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Remember the long tail? It was the omnipresent theory that suggested there were oodles of cash to be made by monetizing a market’s disparate tastes via the Web.

Is most of the business in the long tail being generated by a bunch of iconoclasts determined to march to different drummers? The answer is a definite no. My results show that a large number of customers occasionally select obscure offerings that, given their consumption rank and the average assortment size of offline retailers, are probably not available in brick-and-mortar stores. Meanwhile, consumers of the most obscure content are also buying the hits. Although they choose products of widely varying popularity, top titles generally form the largest share of their choices. (The wide appeal of these top titles is, of course, what makes them popular in the first place.)

Not only this, but the researchers find that “no matter how I slice and dice the customer base, customers give lower ratings to obscure titles.” So, not only is the long tail less profitable, it’s also less enjoyable. Chris Anderson, the man who wrote The Long Tail and whose theory became de rigueur, tries to defend his theory, but it doesn’t measure up to Harvard Business Review’s analysis.

Meanwhile, our research also showed that success is concentrated in ever fewer best-selling titles at the head of the distribution curve. From 2000 to 2005 the number of titles in the top 10 percent of weekly sales dropped by more than 50 percent–an increase in concentration that is common in winner-take-all markets. The importance of individual best sellers is not diminishing over time. It is growing….

Why sell a million copies of Led Zeppelin’s Coda, when you can make a thriving business of selling two to three copies of your neighbor’s garage band to Rick, two copies of a Nigerian band’s tunes to Susan, and so on?

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Is there money in the long tail? Probably. Do you want it? Probably not.

What’s the takeaway? If you’re a vendor, you’re still better off trying to appeal to the short tail of demand, whatever your industry. If you’re an open-source vendor, in particular, you probably can’t afford to do otherwise. The economics of open source generally favor monetizing the unwashed masses of an existing market.

As new research highlighted in Harvard Business Review suggests, the answer may well be that the real money is in the blockbuster, not the long tail, after all:

Indeed, this is the biggest opportunity in open source: To bring Open Product X, Y, or Z to an existing but top-heavy market, one where vast hordes of would-be buyers are priced out of a market or have been kept out by the complexity of existing products. This is what Alfresco does for Enterprise Content Management/Collaboration. It’s what Openbravo does for ERP. It’s what SugarCRM does for CRM. And so on.

Why is a company that did over $10 billion last year worth so little? The primary reason is liquidity. Financial analysts estimate that the company is burning through $700 million in cash each year. At this rate, the company will be low on cash in a few years just when it has $1 billion in debt due in 2011. Unless the Canadian government gets involved, the Toronto-based company probably won’t be able to find any financial lifesaver in this economy.

Sell the metro optical equipment and services groups to IBM. IBM builds lots of private networks for distributed mainframe clusters and storage replication. IBM could also add bodies and expertise to its global services division. EMC may also be interested at the right price as well.

Venerable networking giant Nortel Networks announced a third-quarter loss of $3.4 billion, or $6.85 per share. As of this writing, the company’s stock is trading around 80 cents with a market cap just over $400 million. Yikes!

Sell core Ethernet switching and routing products to HP. HP is on a roll with ProCurve networking but it lacks enterprise-class products. This one probably makes the most sense.

This autumn has not been kind to name-brand companies like AIG, General Motors, Lehman Brothers, and Merrill Lynch. But the tech industry seemed to be cruising along without any major disasters–until Monday that is.

During the boom years, Nortel was known for its multiple layers of middle management and bureaucracy. This stigma led Massachusetts technology veterans to refer to Nortel as “the Digital of the networking business”–a not-so-kind comparison to organizationally challenged Digital Equipment Corp. Unfortunately for Nortel, this comparison still holds. Nortel’s only option is to follow the Digital example, sell off valuable non-core divisions ASAP, and kill other nonessential units entirely. Here are a few ideas for CEO Mike Zafirovski to ponder:

Lean on Microsoft to broker a deal for Unified Communications. Microsoft has years of software development and marketing programs invested in Nortel Unified Communications. Microsoft also has lots of cash and industry connections. Perhaps Microsoft can use its money and influence to drag in a third party like Juniper or Lucent to make sure that this effort continues with a stronger player.

Get out of the network security business. Actually, Nortel has already abandoned most security products but it should kill the remaining offerings including Network Access Control and VPN (virtual private network) products. There may be some small asset value here for someone like Extreme, Force10, or Foundry.

Adding to Nortel’s woes, I don’t see any white knights coming along anytime soon. Huawei has been mentioned as a possible suitor, and I’m sure the company would love Nortel’s channel, but it has too many overlapping products and there’s no way it wants to jump into this financial mess. Fujitsu? Siemens? I just can’t see it.

If priced right, these painful moves could be attractive to other vendors and keep Nortel afloat in the service provider market. Unfortunately, without intervention or divestment, the most likely scenario is continual cuts and eventual bankruptcy. At that point, a “Chainsaw Al” type can come in and rip the company apart. I, for one, would be very sad if this happens.

In my opinion, Twhirl (review) is the best way to use Twitter. But that position is hardly secure. Heavy Twitter users are fickle and often switch apps when newer and better ones come along. I say that based on experience as well as observation.

Twhirl was developed by Marco Kaiser in Germany. It’s the first AIR app he wrote, and he did it as a side project. Kaiser will stay in Germany as a new employee of Seesmic. It’s been a busy week for him, apparently: His wife also had a baby this week.

Meet Seesmic's new desktop client app.

Kaiser’s app will now evolve into Seesmic’s official desktop client, and the first Seesmic-enabled version of it will ship in two to three weeks, Le Meur told me. Seesmic, which is still in private beta, will open up to public access before that version of Twhirl becomes available.

Seesmic’s video service is often compared to Twitter since it encourages short-form back-and-forth commentary, as Twitter does, and its social architecture is similar: You “follow” people whose results you want to see, and they can follow you back. That should make the mechanics of using one client to access both Twitter and Seesmic at least potentially workable; but we’ll have to see how well it operates in practice.

But Twhirl is several steps ahead of the competition. It already cross-posts to Twitter-alikes Pownce and Jaiku, and Kaiser was already working on integration with Seesmic when that comany’s founder, Loic Le Meur, approached him with the acquisition offer. (See Le Meur’s blog post regarding the acquisition.)

Seesmic (review), which is working towards the public release of its video nanoblogging and chat service, has acquired Twhirl, an AIR-based Twitter client. Twhirl is the most popular third-party client according to ReadWriteWeb, accounting for about 7% of messages sent on the service.

Twhirl will continue to support Twitter, and Le Meur has no plans to add text nanoblogging to Seesmic. His service is all about video, he says.

Despite Twhirl’s importance in the Twitter ecosystem, it is not a huge app by normal software standards: It’s been downloaded only about 100,000 times since its first release, Le Meur said. Despite the buzz in and about Twitter, the nanoblog market is still very immature.

“We believe it’s imperative we align our cost structure with today’s economic realities,” said Yahoo spokesman Brad Williams. “We’ve been looking at ways to streamline our processes and bring more efficiencies to how we work as an organization,” he said, and the company hired Bain & Co. to “help us identify opportunities for improvement.”

With Microsoft having, at the very least a “hiring chill,” we decided to check in with other big tech giants on their hiring plans.

Many expect TV and print advertising to be hit harder, but that doesn’t mean online ads are immune. Even if individual ads or campaigns are profitable, the ad market can be hurt when customers tighten their purse strings and advertisers reduce spending.

IBM: “We haven’t announced any freeze,” an IBM representative said. As of right now, nothing has changed at IBM. We continue to hire in key skills areas.”

“It’s a very dynamic situation. There is evidence credit is a problem for certain sectors. We have not yet seen any impact from it,” Schmidt said. But, he added, “We might. All bets are off. Nobody knows.”

For its part, Google said “We continue to hire talented people across functions for our offices worldwide.” Of course, the real question is at what pace they continue that hiring.

He wouldn’t confirm that layoffs are part of the plan, but payroll is a major expense, and most employees know how to read the tea leaves when they hear the word “streamline.”

CNET News’ Charles Cooper, Stephen Shankland, and Robert Vamosi contributed to this report.

HP: “Workforce rebalancing is a continual activity across our businesses and geographies to ensure that resources are aligned with the opportunities in the market,” HP said in a statement. “We expect that our overhead costs, which include IT, real estate and shared support functions, will decline more from (fiscal 2007 to fiscal 2009) than they did from (fiscal 2005 to fiscal 2006).”

Intel: Declined to comment, citing a pre-earnings announcement quiet period.

Oracle: Declined to comment.

Microsoft: “Microsoft will continue to grow and add thousands of new jobs this year, but given the current economic environment, we are taking the prudent step of reviewing our hiring plans and will make some adjustments as appropriate,” spokesman Lou Gellos said in a statement. “We are optimistic about our prospects for growth and will continue hiring the talent we need to ensure our ongoing success.”

Though Yahoo is under pressure itself, Williams said the economy and the advertising market led to the current analysis. “The collapse of the credit markets…accelerated what had been a pretty uncertain market,” he said.

McAfee: “McAfee has not changed its hiring process and continues to make strategic investments in its personnel,” A company representative told CNET News. “We continue to add to our headcount. McAfee has grown significantly over the past quarters.”

In a meeting with reporters Wednesday, Chief Executive Eric Schmidt supplied a big dose of caution about whether there might be effects from the broader economic issues.

Dell: Dell spokesman David Frink said the company is certainly monitoring things, but had nothing new to announce. “But as you know, we’ve got a well publicized effort under way to reduce costs,” Frink said. Dell has cut 8,500 workers from its ranks in the last four quarters. That said, Frink said Dell “will selectively hire in areas that are important.”

It’s a little hard to get a clear picture of what other companies are doing–in part because so many have already announced plans to cut jobs. Intel’s workforce is down thousands from where it was a couple years ago. Hewlett-Packard has already said it plans to shave 24,000 jobs as part of its EDS purchase, while Dell and others have also been cutting back.

Apple: Declined to comment, also citing a pre-earnings quiet period.

Most other companies didn’t have much new to say on a Friday afternoon, but it’s fair to say that every company has got to be taking a second look at those 2009 numbers. Anyway, here’s what several big names did have to say on the matter.

Yahoo, already under pressure from competitor Google and the ugly saga of Microsoft’s attempt to acquire the company, said Friday that it is bracing itself for a weaker advertising market.

There’s a boss that heads up the organization for both the cybercrime gang and the mafia. The boss does not commit the crimes. Under him is the “underboss” who manages the operation, providing the Trojans for attacks.

(Credit:
Finjan)

“The current cybercrime organizations bear an uncanny resemblance to organized crime organizations such as ‘La Cosa Nostra,’” concludes Finjan’s Malicious Code Research Center’s Web Security Trends Report for the second-quarter of 2008 (survey required before downloading the 21-page report).

The business of cybercrime has evolved from auctioning vulnerabilities online to the highest bidder in 2006 to creation of “one-stop-Crimeware-shops” where hackers sell toolkits to less tech-savvy attackers in 2007. The toolkits have gotten more sophisticated and providers are even now offering “Crimeware-as-a-Service,” ala the Web’s software-as-a-service model, the report says.

Cybercriminals have even built into the systems ways for buyers of credit card numbers to do real-time verification of the data to see whether it has expired, said Paul Ferguson, an advanced threats researcher at security firm Trend Micro.

Cybercrime, the harvesting and sale of credit card and other data for online fraud and theft, is a “shadow economy” that mimics the real business world in its practices and the mafia in its structure, according to a new report from security firm Finjan.

Underneath the second-in-command are several “capos” or “campaign managers” who have their own “affiliation networks” perform attacks and steal data, just like “soldiers” do the “dirty work” in the mafia. “Resellers” similar to “associates” in the mafia, trade, or “fence” the stolen data.

“It’s become very professionalized…a cradle-to-death software life-cycle regime, just like The Sopranos,” Ferguson said in an interview in May. “They are pushing the money up the tree. It’s a multitrillion-dollar enterprise…It’s not just a kid in his basement anymore.”

This diagram illustrates the operations of a crimeware server, showing the flow of crimeware and revenues forming a "closed " business loop.

This diagram shows the organizational chart of a typical cybercrime group. It is very similar to the structure of another type of criminal enterprise, the mafia, according to a Finjan study.

(Credit:
Finjan)

Finjan also has located crimeware servers, where stolen data is stored, that function as “drop zones” of organized attacks and interviewed resellers of data to find out how the system is structured and how it works.

While inflation is raising prices in the real world, prices for credit card numbers and bank accounts with personal identification numbers have dropped from $100 or more to $10-$20 each, according to the report. (McAfee Avert Labs discovered a price list of its own earlier this year.)

Microsoft's Mark Bolger demonstrates the Surface's multitouch user interface.

“Hear about the unique attributes of Microsoft Surface computing, dive into vision-based object recognition and core controls like ScatterView, and learn how the Surface SDK aligns with the multitouch developer roadmap for
Windows 7,” Microsoft said, in promoting the session. “Attendees will receive access to the Microsoft Surface SDK.”

Microsoft made that pledge on its PDC Web site, as part of a listing for a session focused on writing Surface applications.

Microsoft has been promising for some time to open up Surface development beyond the select group of companies that have been working with early launch partners such as AT&T and Starwood hotels.

The company has also promised multitouch will be a part of the Windows 7 interface, but has yet to detail how that will work.

(Credit:
Ina Fried/CNET News.com)

The long-awaited software developer kit for the Surface tabletop computer will be made available to those attending Microsoft’s Professional Developer Conference at the end of the month.

Monday, referred to as Cyber Monday by online retailers, capped off a successful Thanksgiving holiday weekend for the industry, which overall saw spending jump 13 percent.

ComScore ranks the $846 million spent Monday as the second-biggest day of online shopping ever. That should be encouraging to retailers, since typically Cyber Monday isn’t the biggest spike in online sales for the holiday season, just the first, according to retail analysts.

“Consumers are clearly responding positively to retailers’ aggressive online discounts,” ComScore Chairman Gian Fulgoni said in a statement. “With Cyber Monday promotions beginning in earnest over the Thanksgiving weekend, consumers have finally begun to open their wallets, setting off a streak of four consecutive days of extremely strong growth…”

It’s a welcome relief for an industry that was mostly bracing for the worst.

It also comes on the heels of a better-than-expected Black Friday shopping day, so the retail picture this holiday may not be quite as dreary as expected. What remains to be seen, however, is whether retailers were able to draw any sort of profit after the aggressive promotions that clearly attracted shoppers.

Visitors to e-commerce sites spent $846 million on Monday, an increase of 15 percent over the same day a year ago, according to ComScore.

Among the critical patches, two affect Windows Media Player, one affects Windows, while the other affects
Microsoft Office. All could enable remote code execution if exploited.

Starting next month, Microsoft will be sharing the technical details of new vulnerabilities to give software developers a catch to update affected products before the public announcement. Also in October, Microsoft will start providing each bulletin with an Exploitability Index to help system administrators prioritize the patches.

On Thursday, Microsoft announced four security bulletins for Tuesday. The announcement is intended as a heads-up for IT departments before Patch Tuesday. All four are considered critical, the most serious ranking offered by the software giant.

Rupert et al: Moderate winners
Round and round they go. Maybe Murdoch or the folks at Time Warner (AOL) still hanker after Yahoo. If so, they may yet get another chance to twirl. During the last couple of months every scenario was on the table. Here’s another: if Yahoo’s stock fails to recover, Yang doesn’t have any wiggle room. Without immediate improvement in the stock price, management may be amenable to a combination between Yahoo and one of its erstwhile suitors.

Not now. Besides, why buy trouble? By walking away from a protracted proxy contest, Ballmer saved billions buying a company which would have existed in name only. Too many malcontented Yahoo employees would have walked out the door. What’s more, the cost of integrating the companies would have been a cluster bomb. Now Microsoft can dip into that big war chest and selectively buy any number of Web 2.0-ish companies to complement its bigger strategic ambitions.

Eric Schmidt and Google: Moderate losers
It’s as simple as a zero-sum game. Whatever hurts Microsoft benefits Google. And vice-versa. The conventional thinking is that the Microhoo combo would have presented Google with a potent threat. I don’t buy that line.

Jerry Yang is a girly-man–and that goes double for Eric Schmidt.

On paper, a Microsoft-Yahoo merger looked formidable. In practice, however, it was rife with potential for a major culture clash. Management would have been bogged down for months trying to figure out how to get all the high-strung boys and girls on both teams to play nice. Google would have continued to feed its juggernaut, snickering all the while at “Micro-molasses.” Now Ballmer’s going to be in a frenzy to get Microsoft back in the game. Google would have fared better if Microsoft had to focus on making a Yahoo merger work.

Biggest winners: Steve Ballmer and Microsoft
A lot has been made of Microsoft’s seeming inability to engineer its way out of a paper bag. Trouble with the conventional wisdom is that it’s usually out of date. Prior to Ray Ozzie coming onboard and Microsoft’s move to embrace cloud computing in a big way, Yahoo may have been worth nearly any price.

Biggest losers: Jerry Yang and Yahoo
When Wall Street opens on Monday morning, I wouldn’t want to be holding shares of Yahoo. After the company effectively put the kibosh on what would have been a 70 percent premium, investors are going to have a fit. In his letter, Ballmer said Microsoft was going to raise its offer to $33 a share, or another $5 billion, but the deal fell apart because Yahoo wanted even more.

Sergey, Larry, and I quite enjoy Steve's Monkeyboy routine

Barring a come to Jesus moment by both sides, “Microhoo” is dead and buried. So who won and who lost? Months from now, we’ll have a clear idea. In the meantime, here are my back-of-the-envelope picks.

I've got a plan. Really. I do.

I’m anxious to hear Yahoo’s side of the story, but the spotlight’s on Yang to convince outsiders that he held out for all the right reasons and not because of personal animus toward either Ballmer or Microsoft. Perhaps he thinks he can inveigle Rupert Murdoch and News Corp. or that the Google connection will work out to Yahoo’s bigger benefit. Tough to say what’s going through his head these days. Yang has remained incommunicado during the course of the entire novella. Perhaps he believes this clears the decks for the “rewiring” of Yahoo previewed by the company’s CTO last month at the Web 2.0 conference. Maybe it does in the long term, but Yang doesn’t have two years to muck around. He’s got to produce a turnaround now.

With advertisers and marketers polluting the Web with scads of pseudo “viral videos” it’s nice to see a legitimate one crop up.

Leave it to the folks at The Onion to remind us what viral videos are supposed to do: entertain.

The expert from the Institute of Miley Research soberly tells viewers that within two years, society will be reduced to “roving tribes of barbarians constantly searching and fighting and scouring the landscape for the last remaining Miley Cyrus fashion doll.”

The Onion News Network reports that we’re burning through the entertainment value of the teen-pop sensation “at far more aggressive rates” than we did of Lindsay Lohan or the Olsen twins. The latter women were “bountiful entertainment resources that our overconsumption reduced to smoldering remnants.”

In a lampoon of CNN and mainstream media, alternative news source The Onion informs us of an approaching disaster: “Entertainment Scientists Warn Miley Cyrus Will Be Depleted by 2013.”

Tip: Pay attention to the graphs and to the ticker running across the bottom of the screen.

Entertainment Scientists Warn Miley Cyrus Will Be Depleted by 2013