breaking news even before the United States Geological Survey, which provides early warnings of seismic events.

Let's see, as this story unfolds, whether this is the moment when Twitter comes of age as a platform which can bring faster coverage of a major news event than traditional media, while allowing participants and onlookers to share their experiences.

Actually, Twitter has apparently come of age before....see here

I come not to praise nor bury Twitter, but to put it into context. Actually, anybody on any form of digital media - email, Twitter, Instant Messenger, SMS - will get the news very fast. In fact I hypothesise that SMS was probably the fastest out of there, it usually is. (Did I hear anyone talking about SMS "coming of Age" in the London bombings, or about the emails flying out at 9/11 after the mobile masts and telephone exchanges went down?? No? Thought not.....they just did their job without celebrity blogger endorsement )

Twitter, like email, has a multicast (near-broadcast) capability, which was why it would have hit the mostest fastest that way. Twitter can run off a simpler mobile so has a better chance of of getting out first before email, but it won't be by more than minutes. (Update - by a whole 3 minutes - talk about storms in teacups) But the Twitter fan-fraternity all hate email don'cha know (its sooo Web 1.0), so no ways is any of 'em going to admit that electronic news is just a function of whatever electronic screen you were watching at the time that would have given you the news. If Rory had logged onto a similar global email group first, on say Yahoo Groups, I can guarantee the news would have been there too - it was on mine - here's a Broadsight Meme Search Engine output of Non Twitter sources for example. Heck, I'll bet people were even telling their friends about it on Facebook and MySpace too, but no one's interested in writing about them anymore...



That aside, the thought that Twitter is a "news system" per se is also not specifically accurate in my view - its more useful to think of it as a comms nervous network, where a stimulation starts to prompt signals to back flow up the system as they occur. How accurate the signal is, is another thing entirely. The 140 character limit is great for short datasets but also mean that huge amount of noise goes with any signal (the "river of drivel") leading many leading comms thinkers to hypothesize that in "microblog" services like Twitter, Filtering is more critical than communication per se.

(We have been on Twitter for at least a year, so yes we do know how it works, and value its unique attributes - and potential - its got its uses, but its just another comms medium people !!!)

Now for it to really come of age, lets see what Twitter can do to organise help. I haven't noticed it in the Burmese forefront - SMS, Mobile and Email are doing the donkey work there.

Update 13/05 - good post this morning on Ogilvy China Watch, highlighting the hubris of the Twitterpimp crowd:

Twitter’s immediacy was nice, but by no means unique. The whole time I was twittering, my wife was on her instant messengers, with both QQ and MSN Live open. She was also monitoring all the portals’ news flashes on the quake. I didn’t feel like I had any more information than she did

Twitter’s public nature was of some real value both for ordinary folk and for professional journalists, who were able to quickly identify English-speakers on the scene who could be interviewed. The broadcast nature of Twitter, while it can bore one to tears when used to gratuitously announce one’s pedestrian comings and goings, was in this case something that made it better than simple IM...

(abridged...)

...On balance, though, I feel there’s something fundamentally unsettling that attention within the Twitter community should have shifted at all off the matter at hand and on to a celebration of the particular communication tool we were using. There’s no doubt that it was useful, but by no means did this episode drive a nail in the coffin of traditional media, which by my lights has been exceptionally good in its reporting — Xinhua, Phoenix, CCTV, and many other Chinese news organizations have really taken full advantage of the candor Beijing seems to be allowing and encouraging.

Plus the telling fact that an Ad Agency blog can be less suckered by the Twitter hype than the BBC.

We've been asked to circulate this, and what better way than blogging it. Besides, the amount of benefit we have had from the British Library while starting Broadsight over the last few years has been enormous, so delighted to return the karma.

Digital Lives is a path finding research project that is setting out
to understand how individuals retain and manage their personal
collections of computerised information - everything from digital
photographs and videos to favourite podcasts and sentimental email
messages - and how these digital collections can best be captured in
the first place and preserved in the long term, perhaps for family
history, biographical or other purposes.

The project is led by Dr Jeremy Leighton John and colleagues at the
British Library who, together with experts from UCL and Bristol
University, are researching the challenges that lie ahead as more and
more of our memories and documentary witnesses exist in electronic form.

We would like to invite you to take part in our research by completing
an online survey. This should take no more than ten minutes of your
time and it will provide us with crucial information that will benefit
the work of the British Library and other archives enormously as we
plan for what is fast becoming a largely digital world.

If you would like to take part in the survey, please click here:
http://tinyurl.com/5wtwgm

If you would like to enter our Prize Draw and stand a chance of
winning £200 in British Library gift vouchers (drawn at random and
with no further obligation) you can register your interest at the end
of the survey.

Please note that all responses are strictly confidential. No
individuals will be named when we report our findings, and the
information collected will only be presented in an aggregated form.

You will not be contacted again as a result of completing this survey.

If you have any questions, or are concerned about the bona fides of
this survey, please email me at University College London by clicking
here: mailto:i.rowlands@ucl.ac.uk

Dr Ian Rowlands (UCL School of Library, Archive & Information Studies)

(Did y'all see the bit about a Prize, and the no-spam guarantee... )

Duncan Riley notes some suggestions on link etiquette for blogs:

Primary source:
If the primary source for the post comes from another blog (an exclusive) a link is desirable in the first line. For example: zyz reports [link], or xyz fact according to a report at [link].

The negation to this rule: if you’ve been approached by the source directly (media release, tip, exclusive etc) or if multiple sites are reporting the facts having obtained the data the same way.

Via source:
It’s good form to include a via link in a post if you’ve obtained the story idea via another site or blog. Format: (via: [link]). This is one part of attribution that seems to be dying out. It’s unfortunate, because it was one of the features that helped build the blogosphere.

Quote/ Inline source:
Where the source isn’t primary (they are reporting it second hand, most commonly with MSM), you can quote the external site within the post as an alternative to a via link. This has become more common than a via link, but it’s really only desirable if you can make it work within the context of the post. I’ve always used with direct quoting: Format: [link] says/ reports “xyz.”

Photo credits:
These weren’t really discussed in the old days, but in an age of litigious copyright holders it’s always safer to give a photo credit when using non-default imagery (in particular photos). Format: photocredit: [link]. The other alternative is to use blog safe photos and I tend to use Wikimedia Commons.

The Honesty Catch:
There are times when blogs write about stories where other blogs have recently written about the same thing, without the second site knowing the first site wrote about it. I’ve had this happen a couple of times in the last 12 months, with people demanding attribution when I’ve sourced the idea usually from a direct email from the company/ startup or site. I don’t believe a link is due where the author honestly wasn’t aware of the earlier article, and lets face it, if you really looked hard enough you’d nearly always find something has been written about before.

Its a nicely done code, I think we'll try to follow something like this as a standard in future.

By the way, there have also been times when our stuff has been taken sans attribution, and even packaged as "research" by 3rd parties to sell to their clients. In fact the reason for Duncan's post is that there is a little bit of whinging going on in the Bitch-o-sphere about Ars Technica apparently holding back for 2-3 days before putting a good overview article in and not linking back to the (supposed) originators. Hmmm sez I, on 3 counts:

(i) Actually, I like overview articles written with a sense of perspective - its that editing value add
(ii) Ars Tech are hardly alone here - nearly all the MSM do it, and are often lauded (erm - sucked up to?) by bloggers
(iii) A-listers whinging about others taking their material and not attributing it is a bit rich, more than one "A List" blog has done this sort of thing.

Read Write Web has a good post noting that aggregation is not the issue for Social Media, filtering is. Agree totally, as you can see from earlier posts we wrote here and here for example. In an interesting note RWW notes that in fact some of the newer aggregators actually add to the problem:

With so many different platforms to aggregate, noise levels are surging. An underlying issue in the level of noise is that some of these services were not made to interact with one another. Users of social aggregation tools should understand that what you may consider noise is actually a side-effect of using a social aggregation platform.

Anyway, filtering and how it works is proving to be harder to define that knowing that we need it. RWW notes that:

Filters are rapidly becoming a pertinent issue for developers of social media services. As a result, social aggregation platforms are in the perfect position to lead the pack. While this is no easy task and one that cannot be solved in its entirety, it would help resolve another issue social media users are facing: courtesy.

Instead of being able to freely add whatever service you wish, some users like myself are taking into account what others may consider noise on certain services as a courtesy to members. In essence, you are becoming our own filter. You may refrain from important other services for fear of being labeled as "noisy".

Its an interesting thought, and I can see that members of a community may wish to self manage a commons in this way - but sadly it is the sort of system that is prone to cheating behaviour, spamming for example, so it is likely to break down unless the cost of removing spam is roughly the same as spamming.

No, longer term we believe that filtering has to be a more active system embedded in the knitting of the UI, and must be user set.

...from our article Spam Spam Spam Spam Spam Spam etc etc yesterday.

For some reason Serendipity (our blogging software) decided to save every update instance as a separate post, so there are now 8 out there. The broadband connection was misbehaving at the time so I suspect this is the cause. I'm leaving them up for now as there are separate comments on different ones and I won't have time to sort it all out before tonight.

Update - The Broadstuff email edition - feel free to sing along

"broadstuff" - 11 new articles

1. Apologies for the Spam....
2. Taking Flack from the Spamalot Caste
3. Servicing Facebook
4. Spam Spam Spam Spam Spam Spam Spam Spam Spam Spam
5. Spam Spam Spam Spam Spam Spam Spam Spam Spam Spam
6. Spam Spam Spam Spam Spam Spam Spam Spam Spam Spam
7. Spam Spam Spam Spam Spam Spam Spam Spam Spam Spam
8. Spam Spam Spam Spam Spam Spam Spam Spam Spam Spam
9. Spam Spam Spam Spam Spam Spam Spam Spam Spam Spam
10. Spam Spam Spam Spam Spam Spam Spam Spam Spam Spam
11. Spam Spam Spam Spam Spam Spam Spam Spam Spam Spam
12. More Recent Articles
13. Search broadstuff

Rick Calvert responded to my earlier post on Spam where I looked at "Bacn" and "Tofu" and concluded that they were:

"Maybe different flavours, but still spam methinks."

I found Rick's post (and his blog post over here) very good in that they are reasoned and to the point, even though we disagree:

You think wrong. To demonstrate lets compare emails that you get at work. Lets use a clothing store for example.

The first email is for viagra. Thats spam.

The next is from a new clothing line you have never heard of asking if you would be interested in carrying their line in your store. You check out the email and think their style is crap. You would never carry it in your store.

You aren't interested but that's not spam. You are a qualified lead and it is your job to read emails like that.

Same difference for a journalist (and some bloggers who consider themselves to be some variation of a journalist) to get pitches for stories that are relevant to the topics they cover on their blog.

Now if you got those same two email examples given above at your personal email address then both would qualify as spam.

I understand that distinction that some bloggers view their site more as a personal endeavor than a business but you have to realize a casual reader of your blog (some PR flack) may not be able to tell the difference. You have to admit it is on the internet for the world to read. So you just might get some unwanted emails, even a stalker or two.

Make sense?

Sorry for not being more diplomatic. It's late.

Firstly, no worries about bluntness, its totally appreciated and I wish there was more of it, especially if the argument is reasoned like yours is, Rick .

Secondly, I take your point on board re the very honest endeavours of trying to inform a business re new stuff that is relevant in a business sense.

The issue with spam though, and the reason - as Stow Boyd originally noted , that there is now quite a kickback starting - is that:

(i) It is (ab)used for more than the reasonable purposes you describe above, and because of sheer volume and information assymetry its harder and harder to tell good from bad. We've all seen the new messages come in from NewGuy@PRCo.com when we checked the "don't send" box from OldGuy@PRCo.com, or the PR messages from Joe.randomletterstoconfuseyourspamcatcher@Flack.com - ie this is a deliberate attempt to subvert the polite "no thank you" we start off with

(ii) Because social media allows us to now kick back, as Gina Trapani showed, at a far lower transaction cost than before - in fact at the sort of cost that matches the cost of spamming.

In other words, like it or not, we are in an arms race. And the thing about social media is there are a lot of brains out there willing to fight it.

I think the argument that it is in some way my"job" to read material sent to me is incorrect - I know of no society (in western culture certainly) that rewards behaviour where people intrude uninvited to impose their agendas. The issue I see is that this desired behaviour is countercultural, and the only reason that PR countenances this behaviour and tells me I should go along with it is that they want to make money out of me?

From self interest alone the game theory is against the Flack from Day One.

What would I do if I were a PR Co? I think firstly accept that the arms race is real now, and its probably a Pyrrhic victory at best if you win. Secondly, I think it comes to the point I made above about Information Asymmetry - you need some way to prove that you are the genuine article, so that I consensually agree to let you through my door.

Facebook has taken on $100m of debt to buy 50,000 more servers (from TechCrunch)

This is where they get hoist by their own petard of huge amounts of to and fro transactions to do anything on Facebook - great for traffic count in the early days, but it also means scalability is impacted - its at a higher multiple of stuff to serve per user this way.

I don't think they are growing faster than was projected, so unless they were after more money than they got in the last round (c$350m) then clearly transaction per new user are higher than planned. And anyone who has built social network systems will know they scale much more geometrically compared to say a Google anyway, which is a much more linear transaction.

What is also interesting is that they have chosen to take debt, not equity this time round. One can weave all sorts of conjectures around this, right now I'll assume the new COO has worked out this is the cheapest form of funding that / and doesn't put that $15bn valuation under threat.