Yahoo On A Buying Spree

Yahoo has purchased a mobile gaming company, Loki Studios, taking its total acquisitions this month to four.

The company said over the weekend it welcomed Loki, Astrid, GoPollGo and MileWise to its growing mobile team. “We recently added 22 entrepreneurs to our growing mobile team,” the company said in a Twitter message in a possible reference to some of the people from the four companies who have moved to Yahoo.

Loki’s flagship application is its location-aware game, Geomon. “We are thrilled to be joining the exceptional folks at Yahoo!. We believe fully in their commitment to creating outstanding mobile products,” the Loki team said on their website.

Earlier in the week, Yahoo also acquired GoPollGo, a social polling tool. The company’s founder and team said they were moving to Yahoo, and would no longer be supporting their offerings.

It is not clear whether Yahoo has bought all these companies for their products and technology or just to get their experienced staff in the area of mobile as it tries to build up its own mobile capabilities. The way the services are being shut down suggests that their user base did not particularly interest Yahoo. The company could not be immediately reached for comment.

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Will Zynga Survive?

Nobody expected Zynga’s results for this quarter to be great, so nobody was exactly surprised when the company announced a decline in almost every number that matters. It turned a small profit, but that’s a bright spot in an otherwise deeply unimpressive set of results. The really important figures – the number of people playing and, crucially, the number of people paying – are all down. Zynga’s business may not be hemorrhaging money, but it’s losing audience, and in a business so heavily focused on scale, that’s a really bad thing.

The company likes to present itself as being on the cusp of a turnaround, or perhaps already embarked upon a slow but steady turn. If so, it’s the oddest turnaround imaginable. The firm’s MAUs – Monthly Active Users – dropped from 292 million to 253 million year on year, so nearly 40 million people have simply stopped logging in to a Zynga game even once a month. Worse still, though, is the disproportionate fall in the number of Monthly Unique Payers – those who make at least one transaction during a month-long period. This number fell from 3.5 million to 2.5 million, a precipitous year-on-year drop of almost 30%.

It bears emphasising just how bad that actually is. For a social gaming business, MUPs are the real customers. There is huge value to having a large audience (MAUs), of course, and companies need to be very careful about not trying to force players into becoming paying customers before they’re good and ready – but ultimately, non-paying users are like footfall in a store. They’re not customers, in a strict business sense. Zynga’s not-quite-so-bad loss of 13% of its players (MAUs) is a side-show compared to the fact that it’s lost 30% of its paying customers (MUPs). Imagine, by comparison, a shop loudly announcing that the number of people walking past its window had fallen 13%, distracting from the fact that the number who came in and bought something had fallen 30%.

Of course, the two figures are related, and the disproportionately large drop in MUPs figures into that relationship to some degree. The process of encouraging players of a social game to spend money is focused around a number of principles, but the key temptation lies in buying items or currency that will give you the ability to match or overtake your friends’ progress, or to create a fantastic character, farm, castle or whatever which will “impress” the many friends who are also playing the same game.

For that psychology to work, of course, you actually need to have lots of friends playing the game. Most social games, as the name suggests, don’t work terribly well if you don’t have friends active in the game. “Active” is a key aspect here too – if you see that your friends are losing interest, logging in less often or spending less time tending to their farm, castle, town or whatever, then you also tend to lose interest rapidly. Hence, a game that gives the impression of being “in decline” – with players losing interest in some visible manner – will likely experience a precipitous decline in revenue, because even though lots of people are still playing, the sense of decline removes the key psychological drive to spend money on the game. (It doesn’t help, of course, that social game operators have established a pattern of shutting down unsuccessful games rapidly, which creates a feedback loop in which players are unwilling to spend money on a game they think might be in commercial trouble.)

The psychology of what Zynga is experiencing is clear enough, then, but the figures on the bottom line are still pretty dreadful. Whatever the reasons or the mechanism, the company is losing paying customers, and that kind of damage is extremely hard to recover from.

A stark contrast to Zynga’s woes can be found on the other side of the Pacific, where mobile developer GungHo this week topped a $9 billion valuation on the Osaka Stock Exchange, making it into a larger mobile gaming company than even fellow Japanese giants GREE and DeNA. GungHo’s valuation is ridiculous, a bubble that will inevitably pop in relatively short order, but there’s a genuine success driving the excitement – a single game, Puzzle and Dragons, which is the most successful mobile game in Japan (and is launching in other territories as well). Puzzle and Dragons reportedly makes about $2 million a day; it certainly makes enough to justify prime-time adverts in evening slots on Japanese TV.

GungHo is an extreme example of a phenomenon which is completely unavoidable in the social and casual game sphere. Mobile utterly dominates this sphere. Facebook, it turns out, was a flash in the pan in gaming terms. Smartphones, and to some extent tablets (though they’re arguably more “midcore”), are the social gaming platforms of today. Zynga, for all its cash (the company still has plenty of liquid assets), its clout and its former dominance, still hasn’t made a successful transition to being a mobile-first company. Clinging to the wreckage of the Facebook social gaming model which it so successful exploited (in doing so, perhaps hastening the downfall), Zynga is being overtaken time and again by smaller companies who have mobile gaming in their DNA from the outset. With this week’s results came a fresh claim that the company will be focusing more heavily on mobile, but a good, nimble firm would have accomplished that focus shift 12 months ago, at least. Zynga right now feels like it’s plodding along in everyone else’s wake.

The other great white hope for the company, of course, is gambling. It has cautiously launched gambling services – what it calls “real money gaming” – in the UK, and wants to expand into other territories. Plenty of pundits like to tap their noses sagely and suggest that Zynga will become a gambling giant down the line – although in doing so, they’re just following in the well-worn footsteps of a large number of video games industry pundits, executives and even developers who have regarded the gambling industry with something like the avaricious wonder of wannabe prospectors hearing about a new gold rush.

I don’t see any gold rush for Zynga in “real money gaming”. Investors and executives consistently overstate the allure and possibilities of this kind of gaming, because by dint of being investors and executives, they tend to be exactly the sort of person who is very attracted to gambling risks (you wouldn’t have an investment, or a career, anywhere within spitting distance of tech stocks otherwise). Moreover, by moving into the online gambling arena, Zynga is entering a market that’s already incredibly crowded with companies who are deeply, deeply expert in this field – not just in the customer-facing psychology of the casino, but also in the legal and regulatory minefield of operating a gambling enterprise online. Many major markets simply aren’t open to this kind of business; most others require you to jump through all manner of hoops simply in order to set up shop. The notion of Zynga having an open goal in “real money gaming” is born either from complete naivety or utter desperation – it could make money in the gambling business, but it has its work cut out for it.

It’s worth highlighting, all the same, that Zynga did make a small profit this quarter – it may only be one bright spot, but it’s bright all the same. The company’s scale still also arguably works in its favour, allowing it to buy talent and IP that smaller firms could never afford. Yet after several grim quarters, it’s also worth highlighting that talk of a “turnaround” is optimistic at best. Something about Zynga – its culture, its leadership or a combination of both – is blocking this company from moving in the agile, intelligent way a firm in its position desperately needs. Inventing fairy stories about the magical potential of gambling games or constantly reassuring the world that a pivot to mobile is definitely happening any day now won’t cover up the cracks for much longer. If Zynga wants the world to buy the “turnaround” story, it needs to start showing evidence; if not, it needs to start making big changes, starting right at the top.

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Is Android Safer Than iOS?

The general consensus is that iOS apps tend to be somewhat safer than their Android counterparts. Apple goes to great lengths to have apps vetted and as a result far fewer iOS apps end up with malware or security issues.

However, a new report fresh out of Appthority claims iOS apps have their fair share of issues and in some respects then can pose an even greater security risk than Android apps. The report covered the top 50 apps from the Apple App Store and Google Play and found that iOS apps exhibited riskier behaviour.

“The majority of iOS apps track for location (60%), share data with advertising or analytics networks (60%) and have access to the user’s contact list (54%). A small percentage of iOS apps also had access to the user’s calendar (14%),” the report found.

However, Android fans shouldn’t be too happy since their platform is not far behind. Half of them share data with ad networks or analytics companies, while 42 percent tracked location. Slightly better, but nothing to be proud about.
One of the most worrying findings is that both Android and iOS apps don’t do much to prevent personal data from leaking from our devices. Not a single iOS app analyzed in the study used encryption to send and receive data, and neither did 92 percent of Android apps.

So while it might seem that Android is a somewhat better platform for users with privacy concerns, both Google and Apple are pants at that sort of thing.

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Tech CEOs Ready For Tablet Wars

The biggest names in consumer technology, smacked by a string of disappointing quarterly results this month, are gearing up for what appears to be the fiercest holiday battle in years.

Investors and consumers have already largely written off flaccid quarterly numbers from tech behemoths like Microsoft, Apple, Google and Amazon. What counts is the next 60 days, when the biggest names in technology do battle at a near-unprecedented scale and pace.

Just last Thursday, Amazon compared its Kindle Fire with Apple’s new iPad mini, point by point, in its earnings release, an unusual forum to name rivals. Apple CEO Tim Cook compared Microsoft’s Surface tablet to an over-engineered car that can fly and float. And Microsoft went for the iPad, saying its Surface boasted twice its storage.

All three tablets will vie for the shrinking consumer dollar these holidays. By tech standards, it’s getting ugly.

“The tablet space is where the growth is. That’s why they are all fighting over it. PC shipments are down and some tablet buyers may never buy another PC,” said Michael Allenson, strategic consulting director in the Technology and Telecom Research Group at Maritz Research.

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Kaspersky Finds New Malware

Kaspersky Lab has discovered three Flame spyware related malware threats that it said use “sophisticated encryption methods”.

Kaspersky claims that it uncovered the three new hostile programs while analysing a number of Command and Control (C&C) servers used by Flame’s creators.

“Sophisticated encryption methods were utilised so that no one, but the attackers, could obtain the data uploaded from infected machines,” the firm’s statement read.

“The analysis of the scripts used to handle data transmissions to the victims revealed four communication protocols, and only one of them was compatible with Flame.

“It means that at least three other types of malware used these Command and Control servers. There is enough evidence to prove that at least one Flame-related malware is operating in the wild.”

The discovery of the three programs indicates that Flame’s Command and Control platform was being developed in 2006, four years earlier than first thought.

Flame was originally uncovered in May targeting Iranian computer systems. The malware drew widespread concerns within the security industry regarding its advanced espionage capabilities.

The full scale of Flame and its overarching implications remain unknown, despite the ongoing joint research campaign being mounted by Kaspersky, IMPACT, CERT-Bund/BSI and Symantec.

“It was problematic for us to estimate the amount of data stolen by Flame, even after the analysis of its Command and Control servers,” said Kaspersky’s chief security expert, Alexander Gostev.

Following the discovery of the three new related programs, Kaspersky’s chief malware expert Vitaly Kamluk told The INQUIRER that Flame is not the only one in this big family.

“There are others and they aren’t just other known malwares such as Stuxnet, Gauss or Duqu,” he said. “They stay in the shadows and no one has published anything about them yet. Others were probably used for different campaigns.”

Kamluk added that it is “very possible” there are more than the three listed in Kaspersky’s report.

“They started building RedProtocol, yet another ‘language’ for unknown malware. No known client types are using that one, which means that there is even more malware out there,” he added.

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Android Apps To Run On Windows

Software firm Bluestacks is on a mission to close the gap between Microsoft’s Windows and Google’s Android OS with its App Player application, which was released in beta earlier this week.

App Player is an emulator that allows Android applications to run on Windows 7, Vista and XP OSes. Users can install the software in Windows and then run around 450,000 Android applications, including Angry Birds and Fruit Ninja, the company said in a statement.

Beyond PCs, the App Player could also allow Windows tablets such as Hewlett-Packard’s Slate 2 and Dell’s Latitude ST to run Android applications. Bluestacks made headlines at last year’s Computex trade show in Taipei when Advanced Micro Devices showed off an x86 tablet with Android running on top of the Windows 7 software stack. Android applications are mostly written for the ARM instruction set, but the x86 tablet was able to switch between Android and Windows without any problems.

The emulator has new Layercake technology, which exploits hardware accelerators to improve the performance of Android games in Windows. The layer was not included in the previous Bluestacks alpha version. Android applications typically use hardware accelerators found in ARM’s Mali, Nvidia’s Tegra or Imagination Technologies’ PowerVR graphics cores, but Layercake is able to take advantage of hardware accelerators from companies like AMD found in x86 chips.

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Google Pressuring Developers

Google Inc has been leaning on applications and mobile game developers to use its more expensive in-house payment service, Google Wallet, as the Internet search giant tries to copy the financial success of Apple Inc’s iOS platform.

Google warned several developers in recent months that if they continued to use other payment methods – such as PayPal, Zong and Boku – their apps would be removed from Android Market, now known as Google Play, according to developers, executives and investors in mobile gaming and payment sectors.

Developers say the Internet search giant is trying to simplify consumer payments, hoping apps-buying will rise and offset their higher costs. Google’s payment service charges a higher cut per transaction than some rivals’. But the move also suggests Google is using its powerful position in the mobile apps market to promote an in-house offering.

“Although this move by Google might seem high-handed, it reduces the friction for purchases inside Android apps and therefore makes users more valuable,” said Hugo Troche, chief executive of Appsperse, a cross-promotion network for app discovery.

Android Market, or Google Play as it is now known, is the company’s answer to Apple’s apps store, where consumers browse and buy or download everything from games and music to individual software or applications. Google wants Google Wallet to be the dominant way that people pay for anything on this platform.

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Future PCs Will Be Constant Learners

Tomorrow’s computers will constantly improve their understanding of the data they work with, which in turn will aid them in providing users with more appropriate information, predicted the software mastermind behind IBM’s Watson system.

Computers in the future “will learn through interacting with us. They will not necessarily require us to sit down and explicitly program them, but through continuous interaction with humans they will start to understand the kind of data and the kind of computation we need,” said IBM Fellow David Ferrucci, who was IBM’s principal investigator for Watson technologies. Ferrucci spoke at the IBM Smarter Computing Executive Forum, held Wednesday in New York.

“This notion of learning through collaboration and interaction is where we think computing is going,” he said.

IBM’s Watson project was an exercise for the company in how to build machines that can better anticipate user needs.

IBM researchers spent four years developing Watson, a supercomputer designed specifically to compete in the TV quiz show “Jeopardy,” a contest that took place last year. On “Jeopardy,” contestants are asked a range of questions across a wide variety of topic areas.

Watson did win at its “Jeopardy” match. Now IBM thinks the Watson computing model can have a wide range of uses.

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Experts Think iPad 3 Coming in March

Apple will debut a new iPad some time in early March, and will start selling it the following week, according to reports and industry analyst expectations.

The March debut of the iPad 3, as some have called it, was first reported today by AllThingsD, the blog owned by Dow Jones, the publisher of the Wall Street Journal. Citing unnamed sources, the blog said Apple will host a launch event the first week of March, likely at the Yerba Buena Center for the Arts in San Francisco, a regular venue for the company’s press announcements.

Last year, then-CEO Steve Jobs returned from medical leave to lead the launch event of the iPad 2 on March 2. Apple started selling the new tablet on March 11, 2011 via its online store.

If Apple follows the same timeline, it will probably conduct the event the week of March 5-9, and begin selling the new model the following week.

It’s possible that Apple will trot out a new iPad on one of the first two days of March — Thursday, March 1 or Friday, March 2 — but Apple usually hosts events earlier in the week.

Next month’s iPad introduction, if it does take place, will be the first without Jobs, who died last October at the age of 56 of complications from his long-running battle with pancreatic cancer.

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Big Blue Still The Patent King

As technology companies start to stockpile patents so that they can see off their rivals IFI Claims Patent Services, a company that maintains global patent databases, has clocked the outfits with the most weapons in any patent war.

More than 224,505 utility patents were awarded in the U.S. last year, jumping two percent over the previous year’s record-breaking tally of 219,614 patents. IBM has always had the most patents, probably because it has been around the longest. The company was granted 6,180 utility patents, up nearly five percent from 2010. Samsung was the number two 4,894 patents, followed by Canon at 2,821 patents, Panasonic with 2,559 and Toshiba with 2,483 utility patents.

Microsoft, which held on to the third spot in 2010, is in the sixth place with 2,311 utility patents granted last year, According to IFI CEO Mike Baycroft global companies, and especially Asian ones, are collecting U.S patents at a dizzying pace, and now Asian firms hold eight of the top 10 slots in the 2011 ranking.

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