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Microsoft Pri0

Welcome to Microsoft Pri0: That's Microspeak for top priority, and that's the news and observations you'll find here from Seattle Times technology reporter Matt Day.

February 25, 2010 at 9:13 AM

GSC: Day 3 begins with talking cloud computing

SAN FRANCISCO — I am reporting from the Goldman Sachs Technology and Internet Conference. Marc Benioff, chief executive officer of, just took the stage to talk about cloud computing. I am livetweeting throughout the day at

Today is the final conference day and it only runs until 1 p.m. but Netflix, Cisco and online video companies like Boxee are scheduled to do Q&A sessions with Goldman Sachs analysts and investors.

Here is a roundup of what happened Wednesday:

SAN FRANCISCO — Investors met with a motley mix on the second day of Goldman Sachs’ Technology and Internet Conference, ranging from a Federal Communications Commission wonk to CEO personalities such as IAC Chief Executive Barry Diller.

The mood was one of tempered optimism about the economy, ranging from eBay Chief Executive John Donahoe’s comment, “We see slow, steady improvement,” to Expedia CEO’s Dara Khosrowshahi’s observation that business travel is coming back.

The more colorful topics included the Siberian vodka Donahoe drank on a recent tech-delegation trip and Diller recounting how just the other day he saw a naked person lying on the floor in his New York company’s building filming a video for IAC’s CollegeHumor comedy site.

Because it was an investors conference, there was much talk of net revenue rates and gross merchandise volume. We spare you the metrics and instead share some highlights.

IAC: Diller predicts Microsoft’s Bing is going to be very competitive.

Asked for his thoughts about the search engine after his keynote session Wednesday, he said:

“They [Microsoft] surprised a lot of people positively. They’ve done really good things.

“I think they are going to be very competitive. They haven’t been frivolous up until now, but now they have so much potency of purpose.”

In his keynote, Diller had definite opinions on how to build search traffic from his experience on, the search engine owned by IAC. did a marketing campaign to increase search traffic, “which we found to be just wasteful.” Microsoft is spending an estimated $100 million to market Bing and build its brand. “You cannot take Google head-on and think you’re going to take on share,” Diller said.

What does work, Diller said, is distribution deals. “You can gain share in search when you have distribution relationships, which MSN, Microsoft, has been very aggressive in doing,” he said.

Diller likewise had definite views on paid content on the Internet. He believes people will pay for online content. Not all of it, but they will pay for premium content.

“The whole shibboleth that people will not pay for things on the Internet is old mythmaking twaddle by techies,” he said.

IAC owns several Web sites, including Daily Beast, CollegeHumor, Citysearch, and

“If you want premium content, then you’re going to — and I think willingly — pay for it,” Diller said, drawing a distinction between premium content and commoditized content.

The future pay model will include both micropayments and subscription, he said.

eBay: eBay considers itself the Costco of online retail. Not Value Village.

CEO John Donahoe, fresh off the plane from a tech-delegation trip to Siberia, was asked by an investor Wednesday: “I always worry Amazon is going to clip your growth as you go to fixed price [sellers]. Why don’t I have to worry about Amazon every time you talk to a reporter?”

Over the past 15 months, San Jose, Calif.-based eBay has restructured its online auction Web site and pricing to attract large sellers who sell lots of items — like 10,000 at a time — at a fixed price. The company has historically been stronger in the secondhand market through its auctions.

Donahoe said online retail “is not going to be a winner-take-all market.”

“If you take a look at the offline retail world discount-market segment, look at Wal-Mart. Costco is another winner in the offline retail segment. Slightly different business model. They coexist very successfully with Wal-Mart,” he said. “Target is another slightly different model.”

“I think of us as the Costco because Costco has a strong emotional component,” Donahoe added.

eBay reported $2.4 billion in sales in the latest quarter. Costco reported $16.8 billion.

FCC: In Washington, D.C., Wednesday, the Federal Communications Commission chairman proposed releasing more spectrum for wireless broadband.

Meanwhile, the director of the agency’s broadband initiative talked up the plan to technology investors here at the Goldman Sachs conference.

Blair Levin spoke of the need to make broadband available to all Americans, especially both low-income and older people.

Levin said his goal is to take the Universal Service Fund, “the program that subsidizes phone service for those who can’t afford it and look at how to extend that to broadband.”

The FCC wants to make 500 megahertz of wireless spectrum available. To get it, it wants to buy it back from broadcasters.

Zillow: The private Seattle real-estate Web site appeared at the conference but declined to give specific numbers on revenue.

“We haven’t said when we will reach profitability,” said Spencer Rascoff, chief operating officer.

“We beat our 2009 numbers and we’re beating our 2010 numbers.”

The strongest sources of revenue are graphic ads and sales to individual agents.

Dell: The computer maker wants to be more than a box company, and it spent its time at the conference pitching Dell Services as an IT solutions provider, like Hewlett-Packard and IBM.

Round Rock, Texas-based Dell acquired Perot Systems last year to build up its business as a provider of IT services.

“Dell Service today is one of the 15 largest IT service organizations in the world,” said Peter Altabef, president of Dell Services. “It’s a market that’s pretty wide open.”

Altabef said Dell recently helped a client convert from mainframe to a Windows-based system.

He said the system saved the client $6 million in annual licensing and operating costs a year.



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