Caroline Kennedy

Sexy consumer start-ups traditionally grab the headlines at the semi-annual Demo conferences. Take Lunchster and its Web app for automatically scheduling lunch meetings. This year was no exception, with excitement centering around Micello's "Google Maps inside a building" and Emo Labs "invisible speakers." But some of the fledgling companies at DemoFall 09 didn't seem fully hatched. USA Today reporter Ed Baig was "a little baffled" by it, while Microsoft director of business development Don Dodge wondered about Lunchster's potential business model.

One Demo attendee wrote that he was "baffled looking for the innovation." Some see the premature launches as the result of "Release early, release often" agile development models favored by some Web companies combined with a lack of resources in today's tough funding environment. "You may have a big vision, but sometimes you need to chew it off in steps," said Chris Shipley, the longtime executive producer of Demo, who is retiring after running the show for 13 years. Or take dotSyntax LLC, which showed off a Twitter client for its IM app, Digsby. But that tactic can leave start-ups struggling to distinguish themselves in a crowded market, said Venetia Kontogouris, a managing director with venture capital firm Trident Capital. "If you're a small firm, how do you cut through the worldwide clutter?" she asked. Keen Systems Inc., for instance, launched a turnkey e-commerce Web store for independent commercial printing companies at Demo. Finding success in niches Business-to-business start-ups, by contrast, tend to target more obscure niches and problems. Vitaly M. Golomb, CEO of the San Francisco start-up, is a former turnaround executive of commercial printing companies.

Most of them either have built expensive-to-operate custom Web storefronts, or they continue to do some work, such as process graphics files and bills, in a laborious, non-integrated fashion, he said. He said the opportunity is sizable: a $162-billion-a-year industry in the U.S. composed of 36,000 businesses. Targeting a niche allows B2B start-ups to operate in low-pressure stealth mode for longer periods, giving them time to perfect their product before hitting the market. For $29 a month, FuzeBox supports up to 1080p video streaming to PCs and 720p streaming to iPhones and BlackBerries. FuzeBox Inc., for example, had 30 developers working for a year and a half before it launched its high-definition, video-enabled webconferencing tool. "There was the sense that the business customer is more discriminating, and thus you only get one chance to get it right," said Rafael Alenda, director of marketing for FuzeBox. That is better quality on a wider variety of devices than incumbents like Cisco Systems Inc.'s WebEx, according to the San Francisco start-up.

Granted, Demo has been the launch pad for successful consumer companies. Hosts invite attendees via Twitter and FaceBook, or via instant messaging sent to the most popular IM networks, including AOL Instant Messenger, Yahoo Messenger, Windows Live Messenger and even Microsoft's corporate Office Communication Server (OCS), according to Patrick Moran, chief marketing officer for FuzeBox. The PalmPilot and the Tivo both debuted at Demo. And eight of the 11 start-ups honored by Demo's "lifetime achievement awards" on Wednesday roughly fall on the B2B side of the fence. "In this economy, enterprises are sexy," said Ravit Lichtenberg, a Silicon Valley start-up consultant with Ustrategy. But so did Salesforce.com, VMware, Adobe's AIR platform, WebEx, blogging platform Six Apart and wireless chip maker Atheros Communications Inc. Not that some of the B2B firms at Demo didn't try to rise transcend the label.

But they also appeal to the software's target market - artsy designer types - along with the features, which Van Sydow boldly claimed, "are the first that give designers a report they can actually read, and metrics they are interested in." Besides conventional stats, such as ad clickthroughs, Rich also measures "visibility" - whether visitors scrolled down low enough on the Web page to see an ad - and "view-throughs" - how many of those people then noticed the ad. Swedish start-up Burt AB named its Web ad metrics tool "Rich." The ironic names capture the personality of Burt's CEO, Gustav Van Sydow, and his fellow 20-something employees. These stats help designers figure out if the ad succeeded or failed because of its quality, or because of factors beyond their control such as its placement on the Web page, Van Sydow said. RumbaFish's real-time analytics let marketers quickly fine-tune their campaigns, such as raising the value of rewards like gift cards for consumers who tweet about their brand, said CEO Michelle Bonat. "You never really know as a marketer what will work," Bonat said. "This is an easy way to iterate and change your campaign." Launched this week, Rumbafish costs between $50 a month for a small company to $10,000 a month for a large enterprise. Another firm, RumbaFish, helps Web marketers set up and track promotional campaigns on Twitter, MySpace, LinkedIn and FaceBook.

That's still a bargain, maintains Bonat, compared to the costs for custom, short-term Twitter campaigns by some corporations. Other noteworthy B2B product releases from DemoFall 09: * Enroute Systems Corp.'s ShipIt! Web app for cutting postage costs * 80legs Inc.'s custom webcrawling service. * Hashwork, which wants to bridge the gulf between personal and corporate Twittering. * Symform Inc.'s unique cloud storage 'co-op' * LeapFILE Inc., which promises enterprise-grade file collaboration for any app.

With the hope of sparking Windows 7 upgrades, Microsoft is planning an early release of its suite of desktop deployment tools.  The tools were originally slated to ship in early 2010, but Microsoft hopes to give customers the software in late October for use in rollouts of Windows 7 across corporate desktops. The news of the early release was announced by Ran Oelgiesser, senior product manager for MED-V, on the MDOP blog. The catch is that the Microsoft Desktop Optimization Pack (MDOP) R2 2009 is only available to volume licensing customers with Software Assurance contracts.

Slideshow: Snow Leopard vs. All the tools in MDOP R2 2009 will include support for Windows 7 except MED-V. Support for the new OS in MED-V 1.0 SP1 will come early in 2010, wrote Oelgiesser. Windows 7 Windows 7 is slated to ship to commercial customers on Oct. 22, but corporate users with volume licensing contracts have had access to Windows 7 since last month. MED-V runs multiple versions of Windows or applications concurrently without having to open multiple virtual machine sessions. The suite is a major part of Microsoft 's Optimized Desktop strategy, which addresses centralized management and deployment of physical and virtual resources. The software complements another MDOP tool called App-V, which is used for managing and deploying virtual PCs. The MDOP lineup also includes Asset Inventory Service; System Center Desktop Error Monitoring; Advanced Group Policy Management (AGPM) for change management via group policy objects; and the Diagnostics and Recovery Toolset, which helps in recovering a crashed PC. MDOP is composed of software from Microsoft's purchases of Softricity, Kidaro, AssetMetrix, Winternals Software and DesktopStandard.

According to Oelgiesser, App-V 4.5 SP1 will have various integration points with 32-bit versions of Windows 7, including with the AppLocker, Branch Cache and BitLocker ToGo features. The 64-bit version, App-V 4.6 will be available in the first half of 2010. Advanced Group Policy Management 4.0 features two new capabilities targeted at Windows 7. One allows users to manage group policies across different domains, and the other provides new search and filtering to ease tracking of group policy objects. In addition, the software will support 32-bit version of XP, Vista and Windows Server. Follow John Fontana on Twitter 

Scammers tricked the New York Times' Digital Advertising department into placing a malicious ad for fake antivirus software on the NYTimes.com Web site over the weekend, the company confirmed Monday. According to the Times, the scammers initially claimed to be Internet phone provider Vonage, and had placed what appeared to be legitimate Vonage ads on the Web site. The newspaper had warned of the scam advertisement Sunday, after receiving about 100 e-mails from concerned readers.

However, sometime over the weekend, they switched these ads for aggressive pop-up advertisements that tried to trick victims into thinking that their computers were infected. When the complaints started pouring in, the Times first suspected that the ad had been unauthorized, and pulled third-party advertisements from the site. The point of the scam was to sell worried computer users a product called Personal Antivirus, a fake "scareware" product that bombards victims with popup ads until they either hand over their credit card information or somehow manage to remove the program. But on Monday spokeswoman Diane McNulty confirmed that the ad had been submitted directly to the company's online ad department. "The culprit masqueraded as a national advertiser and provided seemingly legitimate product advertising for a week," she said via email. "Over the weekend, the ad being served up was switched so that an intrusive message, claiming to be a virus warning from the reader's computer, appeared. " Technology executive Troy Davis was hit with the ad after he clicked on a Times story about Dubai on Saturday night. This gave the criminals a way to include embedded Web pages in their copy that could be hosted on a completely different server, outside of the control of the Times. After his antivirus software warned him not to visit the article, he performed an analysis of the site and discovered that the Times was allowing advertisers to embed an HTML element known as an iframe into their advertisements.

Apparently the scammers waited until the weekend, when it would be hardest for IT staff to respond, before switching the ad by inserting new JavaScript code into that iframe. It was, of course, all just a fake. That code redirected Davis's browser to the Web site that served a pop-up ad designed to look like a Windows system scan that had found security problems on his system.

As expected, the Federal Communications Commission has launched multiple inquiries into the wireless industry, one focused on the billing practices of some top carriers and the others aimed at spurring innovation and competition in the market.

The inquiries, announced late last month, come after months of criticism from consumer groups and users who have said that exclusive smartphone deals - such as the one that made AT&T the sole network for Apple's iPhone - and other industry practices are unfairly boosting wireless prices.

Complaints filed with the FCC about wireless industry billing practices rose some 47% between 2007 and 2008, the agency said.

A notice of inquiry is a first step in the process of creating new FCC policy. Seeking input from multiple interested parties is part of that process.

"We are at a pivotal moment in the history of the mobile industry," said FCC Chairman Julius Genachowski during the Aug. 27 FCC meeting where the inquiries were approved. "We are transitioning from a voice-centric world to a world of ubiquitous, mobile Internet access. This transition promises to increase the pace of innovation and investment."

Consumer groups, such as the Washington-based nonprofit organization Free Press, have said that carriers are using exclusive smartphone deals and other policies to help justify higher wireless prices even as their technology investments decline.

"Wireless carriers are charging more but not improving the quality of network service with network buildouts and coverage," contended Free Press policy counsel Chris Riley in an interview.

Riley noted that the major carriers all charge similar prices. He cited texting costs as the "poster child" for the pricing issue, noting that all of the carriers simultaneously raised the price of a text message from 10 cents to 15 cents and finally to 20 cents. "It all happened at about the same time, although I'm not saying they met in a room in Washington to decide on it," Riley added.

GOP Commissioners Say Wireless Industry Inquiries Aren't Needed

The FCC's decision last month to launch inquiries to find ways to boost competition and innovation in the wireless industry wasn't unanimously backed by the agency's five commissioners.

During an Aug. 27 meeting to decide whether to move forward with the inquiries, the two Republican commissioners argued that the industry is performing well for its users and questioned whether the inquiries are needed.

Republican Commissioner Robert McDowell noted that 94% of U.S. residents have at least four mobile carriers to choose from - an indication that there's plenty of competition.

Fellow Republican Meredith Attwell Baker added that over the past seven years, the mobile phone industry has invested an average of $22.8 billion annually to update networks and expand broadband services.

"We stand on the verge of the next generation of wireless broadband products, and the government should proceed with great caution so as to ensure the best outcome for consumers," she said.

In a statement, Steve Largent, president and CEO of wireless industry association CTIA, said that the U.S. has the "least concentrated wireless market on the planet."

He contended that the "wireless ecosystem" - which he said includes everyone from carriers, handset manufacturers and network providers to operating system vendors and application developers - has changed in just three years. "Innovation is everywhere," said Largent.

He said developments like simultaneous price increases would be less likely if the federal government could help inject more competition into the wireless market.

Jack Gold, an analyst at J.Gold Associates LLC in Northboro, Mass., agreed that wireless prices will stabilize only with more competition. "We don't really have true competition, even with multiple carriers," he said.

Gold suggested that the wireless industry needs a period of "true disruption," similar to the one that the U.S. auto industry experienced 30 years ago with the influx of Japanese cars. That era marked the start of the decline of U.S. automakers, but it led to a period of innovation that yielded lower-cost, higher-quality vehicles.

Gold suggested that emerging technologies like WiMax networks or cellular networks created by cable television companies like Cox Communications Inc. could spawn similar disruption in the wireless industry.

He added that some wireless carriers have avoided cutting prices because they fear that a rapidly expanding user base could lead to choked networks as more and more people download videos and other data-rich applications.

AT&T spokesman Mark Siegel defended his company and the industry in general on the subjects of pricing, innovation and exclusive deals. "The U.S. has the lowest per-minute voice price - 5 cents - in the industrialized world, and it's hard to argue with a system that has produced the highest level of innovation in the world," he said.

He contended that smartphone prices are dropping, pointing out that it's possible to buy an iPhone for $99.

AT&T is spending $18 billion in network upgrades, Siegel said. "We feel really good about where we are," he added.

Members of the CTIA, a wireless trade association, are confused by the level of criticism aimed at the industry, especially by charges of overpricing and a failure to innovate, said Christopher Guttman-McCabe, the organization's vice president of regulatory affairs. CTIA membership includes wireless service providers, handset makers and a growing number of vendors of other wireless-based products and services, such as Google Inc.

"I think it's extremely hard to understand the criticism we're hearing," he said. "People pay a hell of a lot less than they paid [for wireless services] 15 years ago, and think of what you get now that you couldn't get then. The wireless industry in the U.S. has the coolest handsets, the applications are more robust, and the networks have the highest speeds with the lowest pricing.

"I'm willing to debate where the industry is from an innovation perspective, but it's not fair to say we're not innovative," Guttman-McCabe added. "Can things get better? Yes. But things will get better."

The CTIA said it plans to provide any information sought by the FCC in connection with the three inquiries.

Gross is a reporter for the IDG News Service.