Archive for August 9th, 2012

Zynga’s COO quits as stock continues slide

SAN FRANCISCO: Zynga Inc’s chief operating officer John Schappert has resigned, the company said in a regulatory filing on Wednesday, a move that was foreshadowed by a recent management shakeup at the game publisher.

The resignation from Schappert, a former Electronic Arts executive, did not arise from “any disagreement with the company on any matter relating to the company’s operations, policies or practices,” the filing said.

But it came as no surprise to Zynga’s followers after the social gaming company behind Facebook-based hits like “FarmVille” said earlier this month that Schappert had ceded many of his game development responsibilities while Zynga shuffled its top management ranks after reporting a net loss for its second quarter.

Zynga elevated David Ko, its chief mobile officer, and Executive Vice President of Games Steve Chiang, to top positions overseeing game development alongside Chief Executive Officer Mark Pincus.

The company did not immediately name a replacement for Schappert on Wednesday.

“John has made significant contributions to the games industry throughout his career and we appreciate all that he has done for Zynga,” Pincus said on Wednesday in a statement. “John leaves as a friend of the company and we wish him all the best.”

Zynga reported a net loss for its second quarter in late July and cut its full-year earnings per share forecast, news that sent shares down roughly 40 percent and attracted shareholder lawsuits accusing the company of misguiding investors.

The company blamed its poor quarter on sudden changes to Facebook’s algorithm, and delays in its pipeline of new titles.

Zynga is one of several Internet startups that debuted with fanfare in late 2011.

In May 2011, Zynga hired Schappert from competitor Electronic Arts with a cash and stock package worth more than $42.7 million. The package included a base salary of $300,000 last year.

Schappert, a respected gaming industry veteran and former COO at EA, was also mentioned in a lawsuit filed last week by his former employer against Zynga.

EA accused Zynga of copying key elements of “The Sims Social” title, alleging that Zynga obtained confidential development information by hiring three of EA’s top employees, including Schappert, on the eve of that game’s launch.

Zynga responded that EA’s lawsuit showed “a lack of understanding of basic copyright principles.”

Zynga closed on Wednesday at $2.95 and slipped further in after-hours trade. Its stock debuted in December at $10.

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Google goes back to the drawing board for Nexus Q

SAN FRANCISCO: In June, Google engineers took the stage in front of thousands of cheering software developers to introduce the Nexus Q, a black ball meant to stream video and music. It was Google’s first try at building its own hardware – in the United States, no less – and Google called it “a third wave of consumer electronics.”

But last week, just five weeks after the introductory pomp at the annual developers’ conference, Google indefinitely postponed shipment of the device.

Although Google was hardly betting the company on the Q, the failure reveals deeper challenges for the Internet search giant as it tries to move into two new areas: hardware and social technology.

The hardware for the Q, which Google built in a factory in San Jose, Calif., has for the most part been well-received, but early users say the device simply does not do enough. And for what it does, at $299, it is too expensive.

The company’s only statement on the delay came in a letter to customers who had ordered it. The letter acknowledged the criticism of early users and said, “we have decided to postpone the consumer launch of Nexus Q while we work on making it even better.” Customers who ordered the device already will receive it at no charge.

Google’s push to build the Q is part of the epic battle between Google, Apple, Microsoft and Amazon.com for control of the living room – the TV shows and movies we watch, the music we listen to and the advertisements we see while sitting on the sofa.

“The battle for the TV is raging,” said James L. McQuivey, an analyst on media and technology at Forrester. “If you’re Google and you know the future of advertising is going to encompass all the screens – the ones you’re strong on, the PC and mobile phone, but also TV – then you’ve got to nail that piece or you run the risk of hitting a ceiling with your revenue potential.”

Advertisers are expected to spend $64.8 billion on TV this year, compared with $39.5 billion online, according to eMarketer, an advertising research firm. People are spending less time reading print publications or listening to the radio in favor of digital devices, eMarketer said, and they are spending more time watching old-fashioned TV.

The delay of the Q is not Google’s first misstep as it tries to become a consumer electronics company and make its products jump off computers and phones and into living rooms. Google’s Internet-connected TV, Google TV, has struggled to sign on programming partners and rumbled with hardware makers, and has not caught on widely with TV viewers. Like the Q, it was delayed in its early days to improve the software, although Consumer Reports called LG’s latest Google TV the best version of the product yet.

The Q plugs into TVs or speakers so its owners can listen to music or play video from their Android phones or tablets. It is similar to devices like Apple TV, Boxee, Roku and Google TV.

But the Q is much more expensive than those products and does much less. It plays music, movies and TV shows only from Google Play’s limited collection and YouTube, and can be controlled only by Android devices. It is unclear how it would work with Google TV.

The Nexus 7, however, a $199 tablet computer that Google introduced on the same day, has been met with rave reviews and is selling quickly, and can be used as a remote control for TVs.

Tech companies want people to buy their devices so they will also buy their media, and vice versa. Amazon.com sells Kindles so people will buy e-books from Amazon, and Apple sells music on iTunes so people will buy iPods. Companies

are racing with one another, because once people store enough media with one service, it is much harder to convince them to switch services or devices.

Although analysts say the race is far from the finish line, a problem for Google is that most people have not purchased much in the way of music and movies from Google.

“They only extended it to people who had music inside Google Music and media purchased off Google Play which, let’s admit, was a much smaller market than Apple iTunes, Amazon and any other media outlet,” said Chris Silva, a mobile analyst at the Altimeter Group. “They want to get people using Android and using Google Play for media and they know it’s an uphill battle, which is why they’re pushing it so hard.”

Google also hoped that the Q would be the centerpiece of its fledgling efforts to connect home devices to the Internet. It has said it wants to tackle not just the living room but the whole home, eventually connecting coffee pots to the Internet so they can be turned off remotely, for instance, or refrigerators so they can order milk when it is running low.

“They are trying to locate more things in your home, so Google software is continually chugging away in your home environment,” McQuivey said. “But the Q is not enough of anything to be the center of anything.”

The saga of the Nexus Q sheds light on another of Google’s weaknesses – understanding the way that people in the real world want to use technology to socialize.

Google was notoriously late to social networking, although it says its Google Plus social network has been a success, attracting 250 million members since it was introduced last year. The Q is also social, Google said, because people can select or change songs or videos from their own Android phones while listening to music with friends.

“Mobile devices have made music more of a personal and sometimes isolating experience,” Joe Britt, an engineering director at Google, said when he introduced the Q.

But even though people spend a lot of time listening to music on their personal headphones, they always have and continue to listen to music together, since the advent of the phonograph and gramophone, and it is not clear that people have a burning desire to change songs when listening to music with friends.

“The problem is it looks like it was designed by Google engineers for use by Google engineers,” said Michael Gartenberg, an analyst who studies the connected consumer at Gartner. “It’s another one of those solutions in search of a problem. Do I want to change a song with my device at my friend’s? And if my friend wants to switch the song, here’s the remote control.”

The fate of the Nexus Q is also a lesson for Google, Gartenberg suggested, as the company gears up for a major strategic shift with its $12.5 billion acquisition of Motorola Mobility. The deal with the cellphone maker was completed in May. Google is now not just a software company but in the hardware business, too, selling Google-branded devices like the Nexus 7.

Google’s long-held strategy of introducing new products early in their development and revising them on the fly might work for software, like a new tool in search or Google Plus, but it is more difficult to do in consumer electronics, especially once people pay for an expensive device, although Google is focusing on changing the software, not the hardware, in the Q.

“When you’re iterating like Google does with software, particularly when there’s no charge to use the software, you can do that,” Gartenberg said. “But when it comes to consumer electronics, you can’t take that same approach. It’s a product that clearly needed more thought if it was going to sell to consumers.”

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Google to include information from Gmail accounts in search results

Google’s Internet search engine is getting more personal by highlighting information drawn from its users’ Gmail accounts on its main results page.

The feature announced Wednesday marks Google’s latest attempt to deliver data that people are seeking more quickly as it tries to maintain the dominance of its lucrative Internet search engine.

Google Inc. is initially testing the feature with 1 million Gmail users who must sign up to participate.

Gmail’s more than 425 million users already can search within their e-mail accounts to find something they need, such as an order from Amazon.com or an airline reservation.

Now, Gmail users who join the trial will be shown a list of relevant e-mails on Google’s main search results page if the correspondence contains a word entered in a search request.

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Android extends dominance in smartphones worldwide

NEW YORK: Research firm IDC says Google’s Android operating system has extended its dominance in the smartphone market largely because of the success of Samsung’s line of phones that run the software.

IDC says Samsung Electronics Co. and other phone makers shipped nearly 105 million Android smartphones in the second quarter. Android had 68 percent of the worldwide market, up from 47 percent a year earlier.

The gains come largely at the expense of BlackBerry phones made by Research in Motion Ltd. and Symbian phones used mostly by Nokia Corp. Each saw its market share drop below 5 percent.

The market share for Apple Inc.’s iPhone fell slightly to 17 percent, but the company shipped more units than a year ago. Apple is the No. 2 smartphone maker, behind Samsung.

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