Archive for: January, 2007
January 31st, 2007
Google Checkout is a loser, really
Just this past weekend, I underscored that Google Checkout is a losing proposition for Google in “Bill Gates: Microsoft vs. Google Checkout, eBay PayPal”:
Google Checkout is not a competitor to PayPal; Google invests in the Google-centric formula as part of a strategy to continually increase monetization of AdWords. Google positions Google Checkout as undercutting credit card transaction fees but in reality it pays for them on behalf of merchants. It also subsidizes the consumer transaction.
As Google is losing money on its Checkout offering, it is not sustainable as a stand alone micro payments service, or for mass distribution on the Google publisher network. Google Checkout currently has no raison d'etre without its AdWords tie-in.
I dissect the multi-million dollar subsidies Google is committing to acquire merchants and buy customers in “Google Checkout: $20 million AdWords pitch”:
Is Google spending $20 million this quarter to spread holiday cheer to merchants and consumers? NO. Google is investing big-time in the hopes of “locking-in” merchants long-term, as AdWords customers.
I concluded:
There's no such thing as a free lunch,” and Google’s “free” Checkout is costly to merchants.
It is also costly to Google, very costly.
In its Q4 earnings call today, Google stated that its overall cost of sales will increase going forward due to credit card fees for Google Checkout, among other things.
Additionally, consumer promotions for Google Checkout during the quarter were accounted for as a reduction to both Google sites and network revenues in accordance with GAAP.
Google indicated that as per the determination of its Ernst & Young accounting firm a few months ago, Google Checkout transactions are accounted for as “contra-revenue.”
Translation? The unsustainable as a stand-alone payment processing service that is Google’s Checkout “hurt” Google’s total revenue to the tune of 1%.
For multi-billion dollar revenue Google, a 1% hit is a lot to check out.
ALSO: Google Radio NOT a category killer and Google still relying solely on search and Google’s multi-billion dollar apples
January 31st, 2007
Google still relying solely on search
Google is only winning at one thing–search and the monetization of search services–I underscored last year in “Google multi-billion dollar risks in 2007 and “Google’s ‘1 percent’”:
Google proudly declares it does “one thing really, really well”: Search.
Google’s “one thing,” in fact, fuels 99% of the revenues driving its $150 billion market cap: online search and associated advertising services (AdWords, AdSense).
Google reported to Wall Street today on its 2006 results. Google is still wholly search dependent for its revenues, as Google itself illustrates below.
ALSO: Google Checkout is a loser, really and Google Radio NOT a category killer and Google’s multi-billion dollar apples
January 31st, 2007
Web 2.0 in 2007: Brands rule!
My Digital Markets 2007 predictions include:
‘Branded Conversations’ frame social media in 2007, as I presented January 4:
February 4 will not only kickoff Super Bowl XLI, it will mark the major league debut of what I call brand-focused “user-involved” social media content, or “branded conversations."
Last October I put forth “MySpace, Facebook, NBC: Brands rule, not users”:
"Users are in control” packs the same mythical punch as “every vote counts.”
Our democratic system is worthy, but the underwritten by special interests, two-party, primary and insider convention driven presidential election process does not provide each of our citizens an equal “voice.”
Web 2.0 social networking systems are equally bombastic: “Users are in control.”
All the way back in June I underscored "Monetizing you and your friends: The Social Web seeks social brand dollars”:
To reach the frothy financial goals, both MySpace and Facebook are commercializing “friendship” through social branding.
At MySpace, brands have member profiles and make friends with other MySpace members. At Facebook, members join Facebook brand groups, just like they join Facebook fraternity or hobby groups, and display brand logos on their personal profiles.
Social branding may prove to be the ultimate product placement strategy.
Today, my social media “branded conversations” thesis was affirmed, at the SIIA Information Industry Summit in New York City during the “Advertising and PR for Everyone: Who is Winning the Race for Marketing Dollars?” panel.
The leading role of "the brand” in Web 2.0 marketing messages took center stage.
I have predicted the mainstreaming of “branded conversations,” the panel today also underscored the preeminence of "the brand” in Web 2.0 communications:
Brand journalism,
Branded content,
Branded hubs…
David Meerman Scott, Freshspot Marketing, launched the discussion by asking the audience of publishing and technology executives, “Do you believe you have great products and services?” The conference attendees responded in the not surprising affirmative, but Scott shot back: “Get over it!”
Why? On the Web, marketing is not about products and services, it is all about reaching your buyers with content they want to engage with, according to Scott.
Scott asserted that in the “old days” there were only two ways to get brand messages out to audiences:
1) Convince media to write about you,
2) Buy expensive advertising.
NOW, brand marketers are publishing their own content on the Web to reach buyers directly with their own messaging.
How do “‘Branded Conversations’ frame social media in 2007”?
Colleen DeCourcy, Chief Experience Officer, JWT, a WPP Group agency
“Bold Moves, Documenting the Future of Ford” was designed as part of an integrated marketing communications strategy aimed at putting consumers “at center of all Ford-brand marketing.”
How is Ford leading a “Branded Conversation”?:
“Ford Bold Moves" is a video documentary series that takes you inside Ford Motor Company as it attempts one of the largest corporate turnarounds in history. With candid interviews from Ford executives, employees, industry experts and even Ford detractors, Bold Moves approaches each segment from every angle and keeps asking the question: Will Ford succeed?
Bold Moves also involves you in the actual corporate decision-making process—allowing you to engage, debate and discuss what you think is relevant.Site content is updated on a weekly (sometimes daily basis), so sign up to receive Bold Moves content by RSS Newsfeed and ensure you stay on top of every single moment of Ford’s transformation. You can also sign up to receive weekly emails that preview future episodes and related editorial content so you never miss a beat.Bold Moves is interactive, so it relies on you and an enthusiastic community of users to fuel the discussion and shape future episodes. Venture into the site and become a part of Bold Moves today. Ford’s future depends on it.
Ben Edwards, Director, IBM, New Media Communications
IBM seeks to instill an internal “soft publishing” culture that is “liberal and permissive.” IBM is 380,000 professionals strong “within the firewall” and each professional is provided internal access to blogging, podcasting and wiki tools.
How is IBM leading a “Branded Conversation” externally?
The role of IBM communications is to discover the talent and identify the voices within IBM that can carry the brand externally and “do good things” for the corporation. IBM external “voices” are marketed within micro-publishing communities to propagate the IBM brand.
IBM seeks authentic interactivity. IBM voices are encouraged to put forth “points of view, expressed clearly.” IBM communications strategy is a straight forward one. While all are invited to join in the conversation, IBM maintains the integrity of its messaging.
Anyone can “take it or leave it,” or participate, in the “Branded Conversations”

Photo by Donna Bogatin
January 31st, 2007
MySpace 'friend' may cost school $3 million
MySpace touts it is “an online community that lets you meet your friends' friends”:
"See who knows who, or how you are connected. Find out if you really are six people away from Kevin Bacon."
MySpace is for everyone:
-
Friends who want to talk Online
-
Single people who want to meet other Singles
-
Matchmakers who want to connect their friends with other friends
-
Families who want to keep in touch–map your Family Tree
-
Business people and co-workers interested in networking
- Classmates and study partners
- Anyone looking for long lost friends!
Brighton High School in Tennessee is objecting that “MySpace is for everyone” means anyone wanting to make a fake MySpace page for a teacher as well, according to Alexis Amarose, “Eyewitness News.”
Several students were put on probation or suspended from attending the school after they made a phony MySpace page for their assistant principal:
Chris Barnett, who is one of the students who made the page, said, I thought it was (ok), a couple of people looked at it, HA, HA, it was funny….
School officials had a problem with what was being written by students in the comments section of the page. Chris and other Brighton students wrote about the assistant principal acting inappropriately around female students. Chris said, “One girl posted a comment about her shirt and what it was showing, and the way girls feel about him at school. I didn't go into too much detail about it, but I just posted what girls talk about.”
Donald Barnett, father of one of the MySpace pranksters (fraudsters?), believes the school’s suspension of his son is a violation of a right to free speech and is suing the school district for reinstatement to the school.
Barnett also believes each of the three MySpace students are entitled to a million dollars each from the school district and is suing for that as well:
It was just so outlandish the way they reacted, that we were just in awe of the way they reacted.
January 30th, 2007
Microsoft hits home run in NYC: Willie Randolph helps launch Vista
Microsoft was in full force in the Big Apple today for “the most significant product launch in Microsoft Corp.’s history.” Microsoft made the rounds to technology retailers in New York City in conjunction with the release to consumers of the Windows Vista operating system and Microsoft Office 2007.
One of the Microsoft stops was RCS Computer Experience in midtown Manhattan for joint Microsoft-Lenovo-Intel all day demos of Vista and an evening celebration featuring New York Mets Manager Willie Randolph and Microsoft corporate vice president for Windows Client Marketing, Michael Sievert.

Photo by Donna Bogatin
Randolph put forth that he and his Mets team look forward to the “next generation of computing.”
Sievert underscored how Vista enables a digital world experience “like never before with safer, easier and more enjoyable technology.”
I spoke with Sievert to discuss Microsoft’s New York based Vista launch.
According to Microsoft CEO Steve Ballmer:
We designed Windows Vista and Office 2007 as springboards for our partners, for realizing the next generation of computing, for a whole new wave of innovation in devices and software that offer better graphics, better connectivity and communications, and a more productive, more enjoyable experience all around. The launch will have a dramatic impact on computing long-term.
Microsoft is touting a dramatic impact on computing in New York in particular, as I present in “Microsoft or Google: Who helps economy more?”:
In New York, each dollar of Windows Vista-related revenue earned by Microsoft in 2007 will generate more than $19 in revenue for the ecosystem beyond Microsoft. We expect that in the first year of Windows Vista shipments, this ecosystem will sell more than $7 billion of Windows Vista-related products and services in New York.
I asked Sievert why Microsoft chose NYC as the official launch pad for both the business and consumer launches of Vista.
Sievert told me that “so many” of Microsoft’s partners, customers and beta testers are in New York metropolitan area. He also cited a robust local computer reseller and retail sales and support infrastructure.
Sievert underscored the Microsoft retail platform is 39,000 stores strong worldwide.

Photo by Donna Bogatin
January 30th, 2007
Is Google vulnerable? Four CEOs say so
Tomorrow Google reports its 4th quarter 2006 earnings to Wall Street. According to analyst checks by Bambi Francisco, MarketWatch, another blow-out earnings call is on tap.
Francisco began the panel “Are there chinks in Google’s armor?” at AlwaysOn OnMedia conference today in New York City with a reference to Google’s financial prowess.
I pointed out during the Q & A, however, that Google actually underperformed the S & P in 2006 (see Google future: GOOG @ $600 or $300?).
I suggested to the panel of Web advertising services CEOs that Google’s AdWords bid-up-your-own ad rates monetization machine may soon face advertiser resistance. My sentiments were echoed by Gurbaksh Chahal, CEO, Blue Lithium and Lawrence Braitman, CEO, Adify.
Search marketer 1-800-Flowers’ concerns about escalating keywords prices were cited. The company is wary of search advertising being a “very expensive propagation.”
PANELISTS AND ELEVATOR PITCHES
Lawrence Braitman, CEO, Adify
Adify was founded in 2005 by a group of online advertising pioneers from Flycast Communications, one of the original online ad networks. Our mission is to enable and optimize direct publisher-advertiser transactions, removing the overhead associated with selling through a third-party network. Through our hosted site storefronts, Adify provides both publishers and advertisers with an advertising service platform that includes management, tracking, optimizing, reporting, billing, payment and merchandising for online media. We are based in San Bruno, California.
Gurbaksh Chahal, CEO, Blue Lithium
Created in 2004 by a team of online ad network veterans, BlueLithium is dedicated to challenging the legacy ways of doing business to help marketers achieve extraordinary results. Combining a powerful one-two punch of one of the largest online ad networks with innovative ad targeting and serving technologies, BlueLithium creates a customized site network for each advertiser that is optimized to their marketing objectives.
Lance Podell, CEO, Seevast
Seevast operates marketing services companies that drive sales, build brands and leverage core assets for their clients. Pulse 360, Content-Targeted Sponsored Links; Moniker.com, Domain Asset Management; Kanoodle, Search Engine Marketing.
Michael Yavonditte, CEO, Quigo
Founded in 2000, Quigo provides innovative, performance-based marketing solutions that achieve superior results for premium-branded websites and advertisers. ROI-based solutions for content-targeted advertising and search marketing form the foundation of Quigo's product offerings.
IS GOOGLE VULNERABLE?
While all panelists acknowledged the formidable presence of Google, they underscored the large market opportunity Google is not addressing, by default or by design.
Google’s core business and financial strength is Pay Per Click advertising at Google. Many online advertising needs of marketers are not met by the narrowly focused Google value proposition, according to panelists.
Chahal put forth that AdWords only relates to about 10% of the searching public, given that most searchers are not in a “buying state” and therefore not receptive to direct response solicitations. Chahal believes the Blue Lithium behavioral targeting approach is effective for the 90% of times when people are at different points of the buying cycle, such as consideration.
There is room, and profitable opportunity for everyone, the panelists concurred. Why?
There is a limited supply of search queries,
Google’s size does not support personalized service,
Marketers want competitive offerings and vendors.
Differentiation matters,
A small player in a big market can still win.

Photo by Donna Bogatin
January 29th, 2007
Google Local at Google.com
Google is keen on the $31 billion local advertising opportunity, as I discuss in ““Google: $31 billion local winner?”
Most Google searches for local businesses are initiated at the general search box at Google.com, despite Google’s best efforts to drive users to start their local searches at Google Maps. To capitalize more on local searches performed at Google.com, Google is now inserting more of the Google Maps local search experience directly in Google.com SERPS.
In response to a general search query such as Atlanta restaurant, Google returns a mini Google Map with three Atlanta restaurants flagged. Adjacent to the map are restaurant guidebook style listings for the three restaurants including telephone numbers, addresses, direct Website links, links to reviews…
The “normal” Google organic search results appear after the enhanced local listings.
Google says:
Many people come to Google.com to navigate the web, but are you aware that you can use it to navigate the real world as well? Over the past few months, we've been hard at work making it easier to find and compare local businesses and services right from the standard web results page.
What Google doesn’t say, however, is how it determines which three local businesses to feature as listings A, B and C or number one, two and three results in the enhanced local search SERPs.
General Google SERP positions one to three have been considered the most valuable. They will now be trumped by the enhanced local listings which precede them in local searches, effectively representing positions four, five and six in such SERPs.
Not only do the new local listings come before the standard PageRank algorithm derived results, they are more prominent and may be perceived by searchers as Google recommendations for the local businesses. Top placement combined with enhanced presentation means the new local listings slots will be highly prized by local businesses.
Google is putting itself in competition with key local AdWords accounts: Citysearch, AOL, Zagat…The new enhanced local listings appear below and next to Google “Sponsored Links” for local listings directories.
Will the enhanced local listings become a new Local AdWords product?
Google was “hard at work” to develop the new local listings format within Google.com. It will undoubtedly be hard at work going forward to develop new ways to monetize its prime, lucrative Google Local real estate at Google.com.
January 29th, 2007
Google's Adam Bosworth to NYC technologists: Speed rules
I took Google up on its invitation to hear Adam Bosworth, Vice President of Engineering, speak on “Physics, Speed, and Imprecision: What Works and What Doesn't in Software, and Why," at the New York City Googleplex this evening.
Bosworth has held senior management positions at Microsoft, including serving as General Manager of the WebData group, a team charged with defining and driving XML strategy. While at Microsoft, he was responsible for assembling and leading the team that developed Internet Explorer 4.0's HTML engine. These two efforts are considered to have delivered the technology known today as Ajax. Before that, he was responsible for designing and delivering the Microsoft Access PC database product.
In 2003, Bosworth was awarded the XML Cup for his contributions in making XML a successful Internet standard. Bosworth’s engineering accomplishments were realized without benefit of an engineering degree. He holds a bachelor's degree in History from Harvard University.
Bosworth’s background in humanities is undoubtedly reflected in his humanist perspective on software engineering.
I chatted with Bosworth before his formal talk and asked if the title of his presentation suggested that an esoteric debate was in store. He assured me that he had nothing of the kind in mind.
Bosworth began his discussion before an attentive audience of about 250 NYC technologists with a disarming quip, beware “POFs (Pontificating Old Farts).” He then cited “Top Gun’s” Tom Cruise: “I feel the need, the need for speed.”
Bosworth put forth that most projects fail due to the human psychology component. Humans need to feel in control and in the computing environment people want to be “in charge,” he said. Bosworth cautioned that lack of speed results in computer interactions going from “fun” to being “unbearable” while fast, predictable machine responses support reassuring user experiences.
Bosworth offered the “vagaries of windows” as an example of unbearable computing he had experienced, underscoring “I am a Mac user now.” He also noted a frustration with long download time for Outlook emails.
Bosworth pointed to an increasingly large number of broadband users and massively faster chips as enabling Ajax to “get a second life.” He indicated, however, that while carefully crafted apps such as Yahoo’s email were quick enough, they could still be hard to use.
Bosworth credits the “Microsoft Help” function in part for spurring navigation-free, search-oriented solutions to “fuzzy problems.”
Bosworth concluded with remarks on “Google today”: Search is not treated as a natural language problem because there would be no room for error. In search, choices are expected and the magic is just ranking. We present a set of search results, making an educated guess. Searchers don’t know if we are right but imprecision is better than nothing. It works when the problem is huge, such as filtering all links on the Web. We save customers time, the users are always going to win.

Adam Bosworth, Donna Bogatin
January 29th, 2007
Can YouTube make revenue sharing work?
In the recent Chad Hurley induced euphoria over power to the people, monetary power to the “little” video people that is, many celebrated a seemingly greater democratization of Web 2.0.
As in all democracies, however, the Web 2.0 variety has a messy underbelly of conflicting motivations and inherent obstacles.
Hurley touts Google’s YouTube aims to “reward creativity,” eventually.
The YouTuber “creativity,” however, that is credited with catapulting YouTube to “broadcast yourself” video clip-culture fame was a “creative” pirating of NBC copyright and owned video content uploaded without authorization, SNL’s “Lazy Sunday.”
Unauthorized uploads of television network, movie studio and “the (music) labels” content continue to be major draws for the viral video sharing that drives YouTube’s massive usage.
As I pointed out last week in “in “Google’s YouTube: Who are the broadcasters?" the YouTube “community” broadcast yourself slogan is at odds with Google’s plan to make big money off of professional broadcasters’ content.
Google now rotates two logos at YouTube: 1) the vintage YouTube “Broadcast Yourself” and 2) a new and corporate sponsored unadorned “YouTube.”
YouTube, both pre and post Google, has profited off of “old media” content, but has not been willing to compensate the oldies but goodies for the content they spent dearly to produce.
The titans of “old media” are well aware of the value of their content, especially in juxtaposition to YouTuber “clip culture” videos.
At a Davos World Economic Forum panel addressing “the end of (traditional media companies’) business models,” Michael Wolf, President, MTV Networks, underscored:
We’ve seen that our content has remained very popular and that the majority of page views on social networking sites are for professionally produced content.
YouTube co-founder Steve Chen was quick to “add from the floor,” however:
If you charge people for viewing content, they will now simply switch to the next provider.
Ogilvy & Mather Chairman, Shelly Lazarus, is reported to have been “upbeat,” offering:
Internet advertising creates a potential for companies to replace revenues lost from providing free content.
Yes, but traditional media content at YouTube is not provided free-of-charge in exchange for advertising revenues.
The Google value proposition to professional content owners is a “belief” that YouTube brings a “significant new audience of viewers” to traditional media (see “Google’s fuzzy YouTube logic”).
What will be the value proposition to YouTubers?
The YouTube “broadcast yourself” fare is not an easy, or lucrative, advertising sell (see “YouTube vs. MySpace: Is friendly bankable?”). Moreover, typical YouTuber fare is of the “friends and family” variety, garnering minimal views.
The wild successes of “Lonely Girl 15” and “Diet Coke & Mentos” reflect calculated, and professionally produced, video shows, not fabled serendipitous, viral video phenomenona.
The percentage of YouTubers uploading videos is in the very low single digits. Among that small pecentagte that do upload videos, the percentage of videos uploaded of a high quality, non-pirated nature is also udoubtedly very low.
YouTubers may continue to broadcast themselves, but they ought not bank on Google’s YouTube “rewarding” them handsomely for their "creativity."
ALSO: Will YouTube ‘King Hurley’ really share video riches? and
Is YouTube really a $1.65 billion Web 2.0 success? and
Who needs YouTube? Bolt, NBBC, Network2 on stage in NYC
January 29th, 2007
Hillary TV: Will 'User Generated Politics' get Clinton to the White House?
A Digital Markets Blog political announcement: The 2007 campaign for the presidency of the United States will mark the prime-time debut of what I will be calling:
"USER GENERATED POLITICS”
“All politics is local,” the old saying goes. “Every vote counts” is another favorite.
My debut post at this Digital Markets Blog showcased “local markets of one.” What is the ultimate, high-stakes “local market of one”? Each and every voter in the U.S. presidential election, as Al Gore can attest to!
Presidential candidate Senator Hillary Clinton is hoping to have a “conversation” with each and every voting “local market of one.”
Clinton is embarking on a “User Generated Politics” campaign extraordinaire.
Tens of thousands of people have already engaged Clinton in her “conversation” to the White House, as I discuss in “Yahoo: 36,147 people tell Hillary Clinton what to do.”
Hillary Clinton looks to Bill Clinton for presidential campaigning advice. Hillary Rodham, however, is forging a different path to the White House than the one Bill navigated.
Bill Clinton is a supreme campaigner and is known for enjoying pressing the flesh, literally. Experienced campaigner Hillary Clinton is also well-versed in connecting with the “people."
On October 3, 1991, Bill Clinton declared his candidacy for President of the United States via live rally, by addressing throngs of supporters at the Old State House, Little Rock, Arkansas. His wife, Hillary, was at his side:
Thank you all for being here today, for your friendship and support, for giving me the opportunity to serve as your Governor for 11 years, for filling my life full of blessings beyond anything I ever deserved.
I want to thank especially Hillary and Chelsea for taking this big step in our life's journey together. Hillary, for being my wife, my friend, and my partner in our efforts to build a better future for the children and families of Arkansas and America…
All of you, in different ways, have brought me here today, to step beyond a life and a job I love, to make a commitment to a larger cause: Preserving the American Dream…
What is Clinton's "User Generated Politics" campaign strategy?
On January 20, 2007, Hillary Clinton declared her candidacy for President of the United States via Hillary TV, by posting a pre-recorded one minute and 43 second video monologue at her campaign Website. Her husband, Bill, was not at her side:
I'm not just starting a campaign, I'm beginning a conversation — with you, with America…
So let's talk. Let's chat. Let's start a dialogue about your ideas and mine. Because the conversation in Washington has been just just a little one-sided lately, don't you think? And we can all see how well that works.
And while I can't visit everyone's living room, I can try. And with a little help from modern technology…
So let the conversation begin. I have a feeling it's going to be very interesting.
I do to. That is why I will be following the Clinton "conversation" to the White House, here, at this Digital Markets Blog. Presidential race 2007:
The rise of “USER GENERATED POLITICS,” at Digital Markets.
ALSO: “Social media conversations: Talking or selling?" and "Google already winner in Clinton presidential bid"
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