Photo credit for Kevin Johnson: Fortune magazine.

After announcing the flaw, he hoped that everyone would have 30 days to patch their networks. But Matasano, one of the security companies involved in the fix, accidentally leaked the technical description of the flaw early. The company took it down but hackers immediately grabbed the data and spread the news, according to Kim Zetter’s Threat Level blog. Now Zetter reports that at least two exploits of the flaw are circulating in hacker circles. That means that companies that don’t patch their networks will be vulnerable to hackers.

Kaminsky described the problem in general a couple of weeks ago. The bug is in the Domain Name System, or DNS, which is the system for translating the locations of network computers into Internet addresses. The flaw is in the design of the DNS protocol itself and is thus not limited to any single product that uses it. If someone hijacks a DNS server, they can redirect an unsuspecting Internet surfer to a malicious web site. A hacker targeting an Internet Service Provider, or ISP, could replace the entire Web (as accessible through that ISP) — search engines, social networks, banks — with their own malicious content. DNS is used by every computer on the Internet to know where to find other computers. Those attacking corporations could reroute network traffic and capture emails and other sensitive business data.

Now, just a day or so after the leak, exploits are emerging on the Internet. Kaminsky told Zetter that he isn’t surprised and was dumbfounded that some companies didn’t believe him. He accidentally stumbled upon the flaw at the beginning of the year while he was researching something else. After the announcement two weeks ago, Kaminsky had planned to reveal the details a month after the announcement at the upcoming Black Hat security conference in Las Vegas. While that talk was bound to get him some glory, security experts praised how he handled the matter.

Not to be alarmist. But just about everybody better pay attention to this, from CEOs to CIOs to ordinary consumers. On the consumer level, if you notice that Windows has an update ready for you to install, it’s time to go ahead and do it. Kaminsky is doing a webcast with journalists on Thursday.

At the top of Kaminsky’s Doxpara Research blog today, it says, “Patch.  Today.  Now. Yes, stay late.”

The new foray into low-power portable chips for the “embedded” market will connect the Internet to everything from in-car entertainment systems to handheld mobile Internet devices, said Gadi Singer, vice president of mobility at the world’s biggest chip maker.

Today, Intel is launching its EP80579 family of eight processors which combine a bunch of chips into one. The so-called “system-on-a-chip” (SoC) processors use a Pentium M computing core, based on the highly popular Centrino-branded microprocessors introduced in 2003. Next year, Intel will introduce another family of chips based on the Intel Atom core, a faster processor which is targeted at mobile Internet devices. All told, Singer said that Intel is working on more than 15 SoC processors.

Right now, the “embedded” chips go into ATM machines, airport ticket kiosks and gas station commercial screens. The embedded market, where chips do things such as control industrial equipment, is split into 300 different sub-markets where Intel has roughly 3,500 customers. But Singer said that over time, such devices will become much more like general-purpose computers, with fast computing speeds. They will be flexible and connected to broadband networks such as WiMax, 3G or 4G cell phone systems.

“The major forces that are shaping the design of silicon have to do with the need for connectivity to the Internet, computer power, and the progress of Moore’s Law,” Singer said, referring to the maxim that chip performance can double every two years or so thanks to manufacturing improvements.

Over time, the market will shift from dumb computing devices to smart connected machines which make the Internet ubiquitous, Singer said. Today’s chips will cost anywhere from $40 to $95 and will operate at 11 watts to 21 watts at speeds ranging from 600 megahertz to 1.2 gigahertz. A single one of the new Intel chips can replace four, resulting in a 45-percent smaller area and 34 percent lower power.

Those speeds are competitive compared to other embedded chips, but ARM-based chips are typically in the one or two watt range, allowing them to be used in cell phones and other small gadgets where power consumption is paramount. The race is between the two companies on who can get the right combination, as ARM speeds upward in performance while Intel moves downward in power consumption. ARM chips, often used in cell phones, have typical run in the few hundred megahertz range.

Among those competing with Intel in this market are ARM licensees such as Nvidia, Samsung, Texas Instruments and others. Intel had its own ARM-based chips, the StrongArm (Xscale) family, but it sold that off to Marvell. Now, Singer says, the company is making another run with PC-compatible Intel cores.

In the future, Intel says its chips will be more competitive with chips based on the ARM architecture, which is the primary choice for low-power gadgets and cell phones. Singer said the company believes there will be 1.2 billion mobile Internet users in 2012 and 100 million TV households watching Internet video by the year 2011.

Beyond the embedded market, Intel plans to use its SoC chips — code-named Canmore — in consumer electronics devices this year. Next year, a chip code-named Sodaville will debut. Among the gadgets that could use such chips are Internet-connected TV sets. Singer said that in the next five years, car computers will be common. Those will display rich multimedia and access the Internet at a high speed.

[Photo via Techcrunch]

Kannuu

The key part of kannuu’s functionality is that it doesn’t require users to use the iPhone keyboard when searching for something. Say you have a contact list in your application; you input the first letter of a person’s name and immediately an overlap will appear giving your four options for the next letter. These letters are in the up, down, left and right positions. This method gives you a huge click zone to hit the letter you want rather than having to hit a small key on the iPhone keyboard. Clicking the center button will give you more options.

Better still is that kannuu can utilize the accelerometer for input. This means that if the letter you want to select is on the left hand side, you simply tile the device to the left to select it.

The technology runs an algorithm in the background to determine the most likely letters you are looking for. It can be very accurate because it only searches the database for the application you are in, so you cannot mistype for an entry that doesn’t exist.

Obviously this technology would be ideal in a situation where you don’t have a lot of time to stare at the iPhone’s screen — such as when you’re in a car.

Kannuu’s technology works with other devices as well, as we’ve written about in the past. One recent example beyond a phone is Coby Electronics useing kannuu to handle user interaction with its new music players.

The kannuu iPhone SDK is very flexible in terms of how developers can use it. It can be built in as part of an application and reside of the device, it can sit server-side (handy if the app you are building is just a web app), or a combination of the two.

The SDK is available to developers for free. Once an app is commercialized, developers will either pay a small royalty if the app is sold through the App Store or pay a charge based on how its used if it’s a web app.

Kannuu has only taken angel funding to date. It is in the early stages of discussions about doing a proper funding round now.

Check out MobileBeat2008, VentureBeat’s conference on July 24.

Well, Facebook Connect has an answer for that too: Facebook Connect for the iPhone will be coming this fall.

Using the Cocoa framework, Facebook Connect for the iPhone will allow app developers to utilize Facebook data within their iPhone and iPod Touch apps. Facebook’s lead platform engineer Benjamin Ling wouldn’t reveal much other than that developers will have access to it this fall.

A service like Facebook Connect could be really useful on the iPhone given all the new apps it has through the App Store. It’s simply not quite as easy to sign up for all these new services and input all of your information as it would be on a computer — and Facebook Connect would let you do all of that with a single click.

Read about more announcements from the f8 conference on our live blog.

Check out MobileBeat2008, VentureBeat’s conference on July 24.

By utilizing Facebook Connect, anyone who has a Facebook account can easily become a Digg user now with one-click. With this connection, stories you digg are automatically piped into your Facebook Mini-Feed.

Says Rose:

Facebook Connect is a key step in Digg’s effort to extend the Digg experience across the social graph. Look out for more upcoming features that further our commitment to the openness and transparency of user data and in providing you more control over your data.

Digg’s open approach to its user data still doesn’t include showing the data on which stories users on Digg bury (vote down), but hey, I guess that’s only important depending on what your definition of “transparency” is.

For more features unveiled at f8 today, see our live blog.

Hi5 grew 79 percent in the first half of 2008 — twice as fast as any of the other top social networks. The site’s unique visitors grew from 31.4 million in December 2007 to 56.4 million in June 2008. Interestingly, hi5, which is headquartered in San Francisco, Calif., says that over 80 percent of its users are outside of the U.S.

Of course, it’s easier to grow faster when you’re not as large as MySpace or Facebook. Facebook has still had very impressive growth recently as well, while MySpace seems to be lagging a bit.

Facebook’s annual f8 conference is currently going on in San Francisco. Our own Eric Eldon is live-blogging it.

Focused on investors and entrepreneurs (developers), we’re asking the big question: Is now the time to go mobile? And if the answer is yes, what do you have to keep in mind?

As part of the answer, we should take a look at which companies have succeeded so far. What are the biggest hits, from an investor’s perspective?

The answer: Over the past decade, most money has been made on investments in companies building the back-end infrastructure of the wireless networks, but even here the returns have been mixed. An almost negligible sum, meanwhile, has been made from investing in mobile applications that run on phones. With the rise of the mobile browser (think 3G iPhone), however, and better networks to allow quick browsing, people are likely to surf the mobile web more. Open platforms are helping people find a way around the stagnant operators, too. That’s what suggests the types of success we see in the future might change.

To be sure, the iPhone 3G has raised the hype decibels — and it’s just not certain how investors will fare by investing in applications. We’ve got a venture capitalist panel starting at 11am where we’ll chew through these questions, how things like GPS are changing the game, and how apps (if they can become platforms) may become huge hits. We’ve got leading investors, such as Rick Segal from the Blackberry Partners Fund, Richard Wong, from Accel, Shawn Carolan, of Menlo Ventures — and even Rupert Young, of AT&T, who says the company has made few investments so far, but that’s about to change.

So, beyond the iPhone 3G hype, where has the cold hard cash been made?

First, we looked at the top 10 IPOs from 2000-2008 (source: VentureOne). The reality: Only 10 companies went public. Industry watchers will also note that Vonage Telecommunications, one of the companies on the list, had a disastrous enough IPO that shareholders revolted with a class action lawsuit.

Notably, half of the 10 did their IPOs in early 2000 during the Internet boom. After a nearly four-year nuclear winter, Atheros Communications got through the gates and raised $126MM in 2004 with its IPO. Only four of the 10 had billion dollar values at time of going public.

There are few household names on this list, unless of course you’re a fan of the cheesy MetroPCS and Vonage commercials.



A more diverse and interesting picture emerges once we focus on the top acquisitions in the 2000-2008 period (source: VentureOne). While no wireless communications equipment company had IPOs, almost half the acquisition dollars were spent on such equipment manufacturers. Navini Networks, a wireless broadband manufacturer is one example; it was sold to Cisco Systems for $330 million dollars in December 2007.

The most eye-opening trend is the emergence of Nokia as the biggest investor over the last 18 months. The phone giant has bought Trolltech, Navteq and Enpocket. Missing from the list (I don’t know why), are Nokia’s recent acquisition of Plazes, a location technology company, operating system platform, Symbian, this year, and Germany’s Gate5, in 2006.

We’ve pasted the entire list of acquisitions below (provided by Thomson and the National Venture Capital Association). Note how only one company reached an acquisition price of $500 million: Danger, bought by Microsoft in April. Danger is an example of the “device-platform” trend we referred to earlier this week. Apple and RIM have shown how much value there is in such platforms, if you manage your partnerships correctly.

In fact, RIM, which has grown organically over the years, is probably the biggest success of a mobile company around. It is valued at $64 billion. It fell outside of the data table below, because it was never acquired. Another device-platform company, Good Technology, was sold to Motorola, however that company was a classic case of not appreciating the importance of carrier relationships (investors tell us they could never get management to take the issue seriously). It abandoned its device, and focused on messaging, retrospectively perhaps a mistake. See the chart below for breakdown of investments in the mobile industry, according to segment.

A few other large acquisitions aren’t included in the list below (not sure why, perhaps because NVCA didn’t consider them venture deals) but are worth mentioning: Qualcomm bought Flarion in 2005 for a little more than $800 million. Flarion is considered a 4G technology (OFDM). Investors included Cisco, T-Mobile, Bessemer, SunBridge partners, Nassau Capital, Pequot Capital and NVP and SK Telecom. It had raised at least $45 million. Qualcomm also acquired Snaptrack, a San Jose, Calif. wireless positioning (GPS) technology in 2000 for $1 billion. It had patents, which were attractive to Qualcomm’s patent strategy. By the way, this was at the very height of the bubble. Snaptrack was run by Steve Poizner and backed by TI Ventures, owned by Texas Instruments and H&Q.

Also missing is Vodafone’s acquisition of mobile social network Zyb. Except for Symbian, these were relatively small acquisitions, however.

Here are a few of the other big exits worth mentioning:

• M-cube, a messaging company, acquired for $300 million by Verisign
• Jamster, an SMS company, acquired for $390 million by Verisign
• Third Screen Media acquired by AOL
• ScreenTonic acquired by Microsoft
• Mobile365, messaging company, acquired by Sybase for $425 million
• WilderThan, a music ringtone company, acquired by Real Networks for $350 million
• Qpass bought by Amdocs for $275M

Finally, what kinds of companies within the mobile space are venture capitalists investing in? Here is a chart on wireless related financing trends provided to us by Rutberg and Co.

In the graph above, “carrier application” refers to companies that are based around selling their service “on deck” — that is, directly available on the carriers’ devices. JumpTap (mobile search and advertising) and Loopt (mobile social networking) are examples of on deck carrier applications. Companies bucketed under “carrier” are usually mobile network operators (MVNOs) such as kid-focused carrier Kajeet. “Consumer applications” are offered direct to wireless consumers without carrier intervention. MeetMoi, a mobile dating service we referred to as “Twitter for sex” and Qik, which recently launched a public beta are examples of the same.

Few of these companies have real revenue. Companies selling ringtones and wallpaper, such as Playphone, Thumbplay and ad network companies such as Admob are examples.

Look at the carrier and carrier application bars above: Capital influx into these companies has dropped precipitously between 2006 and 2008. Some of these developments have played out prominently in the news as MVNOs like Helio have run into serious headwinds while others such as ESPN Mobile have been forced to exit the business altogether. By the same token, VC money is increasingly pouring into direct consumer applications. While this isn’t necessarily a sign of a weakening of the carrier choke-hold, it certainly tells us that VCs are increasingly funding pure consumer wireless plays that completely bypass carriers.

All in all, the data tells us that while most of the previous exits have been hardware companies and services providers, VCs are betting the future on applications that serve the consumer directly. Will we ever see the mobile version of Google or Amazon, products that enjoy widespread usage and strong mindshare? Come to MobileBeat and find out for yourself.

VC-Backed Acquisitions in Mobile from 1970-2008. (Source:NVCA and Thomson.)