Hey, Check(me)out at Google!

Unless Google solves security & micro-payment issues, its online payment service Checkout can't beat PayPal The online payment industry is on a roller coaster ride and everyone, including merchants, consumers and banks, is contributing to its revenues. In US alone, this industry accounts for $12.5 billion in revenues now, as compared to $8 billion in 2003. To capture the growing billion dollar industry, companies like Yahoo!, Microsoft & AOL have launched their own online payment services over time. The most recent to join this herd is the internet giant Google, which came up with its own adaptation of online payment called Google Checkout.

The fact that companies like Microsoft, Yahoo & AOL did not find the requisite customer backing for their own version of online payment services makes this venture risky. AOL's Bill Pay, Yahoo's Pay Direct and Microsoft 's Passport had issues of security and privacy that deterred their popularity amongst the masses. However, Yahoo has made a second attempt by partnering eBay, and has integrated eBay's online payment service, PayPal, just a month ago.

It is surely gutsy of Google to cross the thresholds and enter into a business that has not been acknowledged well by the consumers in the past. But the Checkout service from Google counts itself to be in a different league. It amalgamates well with Google's search & advertisement service - it enables users to find a product using Google search and pay through its own Checkout service. Salar Kamangar, VP Product Management, Google explains, "In the offline world, shoppers don't tolerate long lines and tedious data entry just to buy something. Google Checkout simplifies and improves the online purchase experience for both consumers and merchants."

Through its Checkout service, Google has been able to attract retail merchants; as now, they will not have to set up a separate payment processing account with PayPal or other conventional card processors to perform a transaction. Every service would be accessible through a single login. It also helps them to work with Google's advertising program, Ad- Words, and rationalise the payment process, thus adding customers and increasing the sales. Thumps Leo Kivijarv of PQ Media, "This isn't really about consumers, this is about advertisers. That is, Google is launching this service to generate more ad dollars because of the incentives that it has attached to those merchants who use their system, such as waiving transaction fees if the merchant uses their keyword search advertising."

But the fact is that even Checkout has its own limitations as it does not have a person-to-person or micro payment solution unlike Paypal, which provides the handiness of making payments to anyone with an email id. Also, like any other online service, Checkout is incapable of ensuring an absolute secure & private transaction, a reason that has led to the collapse of many online wallets. Commenting on the safety issue, Leo says, "Consumers are still wary of giving out their credit information online, though less so than in the past," and says that "the rash of identity theft during the past 18 months" has also brought it bad name.

To cut a long e-story short, Google must not only deal with the problem of fraud that in 2005 alone cost $2.8 billion, but also solve the issue of individual payments if it wants to really dislodge PayPal from the number one position...

Pam's new sPam!
Stop illicit domain registrations

(column by Akansha Pradhan)

Now isn't that a pretty picture of Pamela Anderson in your mail? But do you know she can be hazardous? Potentially toxic? Yes, the email that you've received is not just a sultry picture of Pam, but an image-based 'S'pam!

In the past three months, spamming overall has registered a 40% growth. This June (compared to same period last year) out of all spam mails 12% have been image based; and data from SenderBase (email traffic monitoring service) shows that over 5 billion image-based spams are being sent out each day! These emails, instead of having text that suggests certain 'enhancements', contain an alluring .jpeg or .gif picture that carries embedded within itself a spam message. "If the filter is not equipped to detect & block these highly sophisticated attacks, end-users are deluged with spam... causing severe communication disruptions and major productivity losses," asserted Tom Gillis, Senior VP, IronPort Systems - a leading email & web security products provider.

Though such attacks were prevalent sometime back too, the dynamics of the game have changed. Images are tampered slightly each time (like increasing the size a bit, or changing the colour of the picture's edge) so that these variations make them unique and let them easily slip past conventional filters that might have blacklisted them in the past. Though there are products by Commtouch RPD that check for data patterns in similar emails, Iron- Port's 'reputation' system of sender's ISP and spam pattern checks, and others offered by Reflexion Network and Cipher- Trust, the true solution lies elsewhere.

Spams usually direct one to web links that expire in just 4 hours as compared to last year's 48 hour time frame, further hindering efforts by network filters to blacklist such sites. Spammers are abusing the domain name registration process, making websites active without checking into any details or track record of the requester. In fact, in April 2006 alone, 32 million domains expired of the 35 million plus registered due to non payment of services. Not only are domain registrars losing money, but helping generate spammers. Interestingly, a controlled process of domain registration & collaboration with anti-spam vendors would immediately help nip the problem; and it's extremely surprising that this is not being undertaken on a most urgent basis. Guess Pamela is reaching your email embedded with more than just silicon...

(End of Akansha Pradhan column)

More excitement in the living room
Telcos must use their networks to venture into television services now

(column by Siddharth Nahata)

How about having a combo of TV, phone, internet & other value added services? Exhilarating, isn't it? The idea is to unify traditional cable and telephone lines. That's the vision of telecom giant AT&T when it launched their IPTV (television over the Internet) service, U-verse, late June, 2006. The service integrates IT and telecom services into one bundle.

Cut to India, and Hansraj Narayanan, Media Analyst, Networth Stock responds, "There's a huge potential in this industry, but the existing players haven't been able to capture this potential." The likes of Zee and Doordarshan are still struggling to gain significant ground with their Direct-To-Home (DTH) service that has been around for almost more than a year; lack of attractive packages & any other value added service is to be blamed for that.

Critics argue that shifting consumer from local cable providers to corporate aficionado would require more bait. Though many telecom & media heavyweights like Reliance, Tata, Star, Sun et al are eyeing the huge potential in the organized Indian cable market; the bundling of various services holds the key to differentiate one's offering from another. IPTV based Reliance Bluemagic is likely to be launched in 2007 and may have the upper hand with its established web of fibre optics across the nation. It would be easier for Reliance to offer fascinating services like high-speed internet, telephone, et al. Furthermore, IPTV users have a multitude of channels to choose from. Hansraj says, "Seeing the potential of IPTV, the DTH revolution may be short lived." Point is, it's a time of convergence, and telcos, to remain in the running, must now offer more than just basic connectivity. Players like Airtel, Idea & Hutch must not restrict themselves to just TV on mobile, but also spread into the living rooms.

(End of Siddharth Nahata column)

'Katz' got your tongue! True patent lies...
The case of the Katz' patents indicates serious flaws in the US patent regime

The American legal system baffles the rest of the world. Some will say that it is what you get when you continue to use a legal system that was mostly inspired from iddle age England and carefully craft ed by 18th century lawyers for the benefit of the colonial bourgeois. Some will say that it is the ultimate expression of freedom, where anybody can have his or her wrongs righted in the courts of law.

Whatever you may think of it, the system has its hiccups sometimes, and could, under the alleged rights of a few, affect many. The most recent example is the Blackberry and the continuous court battle that recently threatened to stop the service to millions of users. There are old and recent examples of the same kind that sometimes border on the ridiculous. These are the ones that baffle the world.

On June 29, 2006, PRNewswire announced that ValueVision Media Inc., known to the public as ShopNBC, has taken a license under the patents held by Ronald Katz Technology Licensing regarding the use of its order phone line. Ronald Katz' portfolio of licensees includes more than 150 companies (including names such as American Express, Microsoft & IBM), according to PRNewswire. What is indeed the technology licensed by Ronald Katz? Well, its not a technology really. Ronald Katz actually never created anything. In August 1997, Forbes magazine had a story about Katz stating that "his detractors believe that Katz isn't an inventor so much as an exploiter of the US Patent and Trademark office." The patents that Ronald Katz holds seem to cover technologies that are used in automated call centres, mostly the ability to cobble together telephone, Voice Response Units (VRUs) and databases. Anyone who uses these technologies together, in what seems to be an accepted aggregation of technologies the world over, is in fact infringing on Mr. Katz patents. Nothing was actually invented and patented by Ronald Katz: It's basically the process that puts these technologies together, which is the object.

Two things are actually at work here. One is the fact that things like operating processes and methodologies can now be patented in the US, with the consequence that anyone can claim to have invented the fact methods for cashing checks, for example. Second is the fact that, at least when Ronald Katz patented his ideas, patents could actually have been left dormant and be updated from time to time as the technology progressed until such day that it was interesting to have it issued and used in court against target companies. Allegedly, Ronald Katz stands to make a couple of billion dollars from its patents.

What is happening mostly here, is that faced with litigation and lawyer fees; many companies prefer to pay the piper and get Ronald Katz off their hair for a license fee. To support Katz' claims, a number of companies which decided to take him to court, have effectively lost, which gives him plenty of precedents to become a business threat.

Other examples abound in the United Sates. One that I find the most hilarious is Georges Baldwin Selen. In 1876, at the Philadelphia Centennial Expo, Selen saw one of the first gas engines created by a Mr. Brayton and thought about putting it in a vehicle. Of course, many other people had the same idea at the time, starting with Cugnot, who presented a self propelled tractor, very similar to what Selden had dreamed of, back in 1769. Lo and behold, such a patent was presented by Georges Selen in 1879 for a road "locomotive" using a front drive composed of an internal combustion engine using gas. This did lay dormant for a number of years, until a final issue in 1895. For those who are not automotive engineers and historians, 1894 was a very significant date: The first automobile race took place between Paris and Rouen. While the winner was a steam-propelled car, the next car was a Peugeot, using a petrol engine. Mind you, Selen never built a viable car: All that was paper. At the beginning of the last century, automobile manufacturers actually paid a license fee to a company called Columbia Electric Vehicle Co. (CEVC), which had the ownership of the Selen patent. They even created the Association of Licensed Automobile Manufacturers (ALAM) to actually manage the auto industry in the United States through the Selen patent. Then came Henry Ford and the French manufacturer Panhard et Levassor, who flatly refused the blackmail. Dragged in court, they initially lost against ALAM, thanks to a judge who did not understand anything about cars (we are in 1903) and touted Selen as the "Inventor of the Automobile." Thankfully, on appeal, the case was reversed and in 1911, the ALAM claim became void.

That someone could claim in 1895, after all the European patents on engines and cars, to be the creator of the automobile concept, and to find people to pay him licenses puts Ronald Katz' story in another perspective: Anything is possible and while I cannot judge whether Ronald Katz patents are valid or not, the fact that judges ruled in his favour is far from being proof positive of their validity.

Fortunately, Katz patents have no validity in India, and this may be why US call centres are relocating. On a final note, any foreign technology company that is entering the US market should be aware of the patent trap, and make sure that they can operate there without such a cloud over their head. Today's innovations are not like the invention of the wheel: They are the sum of a number of existing technologies, to which a key element has been added to transform it into a successful solution. If anybody can put a patent around a concept rather than a technology, then we may well end up paying license fees to half of the world.

The US Congress has been shaken by the Blackberry Saga, and is working in reforming some of the patent laws. But there are strong vested interests at play, most notably, those of the pharmaceutical companies, which are of course very interested in continuing with solid and stringent patent regulations.