Francesca Bartolomey, Updata Advisors

While the US has been in the midst of the current financial crisis, much ink has been spilled over the deaths of investment banking behemoths and of Wall Street as we know it. But as Wall Street titans go down one after another, boutique investment banks that specialize in M&A advisory are well-positioned to reap the spoils. Although M&A deals already vastly outnumber initial public offerings as an exit strategy, this spread will likely expand as the market remains hostile to IPOs and more companies see their stock values fall pushing them into the arms of acquisitive tech vendors.

While valuations may fall as a result of the volatility of the stock market, it all may even out as more companies look to be sold to larger technology companies. And those large tech companies are still voracious buyers. As we have noted in a previous blog post, large technology companies such as Microsoft, HP, and Cisco have been taking advantage of the economic downturn by shopping for target companies in order to augment their growth and bolster their product offerings. What’s more, despite the events that have taken place on Wall Street since that post, some tech giants report that their M&A strategy will continue unabated. At OpenWorld, Oracle’s president Charles Phillips, Jr. suggested that Oracle will continue its aggressive acquisition strategy.

While it’s unclear whether the really huge deals (like HP’s $13.9 billion bid for EDS or Oracle’s $7.2 billion acquisition of BEA Systems) will increase or decrease in the current economic climate, it is possible that the next few quarters will see increased M&A activity in the smaller (couple hundred million) deal range. This is the sweet spot for boutique investment banks that specialize in mergers and acquisitions advisory. Additionally, top MBA talent is flocking to boutique investment banks as opportunities for employment dry up at their larger brethren. Armed with top talent and largely insulated from the credit crisis plaguing bigger banks, boutiques may well come out on top during this time of economic uncertainty.

Francesca Bartolomey, Updata Advisors

Remember the days when the primary purpose of a phone was to place calls? In the age of the iPhone, such a notion seems almost quaint. Today’s cell phones are jam-packed with so many features, that the landline phone is quickly becoming obsolete. Mobile applications are exploding in popularity thanks largely to Apple’s iPhone. According to TechCrunch, Apple is on track to reach the 1 billion iPhone applications downloaded mark by the end of the first year of the iPhone App Store’s existence. The iTunes Store didn’t reach that milestone until its second year in operation. Of course, the fact that most iPhone apps are free and most iTunes songs are not, might have something to do with the download rate discrepancy – even so, there are more iPod owners than iPhone owners (Apple sold about 10.6 million iPods in Q2 2008 compared with 1.7 million iPhones). Still, its applications give the iPhone one of its prime differentiators in the smart phone market. Consumers are becoming more and more attached to their mobile devices; phones are now more than an accessory – they’re as vital to the completion of an outfit as shoes are and like shoes, young people want to individualize their phones as much as possible.

Mobile device applications run the gamut from the utterly useless to the completely essential – and everywhere in between: the useful, the fun, the ridiculous, the awesome. While by and large iPhone apps serve to entertain iPhone owners with a short attention span, they’re also a big business. At a New York Tech Meetup earlier this month, we saw a live demo of the iRetroPhone app which turns your iPhone into a rotary phone that you can actually use to make calls. This app reportedly took a day to build and sold a whopping 15,000 copies in the App Store at $2.99 apiece (minus Apple’s 30% cut, that’s $30,000 in net revenue).

But Apple isn’t having all the mobile app fun. Yesterday was the official launch of the HTC Dream by T-Mobile, the first mobile device to run on Google’s Android operating system – the phone is set to be released for sale next month. Google launched an Android application development contest called the Android Developer Challenge. A total of $10 million was awarded to the developer teams that created the best apps. Examples of apps that won the top cash prize ($275,000) were cab4me (which will order a cab to the user’s precise location without having to know the numbers for any cab companies), CompareEverywhere (a comparison shopping application which will scan an item’s barcode and show the user pricing from competitors and product reviews), and Wertago (a social app that shows realtime information on local nightlife). Unlike Apple’s App Store, applications submitted for the Android phones will not be subject to approval before they become available at the store.

The line between cell phones and computers is becoming more blurred with each new development in mobile technology and applications are a critical component of that technology. Expect mobile applications to remain a game-changer in the smart phone market.

Francesca Bartolomey, Updata Advisors

Chances are that by now you know what Twitter is. Famous for its massive following, infamous for its outages, Twitter is a micro-blogging tool made popular by tech-addicted Gen Yers who just have to alert the world whenever they’re about to cross a street or order a sandwich or tie their shoes. Hit refresh every five minutes and continuous status updates from masses of friends (both real and of the Internet variety) provide endless hours of amusement when waiting in lines, walking to work, taking long car rides, etc. (Side anecdote: I was having dinner with a friend a few weeks ago and found out that dining just behind us was Patrick Wilson. As we were led to our table, the friend had seen him and updated her Twitter with the information. During a lull in our conversation, I checked my Twitter feed and that’s how I realized we were mere feet away from a celebrity. We were sitting within his earshot so to say his name out loud would have been horribly uncool.) But celebrity sightings aside, Twitter has more serious purposes as well:

Twitter Will Come to Current TV for Debate Chitchat
Earthquake in UK? News Broken on Twitter
Obama and McCain Sending Official Reps to Debate on Twitter

Twitter has even been known to thwart potential international incidents!

Initially dismissed as a pointless tool for ego maniacal young people who think the world is interested in their every exploit, micro-blogging has emerged as a serious tool for enterprises to use to encourage brand engagement and for internal corporate collaboration.

The CEO of Zappos is somewhat of a corporate pioneer Twitterer. Comcast even has a dedicated professional whose responsibility it is to monitor the Internet for Comcast bashing and respond; his Twitter feed is full of responses trying to placate unhappy Comcast customers. JetBlue’s Twitter feed (with over 4,000 followers) posts airline updates and responds to queries and comments from customers.

So intriguing is the idea of enterprise micro-blogging that several companies offering an internal solution have come to fruition. Yammer, which was launched at TechCrunch50 and won their top prize, is an example. Yammer boasts such enterprise clients as Cisco and Xerox. At the Web 2.0 Expo in New York, I met with Intridea whose latest project, present.ly, offers a simple, customizable Twitter-for-the-enterprise solution. Employees can use services like these to tap the collective knowledge pool of their company for help with an assignment, to circulate corporate news, or to post status updates on projects.

According to TechCrunch, Yammer signed 2,000 organizations up to the service on the day it launched. Clearly, micro-blogging isn’t just for the techie with the over-inflated sense of self anymore. It has already started to permeate the enterprise world as an effective corporate tool – both internally and also as a way to engage with customers. We see this trend growing as micro-blogging becomes more mainstream and users continue to bring the technology to work with them.

by Don More and Francesca Bartolomey

On Tuesday Google launched the latest effort in its battle for supremacy against Microsoft in all things Internet – the Google Chrome browser. Chrome has cool features such as sandboxing (allows tabs to run independently of each other – a crash in one doesn’t bring the whole browser down), a task manager that shows what sites are memory hogs (and lets you kill a tab without killing the entire browser), and a private mode called Incognito that prevents browsing activity from being recorded. More broadly, Chrome’s open source roots and design are meant to make it a better web application platform than Internet Explorer (IE).

Google and Microsoft have been going at it for some time now – search, email, office productivity applications, and now the browser. What’s next in Google’s arsenal?  Signs point to full-out war on Microsoft’s chief money-makers – Windows and Office. It’s no secret that Google’s ambitions extend to full-scale computing in the cloud, and Chrome is a key step as it provides an on-ramp to web application services. One small example of this is that Chrome lets users drag a tab containing a web application, such as Gmail, to the desktop where it looks just like a regular application – the browser’s tabs, buttons, address bar, and menus all disappear. While Microsoft’s franchises are not immediately threatened, Google’s combination of a web-based operating system, SaaS apps, and the market-leading search engine will present a growing threat.

So what does Chrome mean for the Internet browser market?  Currently, it consists of three primary players, but is dominated by Microsoft (see figure below). Some journalists and bloggers tout Chrome as the IE killer, but it could be that Firefox has more to worry about. Google and Mozilla (maker of the super-awesome Firefox browser) have historically had a collegial relationship.  Google’s foray into the browser space, however, looks as though it will result in, if not quite a direct hit on Firefox, at least collateral damage. Both browsers leverage open source and both appeal to the same demographic – the young and tech savvy. Microsoft, with 72% market share, has less to worry about; at this point if users haven’t migrated off IE to Firefox, it will probably take something seismic to get them to move – especially since IE 8 launched in beta last week with new cool features (private browsing, Web Slices,  and visual search,  to name a few). In addition, some are already highlighting security vulnerabilities that Chrome may introduce. Maybe Chrome is a good enough browser to lure the IE-faithful away, and will open up a new front against Windows and Office, but only time will tell.

Browser Market Share