SAP\'s Marketplace Dream

Last spring SAP, the big German business software company, agreed to pay $4.3 billion for a company called Ariba, which runs an online marketplace for businesses selling to other businesses. The deal was for a 20 percent premium to Ariba's stock price, and more than six times the usual multiple of earnings for an enterprise software acquisition. For a deal like that to make sense, SAP must have been thinking about ways Ariba could create new strategic businesses for the company.

The deal became final in early October, and the heads of the two companies are starting to state their aim. Ariba, it is hoped, will turn a business marketplaces into a kind of corporate social network. The equivalent of status updates on Facebook will be awareness of goods that are available, the status of payments or of products in transit.

There are, of course, no guarantees this will come true, but it is an interesting idea.

There will be a lot of headline statistics on the way there. “We are committed to being a triple-digit growth business in the cloud,” said William McDermott, SAP's American co-chief executive. “We're up to the challenge.”

In the third quarter of this year SAP's revenue from cloud computing subscriptions did grow 1,475 percent from a year earlier, to 63 million euros, about $81 million. That was, however, less than 2 percent of SAP's overall revenue, which still relies mostly on old-fashioned software.

Adding Ariba, which had $474 million in revenue in 2011, will certainly bolt a big number on to SAP's cloud revenues, which at least for awhile will look like strong growth. In the long run, however the acquisition has to come up with something substantial to meet Mr. McDermott's commitment.

There is, of course, the benefit to Ariba of being part of a much bigger organization. Purchasing of supplies and services from third parties by the world's 2,000 largest companies, Mr. McDermott said, amounts to about $12 trillion annually. “That isn't limited to SAP” with Ariba, he said (it's not even close), “but we will continue to pursue it.”

In addition, by hooking the knowledge of what supplies are being purchased to mobile devices and real-time analysis software, two other new businesses for SAP, the opportunity exists to create new products.

Robert Calderoni, the former chief of Ariba and now a member of SAP's managing board who will oversee the business, said the real profit would come from becoming less of a place of mere transactions, and more a global network of vendors and corporate buyers. Both sides will have a high level of awareness about things like product availability and payment status. Ultimately, he said, SAP wants it to be “a community we create,” in which it collects high fees by enabling transactions.

“Our first customer liked our software. Our second customer liked our software, and that it had someone on it,” Mr. Calder oni said. As this builds, he said, Ariba can move from collecting a very modest commission (about 0.06 percent of the transaction) to “hundreds of basis points,” or several percent, by managing awareness and fulfillment, the way Amazon does between consumers and third-party sellers.

The connection to SAP should also help Ariba get to bigger numbers of both buyers and sellers. At present there are about 733,000 vendors on Ariba, and growing by 1,000 companies a week, according to Mr. Calderoni.

If SAP does acquire a truly large volume of cloud transactions, it could even end up in a kind of content business, offering industries, financial traders and government economic insight into buying and logistics. “It becomes a predictive tool,” Mr. McDermott said.

For now, the acquisition may seem like more consolidation in the cloud, which has been lead over the past year by SAP, Oracle, and Salesforce.com. That may be interesting from a financial or evolut ionary perspective. The real value is in making something altogether new. That is probably several triple-digit years away.

Twitter to Add Photo Filters to Compete With Instagram

Twitter is finally learning a lesson from Facebook: If you can't buy it, build it.

In the coming months, Twitter plans to update its mobile applications to introduce filters for photos that will allow people to share altered images on Twitter and bypass Instagram, the popular mobilecentric photo-sharing network, according to people who work at the company but asked not to be named as they are not allowed to discuss unannounced projects. The filters on Instagram make photos look like they were shot with 1960s Kodachrome or with 1890s sepia tone film.

Although adding photo filters to Twitter may seem like a trivial addition to a social network that processes nearly a billion 140-character missives every two days, it could prove to be an important part of the company's business.

As most smartphones are now equipped with high-resolution cameras, photography and mobile devices go together like peas and carrots. Flickr, which was once the go-to photo-shari ng site on the Web, has since seen an exodus of people who have opted for Facebook or Instagram. Twitter has proved to be very popular among advertisers who want to reach people on smartphones, where the company's audience tends to flock.

Carolyn Penner, a Twitter spokeswomen, declined to comment.

According to one Twitter employee, the company's V.I.T.'s, or Very Important Tweeters, as they are known internally, usually celebrities and media personalities, would be especially happy to see filters in the Twitter mobile apps. Most V.I.T.'s now use Instagram to take photos, and then share them on Twitter, where they often have a larger following.

Although Twitter considered a photocentric product acquisition for some time, the move to build its own filters was hastened after Facebook said it would buy Instagram for $1 billion. (The deal ended up closing at $715 million after Facebook's precipitous stock drop.)

After the Instagram acquisition was annou nced, Twitter executives explored buying a competing photo service or application. Jack Dorsey, the company's co-founder and executive chairman, and Dick Costolo, Twitter's chief executive, both led the search, people close to the executives said. After meeting with and appraising some companies, Twitter's executives decided the price tags were not worth the goods, and decided the company could build its own filters instead.

Although Twitter inked a deal with the photo-storage site Photobucket in June, the company has since started storing images on its own servers.

Twitter is exploring adding other tools to its mobile applications, one employee said, including the ability to upload and possibly edit videos without having to go through a third-party application or service, like YouTube.

Sadly, the Twitter-centric photo filters are not expected to be named after birds.

One on One: Google Android Director on Nexus Strategy

Google on Monday introduced new Android devices in small, medium and large: a phone, the Nexus 4; an upgraded seven-inch tablet, the Nexus 7; and a 10-inch tablet, the Nexus 10. That puts Google in even more direct competition with Apple, which offers a similar family of three: the iPhone, the iPad Mini and the iPad.

In an interview, John Lagerling, director of business development for Android, talked about the company's strategy with the Nexus brand, one that revolves around lower prices. An edited transcript of the interview follows.

Q.

What do you think are the highlights of the new Nexus devices?

A

My personal favorites are the 360-degree panoramic photo, Photo Sphere, and the fact that you can do inductive charging so you don't need to fiddle with a plug - you can just put it on a surface to charge. On a Nexus 10 it's the fact that it's so thin and light, and the resolution is 2.5 K, so it has very crisp text and pictures.

And th e price. I negotiated the prices and I'm very pleased with being able to deliver these things at these prices; $299 for an unlocked Nexus 4 - I think that's pretty revolutionary.

Q.

How did you get the prices lower?

A

Basically we felt that we wanted to prove you don't have to charge $600 to deliver a phone that has the latest-generation technologies. Simply that level of margin is sometimes even unreasonable, and we believed that we could do this. For Nexus 7, we were able to ramp those new memory SKUs at the same price. These move so fast that we knew after a few months, from an economical perspective, it was doable. Between us and our partners we have a very good understanding of supply chains. We've all done the best we can to really reach these prices - $399, $299 is pretty amazing, if I may say so.

Q.

I noticed each Nexus device is made by a different manufacturer. Is this to keep the playing field fair for Android partners?

A.

It's not so much fairness as it is to sort of work with partners who happen to be in good “phase match” with us in what we're trying to do. So Samsung just happens to be in a good phase match on a high-end display, which is exactly what we wanted to do at a low cost. LG had a good phase match with the hardware they were working on. Asus as well. It's just more about the timing being right.

We've always done that with our lead devices. Even before the Nexus One we did the lead device with HTC. We did the Xoom, which was a lead device with Motorola. And now we've sort of streamlined what the Nexus program is. We did really well with the Nexus 7, I feel, because nobody really pushed the envelope with seven-inch in terms of price and performance. It really proved that category. We felt the 10-inch category was overpriced and underpowered, and we wanted to see what we could do for that from our perspective.

Q.

Where does Motorola stand in all this? Yo u haven't used them yet for the Nexus program.

A.

They stand where Sharp would stand, or Sony would stand or Huawei would stand. From my perspective as a partnership director, they are another partner. We are really walled between the Motorola team and the Android team. They would bid on doing a Nexus device just like any other company.

Q.

So how does Google take advantage of the Motorola acquisition?

A.

The way I understand it is, it's mostly about the patents, the way you can sort of disarm this huge attack against Android. We talked about prices. There are players in the industry who were unhappy about more competitive pricing for the consumers. They want to keep the prices high, they want to force the price to be so high that operators have to subsidize the devices very highly. That's not only the Cupertino guys but also for the guys up in Seattle. They want higher margins, they want to charge more for software.

We simply believe there's a better way of doing it without extracting that much payment from end users, because there are other ways to drive revenues. Patents were used as a weapon to try to stop that evolution and scare people away from lower-cost alternatives. And I think with the Motorola acquisition we've shown we're able to put skin in the game and push back.

Q.

With Nexus phones, the lack of carrier support is the big roadblock. Only having the marketing and retail support of one carrier - T-Mobile, in the case of the Nexus 4 - isn't as good as having the Big Four. In the past you've sold Nexus phones through the Google online store, and it was a failure.

A.

Nexus One was very early. People didn't know what Nexus was or what Android phones were. I feel we're in a very different environment now and I feel the Nexus 7 has set the stage for the Nexus program at a new level, so we feel the time is right.

Q.

Approaching one million sales a month for the Nexus 7, right? According to Asus.

A.

We haven't announced numbers. We typically don't allow our partners to announce numbers. All I can say is it has sold way above expectations. That could mean one of two things: Either we have very low expectations or we've done amazing well. But we're very pleased with how we've done with the Nexus 7.

Q.

Most of the apps in the Google Play store are for phones, not for tablets. How many are there for tablets?

A.

I don't have a number for how many apps are properly adding those APIs that you need to put fully to use the extra screen real estate. What I can say is that the Nexus 7 has been a superstrong catalyst to kick off developers' attention to making those expansions, so we've seen tremendous growth in apps for the larger screen size. The trending is very positive because of the Nexus 7.

But before, I'll be honest and say, yes, there was a lack of tablet apps that supported bigger screen real estate. But I'll add that, I know we talked about the Cupertino guys, but obviously people who have smartphones are a huge target for us. If you look globally that's something we worry more about, not so much about competing with other smartphones, but more about, how can we get more people onto the Internet on mobile phones? And that's a big deal. That's why low cost is so important.

Q.

Android software has gotten to the point where it's more respectable. There used to be these two very polarized camps, where a lot of people would say iOS was the greatest and Android was ugly. But the lines are blurring as Android has gotten polished. What happened?

A.

We had such a long laundry list of things we wanted to do, and the fact we had to roll it out so it would work on a multitude of devices, it simply took a bit more time for us to get here. But the structure we've had for an operating system from day one including widgets, actual multitasking, notificat ions, it's finally coming to its true form right as the software has come into final polish. Project Butter for Jelly Bean, to get every pixel to move really beautifully, it's finally showing off those capabilities we've always planned to have. We have the right teams and maturity to deliver what we've always wanted to do. I'll admit we're finally much more closer to our actual vision in the past year than we have ever been.

Meet the iPad Mini Mega, From Conan O\'Brien

Taking a comical swipe at Apple's latest offering, the iPad Mini, Conan O'Brien made a spoof video of Apple's announcing even more iPads that are slightly smaller and larger than the current offerings.

Data Shows Which Candidates\' Tweets Resonated With Electorate

In Florida, voters responded most when Mitt Romney tweeted about education and when President Obama tweeted about foreign affairs. In Ohio, Mr. Obama's tweets about gay rights, more so than any other topic, held the most traction. For Mr. Romney, it was his tweets about the economy.

Twitter introduced an interactive map on Thursday showing which of the candidates' Tweets drove the most engagement-measured by the number of times the Tweet was retweeted or “favorited” on Twitter-at the national and state levels.

Nationwide, Mr. Obama's most popular tweet was, “No family should have to set aside a college acceptance letter because they don't have the money.” His second most popular tweet was actually a quote from Vice President Biden about women's rights:  “VP Biden: I do not believe that we have a right to tell other people, women, that they can't control their bodies.” Interestingly, at the state level, that tweet resonated most with voters in Wyom ing, followed by Iowa, South Dakota and West Virginia, states where women's rights is not considered the pivotal issue.

Mr. Romney's most popular tweet was this remark on September 11th: “On this most somber day, America is united under God in its quest for peace and freedom at home and across the world.” Second most popular was a comment about wealth distribution: “I am running for president to get us creating wealth again â€" not to redistribute it.”

In swing states, Twitter's map tells an interesting, and sometimes counter intuitive, story. According to the latest polls, Virginia, Wisconsin, Ohio, Iowa, Nevada, New Hampshire, Colorado and Florida are still toss-ups.

In the last presidential election, the President won Virginia by seven percentage points. This year, the race is set to be much closer. There, voters' response was highest when the candidates tweeted about issues related to retirement.

The same was true for Wisconsin. Democrats carried the state in the past six presidential elections, but the addition of one of their own, Representative Paul D. Ryan, to Mr. Romney's ticket has kept the race tight. There, retirement was also the issue that seemed to have the most traction on Twitter.

In Iowa, where six electoral votes are still up for grabs, voters engaged most when Mr. Obama tweeted about topics related to energy and the environment and when Romney tweeted about health care.

Nevada voters responded most to Obama's comments on taxes. “1,240,000 middle-class families in Nevada could face a tax increase under Mitt Romney,” was Mr. Obama's most popular Tweet in that state. Mr. Romney's tweets about education drove the highest level of engagement. “With over 60k jobs lost & the highest unemployment rate in the nation, Nevadans aren't better off under @BarackObama,” was Mr. Romney's most popular Tweet.

In Colorado, women's issues have taken center stage after women proved key to two Democratic victories in the 2010 races for Senate and governor. But according to Twitter's data, Colorado voters responded in the largest numbers when Mr. Obama tweeted about taxes. For Mr. Romney, it was his remarks about terrorism.

If, as in the 2004 election, the race comes down to Florida, then the candidates may do well to defy conventional wisdom that retirement is all Florida voters care about. Within Florida, Mr. Romney's tweets about retirement did not resonate as well as his tweets about education and foreign affairs. Likewise, Mr. Obama's tweets about topics relevant to retirement had less traction than his tweets about terrorism and foreign affairs.

Despite the perception that Twitter is just a place for East and West coasters to talk to each other, Twitter's map shows a surprising level of engagement in states like Wyoming, Utah, Texas, Mississippi and Oklahoma. The opposite proved true for New Hampshire and Vermont, where Twitter noted it was n ot able to collect enough data to draw conclusions.