Baidu Profit up by 80%

Chaina's most popular search engine announced that the profit of the latest quarter is up by 80%. It says more companies are stated showing Ads in their search engine and this makes the competition in online Ads more competitive.

Similar to Google, Baidu also growing fast and Google's exit from China helps Baidu to grow faster. Baidu has steadily increased its market share since Google Inc. closed its China search engine in March 2010 after saying it no longer wanted to cooperate with the communist Beijing government's censorship rules.

Baidu has increased its share to 76% from  64% same quarter last year. At the same time Google share went down from 31% to 19% during the same time frame.

Baidu, long seen as a Google copycat, has launched a series of initiatives including a music download service to expand its appeal and differentiate its brand.

Saravanan

Solarwinds announced their Q3 results

Solarwinds announced their Q3 2011 results. They haev done $53.9M in Q3. They have done more than projection ($51.9M) by the analysts.

Their Q3 total revenue growth is 31% y-o-y. They had a lower new revenue (license) $25.5 M 22% growth y-o-y. But their maintenance revenue is high. It is 28.4 M that is 40% growth y-o-y.

Their marketing and sales spending is high. It is 15M and it has gone up by 31% (y-o-y). They have a projection of $52.8 - $54.2M for Q4 and the year projection is $195M -$197M.

Their Spending to new revenue percentage is 55% this year and it has gone up by 3% y-o-y. This shows the competition is high in the IT market. There are more low and medium end companies coming into business and that make the Solarwinds to be more dynamic.

Solarwinds has a cash and cash equivalent at the end of Q3 2011 is $165.8 M which is dropped by $37M from Q2 2011 end. They have paid $35M to TriGeo aquisition during Q3 2011. They have released Two products Synthetic End User Monitor and Web Transaction Watcher. This is going to add value to their recent aquisition TriGeo product Event Log Manager Product.

Saravanan

Bid-per-Call in AdWords

AdWords is introducing bid per call in US and UK. With our Ads, phone number also will be shown and on getting a call, we will be charged for the call as well as the click. Similar to the Quality Score, Phone Call Quality Score also will be there to decide the position of the Ads.

When we start bidding for the call, Ads will be shown in computers and tablets and will be charged when we receive a call to that number. As this is new, there is a good possibility of conversion at a reasonable cost for the early users.

To take advantage of bid-per-call, select the option to use a Google forwarding number when we set up Call Extensions so that our systems can measure when a call to our business occurs. With bid-per-call, we'll also get the benefit of detailed call reporting right in AdWords, which includes:

• Summaries of completed calls, phone-through rate (PTR), and phone call cost on the Ad Group and Campaign tabs. 
• Details for each call, including call time, duration, caller area code, and the ad group that drove the call on the Dimensions tab. 

When we enable call extensions with a Google forwarding number, Google provides and displays a unique phone number in our ads, on both mobile and desktop devices.

If a potential customer calls the Google forwarding phone number from our ad, AdWords will route the call to our business phone number. We'll then be able to see the number of calls we received, including call duration and the inbound area code, in our call reports.


http://adwords.blogspot.com/2011/10/introducing-bid-per-call-in-adwords.html

Google Announced Q3 Result

Google has announced its third quarter earnings 9.72 billion 33% growth y-o-y. Google owned sites earned a revenue of 6.74b (69%) and the partners sites generated a revenue of 2.7 b 27% of the total revenue.

The paid clicks on the Ads in Google sites and the Adsense program has increased  28% y-o-y and 13% Q-o-Q. But the cost per click has dropped by 5% in Q3 2011 compared to Q2 2011.

Q3 2011 growth % is the best percentage of growth this year. Also this is the second best in the last couple of years.

In the recent past the contribution of US for the Google revenue is coming down. This quarter the contribution of US is 45% which is the lowest ever. It cam down from 46% in Q2.

The cost per click has gone down in Q3 compared to Q2. The core revenue of Google is Advertising revenue which is more than 90% of their total revenue (9.2b is their advertising revenue). The other revenue from GApps, Android and others are around 0.5 b only for the Q3.

Google is completely depending on their Advertising revenue which is dangerous for them. But there is no one to compete in that domain.

Saravanan

Creating a Payment Gateway Account

When you start a company, having an online store become essential. Especially when you start a SaaS business, getting the transaction done through online is one of the critical activities. Setting up store is comparatively easy in US. Most of the Payment Gateways support USD and transaction in US. If you want to do transaction in other currency or setting up store in other countries, the payment gateway must have international transactions enabled.

Identify the top few service providers. Check whether they are fulfilling your requirements. Then check charges for the transactions. The charges will be between 2.15% and 2.75% in addition to $0.25 per transaction. The rate for recurring billing will be different. Discuss with the service provider and get the account creation link. They will send you the account creation form after getting details like Transaction Volume, whether you have used the online transaction or not etc. 

If you are freshly starting the online transaction, you have to submit the company’s last two years revenue report. Once you receive the link, you have to fill the form and activate the account. 

For this, you need the below details

• Payment Processor
• Employee ID Number (TaxID) or SSN number of the owner
• US Bank Account
• Bank Name
• Routing Number
• Bank Account Number
• Bank Address
• US Billing Info.

You have to have a US bank account to start any sign up with the payment gateway. In addition to the Gateway you have to sign up with a processor. For doing transaction in AMEX, you must have the AMEX processor signed separately. The service provider like Merchente-Solutions will automatically link the AMEX processor to the gateway in addition to the Visa and Master card processors. 

In India, if you want to set up the store, it is very difficult. Most of the payment gateways like Google Checkout, PayPal, Authorize.net, ChasePaymentTech. are not supporting INR. In addition, from March 2011 onwards, these gateway providers must sign an agreement with RBI. If they don't sign that agreement, they are not authorized to provide online transaction service. Many providers not want to sign the agreement and stopped supporting in India. PayPal is working on the agreement (may be ready by this time) and they will definitely provide service in India.

Saravanan

Where is TN education system heading to?

At last the "Samacheerkalvi" has been in place after the Supreme court order. Is it the right? Is the syllabus is in competing with CBSE? Can we expect the kids will gain knowledge through the existing system?

There are different thoughts among parents. Many gave the comment that the syllabus is nowhere near the CBSE or Matriculation syllabus. It is two grade lower compared to the CBSE/Matriculation syllabus.

I was comparing the syllabus of two subjects Maths and Science. Maths syllabus was ok, but Science (which is core) is having very less content and in fact it is three grades lower than the CBSE. I just compared the syllabus only. The content and the type of evaluation are other factors that are entirely different topic.

Already the college education system is in a worst shape whereas the students are wasting three/four years of their life in reading subjects that are not at all helping their future life. If the basic education also in that direction, then it is going to be tough time for the kids.

In AP, more schools are becoming CBE in rural areas and the standard of the students in villages are improving. But in TN, we are doing the other way by bringing down the town/city students’ standard and we are keeping the village schools standard same. This is going to affect the next generation greatly.

In the present system there were very few students entering into IITs from TN. Last year we had only 200+ students from TN qualified for IITs where as 1500 + students got IITs from AP. There are other factors behind this count. Even then the number of students entering IIT from AP is 7 imes more than from TN.

TN had a poor performance in service commission exams few years back and now the trend has changed. In the recent years it has been changed. More people are getting top ranks in the service commission exams. The credit goes to few individuals/private centers that train and encourage students at free of cost or affordable cost. We hope the same will happen to our school education also.

Now most of the Matriculation teachers are uncomfortable with the syllabus and many of the managements are thinking of alternative. Mostly they will move from Matriculation system to CBSE. I feel in the next couple of years many schools will apply for the CBSE board and will move to CBSE system of education.

Saravanan

Google is aggressive in Acquisition

Google has been very aggressive in acquiring companies in different domain. Last week they acquired "Zave Networks" a digital coupon company. Already Google has "Google Offers" to compete with Groupon, adds Zave Networks to strengthen the service in that domain.

This year Google already acquired 18 companies. This is the second max. acquisition in any year (in 2010 it acquires 27 companies). They are acquiring companies in different domain. The major acquisition this year includes, Motorola Mobility (Android), AdMeld (online Advertising), BeatThatQuote (Price Comparison), Deal Map.

Last year they acquired ITA Software (online flight booking), Like.com (Visual Search Engine), Slide.com (Social Gaming) etc.

Google is proving that instead of developing in-house products/services, by acquiring companies that are strong in a particular domain, they can broaden their product line. As Google culture is always better than other companies, they are not getting any major issue in that area. In addition, they are doing more acquisition, and so they are becoming expert in addressing the culture problem. 

They are moving clearly in all directions and are going to be the most successful company for next few decades. 

Saravanan

Tracking the Ads performance from our own tracking system

Google has introduced a tagging mechanism ValueTrack to track the Ads performance from our own tracking tools. Today we are completely depending on google analytics/google conversion for the AdWords tracking. The new Value Track will help us in traking the Ads from our own logs.

When a user clicks the ad and visits our website, ValueTrack send information like, the search keyword, match type, keyword, creative etc with the logs. We have to add a parameter {adposition} with our destination URL. Google will pass the values with the url and from the details available in the URL we can generate various reports.

In the destination URL add the parameter. Below is the sample destination URL

www.solarwinds.com/?adpos={adposition}

Google will replace the parameter with the relevant ad information like "1t2" (Page 1, Top, Position 3), "2s3"

(Page 2, Side, Position 3) etc.

In the logs it will be seen ad

• www.solarwinds.com/?adpos=1t3
• www.solarwinds.com/?adpos=2s4
• www.solarwinds.com/?adpos=none

For more details refer the below links

http://adwords.blogspot.com/2011/08/tracking-your-ad-position-with.html

http://adwords.google.com/support/aw/bin/answer.py?hl=en&answer=178482

Saravanan

Steve Quits Apple

Apple CEO Steve Jobs quits Apple CEO. There was a rumor early this year he will quit Apple. But he went on medical leave and joined duty in April. After releasing Ipad in July he now quitting Apple. He will continue to be the Chairman of Apple Inc.

He is one of the successful persons who dropped out of school. Jobs was the man behind the success of Apple. The inventor of the Mac OS X, has introduced three great products IPad, IPhone and IPad. These three products are the bringing most of the revenue to Apple. In addition, the Mac also growing substantially.

Now Tim Cook has replaced Steve as CEO of Apple Inc.

Jobs is the founder of NeXT and Pixar. NeXT was acquired by Apple Inc. and Pixar was acquired by Disney in 2006. Jobs is a director in Disney and he is the max. share holder (7%)in Disney. Hours after his resignation, teh Apple stock dropped by 5% and Disney by 1.5%

Saravanan

Google Acquires Motorola Mobility

Today 80% of Google revenue is coming from Google AdWords. There is no big alternate product for them to make money. Even though the Android OS is there, there is no big revenue model for them. In addition, they have stopped its Google Labs (new inventions) completely. But they are acquiring companies that have established products in connection with their products and integrating it and increasing their opportunity to make money.

In the past, they had the top three acquisitions

• DoubleClick an online Advertising company for 3.1 billion
• YouTube a Video sharing product for 1.65 billion
• AOL doing business on Broadband Internet Access for 1 billion

All are used in internet based businesses. Today they have announced the acquisition of Motorola Mobility for 12.5 billion is the record acquisition value for Google. This clearly shows that their investment and the reach of the Android will be effectively monetized. This is going to be the future of Google. Even if Google loses its popularity of AdWords (recent days, the ROI from Google AdWords are going down) this acquisition make Google to move to a greater level.

With this acquisition, the 17,000 exiting patents all over the world and the 7500 pending for approval patents are moved to Google. This will help them in competing with the Apple. Now Microsoft has to be aggressive in getting into the deal with Nokia. They all already moving their cards but Google was aggressive and made the greater move.

They have already acquired mobile ad company AdMob for 750 million. Their expertise in Ads (AdWords) will ensure that they are successful in mobile ads also in future.

Solarwinds also doing similar approach of acquiring companies related to their flag ship product and by integrating it with their existing products, they are increasing the product width.

Normally companies will face culture problem during acquisitions. In the web3.0 world, most of the acquisitions become smooth. The Motorola acquisition is going to be a challenging one for Google and they will ensure that their business approach in mobile market also smooth and successful.

Saravanan

US Stock Market Fluctuation

In the last few weeks, there was a high fluctuation in the US Stock market. It went down to the lowest 10, 800 early last week and picked up in the later part of the week. But it is not going to be steady growth as there is a big challenge ahead for them. There is continuous lay off in private sector and less or no recruitment in government, it is going to fall further.

The European market fluctuations, adds fuel to the US economic problem. This may lead the DOW value go bel0w 10.000 mark or even 9,000 mark.

In the recent past most of the companies stocks gone down by 15-20% even though they have been performing exceptionally good in the last quarter. This is a great indication that the tough times ahead for US.

Saravanan

Experience on revamping an existing website

Our website has become outdated and the UI is now like 0.5 version in the web 3.0 world. We are now working on the new website. 

Our website is highly Search Engine Optimized and so we have to be very careful in our website design. The structure of our website should not be affected at the same time we have to improve the performance. 

There are two approaches in organizing the website. One is by highlighting the major domains that we are having and grouping the products under that category. The other way is providing links like Products, Solutions, Support etc. and listing the products and groups inside. Most of the major solution providers are following the second approach. But one of our main competitors is following the first approach. We are also following the first approach for the past Seven years.

We are categorizing the page into four.

• home page,
• main level pages or solution pages
• product home page
• product inner pages

The home page and the main level pages will come at the top for high level keywords. The product index page and the feature pages will come at the top for the product specific keywords.

We are tracking few hundred key phrases for the past Seven years and most of them are coming in top three positions or on first page. Now we have a big challenge that without affecting the SERP we have to do the new website release. In addition, we have a challenge that the new website should have very good UI as one of our other brands has a well-established user interface (a SaaS service).

We are doing a number of test (A/B testing, Number of click on a page, loading time, etc.) for the new pages.
 

We are using Google website optimizer for the A/B testing. In this we are comparing the old page and new page performance for the primary conversion. Once that is completed, we are using CrazyEgg tool for testing the number clicks we are getting in the old and new pages. Also we are working on the time spent by the user on our website.

We are doing these tests for few top product pages. We went for few designs and we settled with the top performing UI. Now the challenge is to polish the UI so that the look and feel and the usability of the pages are good. We have done three designs and finally we settled with the third one. One of the feedback was “it was just atrocious. I think it's worth just starting again from scratch.”

Here comes the big challenge for us. The new site is working on the conversion perspective but the UI standard is pathetic (from the comments we have received).

We are going to work more on the UI and then we will be rolling it out in the next couple of weeks. We have one more work pending is the page loading time. This can be started only when we finalize the UI. Over and above we have not yet worked on the content. We are doing the UI changes only. But it is supposed to be content as well as UI changes.

In the new design also we are following the same. This introduces a lot of limitations. Any how we have completed the design and make it ready. I hope the next couple of weeks are going to be very challenging as we are going to revamp it for better UI!

Saravanan

Impact on Global Economy due to US Credit Rating Downgrade

Standard and Poor's credit rating for US has been downgraded from AAA to AA+ on Friday. This is a big blow to the US economy. There was a rumor for the past few days that the US rating will be downgraded if US not increasing the debt limit. After a big discussion between the White house officials and the republicans, the debt limit is increased and the default is avoided.

In spite of the increase in the debt limit, S&P downgraded the credit rating of US. This is a historical change for US. Their rating was at AAA from 1917 onwards and for the first time it has been downgraded.

The strongest US economy is downgraded means how is it going to be for the other European countries like Spain, Italy rating. After the World war the global economy is rely on the US economy and due to this downgrade the world economy is going to suffer greatly. The main debtor of US is China which has the maximum investment on US Treasuries nearly 1.15trillion.


What is the impact of this downgrade to US?

Due to this downgrade the credibility on US investments is gone. The investors will start demanding for higher interest rates as the US securities are not reliable. This will have pressure on the interest rates of home loans, educational loans and credit card loans in US. Already US people are facing problem due to inflation and un-employment, this increase in interest rates will make them to reduce their spending. Already Government started reducing their spending. This will cause reduction in money flow that will result in the collapse of US economy.

How this is going to affect the world economy?

Global economy is completely on US economy as the trading currency is USD. All the countries are keeping a lot of USD and US Treasuries. If US economy collapses, the currency value will go down, the countries invested on USD (complete world has invested on US) will lose their investments value. This in-turn will affect their economy. The intensity of impact is based on the amount of USD/equivalent (Treasuries) investments by the countries. The major investors are China and Japan. China is already started giving pressure on US government. Japan has not yet recovered completely from their economic burst they faced in early 1990's and are facing tough time this year (Tsunami and Earth Quake impact).

Already European market is having great impact due to economic burst in Ireland and Greece. Now Spain and Italy is facing financial crisis. The US rating downgrade will add more pressure for them. European Central Bank is trying to support Italy bonds and Spain bonds that are losing its value.

In such a critical economic conditions, countries like Indonesia are improving. US and Europe are getting into the recession, now investors are identifying which risky and non-risky investments. China and Russia are shouting for the new trading currency other than USD for quite some time but there is no big alternate for USD for investments.

There are many other questions that will be raised due to this downgrade and there will not be an immediate solution for most of the questions.

How are they going to face the issues that are going the raise due to this?
What is the impact on the Global economy?
What is going to be Gold price?
Will there any change in the trading currency?
What is going to be the next step for China as they are the major debtor?
Will there be a great recession happen in US?
And so on.....

One thing is very clear that US must reduce their spending and start working on increasing their revenue. Even if they do so, it will take time to recover as this economic situation is reached over a period of time.

Saravanan

Solarwinds Q2 result anlysis

Solarwinds has announced their secon quarter 2011 results. They have grown 29% year on year in Q2. This is a good growth in-spite of the US economy threat. They have done 45.8M in 2. This is more than the Analysts prediction. Their new revenue for Q2 2011 is 21M and their maintenance revenue is 24.75 M. The new revenue growth is 22% and their maintenance growth is 36% year over year. They have grown by 5% compared to Q1 of 2011. Their customer base is also increasing drastically.

Their strategy is on acquiring more companies and increasing their product domains. In the past few years, they have acquired around five companies of different area. Initially they acquired Kiwi a free syslog server company. In Jan 2010, they acquired TekTools a storage company for 42M (had 60 employee company). The expected revenue from those products is around 3M.

In Jan 2011, they acquired Hyper9 a company that has Virtualization product for 23m (32 employees). In July they acquired TriGeo which has event log management product for 35M(65 employees). They are enhancing their product spread on IT management.

They have a spike in their Q3 growth every year (credit to the US Military fund release) and they maintain their new revenue for the other three quarter (How they are maintaining is a big question).

Saravanan

US Debt Limit Increased

On Sunday, President came to an agreement with Republicans to increase the debt limit. This will be put in the Senate and the house today the bill has to be passed. This is a great relief for China and Japan as there were talks that if the debt limit is not increased, US will go for Default which will affect their economy and in fact the global economy.

President is authorized to increase the max. debt limit by 400 billion immediately and an additional increase of 500 billion in debt ceiling has also been authorized to the President. The present debt limit is 14.3 tr. and it will reach 24 tr. over Ten years. US has gone for the increase in debt limit 68 times from 1960.

The increase in debt limit is not the solution for US. This is going to be a temporary relief for them. They have to plan such that they are reducing their spending and they have to control their budget so that there is no budget deficit in future.

Saravanan

Innovation and Execution

Innovation is one of the keys for any business's success. Secondly, if you are emulating any successful product early with competing quality, then you can see the success. There were many companies executed well and shown very great results. As there is always emulation new innovations happen, you have to keep innovating things and execute well to succeed in business. Innovation is needed not only in Product but in everything that we do.

Recently Apple announced their Q3 2011 results. They have shown 82% revenue growth in Q3 Y-O-Y. The iPhone sales count increased by 143% and iPads 182%. At the same time their iPod growth was 32% and Mac was 17%.

If you see the history of Apples revenue, after the initial success, they suffered many years until Steve took charge. Steve Jobs faces ups and downs during his initial stages. They didn't grow much until 2005. There comes their new innovation iPhone entered into the market. After the release of iPhone, they were growing year over year. In 2010, they released the iPad with the touch based similar to iPhone.

They made an exceptional growth in the first half of 2011 and the credit goes to Steve. Even though the tablet PCs are in the market, the innovation they made in the UI/Touch based and their perfect execution, brought them the success.

The other company that has shown great growth by mere execution is Google. Even though their main product is Search with unique algorithm and a great innovation, their AdWords is the main revenue bringing product. AdWords is a replica of the ad model invented and introduced by Overture.

Google copied that business model and introduced it in early 2000. They executed very well and keep introducing new models and new schemes like AdSence into AdWords. Their aggressive improvements and the reach of the search made them to grow exponentially. In addition to this, Yahoo was using the AdWords for Yahoo marketing for some time that added value to the AdWords growth. In 2003, Yahoo acquired Overture and moved to their own Ad hosting service. But they were not able to compete with AdWords and merged it with Microsoft Adcenter.

Today AdWords is the major revenue contributor to Google. More than 80 % of the revenue of Google is from AdWords. Even though Android is picking up momentum, it has not yet reached the great revenue mode.

Google has reduced their inventions (Google Labs is stopped and most of the Google projects are stopped after Pages taken over as CEO), they are concentrating on the existing market and they want to grow by executing well. This(reducing the experiments) might be a wrong move but they may excel as their execution is exceptionally good.

The third example is Nokia vs Samsung. Nokia was dominating the phone world in the early and mid-2000. But after the introduction of iPhone, they didn't change and they are almost lost the battle. At the same time Samsung keep themself adopting to the latest changes and they were keep releasing various models competing with iPhone, they were able to perform (even though they are facing legal issues).

Saravanan

Credit Card Processing Flow

In the cloud world, setting up an on-line shop is one of the core business activities. Recently there were many cloud applications like Zoura, Magento, etc. Setting up an on-line store and connecting it with a payment gateway/processor has become easy now. There are many providers provide API to integrate payment gateway/processor to our on-line shop. Some of the providers are

• PayPal,
  
• Merchante Solutions,
• Authorise.net
• CyberSource
• ChasePaymentTech
• Paymentonline
• Zoura
• CCAvenue
  

The payment may be one time payment or recurring payment. The payment process is happening in two steps Purchase Authorization and Settlement

Purchase Authorization Process

In the Authorization process, the users' credit card validity is checked in addition to the availability of fund in the credit card. The following are the steps.

1. Customers will add the product to the cart in the online shop and checkout.
2. He will provide the credit card details and proceed to checkout.
3. The transaction will be send to the payment gateway by the Merchant's shop.
4. The Payment gateway route it to the Processor.
   
5. The Processor will send the transaction details to the Issuing bank (Visa/Master/AMEX) and validate the card details and check the availability of funds.
6. The issuing bank returns the Transaction result to the Processor.
7. The processor routes the result to the Gateway and from there the result is sent to the Merchant's shop to proceed for the further action (shipping of goods or decline message).

Capture and Settle Flow

In the Settlement process, the issuing bank will settle the amount to the merchant's bank.

1. Merchant request the payment gateway for the settlement of the transaction.
2. The gateway sends the request to the processor.
3. The Processor sends settlement payment details to Customer's credit card Issuing Bank; at the same time the Processor sends payment details to Merchant's Acquiring Bank.
4. The Issuing Bank includes the Merchant's charge on the Customer's credit card statement while the Acquiring Bank credit's the Merchant's account
   

Fraud Transaction

In many online shops, the big challenge is the fraud transactions. Even if we have the secured websites (SSL Certificate enabled), there will be many fraud transactions happen. To minimize this, we can enable the AVS (Address Verification Service) check enabled. In AVS check, the address mapped to the card also will be validated. In addition, we can check the Card Security Code (CVV2 for Visa and CVVC for Master and CID for AMEX). This is one of the good check against fraud. In the store this field should not be shown (show it as password ***).

PCI Compliance

The store should be PCI compliant to do online transaction. There are Four levels in the PCI for merchants.

Level 1: Visa/MasterCard transactions totaling 6 million or more per year. This level also includes anyone who has been caught with a data security breach.

Level 2: Transaction levels between 1 million and 6 million.

Level 3: E-commerce transaction levels between 20k and 1 million.

Level 4: E-commerce transaction levels up to 20k. This includes all merchants processing 1 million transactions per year, regardless of what channel they are in.

We have to scan the servers through approved vendors and we have to submit the Assessment Questionnaire, which may be self or by the approved vendors based on the level.

Online shop should not store the credit card. If you want to store the card details, you must have a higher level of PCI compliance with the scanning of servers with physical periodic auditing by approved vendors.

Saravanan

Companies Performance vs US Economy

In spite of turmoil in the US economy, the US companies are performing extremely well in quarter ending June 2011. Already Google announced a record breaking 32% growth (9b) y-o-y. Infosys has shown 30% growth y-o-y and 10% q-o-q.

Today EMC a SaaS based end to end solution provider announced their Q2 result. They ended this quarter with 4.9 b. They have grown by 20% y-o-y and their profit is 28% y-o-y. Their US revenue is 2.5 b grown by 17%.

Apple has 28b revenue in Q2 2011 and a profit of 7.3b. This is their record sales and profit in any quarter. The revenue growth is 82% y-o-y and profit growth is 125% y-o-y.

The iPhone and iPad no. of sales made a record triple digit growth. iPhone sales increased by 143& and iPads sales increased by 180%. The iTunes growth is 32% and Mac growth is 14%. Even though their growth is not substantial in Mac, they have shown a big growth from the new innovations.

The main sales of iPhones and iPads are from China. They have created more online stores this year and mainly out side US. Apple is projecting their growth in terms of number items sold than the amount. This shows they are foreseeing their maintenance revenue (easy money) from upgrades. As they are charging for the upgrades and appliance, it is going to be substantial in future.

Many companies are showing growth this year in spite of the economic problem. What is the difference between the Govt. and these companies? What is missing in US administration? How do these companies making money? How can Govt. gain learning from these companies? Many hows and whats are there.

The main difference is these companies are keep innovating things and are moving fast on their execution. Govt. still has the old policies and keeps trying old failure things. Over and above they wait for things to happen. In the cloud world if you are not innovative or if you are not executing well survival it self is a big question mark. It is not for the Govt. it is applicable for everyone.

We can say companies are small compared to the Govt. How can you compare both? I don't want to do an apple to apple comparison. Govt. should learn from the type of changes made by these companies to grow. Apply similar strategy that is applicable for the Govt. Do changes in the policies and execute fast. We can bring it back. It may take time, but we will have a long term solution. By doing temporary solutions, we are postponing things that will bring us a calamity.

Excellence Matters

What ever we do we want make it perfect. Is perfection gives the completion of work? Not so.

When we do things perfect, our mindset will be on timing, more concentration on the work that we do by ignoring the long term vision, more stress, and un-satisfaction in the work we delivered.

When we work for excellence, we can do it with enjoyment, we can think on high level and we will be working in a relaxed way. We will have flexibility and adaptability in our work, there will be a continual progress and learning and more over we will have work satisfaction.

In the recent, we were doing a major shift in our office. I was responsible to deliver one of the major activities. There was a heavy pressure in our work. Many unexpected issues creep up. We were able to solve all the issues. Still we are working on some surprises. And we have confidence in completing it and learn out of it.

We had a good satisfaction and the team members are relaxed. They have done an excellent work. Still many issues are open and I am very confident that they will complete it.

At the same time, there is another project that I am handling in parallel. In that project we are concentrating on perfection of all small small items and it is dragging like any thing. I have complete dis-satisfaction in the progress and there is a big delay in it.

Of course there are too many dependencies in that but when we work on excellence, our mind set will be work on big picture and will progress continuously and learn many things.

How to move from perfection to excellence?

• Get the real picture of the work and do it in small steps.
• Prioritize the work and identify the important work items.
• Delegate the work and set the expectations.
• Get guidance from the experts on the different areas of the work where you lack expertise.

Saravanan

Google Announced the Q2 2011 results

Google today announced their Q2 results. They completed the second quarter with 9.026B, the highest ever. In the last three years, google has done 1%-2% growth from Q1 to Q2. This year they did 5% growth. Their Y-on-Y growth is 32%.

It was expected that Google will do around 8.6B in Q2. And it is a great surprise for the new CEO Larry Page.

The AdWords made 18 % growth which is lower than the comp any growth. US revenue is 46% and the rest of the world revenue is 54%. This is the lowest US quarterly revenue percentage in the last three years. Their UK revenue is flat.

Google increased their headcount this year by 2,450, this is the biggest increase in Google history. Larry Page said, 2011 is going to be the year of maximum recruitment.

Their performance shows there is no threat for them by the US economy situation.

Saravanan

US economic situation worsening

In spite of the best week (June last week) for stock market, and improvement in the stock market, June had a drop in the jobs in US and the unemployment problem is creeping up. The US just added 18,000 jobs in June. The unemployment percentage increased from 9.1% in May to 9.2% in June. This is the max. after Dec 2010.

The unemployment percentage is more than 16% including the "Discouraged Workers" who were stooped looking for job or under employed. Th unemployed numbers increased from 8.2M in Q2 2008 to 13.9M in Q2 2011. This doesn't include the discouraged workers. The highest was 15.3M in Q4 2009.

In 1930, the unemployment was 24% which includes "discouraged workers". The present situation is heading towards that. In the last 16 months, there were 2 million jobs created and 8 million people last their job. This is one of the worst situation US is facing in the past few decades.

In addition, the US debt is now 14.3 trillion and the bills for payment is crossing the debt ceiling. Once the debt ceiling is reached, US treasury can not auction the Treasury notes, bills, and bonds. Either they have to default, in which case, consequence in US economy will be significant or they have to increase the debt ceiling.

US Congress has raised the debt ceiling TEN times in the last 10 years. In 2008 and 2009 alone, they have raised the debt ceiling FOUR times. US government has no money to pay the bills on August 2011. Before August 2nd 2011, they have to increase the debt ceiling.

Even if they increase the debt ceiling, they have to control their spending and increase the internal revenue otherwise they will reach the debt ceiling soon as their budget deficit is around 1.5 trillion every year.

They have to

• Cut in their gov. spending
• Cut their Defense spending
• Healthcare spending
• Do proper Tax changes
• Increase the internal revenue
• and more...

As the economic drop has happened over a period of time, the recovery will not happen over night. It will take few years for them if they work on right ways to improve it. If they still work on short term solutions, it is going to be a great depression for US.

Saravanan

Wall Street closes maximum in two years

June last week is very good for US stocks market. Dow Jones closed July 1st week as the best week in last two years. We are seeing increase in NASDAQ index for many companies. The increase was helped by the manufacturing data that eased the concerns about slowing growth.

Google NASDAQ index increased from 474 to 521 in last week of June. This is 10% growth in the last one week.

Similarly we are seeing steady growth for BMC. It was at at 51.64 on July 24th. From there it moved to 22.79 on July 1st. CA improved by 7% in the last week. HP growth is 6% in the last week. Apply up by 5%. The CISCO has gone up by 6%. It was performing very poor in the last few months.

Solarwinds index steadily increasing in the last one year. The price was low at 12.42 in July 2010 and it is increased to 25.92 in July 1st 2011. This gives the hope that this year the market will recover in the second half.

Saravanan

Is it good to study Plus two Vocational group?

My friend's son is an average student and so he put him in vocational group as it is easy for him to perform. He did exceptionally well and got a very good marks in +2 vocational course.

I was asking my friend not to worry as the score is enough for his son to get BE civil in good one of the Chennai colleges. In spite of that, he tried many engg. colleges for admission and all didn't give him seat as he is a vocational student. The pity thing is he wants BE Civil.

At last he got admission in Adiyamaan College of Engineering (Management Quota). I was very confident that he will get on merit. When Anna University announced the ranking, he got 200+ ranking.

Today he attended the Anna University Counseling. There was vacancy in BE Civil in almost all Chennai Engg. colleges. but he gave Adiyamaan Engineer college as the only preference and got admission on merit. He was happy that he got through merit.

I used to predict things on intuition. Most of the times it will happen. Recent past it is not working out as I loose concentration on analyzing things. But this one worked.

Saravanan

Google Toolbar update for PageRank

This week Google updated its toolbar for PageRank. Google will do the PR update thrice a year but this time they did the change after one year. Many of the websites got higher position. The websites that concentrated more on the content has gone up in position. SEO specialists are saying, back link as one of the major factors for the PR improvement. I feel the major factor Google considered in this update is the CONTENT.

The first reason being this update is happening immediately after the Panda 2.2 and in Panda 2.2 pages that are having real content are gaining position. The second reason is our own experience on one of our websites.

We have one of our product pages highly optimized for Google which is the best SEO page of our website. We were submitting links for that product page religiously for the past six months. But the content never changed.

At the same time, in many of the products, we were revamping the content a lot in addition to the site submission. The intensity of the site submissions is lesser than our best product.

Most of the other pages got improvement in PR but our best product page PR didn't change. This show, existing PR update consider mainly the content change. We cannot conclude anything as this is like "Google Dance" will last for 48 hours.

What ever it is, the PR increase != Traffic increase.

Saravanan

US unemployement rate is more than the disclosed

According to US department of labor the unemployment is 9.1% as on May 2011. That is 13.7 M. The dropped out and under employed people are not considered in the above list. In May, the number of long-term unemployed (those jobless for 27 weeks and over) increased by 361,000 to 6.2 million. This number will continue to increase as the unemployed move through the duration categories. But this number is not the actual number.

In the above image, the unemployment was in peak in early 1980s. That time that is
before Clinton administration, the unemployment percentage was calculated inclusive of "discouraged workers". Discouraged workers are those who tried for job and gave up as they didn't get job. Many of them are more than 50 years. The above doesn't include the "Marginally attached" workers. They are people who are available for jobs but not joining any job due to child care or transportation cost.

US must address this problem as this is growing seriously. Otherwise a great depression is unavoidable.

Google updated Panda 2.2

Google has updated its search algo Panda 2.2 last week. Most of the websites started getting the traffic slowly back. All the traffic drop happened for them during the Panda update earlier this year.

We are able to see the increase in traffic in our website. In the Panda update G removed low quality content websites and gave tips to think like Google to have a quality website.

http://googlewebmastercentral.blogspot.com/2011/05/more-guidance-on-building-high-quality.html

We have to give high priority to CONTENT and we have to stop tweaking the pages for Google. In addition to this, we have to give importance to the page loading time. These two are the primary factors for any page to be on top of SERP.

Is US heading towords another recession?

US stock market is down continuously for the sixth week. This is the worst in nine years. If this continues for one more week, then this is the worst state after the 2001 Dot Com bubble.

QE2 is going to end in June 2011. Now Fed. is releasing more risky mortgage bonds and are bought by big banks. This makes the Fed. monetary base as high. This may be the starting point for the recession

Some of the signs for the recession are seen recently.

1. The Unemployment rate is increased to 9.1%
2. The Dow Jones is falling down continuously.
3. tax receipts from households total less than the government paid out in unemployment
4. One out of every four dollars that the U.S. government borrows goes to pay the interest on the national debt.
5. China has announced that they are going to be reducing their holdings of U.S. dollars.
6. Americans are planning to slow down their spending due to price increase.

Below is the comparison of "Great Depression vs Great Recession".

		Great Depression		Great Recession
Bank failures	9,096 – 50% of banks (Jan. 1930 – March 1933)		57 – 0.6% of banks (Dec. 2007 – May 2009)
Unemployment rate	25%		8.5%
Economic decline1	-26.5% (1929 - 1933)		-3.3% (Second quarter 2008 - first quarter 2009)
Biggest decline in Dow Jones industrial average	-89.2% (Sept. 3, 1929 – July 8, 1932)		-53.8% (Oct. 9, 2007- March 9, 2009)
Change in prices	-25% (1929 – 1933)		+0.5% (Dec. 2007-March 2009)
Emergency spending programs	1.5% of GDP for 1 year (Increase in 1934 budget deficit)		2.5% of GDP for 2 years2 (2009 American Reinvestment and Recovery Act)
States’ response	Raise taxes, cut spending		Federal stimulus plan gives fiscal relief to states to lessen impact of tax increases
Increase in money supply by Federal Reserve	17% (1933)		125% (September 2008 – May 2009)

Some of the values of above Great Recessions are already reached now. Is it going to be another recession? Or Is US heading towards a "Great Depression"?

Saravanan

Groupon IPO - Is it a high risk in Social media?

Groupon a website that offers daily discount on local merchants has filed for an Initial Public offering. In Dec. 2010, Google offered 6B to acquire Groupon was rejected by them. They raised a fund ($950 M) in January 2011 and most of the money was paid to the employee and the initial investors ($810M). At the end, around $135 M was used to run the company.

They are investing more on the marketing, Sales and Administrative expenses. Their net LOSS for the year 2010 was $390M. Their marketing and selling spending was more than that of their Cost of Revenue. The letter from ANDREW D. MASON CEO of Groupon Inc. says

We don't measure ourselves in conventional ways.

There are three main financial metrics that we track closely. First, we track gross profit, which we believe is the best proxy for the value we're creating. Second, we measure free cash flow—there is no better metric for long-term financial stability. Finally, we use a third metric to measure our financial performance—Adjusted Consolidated Segment Operating Income, or Adjusted CSOI. This metric is our consolidated segment operating income before our new subscriber acquisition costs and certain non-cash charges; we think of it as our operating profitability before marketing costs incurred for long-term growth.

If you compare the first IPO filings of the two companies, Groupon and Google, there was a profit for Google $143M when they went for IPO where as Groupon has a loss (389M) in 2010 and 102 M in Q1 2011.

Also when you compare the business model of other successful Social Media companies like Facebook and LinkedIn, where their marketing spending and sales spending is less to bring in customers where as Groupon is investing more on that area.

In addition, there is a continuous drop in the US economic growth for the past six weeks, and policy makers started controlling the headline inflation instead of the core inflation.

The Weekly Leading Index (WLI) Growth indicator of the Economic Cycle Research Institute (ECRI) declined to 4.9 from last week's 5.0. This is the sixth consecutive week of decline from the 11-month interim high of 7.8 for the week ending on April 15.

Wall Street Journal says 3 reasons to worry

1. Crazy Spending
2. Early investors taken out around $1B
3. Wrong timing.

Jason Fried of 37 Signals was a board member of Groupon and now an advisory to the company says "spending less than you earn is the only way to have a healthy relationship with money."

This is going to be a big risk, which Andrew says as "We aggressively invest in growth" & "We are unusual and we like it that way".

Saravanan

Social Pressure

I have a strong feeling that getting an ENGINEERING Degree is a criminal waste of time and money. My daughter was interested in Architecture (some study related to Art). She was seriously preparing for the NATA exam. But unfortunately she scored lower marks (I think we made mistake in putting her in state board from CBSC), and I thought B.Arch is going to be tough for her and I suggested her for Degree in Visual media. She is also accepted and my daughter and my wife got applications from few colleges in Chennai.

Once this news spread to my close friends and family members (all are well wishers of me and my family), they stared calling me and asking me not to put her in the visual media and asked me to put her in BE. In fact everyone said the same reason for putting her in BE, which really hurts me. Same time my daughter attended a "Free counseling for Plus 2 students" and she has decided to go with engineering degree.

My BIL said I must ignore all their comments. But I didn't.

At last I convinced myself and I admitted her in one of the Chennai colleges BE computer science, a course that I HATE IN MY LIFE (even though it is my profession). I gave my daughter an option to take Civil!!!!!!!! But she said, she is not interested in Civil.

Saravanan