Editor’s Note: Semil Shah is a contributor to TechCrunch. You can follow him on Twitter at @semil.

Apple has a good deal of cash. And, in the Valley, the startup ecosystem — for many reasons — wants to see Apple spend that cash. As their cash pile continued to grow as their stock price and market cap soared, Apple’s inability to provide robust software services combined with opportunities to expand their reach through acquisitions has become a fancy parlor game which includes every stripe of public and private investor imaginable. On top of this, pumping even a small percentage of cash pile into acquisitions could provide another pool of much-needed liquidity for founders and investors alike. While it all makes sense on paper, part of what makes Apple “Apple” is that they operate how they want to — not how the market wants them to. Recently, in response to a variety of pressures to do something, to do anything, Apple announced a two-part share buyback. There are many explanations for this financial strategy, and while the Valley may have their own armchair financial analysts with a Twitter account, I reached out to some friends who actually work in technology banking or at techonology-focused hedge funds and asked them to send me a paragraph on their perception of the move. Because of the world these folks work in, I’ve reproduced their answers below anonymously, as they are not permitted to publicly share their opinions on such matters:

Technology Investment Banker: With the amount of cash stock piled by Apple, and mainly overseas, it was only a matter of time until the water would break, especially with activist investor David Einhorn ruffling feathers. Apple did something very standard and not uncommon, but on a large scale the way Apple likes to do things. At the end of the day I feel Apple’s actions represent the following four points: (1) Increased Shareholder Value: There are many ways to value a profitable company but the most common measurement is Earnings Per Share (EPS). If earnings are flat but the number of outstanding shares decreases. . Voila! . . A magical increase in period-to-period EPS will result; (2) Higher Stock Prices: An increase in EPS will often alert investors that a stock is undervalued or has the potential for increasing in value. The most common result is an increase in demand and an upward movement in the price of a stock; (3) Increased Float – As the number of outstanding shares decreases, the shares remaining represent a larger percentage of the float. If demand increases and there is less supply, then fuel is added to a potential upward movement in the price of a stock; and (4) Excess Cash: Companies usually buy back their stock with excess cash. If a company has excess cash, then at a minimum you can bank that it doesn’t have a cash flow problem. More importantly, it signals that executives feel that cash re-invested in the corporation will get a better return than alternative investments. This is definitely a positive sign for the company going forward. Customers and investors should feel confident with these events transpiring that Apple will continue to deliver value to both parties respectively.

Technology Hedge Fund Principal: Since Apple has around $150B cash on the books (70% of which is foreign), it’s clear they need to do something with this cash because it’s just wasted sitting on the balance sheet earning low interest rates. People have assumed the market would respond well to Apple making acquisitions, especially in software and services, particularly in cloud and mobile software. While they have reaped the benefits of profits in mobile hardware, the value going forward is at the application and services layer. Other hardware manufacturers are catching up, if they haven’t caught up already. Unfortunately, Apple doesn’t seem to have an appetite for these types of acquisitions. Another option is to buy back shares, a proven way to deploy cash, though doing so sends a signal that they are a mature (read: not growth) company. Tactically, buybacks can decouple EPS growth from new product lines, and Apple could see 2x its buyback investment in earnings growth as a result. Ultimately, Apple has withstood significant pressure from the investment community to do something with the cash, especially as growth has slowed. (Venture arms, since you asked, are not an effective use of capital for a corporate player; I see the share repurchase as a much more responsible use of proceeds.

Hedge Fund Partner #2: Apple had four basic choices of what to do with their cash, remembering that apple has a duty to its shareholders: (1)  Do nothing (status quo), which makes zero sense. given that they have ~$145Bn in cash and are adding ~ $40Bn in cash annually assuming zero growth earnings earning; (2) Strategic acquisition or expansion, though Apple will be hard pushed to effectively put either their cash hoard or future cash flows to use to do this; (3) a one-time special dividend and increased annual dividend; or (4) a share buyback (or various form of it). Only options #3 or #4 made any sense to me and I assumed it was only a matter of time before they did something. #1 is out as they are would not be meeting their shareholder responsibility and #2 is out simply because of scale.

I see the share buyback as positive for three key reasons: (1) Apple stock is currently very cheap. My back of the envelope calculations conservatively value them at $500-$550/share, so they are effectively leveraging and creating additional shareholder value here until the multiple recovers to fair value. What’s more is that management knows a lot more than what we all do, so they should be able to calculate their own value in two to three years fairly well, and I assume they saw this as a positive. (2) Because Apple issued bonds to finance the deal rather than using cash, this way they will not need to repatriate taxable offshore cash to perform the buyback and they will likely get a bond rate the crazy low prices. Bottom line, they are saving shareholders cash, although at some point they will need to find a way to address the offshore cash, so perhaps they are waiting for another tax holiday. And (3), assuming the market reacts rationally, a buy back signals that managements believes in stock and the story and believes that this will generate returns that will outperform for long-term investors, something that a cash hoard did not address at any level and effectively generate returns far in excess of what could be achieved in any other safe manner.

More often than not I do not like share buybacks. often management does this to boost their own salary bonuses (EPS biased etc) or simply follow bad advice and follow the investment banking herd, but this time I liked Apple’s share buyback at this share price and multiple and applaud the debt financing way of doing it, I would have applauded it more if they had also issued a $40 special dividend.

Hedge Fund Partner #3: The view is Apple has stopped being an innovator. While they were at the forefront of technology, people bugged them to use their cash for a dividend or buyback and they could say “no” because the stock price was going up on leading edge innovation. Once Jobs passed away, Tim Cook hasn’t been able to keep that going, and if anything they are now playing catch-up to Samsung or even Google. When you aren’t innovating and you have $150B in cash, a board has to find ways to keep investors happy and one tactic is to conduct a massive buyback. Showing they are returning money to shareholders, creating a new base if “capital return” investors rather than growth investors. It’s all a game to prop up the stock price, money is cheap because of Bernanke, so it’s an easy way for them to please shareholders without much cost to the business. In general, I think that Apple is falling behind and trying to figure out how to regain their lead, and I’m not sure if its possible any time soon.

Technology Stock Investor: They’re doing the buyback because: 1) they have an unprecedented amount of cash ($140+ billion) that’s earning nearly nothing; 2) the stock is down nearly 40% from its high and shareholders are angry; 3) the stock is cheap on every financial metric, signaling that buying shares is a good use of cash if you believe in the long-term growth of the company.  The company does not appear to want to do a large acquisition or massively increase its capital expenditures.  They don’t “need” to hold that much cash. So the company had a very inefficient capital structure ($140+ billion of cash and no debt). Equity investors (who, in the end, own the company) sooner or later demand to get returns on their companies’ cash. Capital markets are competitive, and if management doesn’t give investors great reasons to own their stock, investors will go somewhere else. AAPL is facing slowing revenue growth, margin pressure, and uncertainty about their next major product line. A management team that is perceived as unfriendly to shareholders is another reason for investors to sell the stock. The buyback is a big gesture by management that they understand their shareholders’ concerns, in addition to likely being a good investment.

Photo Credit: Eddi 07 / Flickr Creative Commons

Article courtesy of TechCrunch

Did Google’s conference succeed? It launched dozens of products and services in its 205-minute keynote, but did the world understand them? I saw some of the smartest journalists in technology struggling to handle the information density. But what’s the alternative? Break it up across multiple days, or even multiple conferences? Google’s breadth presents it with a challenge unique among the tech giants.

Apple? Its launches center around a discrete set of devices. That’s why WWDC works. There might be one radically new product, but then just a set of iterations on what we already know. The screen is bigger, the tablet is thinner, the software gets a new sheen. And since Apple is all about hardware you need to touch to believe, it has to do it all in-person. Journalists and pundits can easily digest the news and offer their insights to the world.

Facebook? It prefers the rolling thunder approach that works because it’s mostly a software company. Releasing things when they’re ready rather than waiting months for an event embodies its “move fast and break things” ideal. It reaches out to journalists almost daily about new updates. When it has something big, it throws a laser-focused, dedicated event like it did this year for content-specific news feeds, Graph Search, and Home. Even when it threw its last f8 developer conference 20 months ago, it kept it tight to just Timeline and Open Graph. The media could wrap its head around the social network’s plans.

Those conferences serve their purposes because they align with the identities of producers. Some see Microsoft’s events as a fragmented mess as they too embody their producer. Microsost has Build for Windows and developers, TechEd for enterprise, a partner conference, a management summit, and a whole event for SharePoint. By splitting them all up, it never feels like there’s one day where Microsoft rules the world.

But Google has its own identity and it’s causing I/O growing pains. The conference certainly captures the spotlight. The problem is that Google’s vast ambitions have left I/O bursting at the seams. This year’s mega-keynote tried to combine search, maps, Google+, YouTube, Google Now, Google Play, music, games, Chrome, Android, and a new phone. And that was just the consumer facing stuff! Then there were a huge set of developer announcements like a native client for C++, location APIs, game services APIs, cloud messaging for notifications, and a suite of mobile app building tools called Android Studio.

Did you watch the keynote? If so, did you remember all these things? Did you have time to read insightful analysis about them? Did journalists even have the bandwidth to write intelligently about it all? It could take a while to unpack everything from I/O. I know I have at least five stories I want to write. And inevitably things will fall through the cracks as a new week will bring new news from elsewhere.

And it’s only going to get more intense. Google employees I’ve talked to say Larry Page is really pushing his 10X innovation mantra and speedier product cycles. They explain that Google could have saved some stuff for another conference later this year, but by then it’ll already have whole slew of new things ready to show off. Plus, developers and futurists might not be willing to come from around the world for two events a year.

The single, 3+ hour keynote with no intermission did symbolized Google’s big theme of unification. Google wants to show it isn’t just a grab bag of different products. They all piggy-back on each other. Android ties mobile together. Google+ ties people together no matter what other Google products they’re using.

But I/O may be too dense and rich. Like a chunk of chocolate fudge, it overwhelms the senses and leaves you struggling to chew up Google’s vision. It was so mind-boggling it put Wired’s Mat Honan into a psychedelic trance.

The three days of developer sessions that followed the keynote were a success, in that they helped developers develop. But perhaps splitting the keynote into two bite-size sessions would make it all easier to swallow. One consumer keynote (Search, Maps, Google+, Hangouts, Music, phone) and one developer keynote (Android, Chrome, APIs, developer tools). They could be split across two days. Alternatively, it could be one keynote with announcements sorted into these two categories with an intermission in the middle. Either would go a long way to making I/O more comprehensible.

But for now, sticking with a single, epic conference may be the best route for Google to create momentum, convey unification, bring its community together, and impress the globe. Google is determined to innovate faster and deliver the future. The duty falls on us to keep up.

Article courtesy of TechCrunch

I’ve spent the last two weeks wandering around London, Paris, and Istanbul (not Constantinople.) As an experiment, I left my trusty MacBook Pro behind and brought only the $199 Chromebook on which I type this. And to my considerable surprise it has served admirably. So admirably, in fact, that I believe ChromeOS is only one or two iterations away from being the right choice for many-if not most–homes.

I was skeptical to begin with: after all, I thought, Chrome is acceptable when you’re online, but I’ll be spending much of my travel time offline, which probably makes it a non-starter, right? — So I devoted most of my Chromebook’s (bizarrely spacious) 320GB hard drive to an install of Ubuntu. Which I then never used even once.

I suppose I would have if some kind of critical work emergency had come up: after all, I’m (mostly) a software developer by trade, and ChromeOS isn’t much of a developer platform. But that didn’t happen. Good thing, too, because Linux-on-the-desktop seems as ugly and frustrating as ever for someone, even a deeply techie someone, who just wants to get things done.

ChromeOS, though, is both very pretty and almost painless. Its biggest problem is that out of the box it naively insists that you’ll be online all the time–even though it can be perfectly serviceable while disconnected. You may not have known that nowadays both GMail and (most) Google Docs can work just fine offlne.

And if you didn’t, well, Google sure isn’t about to proactively tell you. You actually have to make a point of seeking out, installing, and then activating Offline Gmail and Offline Google Docs from the Chrome Web Store. Why ChromeOS doesn’t prompt you with this option as part of the onboarding process is truly beyond me. Similarly, why on Earth are “Gmail’ and “Offline Gmail” two separate apps? Google may be full of incredibly smart people, but they can also be insanely myopic when it comes to end users.

Once those were up and running, though, my Chromebook was a charm to use under almost all circumstances. Offline, I could write documents, check old email, and even play a few free games from the Chrome Web Store, although most Chrome games still seem to require an initial server connection to start up. And online, of course, the world was my oyster.

Did I have access to all the features of, say, Word or Excel? Hell, no. (You still can’t create a Google Docs spreadsheet when offline, either.) Was it an all-guns-blazing gaming experience? Again, no, although Chrome’s rapidly evolving Native Client ought to keep matters improving here. What I could do, though, was email, play a few games, surf the Net, communicate (via GChat or Google Hangouts, which worked excellently), and write documents — which unless I’m much mistaken is pretty much everything that most people use their computers for at home.

ChromeOS still needs better, and simpler, offline support; and I’d like to see more diversity of available hardware; but once those two things are addressed, which shouldn’t take long, I would happily recommend a Chromebook to my parents the next time they upgrade. In fact I’d happily recommend one to anyone who wants a small second laptop for travel, or who doesn’t need to do serious work on their home computer.

Long ago Neal Stephenson, when comparing operating systems to vehicles, described MacOS as a hermetically sealed day-glo VW Beetle; MS Windows as a clunky two-tone station wagon; and Linux as the product of a horde of dreadlocked hippies who spent their time building M1 battle tanks and giving them away for free. Which sounds great at first, but who actually wants to drive a tank?

Well, if I may extend that a little, ChromeOS is like a sleek, shiny Airstream trailer built around that same M1 engine. There are many things it can’t do, and a bunch more at which it’s very clumsy, but within its bailiwick, casual exploring, it’s both very attractive and awfully comfortable.

I don’t think Stephenson’s original analogies quite hold any more, though. Nowadays OS X is more like a Porsche…and Windows is a gas-guzzling pickup truck, or a cube van that makes disturbing noises whenever it corners. Still suitable for work, but not particularly great for either road trips or sub/urban living — and nowadays looking nervously over its metaphorical shoulder at the flotilla of drones and self-driving cars on the horizon.

Image credit: Dan McCullough, Flickr.

Article courtesy of TechCrunch

Today, thanks to the maturation of the web, digital tech, and smartphones now in seemingly every pocket, startups are finding it easier than ever before to build scalable solutions to finally address the many inefficiencies in our food manufacturing, production and distribution systems.

As interest in food tech balloons, one area in particular appears to already be at the tipping point: Online and mobile food delivery. Over the last few days, we’ve hearing about a merger between two of the largest companies in the space. Rumor has it that “arch rivals” GrubHub and Seamless are in talks which could see them join forces as part of a merger. While our sources tell us that the talks are serious, the terms of the merger are not yet clear and, of course, any potential deal could fall through.

Furthermore, it’s not yet clear what kind of synergies would take place, how management of the new entity would be structured or even what the new business will be called. The two companies would not confirm on the record on any of the above. But as far as the name goes, we’re hoping for Grubless. Or Hubless GrubSeam. But they have a nice ring to them, don’t they?

If these rumors are true, the merger comes at a good time for the arch rivals, who have been seeing mounting competition of late from a laundry list of new startups entering the space, including increasingly popular alternatives like Delivery.com, ChowNow, Munchery (meals from local chefs), Campus Special, eat24 or the bigs of Europe, like Food Hero and Just-Eat. 

If the online food-ordering and delivery market is roughly where daily deals were three-plus years ago, then the deal essentially creates the Groupon of food delivery. Like the daily deals market, food ordering has traditionally had a fairly low barrier to entry, which helps explain why we seem to see a new startup pop up every week.

Plus, the business model isn’t particularly complicated, making it replicable. That being said, innovation and tech adoption have been slow to come to the food industry, and, at scale, this model (taking a slice of transactions) has the potential to be able to generate a lot of cash.

This is just one part of why the “food tech” business has been so hot lately. Just ask venture capitalists who collectively poured $350 million into food startups over the last year. (Compare that to 2008, when it was less than $50 million.) Plus, when you get right down to it: People need to eat. And, as it turns out, people are pretty busy. Uh, and lazy.

Of course, for those who remember the spectacular failure of online food companies like Webvan, Kozmo and HomeRuns, this whole “tech in your kitchen” and online ordering jibber-jabber probably sounds familiar — and not in a good way. But this time it’s different. Research from Cornell University recently found, for example, that over 40 percent of adults in the U.S. have ordered food online, and 10 percent of restaurant orders now originate online — and these numbers continue to head north. GrubHub and Seamless have built successful businesses on this very idea.

Both GrubHub and Seamless have been around for some time: The New York City-based Seamless was founded in 1999, while the Chicago-based GrubHub got its start in 2004. And for the most part, the two companies have catered to two different markets geographically. While both now have fairly expansive coverage, GrubHub has naturally developed a firm foothold in the Midwest, while Seamless focused its early attention on NYC, before moving into cities like Los Angeles and San Francisco. From that perspective, a merger would make sense, allowing the new, consolidated entity to gain penetration into markets where they lacked a major presence.

Writ large, the companies, while having some fundamental differences, do seem to have a lot of synergies on paper — at least “nominally,” depending on who you ask — likely why they’ve increasingly become rivals over the years. Bboth are of fairly comparable size, as GrubHub has more than 18,000 restaurant partners across more than 500 cities, while Seamless has over 12,000 restaurants and serves nearly 5,000 businesses and more than 2 million users. As of February, Reuters reported that Seamless was on track to generate more than $100 million in revenue this year as it expands into new cities and focuses more aggressively on mobile.

The company reportedly generated $85 million in revenue last year, growing its consumer business by 60 percent year-over-year and “will soon be processing $1 billion worth of food orders a year,” Seamless CEO Jonathan Zabusky told Reuters at the time. For the majority of its history, the company focused primarily on New York, but launched a major expansion effort last year, bringing its service to 10 new cities. According to the report, Seamless saw its transaction volume quadruple in Los Angeles during 2012, with transactions tripling in San Francisco.

Another interesting point to note: GrubHub was reported to be considering an IPO last fall. The company denied the rumors at the time, and if this merger is true, then they’ve been given the proper perspective. Certainly, it would seem that this wouldn’t take a potential IPO off the table, instead, likely making an opening price that much higher.

The IPO rumors for GrubHub came at a time when the company was reportedly doing about $60 million in revenue (this was in 2012) — a little less than half that of Seamless. Furthermore, Crain’s reported in December that GrubHub’s revenue has been doubling every year and, as the company reported $30 million in revenue in 2011, that revenue estimate would make sense and put the company on the path to crossing $100 million well before the end of this year.

That is all to say that, although the terms of the potential deal are unclear, these are two sizable businesses that are growing relatively fast, so any potential valuation has got to be fairly high. After all: The two companies were fairly comparably capitalized and staffed, with GrubHub growing to over 250 employees and Seamless over 300, while GrubHub raised about $84 million from a mix of venture and growth equity firms (including Benchmark) and Seamless raised $51 million, $50 million of which came from private equity firm Spectrum Equity.

While both companies have made a couple of acquisitions, this would be the second big M&A deal for Seamless, as the company was acquired by food services giant, ARAMARK, in 2006. Five years later, Spectrum bought a minority stake in Seamless from ARAMARK, and about a year later, the food services company spun-off its remaining interest in Seamless to its shareholders. Free from its corporate ownership, Seamless proceeded to go out and buy MenuPages for $15 million, showing up GrubHub, which MenuPages had initially targeted as its acquirer. When GrubHub and MenuPages couldn’t agree to a deal, and it seems that GrubHub was instead in the process of buying Dotmenu/Allmenus, Seamless swooped in — according to BetaBeat.

So, as you can see, the companies have a long history of jostling. While GrubHub had been out acquiring restaurant partners fast and furiously, Seamless stagnated a bit under ARAMARK, but since becoming an independent company (again) and with a new board/investors, the company seems to have been compounding its growth. Together, that growth could be exponentially higher.

Finally, if this deal is in fact a go, it’s worth looking at this quote from GrubHub co-founder and CEO Matt Maloney from back in 2011. In it, he shares his opinion on GrubHub’s top competitor, a little company called Seamless. He told BetaBeat:

I typically don’t talk this much about Seamless because we don’t view them as incredibly strong competition for what we’re doing … Seamless fundamentally is a corporate catering business. They were founded years and years and years ago to do just that. And they’re still best in the business for corporate. They recently got into the consumer and residential pick-up and delivery. And they do it well in New York, but they really have zero business anywhere else. We don’t even consider them competition anywhere other than Manhattan specifically.

So, there you go. A match potentially made in heaven, and one that’s sure to shake up online and mobile food ordering if it happens.

Find Seamless at home here and GrubHub here.

Article courtesy of TechCrunch

Editor’s Note: Semil Shah is a contributor to TechCrunch. You can follow him on Twitter at @semil.

This is the final episode of my show on TCTV, “In The Studio.” The final guest is a good friend, Parth Shah (no relation), an engineer with VMware, and before that, at Yahoo! Parth combines the precision of CMU CS graduate’s take on web development with a hacker mentality, and has the rare skill of being able to explain some of the most complex enterprise IT concepts to those who don’t have as much context — such as me! In this short conversation, Parth shares with us his work at VMware and his generalized thoughts on how the enterprise stack is being disrupted today. This video would be a great primer for anyone who wants to begin to learn about the enterprise world.

As an added bonus, Parth and I have spent a few months collaborating on a post about the enterprise IT stack, written in lay-terms so that a wider audience can learn more about it. We are proud to publish this post today, which you can read here.

Finally, thank you for being a loyal viewer of “In The Studio” as it ends today (my Sunday column, Iterations, will continue). In the span of 18 months, the show ran for 70 consecutive weeks, producing 70 episodes featuring Silicon Valley’s up-and-coming founders, legendary venture capitalists, emergent seed investors, and focused on producing quality, primary-source content in today’s noisy tech media landscape. For me, “In The Studio” was a terrific platform to get to meet people who excelled at what they do. As someone who is new to the technology world, doing the show was a crash-course in learning by conversation, and making those conversations public will hopefully provide insight to others who are looking to learn. I have worked to organize and reproduce all the videos, which you can access here. This is a great privilege, so thanks again to all those who participated.

Article courtesy of TechCrunch

The crescendo of media reports about the advent of a DIY printable firearm has caused an understandable uproar. In the wake of so many high-profile, mass-casualty incidents involving firearms — and a lot of impotent rage by our elected officials — it seems counterintuitive that, as we circle the wagons around the idea of passing rational gun legislation at the federal level, we can also literally create a gun.

When I was in high school, some classmates brought a crinkled copy of “The Anarchist’s Cookbook” that they printed off the Internet. I, being an inquisitive teenager, flipped through the pages with a certain morbid curiosity. I didn’t know you could make a tennis ball bomb, or even develop thermite plasma that could melt through steel, in your basement or garage. Of course, the rational part of me knew I would never experiment with such ingredients, but I couldn’t help but be a little concerned about the people who would.

Now, the Internet is no longer the provenance of a select, geeky few, but rather is a mainstream information source that often eclipses television and leaves radio and print media in the dust. What was once accessible only by people in the know is now highly publicized.

The Liberator is the first widely distributed 3D-printed pistol to hit the Internet. It can be manufactured using a commercially available 3D printer. The instructions, created and given away by cyber-vigilantes/anarchists Defense Distributed, even contain a step to include a piece of steel to avoid running afoul of the Undetectable Firearms Act of 1988, though how they plan on ensuring that less-than-scrupulous DIY gunsmiths don’t simply ignore that step remains unclear (however, the point could be moot, as the law is set to sunset in December of this year if it is not renewed). Numerous tests have confirmed that when properly assembled, the weapon can fire at least one .380-caliber round without harming the user.

There is no question that the ability to use a 3D printer to create, on-demand, just about anything you can draw up in a CAD program is the future. The disruptive potential across nearly every industry for this technology is incalculable. From the medical field to manufacturing, empowering consumers to produce will surely up-end the natural order in mostly good ways.

However, removing all friction from the process of obtaining a lethal firearm could put a functional handgun in the hands of someone acting impulsively. How many times have you been brought to a boiling rage? The kind of fury where everything that connects you to the human race fades into the background and you feel like you could almost kill. If you were peeved enough to go through with it, you likely couldn’t obtain the requisite gun before your anger subsided to a manageable level where the thought of killing repulses you — as it should.

So much of the conversation about tightening gun legislation in the U.S. is focused on keeping guns out of the hands of the criminally mentally ill. But what about when an otherwise rational person is driven to a near-murderous rage? Aren’t the hurdles to obtaining an impulse-buy handgun a buffer between the fleeting notion (and temporary desire) to harm another human being and an actual violent crime? If pushing a button and snapping a few puzzle pieces into place was all it took to convert that inert, lethal rage into something real, would it lead to more crimes of passion? The U.S. State Department seems to think so, and has demanded that links to plans for the Liberator be removed from the web (good luck with that).

This technology is already being used for the betterment of mankind. 3D printers are already being used to create an articulable replacement hand for a child in South Africa. Even NASA recognizes its potential and has plans to create a zero-gravity 3D printer, which is slated to be taken aboard the International Space Station sometime next year.

This technology is in its infancy, and, to paraphrase Dr. Ian Malcolm, learning what we can do with it will hopefully not outpace learning what we should. Free information advocates and gun advocates alike defend the distribution of the Liberator’s plans as the latest battle on the frontier of Internet freedom, saying that all information should, without vetting, be easily accessible by anyone and everyone. But the stakes are higher than ever. We’re not talking about shutting down sites hosting illegal copyrighted material for download. We’re talking about life and death now. Guns exist for one purpose — to shoot stuff.

Some people point to the high price of a 3D printer as an obstacle to a world with an unknown number of amateur gun distributors, but if there is a profit to be made, a few thousand dollars becomes not much of an impediment. The high cost of the materials and equipment has certainly not stopped large-scale illegal drug laboratories from being operated by the rankest amateurs.

Should we support an avenue for people with more intellect than sense to manufacture deadly weapons simply because of the perceived freedom it entails? I’m not sure. But I, for one, had hoped we’d perfect a 3D-printed replacement heart valve or water purification device for developing countries before yet another way to kill people.

Article courtesy of TechCrunch

I’m probably going to be consigned to whatever level of hell is reserved for pretentious editorialists for saying this, but sometimes when I’m trying to evaluate some new piece of technology, I consider whether Henry David Thoreau would have taken it to Walden Pond with him.

Wait, just give me a second. I know how it sounds. Let me explain.

I’m not some Neo-primitivist who thinks we should all go barefoot and use calorie-impoverished diets to extend our miserable lives. On the other hand, I’m suspicious of things people invent that have no purpose except a slight increase in convenience.

Yes, time is the only thing that we, as privileged first-worlders, can’t purchase. Convenience is the nearest thing to buying time, however, and it commands an understandable premium. That said, I can’t help but feel that our connected world (inclusive of the web and the devices we use to interact with it) is being populated with tools that would not look out of place in Skymall.

Google Glass is one of them (and I expect to see a knockoff in my complimentary seat-back magazine soon), but the objections against it are so obvious that I abandoned several articles enumerating them as unnecessary (one working title: HUD Sucker); at any rate, they have been expressed perfectly well by others, and I don’t plan on duplicating their efforts. Now that you know this isn’t about yet another opinion on the thing, you can move your cursor away from the “close tab” x, unless you’re reading this on Google Glass, in which case I beg to inform you, sir or madam, that it is not becoming.

But to proceed: Technology is about empowerment, and in fact I think that Thoreau’s modern analogue would find many useful tools to bring with him on his sojourn in nature.

The man was, after all, hardly a masochist or even what we would now call a Luddite, not that he had many technologies to which he could object in those days (“glow-shoes, and umbrellas”). He brought a grinder with him in the days when mortar and pestle were still in vogue, and of course many books, which were one of the primary means of entertainment, along with drinking and conquest.

Picture this modern Thoreau embarking on his hermitage. He is not trying to return to the necessities of cavemen — he wants to carve and fill a niche that is big enough to hold him, his needs, and his edifying pleasures — but no more.

So while it seems unlikely he would find room in his bag for a Slap Chop or personal air conditioner, there are many marvels of modern technology which he would be happy to utilize. If he could bring the entire Western canon on an iPad (or e-reader, to conserve power), surely that would be preferable to choosing a bare two dozen paper books. A compass would be essential, but surely a GPS unit would not be amiss? If a knife, why not a multitool? And if I’m honest, if paper and envelopes, why not Twitter? But there things begin to unravel.

Enablers and facilitators

Anyway, the point is not to make an inventory of Thoreau 2.0′s bag (heavy waxed canvas, I think), but to express that the criteria he might use to select what goes into that bag are useful ones. The idea is to find things that extend our own natural powers, or grant us new ones.

There is a real difference between the tools, digital or physical, which empower us with new actions, and the tools which merely make existing actions easier. If you want to chop down a tree, it is not realistic to do it with your teeth. Yet once a man has an axe, it is only a continuum of difficulty between felling the tree with that, and felling it with a chainsaw. The difference between the two is only effort.

Similarly, if you want to communicate with someone across the world, or retrieve information hosted on a server thousands of miles away, you will need a tool — even the most stentorian or far-sighted among us could not hope to work in place of the most fundamental element of a phone or the Internet. But once that connection is made, as you add speed and modes of consumption, past a certain point you are no longer enabling new actions, but rather facilitating existing ones.

I’ve always liked Samuel Warren’s description of difficulty in Ten Thousand A-Year: “What is difficulty? Only a word indicating the degree of strength requisite for accomplishing particular objects; a mere notice of the necessity for exertion; a bugbear to children and fools; only a mere stimulus to men.”

Do we all need the digital equivalent of chainsaws, reducing the necessity of exertion to its absolute minimum? Note, I don’t think we’re quite there yet – our devices and networks are still developing. But once you see that something is not actually new, but only does what another thing did before faster or cheaper, isn’t it a rational choice to draw a line there — whichever side of that line you choose to stand on?

For more powerful tools carry risks and problems of their own, and some find that the cure is worse than the disease. It’s a mistake to write off such people as simply old-fashioned, or ignorant, or afraid of the future. There are sophisticated objections to these things on the tumultuous outmost margin of technology, every spasm of which is breathlessly extrapolated into some magical future by pundits with brief memories and narrow considerations.

Sometimes, on reflection, I find myself among their company. That’s why I like this little Thoreau exercise. A simple question: Does this add something new, as an axe or a mobile phone does? Or does it make something easier, as a chainsaw or Google Glass? And in either case, at what cost?

The answer is rarely surprising, but the process helps clarify what exactly it is that I think I need from these things, what they really provide, and what may come in the future to replace them.

Article courtesy of TechCrunch

Editor’s note: Anthony J. Lombardi practices patent litigation and patent prosecution at Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. He also provides counseling to clients on prelitigation strategy, portfolio development, patent monetization, and licensing activities.

A clear legal standard for determining patent-eligible subject matter remains elusive. On Friday, the Federal Circuit, in CLS Bank International v. Alice Corporation, ruled that an invention involving software for a computerized trading platform does not constitute patent‑eligible subject matter. The decision — which spanned 135 pages — by a 10-member en banc panel of the Court included seven separate opinions, but not the clarity many had hoped for.

Alice’s computerized trading platform patents were at issue in the case. Those patents describe a process for two parties to exchange obligations, such as stock trades, which are then settled by a trusted third party.

The focus of the legal proceedings was Alice’s patent claims. Positioned at the end of a patent, claims are numbered sentences that define the scope of protection afforded by the patent. Among other requirements, the subject matter of a claim must comply with section 101 of the patent laws.

Section 101 defines patent-eligible subject matter and reads: “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.”

Alice asserted a variety of its patent claims in the case, including claims written in method, system and computer-readable-media claim formats. However, Alice’s asserted claims generally share the same underlying premise — that of software for exchanging obligations between parties through a computerized trading platform and using a third party to handle settlement of the exchanges.

What Guidance Did the Court Provide for Software Patents?

A majority (seven of the 10 members) of the Court concluded that Alice’s method and media claims are not directed to patent-eligible subject matter. The Court split 5-5, however, on Alice’s system claims. A split means the lower district court’s ruling, which found Alice’s system claims patent-ineligible, stands. A majority (eight of the 10 members) also agreed that Alice’s method, media, and system claims should rise or fall together when determining patent eligibility.

The majority consensus ends there. A majority of the Court, however, failed to reach agreement on the reasoning behind these conclusions.

Judge Lourie, in an opinion joined by four judges (Judges Dyk, Prost, Reyna and Wallach), found all of Alice’s asserted claims drawn to patent-ineligible abstract ideas.

In his view, Alice’s method claims are directed to nothing more than the abstract idea of reducing settlement risk by effecting trades through a third-party intermediary. This, he said, is a “disembodied” concept without any real-world application. Computer-related aspects of the claims — including steps for creating records to store data, using a computer to adjust and maintain those records, and reconciling those records at the end of a trading day — in his opinion failed to add anything of substance that would save the claims.

Judge Lourie similarly grouped Alice’s media and system claims in the same boat with Alice’s method claims. He characterized the media claims — although defining physical storage media — as nothing more than the same underlying method of reducing settlement risk “in the guise of a device.”

He then questioned whether structures found in the system claims—including “a computer” and “a data storage unit” — could justify a different approach for those claims. In his opinion, they did not. He reasoned that the computer-related limitations failed to provide any “meaningful distinction” from the computer-related limitations found in the method claims.

In a separate opinion, Chief Judge Rader said he would have found the system claims patent eligible. Three judges (Judges Linn, Moore, and O’Malley) joined in that part of his opinion. In Chief Judge Rader’s view, the issue was “whether a claim includes meaningful limitations restricting it to an application, rather than merely an abstract idea.”

Applying that rationale, he reasoned that the structural limitations in Alice’s system claims (e.g. limitations drawn to “a computer” and “a data storage unit”) brought those claims into the realm of patent-eligible subject matter. However, in the remainder of his opinion (which only Judge O’Malley joined), Chief Judge Rader concluded that Alice’s method and media claims are patent-ineligible abstract ideas.

Judges Linn and O’Malley, in a separate opinion, said they would have also found Alice’s method and media claims patent-eligible for the same reasons expressed in Chief Judge Rader’s opinion regarding Alice’s system claims. Additionally, they noted that several technology companies, in amicus (friend-of-the–court) briefs, expressed concern about what they viewed as widespread proliferation and aggressive enforcement of low-quality software patents. In responding to that concern, Judges Linn and O’Malley said Congress, and not the courts, is the proper avenue for developing special rules for software patents. For example, they speculated that Congress could limit the term of software patents or devise rules for limiting their scope.

Judge Moore, in a separate opinion (in which Chief Judge Rader and Judges Linn and O’Malley joined), said she would have found the system claims drawn to patent-eligible subject matter. She also wrote that the uncertainty in court decisions over this issue is “causing a free fall in the patent system.” If all of Alice’s claims are not patent-eligible, she conjectured that “this case is the death of hundreds of thousands of patents, including all business-method, financial-system, and software patents as well as many computer implemented and telecommunications patents.”

In a separate opinion, Judge Newman shared the majority view that all of the claims stand or fall together. She would have found Alice’s system, method and media claims patent‑eligible based on the plain language of section 101.

Chief Judge Rader offered an additional opinion captioned “Additional Reflections.” There, he emphasized that the Court should focus on the language of section 101 and indicated it is unlikely that innovation is promoted by the subjective standards for evaluating patent eligibility expressed in the panel’s opinions.

What’s Next for Software Patents?

The Federal Circuit has ruled, but the dividing line between patent-eligible software and patent-ineligible abstract ideas has not come into focus. Some may say the landscape remains in a similar state as it was before the Federal Circuit’s decision: some software claims might rise to the level of patent-eligible subject matter and others may not.

The CLS Bank case is likely to undergo Supreme Court review. The Supreme Court may view the Federal Circuit’s fractured decision as an opportunity to consider software patenting again. Whether a clear dividing line will emerge remains to be seen.

Article courtesy of TechCrunch

A few days ago I landed in England and, expecting little, slipped an old UK SIM card into my phone. I’d bought it when living in London five years ago, and hadn’t used it in more than a year. But to my amazement it was still active — as was the money I’d added to its pay-as-you-go account 16 months earlier…and then I received a friendly text message informing me that my data costs were now £1 per 100MB. Another SMS popped up when I emerged from the Channel Tunnel in France a few days later, informing me it would cost me 8p to send texts and 7p per minute to receive calls.

Can you imagine any of that happening with an American phone company? Or Canadian? North American carriers generally expire pay-as-you-go accounts after 90 days of inactivity, and it’s at best a struggle to get them to support data at all, much less seamlessly, much much less at that price. (Which isn’t even that great, by global standards; in India two years ago I was charged $1 for a full gigabyte.)

As for roaming, you’re very lucky to get American or Canadian pay-as-you-go accounts that can roam across that vast undefended border at all, and if you do, they’ll charge the proverbial arm and a leg. That same UK SIM card worked just fine in Kenya last year, and as I type this I’m about to land in Turkey, where I expect to receive another text informing me that my UK pay-as-you-go number continues to work just fine outside the EU, albeit more expensively. (Update: yep.)

What’s wrong with this picture? Why are America and Canada so unbelievably awful? Yeah, I’m being anecdotal, but there is all kinds of data to support the notion that cell service there is outlandishly expensive compared to almost all of the rest of the developed world. (And worse than a lot of the developing world, too.)

Part of it is laissez-faire capitalism run amok. Don’t get me wrong. I’m a staunch defender of capitalism…that is, well-regulated capitalism. Until 2008 that was a hard row to hoe among many of my friends, but that recent embarrassing spate of financial cataclysms have made it much easer. Why is my UK SIM card relatively cheap to use in France? Because EU regulators insisted on it. Why are America’s carriers so parasitical, predatory, gouging and user-hostile? Because they can be, which in large part means because their regulators (including, alas, Canada’s CRTC) don’t insist on much of anything.

Oh, sorry, no, my mistake. They do insist on perpetuating this state of affairs. Consider the recent breathtakingly wrong decision to make it illegal under the DMCA to unlock your phone. This was one of those classic bureaucratic catastrophes: every individual step that led to it doubtless made sense to the people involved, who were too close to their system to take a step back and notice that its actual outcome was complete insanity. If anything it should should be illegal to lock phones, not unlock them. This is regulatory capture taken to new heights of Stockholm-Syndrome madness.

And yet. At the end of the day the true power lies not with the carriers, but with their customers. Alas, American and Canadian customers seem to have been hypnotized into a kind of learned helplessness where they just sit there and silently accept locked phones, bloated Kafkaesque pricing plans, insane roaming charges, Android phones stuffed with crapware, and two- or even three-year locked-in contracts.

But they don’t have to. That’s what’s so infuriating. You too could buy an unlocked phone — an unlocked Nexus 4, which is a terrific phone, costs all of $299! (And I have high hopes that Google’s rumored new X Phone initiative will be even cheaper.) You too could switch to T-Mobile’s monthly pricing plan, or Straight Talk’s, instead of signing a contract. You’d more than make back the upfront costs of the unlocked phone in less than a year. And if enough people did it, the carriers would be forced to compete on quality and improve their pricing, rather than rely on their customers’ passive despair.

The logical conclusion is that if your phone is locked, or if you’re on a multi-year contract, then you have no right to complain about your terrible carrier — because you’re part of the problem. “The fault, dear Brutus, lies not in our stars, but in ourselves, that we are underlings.” In fact, you’re ruining it for the rest of us. Thanks.

But it’s not too late for redemption. Just repeat after me: “I solemnly swear that I will never buy a locked phone or sign a multi-year phone contract again.” And when your current contract expires, do just that. Maybe, just maybe, with your help, we can finally defeat these gargantuan economic tapeworms called AT&T, Verizon, Rogers and Bell — and finally catch up with the civilized world.

Image credit: Tapeworm, by Rhys Ormond, on Flickr.

Article courtesy of TechCrunch

Editor’s Note: Semil Shah is a contributor to TechCrunch. You can follow him on Twitter at @semil.

This is the penultimate episode of “In The Studio.” The show, which features developers and entrepreneurs working on enterprise technology, will be ending. This week’s guest is Varun Singh, CEO and founder of ScaleArc, a young startup that began in India but registered as a U.S. company with designs to expand to this country once it got off the ground in Mumbai. ScaleArc operates in the space of database infrastructure and sits between apps and database services — what Singh calls as SQL/NoSQL hybrid. Whereas Amazon Web Services would require integration and does not allow for multiple masters across multiple zones, ScaleArc offers a more distributed approach, especially in an age when certain sites (such as gaming portals) cannot afford even the slightest cloud outage.

In this short video, Singh and I discuss a range of topics that would be of interest to technical founders, especially those living outside the U.S. First, Singh incorporated in Delaware but founded his company in India. Technical talent is cheaper in India, and this allows his team to have more iterative cycles, whereas in the Valley, his runway would have been cut from 2.5 years to maybe a year. Singh then started shuttling back and forth between India and the Valley, and found that as long as he could give potential customers the right to try before they bought, the customers didn’t care where the company was located or headquartered. This is a trend I’m seeing on the enterprise technology and SaaS space, where foreign companies are now coming to the Valley and actually disrupting what the Valley considers to be upstarts.

Article courtesy of TechCrunch