April 25, 2011
Volume XXXIV, Issue 11
Cloud computing Market: $241 Billion by 2020
Excerpted from ZDNet Report by Larry Dignan
The global cloud computing market will grow from $40.7 billion in 2011 to $241 billion in 2020, according to Forrester Research.
On the way to all of this growth are a few notable nuggets from the report:
For starters, the infrastructure-as-a-service (IaaS) market will peak at $5.9 billion in global revenue in 2014 and then commoditization, price pressure, and falling margins kick-in. In other words, early wins by Amazon Web Services and Rackspace won't add up in the long run.
Software-as-a-service (SaaS) will be adopted by companies of all sizes. In 2011, SaaS will be a $21.2 billion market and grow to $92.8 billion in 2016. At that point, SaaS comes closer to saturation.
Business-process-as-a-service (BPaaS) will be notable, but face modest revenue.
Virtualization will recede to the background as new technologies take over.
Please click here for a graphical look at the big cloud picture through 2020.
File Transfer Protocol (FTP) Is 40 Years Old
Excerpted from Bit-Tech Report by Clive Webster
File transfer Protocol (FTP) still forms the backbone of many parts of the Internet, despite its age.
The backbone of the Internet, FTP, celebrated its 40th birthday this week. Originally launched as the RFC 114 specification, which was published in April 1971, FTP is arguably even more important today than when it was born.
Even though young upstarts such as P2P networks are now available, it's FTP that forms the link to many cloud-based services and applications. It's also deemed more secure than P2P, which is an essential trait for online banking or other sensitive traffic.
Frank Kenney, Vice President of Global Strategy for US managed file transfer company Ipswitch, told us that the protocol we know as FTP today is "a far cry from when Abhay Bushan, a student at MIT, wrote the original specifications for FTP."
According to Kenney, the standard has grown from "a simple protocol to copy files over a TCP-based network to a sophisticated, integrated model that provides control, visibility, compliance, and security in a variety of environments, including the cloud."
Kenney added that "FTP has gone through a drastic evolution, from a basic way of easily moving information, to the foundations for the majority of the data transfer and application integration technologies that we all rely on so heavily today."
Ipswitch just finished exhibiting at stand H70 of the Infosecurity Europe 2011 show in Earl's Court, London. Join us in a toast to FTP - at 40 years of age, it's lasted well and looks like it will remain a relevant technology for years to come.
What uses do you currently have for FTP? Let us know your thoughts in the forums.
Report from CEO Marty Lafferty
 US Senator Amy Klobuchar (D-MN) and Senator Orrin Hatch (R-UT) introduced The Cloud Computing Act of 2011 this week targeting the rapidly growing cloud computing services sector in three ways.
First, the bill would seek to encourage the federal government to negotiate with other countries to establish consistent laws related to online security and cloud computing, Second, the measure would aim to form new civil and criminal enforcement tools to investigate and prosecute hackers who attempt to interfere with cloud computing services. And third, the proposed legislation would also require all federal agencies to create a cloud-computing implementation plan and monitor their progress toward more secure policies.
In introducing the bill, Senator Klobuchar said, "The technology is moving ahead fast, and it's essential for our laws to keep pace with it. This legislation will clarify the rules of the road to make it safer and more convenient for both consumers and companies to zoom along on the information superhighway. It's pro-consumer, pro-business, and pro-innovation."
She added, that, "We know crooks are trying to exploit this new technology. I've always said we need to be as sophisticated as the crooks who are trying to break into our systems." And also that, "Cloud computing can be a powerful engine for efficiency and innovation. That's something a lot of government agencies could use, especially in a time of tight budgets."
And indeed, in a national survey of technology experts last year, more than 70% agreed that within the decade, most people will no longer do their work with software running on a general purpose PC, but instead will use software and information that is stored on the Internet.
Senator Klobuchar has chaired the Subcommittee on Competitiveness, Innovation, and Export and serves on the Senate Commerce and Judiciary Committees. She is also a co-sponsor of the Commercial Privacy Bill of Rights Act introduced last week in an effort to add new rules pertaining to personal data.
The DCIA does not question that her cloud computing bill is well-intentioned. In many ways, it tracks Microsoft's testimony at a House Committee on Oversight and Government Reform hearing also this week, where Microsoft Public Sector Technology Officer Stuart McKee said the company would like to see the issues of privacy and security addressed by lawmakers as technology companies increasingly gravitate to cloud computing.
"We urge Congress to consider legislation that would 1) require cloud service providers to make their privacy and security practices transparent to customers, and 2) ensure rigor in federal government procurement of cloud services by requiring agencies to evaluate provider security practices," he said. Microsoft would also like to see the passage of tree trade agreements that contain protection for the intellectual property (IP) of American firms that sell in the global marketplace and has been urging Europe to adopt a common set of data rules.
Oversight Committee Chairman Darrell Issa (R-CA) said his goal is to hold government accountable to taxpayers and to look for ways to get government out of the way of businesses so they can innovate and create jobs.
We certainly agree with his last statement and, on this issue, tend to support the opinion succinctly articulated by Dan Burton, Senior Vice President for Global Public Policy at Salesforce.com, at this week's Congressional Internet Caucus forum at the US Capitol: "It is premature for Congress to be passing legislation."
He added that current data security policies and initiatives, such as the safe harbor certification program, appear to be working for providers and users of cloud-based applications.
Cloud providers that sign up for the US Department of Commerce's Safe Harbor program voluntarily pledge to follow the European Union's (EU) data protection principals, which currently functions well.
Salesforce.com can point to practical real-world experience indicating that businesses can resolve cross-border concerns, such as the way it provides for its Japanese customers access their proprietary content on Salesforce.com data centers in the United States.
David Valdez, Vice President of Public Affairs for the Computing Technology Industry Association, echoed Dan Burton, and added that a lot of concerns about cloud computing can be handled with education and through the service level agreements (SLAs) between vendors and their customers.
"There is not a need for new laws and regulations," he said. What US companies control right now is a cloud computing market that is growing by leaps and bounds.
The Obama administration is also proposing new data privacy laws that could affect cloud service providers and the White House may see the need for international agreements.
At a separate forum on cloud computing held by the National Institute of Standards and Technology last week, federal CIO, Vivek Kundra, said that as data moves across networks from jurisdiction to jurisdiction, the US and other countries have to think about "data sovereignty" issues. "We have to think about governance models," he said.
We would also like to see the US government work cooperatively to overcome the policy barriers that cause potential bottlenecks among data centers and assuage concerns that the Patriot Act can be used in draconian ways to access private and sensitive data.
But when it comes to regulation of cloud computing, we take the view that lawmakers for now should resist the urge to legislate. It's not yet clear whether this rapidly growing technology needs a new regulatory regime and, if so, what that should be. Instead Congress should observe how the cloud computing market - which is far from broken - evolves and adapts.
Cloud computing in fact is the preeminent demonstration of how America has innovated its way out of a recession. Let's fuel continuing further development, not stifle it with new regulation that would inevitably have unintended consequences. Share wisely, and take care.
Cloud Computing's Tipping Point
Excerpted from Information Week Report by Michael Biddick
Private clouds promise maximum control and strong security, while commercial cloud services are fast and flexible. Which works best? Government agencies are adopting both, as well as hybrids. The private cloud vs. public cloud debate is rapidly giving way to new models where agencies tap on-demand IT resources from a variety of cloud platforms--private, commercial, hybrid, software as a service--based on what best suits their needs.
There are few technology trends the US government is embracing with such fervor as the cloud. In his Federal Cloud Computing Strategy report, published in February, federal CIO Vivek Kundra set a target of shifting 25% of the government's $80 billion in annual IT spending to cloud computing.
How fast will federal agencies make the transition? Information Week surveyed 137 federal IT pros in February to gauge their plans. Our 2011 Federal Government Cloud Computing Survey shows a big jump in the use of cloud services, with 29% of respondents saying their agencies are using cloud services, up 10 points from last year. Another 29% plan to begin using the cloud within 12 months, which means adoption should surpass the 50% mark in the year ahead.
As federal IT teams evaluate where cloud computing fits in their broad IT strategies, they must answer some fundamental questions: Where will cloud services deliver savings over existing systems? How should they provision and manage cloud services? And the big one on everyone's mind, what about data security?
The Obama administration's "cloud first" policy requires agencies to use cloud services where possible for new IT requirements. Cloud computing is more than a new technology services approach; it demands changes to deep-rooted procurement processes and organizational culture. It's also an alternative to capital investment in systems and software, as agencies look to eliminate 800 data centers over the next four years in accordance with the Federal Data Center Consolidation Initiative.
The Office of Management and Budget's (OMB) influence is shown in our survey, with 21% of respondents saying that compliance with OMB guidance is a driver in their shift to cloud computing.
The economies of scale from shared, centralized infrastructure have the potential to lower usage costs across government. In a pure utility model, users pay only for what they consume, but that doesn't translate to federal IT yet. However, with the prospect of decreasing budgets, agencies must find ways to direct limited funds to their core missions, which may mean having less money available for IT investments. Cloud computing could very well be part of how they cope.
Federal IT pros are clearly looking for savings in the cloud. In our survey, lowering IT costs is the No. 1 business driver of cloud computing, mentioned by 62% of respondents.
Agencies face many challenges in moving to the cloud. Top among them is assuring the security of systems and data, identified by 77% of respondents. To address that concern, vendors are offering private clouds with tighter controls over the geographic location of data storage and other aspects of security.
Please click here for the full report.
Global Cloud Computing Adoption: Transformation Is in the Air
CIOs are beginning to see the cloud as much more than a web developer playground or an infrastructure add-on. It's a strategic approach that creates business value by changing the way IT is produced and consumed. IT leaders who consider cloud computing just another asset to add to their frameworks and processes - a capacity bump-up for their core infrastructure - risk getting left behind by the organizations that recognize cloud computing as the game changer it is.
IT leaders who consider cloud computing just another asset to add to their frameworks and processes-a capacity bump-up for their core infrastructure-risk getting left behind by the organizations that recognize cloud computing as the game changer it is.
A new IDG Research study of how global enterprises are adopting cloud computing finds that CIOs are beginning to realize the strategic implications of the cloud - specifically, how it is dramatically changing IT's relationship with the business. The mature adopters understand that enterprise cloud computing will help them evolve from delivering "IT as usual" to "IT as eagerly anticipated."
The majority of IT decision makers among the more than 600 surveyed at enterprise companies in the US, EMEA, and APAC see business agility as the top driver for cloud computing. IT innovation fuels greater business agility, and organizations can leverage the cloud's ever-expandable, self-serviced and always-available infrastructure to speed the delivery and reliability of new and existing applications. What's more, the efficiency of the cloud can free up funds for service-led innovation.
Rather than focus on the various definitions of cloud computing, the respondents say, focus on the powerful ends it serves. More than 90% of those surveyed agree that the cloud provides a way to access the efficient pooling of on-demand, self-managed virtual infrastructure, consumed as a service.
But the most striking survey finding is that, for a significant number of CIOs, the cloud is far more than a mechanism to support one-off projects or commodity business applications. Rather, it is a platform for IT transformation.
Some visionaries even identify its potential to transform the business itself.
Please click here for the full white paper.
Over-The-Top Goes Mainstream
Excerpted from Multichannel News Report by Todd Spangler
Someday that familiar query of "What's on TV?" may evolve into something like, "What's on the Internet?" About 77% of consumers now watch over-the-top (OTT) video on a PC or TV, according to an Accenture survey of 6,550 consumers in seven countries.
The behavior still skews young: 85% of respondents between 18 and 24 access and interact with video on desktops, laptops, Internet-connected TVs, and mobile devices, while 82% of those 35 to 44 do. About 64% of consumers 65 and older watch Internet video, Accenture found.
And traditional TV remains the most prevalent means of video consumption, with 92% of respondents saying they watch video this way. But fundamentally, the survey results show that Internet-video viewing spans all age groups, according to Francesco Venturini, global broadcast lead of Accenture's Media & Entertainment industry group.
"Consumption of video over the Internet is no longer a millennial-generation phenomenon," he said. "Video over the Internet is well on its way to becoming a mass medium."
The numbers are pointing up across the board.
In March 2011, 144.2 million Americans watched 14.5 billion online video streams, according to Nielsen. That's an increase from 131.7 million US Internet viewers who watched 9.3 billion streams one year ago.
Revenue from online television in the US jumped 34% last year, totaling $1.6 billion for 2010, according to figures released last week by IHS Screen Digest. But in terms of time spent viewing, traditional TV still outstrips online.
US online viewers spent an average of 14.8 hours watching Internet video for the month of March 2011, according to comScore - but Americans currently spend an average of 35.6 hours per week watching television, Nielsen figures show.
Still, Accenture's survey found that in the past year, viewing video on nontraditional devices is trending upward. Viewing increased on laptops (35%), desktop PCs (28%), and Internet-enabled TVs (26%) across all age groups.
"Consumers are possibly more sophisticated than content owners or operators believe," Venturini said. "Consumers are strongly indicating that they are ready for a true multidevice experience."
The consulting firm released the results last week as part of pitching its outsourced offering, dubbed the Accenture Video Solution, aimed at letting service providers, entertainment companies or retailers deliver both linear and on-demand content to TV sets as well as PCs, mobile, gaming consoles and broadband- connected TVs.
New York-based Origin Digital, an Internet-protocol video-broadcasting provider that Accenture acquired in 2008, will provide streaming and hosting for the solution. Pay TV operators are responding to rapidly shifting consumer expectations.
But because of programming rights issues and the need to develop the technical infrastructure to deliver "TV Everywhere" services, not everything available on TV will be coming to PCs, Internet- connected TVs or other devices right away.
For example, Time Warner Cable and Viacom earlier this month sued each other over the MSO's iPad app, which lets subscribers view live TV in the home. TWC is seeking declaratory judgment from a federal court that it has the right to distribute Viacom's programming to any device in a customer's home, while Viacom filed a lawsuit alleging breach of contract and copyright violation.
Comcast, for its part, is focusing first on delivering on-demand programming over any Internet connection, wherever a customer happens to be. This month, the operator boosted the amount of video-on-demand (VoD) content available through its Xfinity TV app for the iPad to 4,500 hours - from 3,000 when it launched two months ago - but live TV on the tablets won't be available until later this year.
Comcast spokesman Peter Dobrow confirmed that the company still plans to launch in-home access to live TV in 2011 through the iPad app and to other devices. To distribute video to a variety of devices, Comcast is cutting over the Xfinity TV authenticated online video service to Microsoft's Internet-streaming platform, which the operator's thePlatform subsidiary has integrated into its video-management system.
That replaces the video player from Move Networks, which was acquired earlier this year by EchoStar Technologies. "We're always looking at technologies that will help us deliver high-quality, premium video to a broad range of IP-connected devices," Charlie Herrin, Comcast Interactive Media Senior Vice President of Product Development and Technology, said.
Consumers are certainly ready, said Accenture's Venturini, and "in some instances may be ahead of the industry in terms of the vision they have for how, when, and where they watch and interact with video content."
AT&T: U-verse Now $6 Billion Annual Business
Excerpted from Multichannel News Report by Todd Spangler
As Wall Street focused on AT&T's iPhone numbers in the first quarter of 2011 after losing device exclusivity, the telco reported continued growth in U-verse -- adding 218,000 TV subscribers in the period -- even as legacy DSL and phone line connections continued to slide.
AT&T had 3.2 million U-verse TV subscribers at the end of March. That's just behind Cablevision Systems, which with the addition of Bresnan Communications, counted 3.31 million basic video subs at the end of 2010.
U-verse video, voice and data services in the first three months of 2011 generated about $1.5 billion in revenue, representing about $6 billion on an annualized basis, AT&T said. That's up more than 50% from the first quarter of 2010, but U-verse still represents only about 10% of AT&T's total wireline segment, which tallied revenue of $14.95 billion in the quarter (down 3.2% from the first quarter of 2010).
Moreover, AT&T's residential phone lines fell to 23.48 million at the end of March, a year-over-year decline of 11.8%. While the telco posted a net gain of 175,000 wireline broadband connections that was down 31% from the year-ago period "and leaves legacy DSL in almost certain decline," Sanford Bernstein senior analyst Craig Moffett wrote in a research note.
In "a return to a familiar theme, the Wireline segment continues to struggle," Moffett wrote. "Taken together, Wireline revenues of $14.95B were just under consensus of $15.01B, but margins of 31.3% were a clear disappointment versus consensus of 33.2% and us at 33.7%."
AT&T is banking on U-verse grabbing more share from cable competitors to shore up the wireline segment.
The telco said the U-verse network deployment now reaches 28 million living units. Penetration of eligible living units is 15.3%, and across areas marketed to for 30 months or more, overall penetration is 23.8%. AT&T said average revenue per unit for U-verse triple-play customers was $168, up 14.3% year over year. About two-thirds of broadband subscribers have a plan of 3 Mbps or higher.
Satellite TV connections, through the telco's current reseller deal with DirecTV and the now-expired one with Dish Network, dropped 11.3% to 1.89 million at the end of the first quarter.
The storyline many investors were following was how well AT&T fared on the iPhone front given that Verizon Wireless began selling the smartphone during the quarter.
AT&T touted that it had the best-ever first-quarter increase in total wireless subscribers, up 2.0 million to reach 97.5 million. The telco said iPhone activations increased nearly 1 million year over year to 3.6 million, with 23% new AT&T subscribers and that iPhone subscriber churn was flat.
However, it had only 62,000 net new subscribers on contract-based plans -- down 88% from 512,000 a year ago and a record low.
"AT&T began aggressively upgrading subscribers more than a year ago, locking the base into long-term contracts. Then, they began aggressively spending on advertising, selling their wireless data speed advantages," Moffett wrote. "The strategy appears to have worked. Growth metrics were relatively good, but at a clear cost to Wireless margins."
AT&T last month announced plans to acquire rival wireless carrier T-Mobile in a $39 billion deal, which must still clear regulatory approvals. AT&T's earnings growth "will likely accelerate even more in 2013 and 2014 as merger synergies from its T-Mobile deal work their way to the bottom line," Moffett noted.
Overall, for the first quarter of 2011, AT&T posted revenue $31.2 billion (up 2.3% year-over-year) and net income attributable to AT&T of $3.4 billion versus $2.5 billion in the year-ago period, which included a $995 million charge related to the tax treatment for Medicare.
AT&T's capital spending increased 31.3% in the period, to $4.13 billion compared with $3.15 billion in the year-ago quarter. Headcount declined to 260,690 employees at the end of March, down 5.6% from Q1 2010.
uTorrent 3.0 Beta Now Available
Excerpted from WebProNews by Josh Wolford
I can say that with confidence now that "<3 is officially in the OED." Rejoice, fellow uTorrent lovers, as they have just released version 3.0 beta, and it has a bunch of promising new features.
Over on the BitTorrent Blog, many of the new features are detailed. First up is the most exciting new feature to me - streaming. uTorrent users can now preview their downloads directly from the client.
This serves two functions - helping the extremely impatient to begin watching or listening before their download is complete and also allowing users a sample before they fully commit to an entire download. Stable and consistent previewing is one of the things that endeared this writer to LimeWire in the beginning (R.I.P.).
uTorrent 3.0 beta is also looking to please torrent pros and novices alike, as new features are targeted to users of various degrees of familiarity.
The new version also includes "getting started guides" that help new users with tips and tutorials.
For the most experienced users, uTorrent is now offering a remote feature that allows you to access the client from another computer or mobile device. The feature is already integrated into uTorrent's Android app. uTorrent 3.0 also adds portable mode which lets you run the client via USB.
The new "Sending" feature also sounds neat:
"Easily send large files - for example home movies, large videos taken with your cell, and photos - to your friends directly from uTorrent. Select any file on your computer, drag it into the uTorrent "Drag files to send" box and uTorrent will create a Web link. Enter a friend's e-mail address or post the link to social media. Recipients can easily download the torrent, or if they don't have uTorrent, download an app bundled with the file. Simple!"
Finally, version 3.0 beta adds a ratings and commenting function to the client. Apparently this was one of the top requests from users. Don't get me wrong, comments and ratings can be useful - but I'm wary of comments and ratings when it comes to torrents. Hopefully this feature doesn't get too spammy or doesn't annoy users with too many "Ugh. I can't get this to work. HELP!" comments.
Happy Sharing!
Steve Jobs Wants to Be King of Cloud Computing
Excerpted from Motley Fool by Tim Beyers
Only the delusional consider MobileMe any serious form of cloud computing. But don't take my word for it. Look at the moves Apple's making to bolster its presence in the market for on-demand computing.
According to separate press reports, Apple recently: 1) Hired Kevin Timmons away from Microsoft. Fools may remember him as one of the architects of Mr. Softy's mobile data center strategy. "Cloud computing, gone portable," I called it in covering the news last year. And 2) Purchased 12 petabytes of data storage from EMC unit Isilon Systems for what appears to be a massive scale-out storage infrastructure presumably housed in one or more data centers for the purpose of storing downloadable iTunes files.
Granted, there's plenty of conjecture at work here. But thanks to Netflix and Google, Apple's customers -- yours truly, in particular -- are becoming increasingly comfortable with streaming and browser-based apps. Both models could render downloads and installed software obsolete, and in the process threaten iTunes and the Mac OS. Not acting isn't an option.
The good news? CEO Steve Jobs knows this; it's why this summer's Worldwide Developer Conference is rumored to feature software -- the iOS-inspired Mac OS X Lion, in all likelihood. But hiring Timmons and loading up on storage is also probably just a first step.
Apple's cloud is coming, and it's not going to look anything like MobileMe.
Akamai to Launch P2P-Based Streaming Video Client
Excerpted from GigaOM Report by Ryan Lawler
Akamai could soon begin leveraging peer-to-peer (P2P) technology to enable its media customers to stream live or on-demand videos to end users. While Akamai has been experimenting off and on with P2P ever since its acquisition of Red Swoosh way back in 2007, the introduction of video streaming through its NetSession client-side technology might finally be close to release.
When asked for comment about video streaming through the NetSession plugin, an Akamai representative said the company had nothing new to announce. But there are indications that it's almost ready for primetime: At the National Association of Broadcasters show this week, the CDN "cloud services provider" was showing off its NetSession Interface technology to media companies. And on Akamai's HD Network page, the company also has a demo of video streaming with what it calls the Akamai HDClient. (A link for further information routes back to the Akamai NetSession Interface page, suggesting that the HDClient and NetSession plugin are one and the same.)
Last fall, Akamai won a deal with the NFL for the delivery of HD video streams on the sports league's website, which included the use of its NetSession plugin. But Akamai said the plugin wasn't being used for in the typical peer-to-peer fashion, but to send information back to its servers and ensure that the end user was receiving the highest quality stream possible.
Akamai also rolled out a version of its client-side software for game publishers in March to improve the delivery of large game downloads. That client is being used by massively multiplayer online game publishers Aeria Games and Burda:ic. But downloading static files via P2P is relatively easy, and something that software providers have used for years.
The technology that's required to capture bits from multiple seeds and put them in the correct order for streaming video is somewhat more complex. The benefits of P2P-based delivery are huge, as client-side technology drastically reduce the number of bits that a CDN has to deliver. More importantly, if implemented in the right way P2P technology can source bits from viewers closer to the end user, which takes much of strain off the global Internet architecture. P2P advocates have claimed for years that the only way the Internet will be able keep up with traffic demands is if video files can be streamed and sourced through local ISP networks.
For years, tech companies have been trying to crack the code for live and on-demand streaming via P2P - and while some have been fairly successful with limited implementations of the technology, it's yet to receive mass consumer adoption. Perhaps the biggest reason is the need for a software client or plugin to make the technology work.
With the exception of Adobe's Flash, which today is nearly ubiquitous, every streaming solution that has relied on new client software has struggled to gain massive scale, if only due to the need to install a client on the end user's computer. Think Move Networks or Microsoft Silverlight. While not P2P-based solutions, the software install kept both plugins from reaching the same mass adoption that Flash appreciates.
When it goes live, Akamai will face this issue as well. In fact, it's already received a bit of backlash from gamers who don't understand what benefit the client provides while running silently in the background. A quick Google search for Akamai NetSession Interface shows user fears of viruses and malware, as well as the assumption that the P2P client will slow down their computers or Internet connections.
Akamai isn't the only technology company that is trying to improve video streaming with P2P technology. Earlier this year, BitTorrent announced a live streaming solution based on a new P2P technology developed by founder Bram Cohen. And Adobe is making P2P-based streaming available as part of an update to its Flash Media Server.
Ku6 Announces Merger With Pipi.cn
Ku6 Media, a leading Internet television company in China, announced that Ku6 and the shareholders of Hangzhou Soushi Networking ("Pipi"), a leading P2P based Internet video platform in China, have agreed to the sale of Pipi to Ku6, in an all stock transaction under which all of the equity interests in Pipi will be sold to Ku6 in exchange for an aggregate of 2,212,114,257 Ku6 ordinary shares. After the completion of the merger, Pipi will become a wholly-owned subsidiary of Ku6.
Completion of the share purchase will be subject to the condition that the shareholders of Ku6 approve the issuance of ordinary shares of Ku6 to the shareholders of Pipi at a special shareholders meeting to be convened in the near future. The transaction is expected to close in the second quarter of 2011.
Shanghai Shanda Networking, a wholly-owned subsidiary of Shanda Interactive Entertainment Limited (which is a major shareholder of Ku6), is one of the early investors of Pipi and holds 32% of the equity interests in Pipi.
Shanda Networking will sell its equity interests to Ku6 in this transaction. A special committee, comprised of three independent directors of Ku6, represented Ku6 in the negotiations of the transaction. Based upon and subject to the qualifications, limitations and assumptions set forth in its written opinion dated April 20th, the same date as KPMG Advisory has rendered its oral opinion, to the effect that as of that date the consideration to be paid by Ku6 was fair to Ku6 from a financial point of view.
The special committee approved the proposed transaction on April 20th.
All selling shareholders of Pipi intend to enter into lock-up agreements for a period of 181 days to two years after closing with respect to the Ku6 shares that they will receive in the merger.
Commenting on this merger, Haifa Zhu, Acting Chief Executive Officer of Ku6, said, "We are very pleased to announce this merger with Pipi, which we believe is one of the best P2P based Internet video platforms in China. After merger with Pipi, we believe we will become the first Internet television company with large-scale operations in both browser and video player in China. We believe that we will have more opportunities to achieve synergies going forward and we will continue to expand our market share, our users number and our advertising clients number in the fast-growing online video market in China."
Lianghai Yang, Chief Executive Officer of Pipi, said, "We are excited to join forces with Ku6. In March 2011, Pipi Player has reached peaked concurrent users number of about 5.3 million. I am confident that the combined company will be better positioned to compete effectively in the continually expanding online video advertising market in China."
Coming Events of Interest
1st International Conference on Cloud Computing - May 7th-9th in Noordwijkerhout, Netherlands. This first-ever event focuses on the emerging area of cloud computing, inspired by some latest advances that concern the infrastructure, operations, and available services through the global network.
Cloud Computing Asia - May 30th - June 2nd in Singapore. Cloud services are gaining popularity among information IT users, allowing them to access applications, platforms, storage and whole segments of infrastructure over a public or private network.CCA showcases cloud-computing products and services. Learn from top industry analysts, successful cloud customers, and cloud computing experts.
Cloud Expo 2011 - June 6th-9th in New York, NY. Cloud Expo is returning to New York with more than 7,000 delegates and over 200 sponsors and exhibitors. "Cloud" has become synonymous with "computing" and "software" in two short years. Cloud Expo is the new PC Expo, Comdex, and InternetWorld of our decade.
The Business of Cloud Computing - June 13th-15th in San Diego, CA. Cloud Computing is the latest disruptive technology. Enterprises, large and small, are looking to cloud computing providers for savings, flexibility, and scalability. However, potential adopters of all sizes are concerned about security, data management, privacy, performance and control.
CIO Cloud Summit - June 14th-16th in Scottsdale, AZ. The summit will bring together CIOs from Fortune 1000 organizations, leading IT analysts, and innovative solution providers to network and discuss the latest cloud computing topics and trends in a relaxed, yet focused business setting.
Cloud Leadership Forum - June 20th-21st in Santa Clara, CA. This conference's enterprise-focused agenda, prepared with the help of nearly a dozen IT executives, will bring you case studies and peer insights on how leading organizations are approaching the cloud opportunity plus much more.
Cloud Computing World Forum - June 21st-22nd in London, England. This third annual event is free to attend and will will feature all of the key players within the cloud computing and software-as-a-service (SaaS) market providing an introduction, discussion and look into the future for the ICT industry.
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