Bill Burnham writes: "Owning software stocks can be a frustrating experience. Just when you think they can do no wrong, they often miss their earnings and fall like a rock only to rise up over the next few quarters and then have that renewed optimism crushed yet again by another earnings miss. It can, and has, driven many a software investor crazy...In the face of such volatility, knowing when to get out of software stock is critically important. Given this importance, I thought I would provide a list of the Top 10 Early Warning Signs that a software stock is about to crater."

1. It capitalizes software development expenses.
2. DSOs are greater than 95 days.
3. License revenues account for less than ½ of overall revenues and are declining.
4. It reports more than 30 days after the end of the quarter.
5. EBITDA Margins are less than 10%.
6. It does not provide a cash flow statement when it announces earnings.
7. It misses ship dates.
8. Its deferred revenues are declining.
9. The head of sales and marketing leaves.
10. Competitors miss their forecasts.

WSJ writes about Apple's newest introduction:

Essentially making the same bet in video that it did with music, Apple is introducing hardware for playing digital entertainment that is tightly wedded to an online store that sells that content. The new version of the iPod, expected in stores next week, is designed to play home movies, short films, music videos and other content transferred to it from a computer.

Apple plans to sell two models of the device, priced at $299 and $399, with the capacity to store as much as 150 hours of video. The products will display the video on 2.5-inch color screens.

Under the relationship with Disney, new episodes of the five TV shows will be available the day after they are broadcast. Past episodes from the first seasons of "Lost" and "Desperate Housewives" are available immediately. Apple also announced a deal with Pixar Animation Studios, which Mr. Jobs also leads, to distribute short animated features.

C. Enrique Ortiz writes: "The current services and content are not compelling enough - things like ring-tones and wallpapers and pictures can get old pretty quick. And the cool handsets with the cool features are few (or not offered by most carriers), and cheap are not; mass adoption requires easier access to such handsets. The state of affairs is pretty dull right now. But it doesn't have to be that way. You know, handsets are first and most, a communication apparatus, a social device, to connect and interact with other people - friends, family, work. It is not only about ring-tones, and access to weather or stocks, and so on. This is why email and IM and voice! and blogs (i.e. communication) are the killer apps. We need to continue to improve, innovate how people communicate. And there is a lot of innovation to be done, to enhance the people-to-people communication (and social) experience. And with the new generation of handsets (cost and ease of access permitting), with music and (2-way) video support and better graphics and network speed, a new generation of content and services and user-experience we should expect -- I have my own ideas on this. It is up to us to come up to come out of the dull, with new cool software and services and user interfaces that will disrupt and mark the entrance of the new generation."

The New York Times writes:

IMAGINE public recycling bins that use radio-frequency identification technology to credit recyclers every time they toss in a bottle; pressure-sensitive floors in the homes of older people that can detect the impact of a fall and immediately contact help; cellphones that store health records and can be used to pay for prescriptions.

These are among the services dreamed up by industrial-design students at California State University, Long Beach, for possible use in New Songdo City, a large "ubiquitous city" being built in South Korea.

A ubiquitous city is where all major information systems (residential, medical, business, governmental and the like) share data, and computers are built into the houses, streets and office buildings. New Songdo, located on a man-made island of nearly 1,500 acres off the Incheon coast about 40 miles from Seoul, is rising from the ground up as a U-city.

Although there are other U-city efforts in South Korea, officials see New Songdo as one apart. "New Songdo will be the first to fully adapt the U-city concept, not only in Korea but in the world," said Mike An via an e-mail message.

Knowledge@Wharton tries to answer the question: Why is Microsoft afraid of Google?

"What Google wants to do is strategically decrease people's reliance on Microsoft. It's as simple as that," says Wharton management professor Raphael Amit.
...
Thomas Y. Lee, professor of operations and information management, sees Google's challenge to Microsoft in broader terms. "I don't know that I would say Google is a threat to the operating system, per se, but it is a threat to Microsoft's business model. Microsoft has software [such as Office] that they use to leverage the operating system."

Lee says Google benefits from two key strengths. The company gives free rein to talented people to innovate and it encourages program developers to use Google as the basis for products of their own. "Google has hired really, really smart people. Some of the smartest graduates coming out of the top computer science programs are going to Google. When you put that many smart people in one place, neat things happen. Google also has not been threatened by people working off their products. Look at all the product extensions that are tied to Google Maps."

Balaji Padmanabhan, professor of operations and information management at Wharton, agrees with Whitehouse that "there is a move toward PCs that don't have a lot of software installed on them, where most applications can run off a network."

Zdnet has a report on some of the other developments:

Rollyo demoed its personalized, vertical search engine (at right). You select sites that you want to search and save it as a “searchroll,” which can be shared.

Flock tooks the wraps off its open source, social networking browser based on Firefox code. CEO Bart Decrem said the first public release will come out in about a week. "We are focusing on favorites and history and how to drag them into the modern era in our initial relaease and on integrating blogging into browsing," Decrem said.

Zimbra, which I have written about here, demoed its calendar/e-mail application, and Joyent introduced its Web-based e-mail/calendar small group collaboration application, with tagging and open APIs.

zvents showed off a local event/calendar and fully Web 2.0–RSS, REST, SOAP, ,XML-RPC, iCal and blogging widgets for embedding event data in a blog or Web site–according to CEO Ethan Stock. Yahoo just acquired Upcoming.org, which lets users manage and share their social calendar and syndicate event calendars to their own sites.

Ross Mayfield of Socialtext announced that he is gradually moving his company's Wiki unique code (which is built on an open source foundation) into the open source arena, starting with real-time and asynchronous editing.

KnowNow demoed an continous live RSS notification service for consumers and enterprises. KnowNow doesn't require an RSS reader and is free for personal use. AllPeers 2.0, which works within the Firefox Web browser, claims to "assist in the creation of so-called Web 2.0 applications: software that exploits new trends such as social networking, self-publishing and client-centric computing." Forget the buzzwords–it's peer-to-peer application for tagging, annotating and sharing media files and Web pages.

Brightcove will offer a rich application, developed in Flash (why am I not surprised ?) for maximum reach, allowing content owners to assemble, package and deliver media for target audiences. The packaging involves adding metadata that will be used by search engines and end users: title, producer, genre, etc. A piece of packaged media can include videos, photos, music, animations, etc. Different quality and size of videos are supported.

Brightcove allows content owners to create white labeled players that will include the publisher’s brand, choice of functionality, and specific advertising. The player can then be integrated in any container through a piece of HTML code, and play the content that has been packaged through the service. This is very similar to what client Userplane offers to 8,000+ communities in the real-time communication space.

Tomorrow: Conference Highlights (continued)