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Tuesday, August 12, 2008

Flipping For Domains

It wasn't a great school year for Steven McDonald. He didn't win a single track meet, and he was rejected or wait-listed by every college he applied to.

McDonald's fiscal year, however, has been phenomenal.

It started last September, when he paid $620 for the Internet domain name qsd.com and, two weeks later, sold it for $12,000 to a fellow domain trader, or "domainer." Since that first investment, McDonald has grossed $325,000 from flipping domains.

"It's pretty cool," says the Southbury, Conn., teenager.

And he's not the only one who thinks so. As the real estate and credit markets plummet, the so-called domain aftermarket, where Internet addresses that cost less than $10 to register are bought and resold for thousands of dollars, is thriving.

A precise measurement of the industry is hard to come by, because most domain trading companies are privately held and the majority of their biggest deals are subject to nondisclosure agreements. Ron Jackson, whose trade magazine DNJournal tracks the sale of domains in public deals and auctions, says domain name sales in the first half of 2008 reached $68 million, up about 12% from the same period last year. Jackson estimates that entire aftermarket did $700 million in sales in 2006. Since then, sales likely have topped $1 billion.

"Domain sales are still going up by double digits," says Jackson, who is a domainer himself. "The low-hanging fruit may be gone, but there's still a lot out there."

The fiercest competition is for domains that use short, generic words--such as porn.com or fund.com--to describe lucrative Internet businesses. Fund.com sold for $10 million in March. But such domains were almost all snatched up in the '90s and again in the wake of the dot-com bust.

And as a sign of the growing demand for the Internet's limited valuable real estate, seemingly meaningless URLs, like qsd.com, or McDonald's latest investments npt.com, cjz.com and hyb.com, are now worth thousands of dollars in the domain aftermarket. It's now all but impossible to register a new two-, three- or even four-letter dot-com domain at registrars like GoDaddy.

Most of them are functioning Web sites or they're in the hands of domainers, who trade them back and forth, betting that the letters will inevitably match the acronym of one of the millions of new companies and organizations that go online each year.

"Back in the day, who would have thought that a random-group-of-letters-dot-com would be worth something?" says Jeremiah Johnson, chief operating officer of the domain auction site Sedo.com. "Well, to that company that has the corresponding name, it's worth a lot."

The highest reported sale of a three-letter domain this year was $202,000 for cpc.com. The Web address was sold to Contract Pharmacal Corp. by the registrar Moniker, which, like Sedo and other domain marketplaces, auctions domains for investors looking to sell and brokers deals for buyers seeking domains that have already been registered.

Appraising a domain is an inexact science. Johnson says Sedo has developed formulas that take into account the length of a domain (shorter is better), its inherent traffic (the number of visitors who type it directly into a Web browser) and the selling price of similar domains.

There's also a hierarchy in the value of domains based on the popularity of the suffix, or "extension," that follows the name. For example, a ".com" domain name is generally more valuable than ".org" or ".net," which in turn fetch more than newer ".info" or ".us." domains.

Although Jackson says he's having his best year yet for three-letter ".us" names, he sells them for a relatively modest $1,000 each. But that's not too shabby, considering he bought the domains for $8 apiece.

"Dot-com is always going to be the blue-chip standard," Jackson says. He reasons that the extension is ingrained in the minds of Internet users. Even new industry rules that will allow registrars to use almost any extension--theoretically expanding the domain universe by billions of names--will have little impact on the dominance of ".com." As a result, "all of this new property is going to be wasteland, because it's not going to be recognizable to the public," Jackson says.

In addition to flipping, domainers have other ways of making money from their investments. Most domainers post ads on their Web sites, which can generate a decent monthly income. And Jackson says more and more domainers are teaming up with Web developers to create their own online businesses.

Then there are even more creative arrangements.

"I've leased a domain to the president of Spain," says Adam Dicker, a domainer who owns DNForum.com, a site where domainers chat about industry trends and sell domains to each other. Dicker says the Spanish premier José Luis Rodríguez Zapatero rented his domain, zp.com, and used it as the homepage for last spring's presidential campaign. Maybe it helped. Rodriquez Zapatero was re-elected. Notes Dicker, "And he paid a good buck."

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What bandwidth addiction will cost

Americans today spend almost as much on bandwidth – the capacity to move information – as we do on energy. A family of four likely spends several hundred dollars a month on cell phones, cable television and Internet connections, which is about what we spend on gas and heating oil.

Just as the industrial revolution depended on oil and other energy sources, the information revolution is fueled by bandwidth. If we aren't careful, we're going to repeat the history of the oil industry by creating a bandwidth cartel.

Like energy, bandwidth is an essential economic input. You can't run an engine without gas, or a cell phone without bandwidth. Both are also resources controlled by a tight group of producers, whether oil companies and Middle Eastern nations or communications companies like AT&T, Comcast and Vodafone. That's why, as with energy, we need to develop alternative sources of bandwidth.

Wired connections to the home – cable and telephone lines – are the major way that Americans move information. In the United States and in most of the world, a monopoly or duopoly controls the pipes that supply homes with information. These companies, primarily phone and cable companies, have a natural interest in controlling supply to maintain price levels and extract maximum profit from their investments – similar to how OPEC sets production quotas to guarantee high prices.

But just as with oil, there are alternatives. Amsterdam and some cities in Utah have deployed their own fiber to carry bandwidth as a public utility. A future possibility is to buy your own fiber, the way you might buy a solar panel for your home.

Encouraging competition is another path, though not an easy one: Most of the much-hyped competitors from earlier this decade, like businesses that would provide broadband Internet over power lines, are dead or moribund. But alternatives are important. Relying on monopoly producers for the transmission of information is a dangerous path.

After physical wires, the other major way to move information is through the airwaves, a natural resource with enormous potential. But that potential is untapped because of a false scarcity created by bad government policy.

Our current approach is a command and control system dating from the 1920s. The federal government dictates exactly what licensees of the airwaves may do with their part of the spectrum. These Soviet-style rules create waste that is worthy of Brezhnev.

Many "owners" of spectrum either hardly use the stuff or use it in highly inefficient ways. At any given moment, more than 90 percent of the nation's airwaves are empty.

The solution is to relax the overregulation of the airwaves and allow use of the wasted spaces. Anyone, so long as he or she complies with a few basic rules to avoid interference, could try to build a better Wi-Fi and become a broadband billionaire. These wireless entrepreneurs could one day liberate us from wires, cables and rising prices.

Such technologies would not work perfectly right away, but over time clever entrepreneurs would find a way, if we gave them the chance. The Federal Communications Commission promised this kind of reform nearly a decade ago, but it continues to drag its heels.

In an information economy, the supply and price of bandwidth matters, in the way that oil prices matter: not just for gas stations, but for the whole economy.

And that's why there is a pressing need to explore all alternative supplies of bandwidth before it is too late. Americans are as addicted to bandwidth as they are to oil. The first step is facing the problem.

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MobileMe Mail and Gmail Go Down Simultaneously

For a period of several hours on 11-Aug-08, both MobileMe Mail and Google's Gmail were inaccessible for many users, although Gmail reportedly remained accessible for those retrieving email via IMAP and a standalone email client. MobileMe's outage was not accompanied by any acknowledgment of the problem on the status blog, and after a few hours, access returned. If Apple is going to be serious about providing a status blog, they should at least put the effort into updating it promptly (see "MobileMe Status Page Promises Updates, But Tone Rings Flat," 2008-07-26). We'll see if Google provides any more explanation than Apple when the dust settles.




Other MobileMe and Google services were unaffected, as far as I've seen, but it's distressing that MobileMe continues to suffer outages even after Apple claimed to have fixed the initial problems after the .Mac-to-MobileMe transition. Steve Jobs dissected the MobileMe launch in an internal email message, coming to essentially the same conclusions as Glenn Fleishman did in "Apple Claims MobileMe Mail Fully Restored" (2008-07-30).

I haven't tracked Gmail outages separately, but for the most part, I haven't heard complaints about frequent problems. Although there are no guarantees with any email service (heck, my server has been inaccessible for my few local users every so often too), people relying on email for mission-critical services would do well to maintain alternate accounts in case of trouble.

Congratulations Apple, you made the iPhone less stable than Windows Mobile

Congratulations Apple, you made the iPhone less stable than Windows MobileAfter a couple of weeks since the iPhone 3G launch, I gave in and picked up a device at the Apple store just over a week ago to personally give it a try. It is a good device, but the only two improvements over my original iPhone are the 3G support and GPS. The 3G has been very spotty, especially compared to the solid reception I am seeing on the Nokia E71-2, N95-3, and HTC Advantage. I saw 3G at work for the first couple of days, but for the last four days all I get is an EDGE connection. GPS is nice and I have actually used it twice to help me quickly navigate around traffic jams and in an unfamiliar area, but I could have just used Google Maps and the approximate position on my original iPhone to do the same thing. Recently the device has almost ended up going airborne across the room because of the constant instability with both 3rd party and native applications and I am strongly considering a return of the device this week.

As a person who enjoys trying out and using lots of 3rd party applications on my mobile devices I expected issues with some applications because not all developers are created equal and Apple doesn’t seem to be performing much of any kind of actual review in letting applications appear on the iPhone App store. However, I have had way too many experiences where I go to start an application, it appears to load and then I am taken right back to the home screen again. The only way I have figured out how to get the application back up and running is to remove it and then reinstall it on the iPhone. I also discovered that for paid applications you have to “repurchase” the application on your device and then as you go through the process a pop-up will appear that states you already paid for the application and would you like to download it for free. Thus you don’t actually have to buy the application again, but that is the method you have to follow to redownload it. I would think that the iPhone would be smart enough to know which applications I purchased before you have to get to this point and think there is definitely some room for improvement in the App Store on the iPhone.

There have also been syncing issues where I load the application on the phone itself and then when I sync it to my Mac the application disappears. Also, when I delete an application on the phone it gets reinstalled when I sync at times. I think Apple is having a difficult time managing the store synchronization between the device and a Mac/PC.

I was actually willing to forgive some of these early adoption/third party application issues, but lately I have been noticing major issues with the native Safari web browser that I never see on Internet Explorer Mobile or Opera Mobile on Windows Mobile. Over the last 4-5 days, I have noticed I’ll be just scrolling down a web page reading it when the browser will just close and kick me back to the home screen. I will then relaunch the browser and surf for a while before it kicks me off again. It isn’t even a case of trying to do something crazy like watch a video or stream something, but I am just trying to read the text on a page. I spend quite a bit of time browsing the web on my mobile devices and if the iPhone 3G is going to keep kicking me out of the browser then it is going back.

I also do not like that jumping between tabs does not always take you back to where you were on the page. The page may refresh or go back to a previous page and the browser does not seem to do a good job of maintaining the state you left it in. The browser supports up to 8 open tabs and I tend to limit myself to 6 so I can open another tab or two when I find a link I want to check out so it isn’t a case of trying to open up more tabs than are supported. This type of performance reminds me of using the Blazer web browser on a Palm device that rarely, if ever, let me go back to where I was browsing previously. I never have this issue on Windows Mobile or S60 devices and browsers.

In addition to the application sync/loading issues and browser crash issues, the iPhone 3G will tend to pause or slow down (especially noticeable when using text input and seeing a significant lag) and require me to reset the device. In the old days of Windows Mobile I would have to soft reset it from time-to-time when a 3rd party application would lock me up and the current performance, or lack thereof, on the iPhone reminds me of those good old days. I NEVER experience resets on current Windows Mobile non-touch screen devices (like the T-Mobile Dash or Shadow) and they are rock solid. I occasionally have to reset the Windows Mobile touch screen devices (like the Touch Diamond), but at this time the Apple iPhone is requiring more resets than even these devices and I don’t see much of an advantage in the iPhone over these more stable devices. I rarely (and mostly never) experience resets on S60 devices either. The Windows Mobile and S60 devices are also multi-tasking with 3rd party applications so the fact that they are more stable while the iPhone is only running a single 3rd party application with a native application or two in the background is also significant.

Other rants: As long as I am talking about some major issues I am seeing on the iPhone, I wanted to mention a couple other things that bother me on the iPhone. People used to constantly complain about Windows Mobile’s lack of ability to work as a reliable alarm clock, but that has now been fixed for the most part. I find the iPhone to be practically worthless at ever waking me up and keep going back to a reliable and loud Nokia S60 device to serve as a trustworthy alarm. Basic functions like this used to be required for a device, but we seem to let these issues slide today. Also, why do I have to turn on the device and slide across the display to get to the Home screen to see how many text or email messages I received? The notifications on the iPhone are very weak in comparison to other mobile devices.

I know that we have been clamoring for 3rd party applications on the iPhone and there are some awesome applications available (and some really stupid ones). However, the stable days of pre-iPhone 2.0 may be gone forever and Jobs may not like the can of worms that he has opened up. It is particularly a shame when the native applications on the device can’t even perform reliably and I just have to keep remembering this is the early days of the iPhone and I suppose it is similar to the early days of the Pocket PC when stability was also an issue. I did cut Microsoft and Nokia a break back then when they were starting out and I’ll keep using my original iPhone because I do think that many of the applications are useful and well designed and we will see lots more coming from developers. I expected Apple to have a better product with this second generation of iPhone though and have been disappointed with its performance. I think I’ll wait and see what the 3rd generation brings us next year (we are on a yearly cycle, right?) since it took these other companies a few tries to get it right as well.

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Intel Officially Brands Nehalem as 'Core i7' Processor

Intel has announced that the upcoming Nehalem processor will be officially known as the Core i7.

Nehalem has been the code name for Intel's upcoming processors first due in Q4 2008. Nehalem represents a major overhaul of Intel's processor technology and introduces a number of improvements over existing process bottlenecks.

Intel's choice of name seems to be arbitrary but will reportedly fit into the naming scheme for the full line of chips, as explained by TGDaily.com:

Intel told us that “i7” was simply chosen because it is “short and sweet”. The company showed some understanding for our confusion over this name choice and promised that i7 would make sense down the road when additional new identifiers are introduced.

Intel is expected to reveal more information about the Core i7 at the Intel Developer Forum on August 19th. At the conference, Intel will also detail a new energy saving technique in the i7:

Intel would not reveal the nature of the new energy efficiency feature in the Core i7 chips. A company spokesman said it is not a direct evolution of the Intel's SpeedStep technology that automates frequency scaling based on workloads.

While the first of the Core i7 processors will be introduced in Q4 2008, mainstream desktop and mobile versions of the processor will be delayed until well into 2009.
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Steve Jobs: 60 million iPhone apps downloaded, confirms kill switch

Steve Jobs, presumably speaking from a hyperbaric chamber where he's being nourished with an infusion of liquefied developers-souls before his next public appearance, had a few interesting tidbits about the AppStore for the Wall Street Journal this morning. Namely, users have downloaded some 60 million programs for the iPhone representing sales of about $30 million since the launch last month -- a 30/70 revenue split between Apple and developers, respectively. "The thing's going to crest a half billion soon," Jobs added, "I've never seen anything like this in my career for software." He went on to say that phone differentiation is no longer about radios and antennas (or uh, battery life) but about software. Steve also confirmed the controversial iPhone application kill switch in the event that Apple inadvertently approves a malicious program for distribution. Jobs said, "hopefully we never have to pull that lever, but we would be irresponsible not to have a lever like that to pull." As to the $999.99 I Am Rich application, the dubious download that displayed nothing but a glowing red gem, pulling that from the store was a "judgment" call. Sure, but that doesn't explain how it made it through the vetting process to begin with.

iPhones-Macintosh computers become apples of hackers' eyes

Security specialists said Saturday that hackers are taking increasing aim at iPhones and Macintosh computers as the hot-selling Apple devices gain popularity worldwide.

Hackers have historically focused devious efforts on computers using Windows operating systems because the Microsoft software has more than 90 percent of the global market, promising evil-doers a wealth of targets.

Macintosh computers have been gaining market share and catching the interest of hackers, according to Zero Day Initiative (ZDI) security vulnerability analyst Cameron Hotchkies.

"There are more eyes looking over Apple products for vulnerabilities," Hotchkies told AFP at a notorious annual DefCon gathering of hackers in Las Vegas.

"It has slowly been growing as a target people are more and more interested in."

Hotchkies specializes in Apple software as part of a ZDI team devoted to scrutinizing programming holes and crafting "patches" to prevent hackers from exploiting weaknesses.

More than a thousand people crammed into his DefCon talk about hacking Apple software. He was peppered with technical questions at the close of the session.

"There are a lot more people getting into it and really getting their hands dirty," said Hotchkies, who noted an obvious spike this year in the number of DefCon attendees toting Macintosh laptops.

"I've been seeing a lot of reverse engineering on the Apple platform."

Part of the reason for increased popularity of Macintosh computers is that Apple has made the machines friendlier to running programs popular on Windows-based machines.

Hackers experienced with attacking Windows programs can apply some of their know-how to software modified to run on Macintosh computers.

Developers that re-craft Windows programs for Macintosh systems might not be adept at building security components on the latest Leopard operating system used in Apple machines.

"Windows developers take their code and make it work on Apple," Hotchkies said. "They could take potential vulnerabilities with them or possibly create new ones because they are working on an entirely different platform."

Apple's Safari operating system is the basis for internet browsing using iPhones, which are basically handheld mini-computers with telephone, music, and video viewing capabilities.

It took about a month for someone to hack a first-generation iPhone after its release, but an iPhone 3G was cracked within hours of the start of sales in July.

The hack is crowned a "jail break" because it liberates iPhone models from the shackles of deals Apple has with telecom giants providing exclusive service to the devices in varying countries.

"It shows people are getting proficient at analyzing Apple software," Hotchkies said.

"There are people looking at the iPhone. We pass vulnerabilities on to vendors, and when I communicate with Apple the first thing they ask is if we've tested it on the iPhone. They don't want to be surprised."

Apple engineers are also addressing "legacy issues," protecting old software from new threats, according to Hotchkies.

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