The knock against Web 2.0 is that it’s chockablock with me-two, doodad makers, companies fated to blow away like prairie grass at the first sign of a storm. Some of that is true. But when you walk the floor at Web 2.0, you see that this year’s conference is dominated by serious companies with serious products: Disney, IBM, Intuit, Microsoft, Cisco-Webex, Oracle, Juniper, Google, EMC–well, you get the idea. (You can find the full list in the program guide.)

Why not, indeed? After all, it worked for Andreessen.

“You look at CPMs for a lot of the social-media platforms we work with and you wonder about the CPMs,” said an executive who asked to remain unidentified. This guy was one of the smart ones: he took the money last year and decided to hang around the mother ship–at least for the foreseeable future–and run the division. “Unless they run a very small shop, it’s going to be really hard for them to make serious money. But that’s the dream that drives everybody so, why not?”

So why the lingering insecurity?

Nothing controversial about being conservative in uncertain times. Still, a nuclear winter? Author and Oxford professor Jonathan Zittrain followed Andreessen onstage–via a recorded transmission –by pondering grim Internet scenarios lurking just over the horizon. The odd thing is that I’ve heard similar hedge-your-bet comments all week. This is a crew that survived the last bubble and they know from firsthand experience that a lucky rabbit’s foot won’t be enough to get by in case lightning strikes twice.

That’s true. It’s also true that many of the smaller companies are ready to grab the first good offer that comes their way.

“I think it depends on your perspective–that is, where in the market you are in terms of the growth curve and users,” said Kaku Srivastava, general manager at Flickr. “From where we’re sitting, we’re bullish.”

For the record, this line is becoming old hat for Andreesen–in a blog post he wrote after Ning raised $60 million net in a private round of funding, Andreesen said the money would “enable us to keep scaling given our accelerating growth (more than 230,000 networks on Ning now, growing at over 1,000 per day) and to make sure we have plenty of firepower to survive the oncoming nuclear winter. At current growth rates, we don’t need it to get to cash-flow positive, but having lived through the last crunch, it’s good to be conservative with these things.”

SAN FRANCISCO–So there was Marc Andreessen, scaring the bejeesuz out of the crowd at the Web 2.0 Expo here with talk of a “nuclear winter” descending upon techdom. Maybe it was the Lex Luthor resemblance that made it seem extra sinister.

Barring a real nuclear winter, I expect they’ll still be around for quite some time.

Marc Andreessen: Watch out or…kaboom!

Which also failed.

To its credit, Gizmodo stayed up, although it did get slow, according to reports I got. I did not get any reports of TUAW failing, and people I know say that MacRumors’ special liveblog site, MacRumorsLive, which has its own home-grown AJAX-based liveblog platform, did great.

I had to eat a little crow this morning. Yesterday I recommended that CNET One More Thing Apple blogger Tom Krazit use CoverItLive to liveblog the Steve Job Macworld keynote (see review: Ultimate Liveblogging Tool: CoverItLive). He declined. And good thing, too, since CoverItLive choked during the keynote. The failure was because of a minor programming slip-up, not the platform’s inability to scale to hundreds of thousands of users, CEO Keith McSpurren told me. But it doesn’t matter. In the liveblogging Superbowl, CoverItLive “tripped over its own laces,” McSpurren admitted. Bloggers burned by the outage included CrunchGear, Fake Steve Jobs, MacDailyNews, and about 25 other blogs. Some sites posted messages sending their readers elsewhere, including to Twitter.

Sad Engadget

With CoverItLive and Twitter out of action, traffic continued to pour into other, more traditional blogging platforms, many of which were already reeling under the load of having, basically, all of their regular readers hitting refresh every 5 seconds looking for updates. CNET’s own blogging platform, which hosts the One More Thing blog as well as Webware, struggled and collapsed, generating error pages 23 percent of the time. Engadget failed, too.

“The Live Framework will be integrated into the next release of Windows Live. Stay tuned to Dev.live.com for more details in the future,” Microsoft said in its blog. “If you are a Live Framework technology preview user, we ask you to please download any data and/or code from the service prior to September 8th as well as remove your devices from the service.”

Microsoft said on Friday that it plans next month to end support for a test version of its Live Framework, which was essentially the developer side of its Live Mesh service.

Microsoft rolled out the Live Framework as a community technology preview at last year’s Professional Developer Conference, though its launch was somewhat overshadowed by the debut of Windows Azure. At the time, Microsoft said it was supporting both platforms, with Azure being a more basic set of building blocks and the Live Framework a collection of more finished services.

Microsoft’s consumer-facing Live Mesh application is not affected by the move, Microsoft said.

In a blog posting, Microsoft said it plans to integrate many of the concepts behind the Live Framework into the next version of Windows Live. In the mean time, though, developers will lose access to the test version of the Live Framework as of September 8.

The idea of Live Framework is to give developers of Web-based applications the ability to add desktop components, while those writing traditional applications could use the Live Framework to add synchronizing and other online capabilities.

Developers can expect to hear more about where Microsoft plans to go with Live Framework at this November’s Professional Developer Conference.

Nintendo’s increased outlook is driven by stronger-than-expected sales of its Wii console, which are expected to increase 42 percent for the year, as well as a reversal of its projections for its DS game player. The company now expects its year-over-year DS sales to rise, rather than drop, according to the report.

The company said it expects to post net income of 410 billion yen, or $3.8 billion, for the year ending March 31, surpassing Wall Street’s expectations of 382.6 billion, according to Bloomberg. That anticipated performance marks a 59 percent increase in profits over the previous year.

Japanese game maker Nintendo raised its outlook for its annual profit by 23 percent, due to soaring sales of its popular
Wii and Nintendo DS, prompting its stock to jump nearly 8.4 percent on Friday.

The services are part of its Online Services business, as spotted by Valleywag.

For $25 a month, Sam’s Club will work to improve the ranking of a Web site on search engines, and for $50 a month a company can get pay-per-click advertising services. Sam’s Club also offers Web site design and e-commerce services. Who knew?!

(Credit: Sam's Club)

In addition to low-end appliances, office supplies, and jewelry, Wal-Mart-owned Sam’s Club is now offering its primarily small-business customers online advertising and search engine optimization services.

I was on the show with (obviously) Leo Laporte, John C. Dvorak, Molly Wood and Jason Calacanis.

Trying to make sense of that platform is no easy task, however. Treadwell said he likes to think of the Live components as falling into three categories. At the top layer are finished services, things like Windows Live Hotmail or Windows Live Photo Gallery.

On the corporate front, Treadwell reiterated that although the Live Mesh technology preview is not necessary enterprise-friendly, the final product will be. For example, businesses that want employees’ Mesh documents to stay on their own servers will be able to do so.

SAN FRANCISCO–The launch of Live Mesh this week offers the clearest understanding yet of what Microsoft’s Windows Live Platform group has been working on for the last two years.

“Mesh is a big part of the platform; it is not the entire platform,” David Treadwell, the vice president in charge of the group, said in an interview at the Web 2.0 Expo 2008 here.

“We’re looking at other ways to have a business model,” he said. In addition to subscription and advertising, he also mentioned the possibility of including Mesh as part of a higher-end license for some of Microsoft’s other products.

Microsoft's Live Mesh is but one part of the company's overall Live plan.

“Most companies will want to be careful about where their private data is stored,” he said. Likewise, businesses may want more security in place around the remote desktop feature. Once you are connected to a machine, you have full access to anything that machine can do.”

I also talked with Treadwell about all the things that are on his “to do” list with Live Mesh–adding support for more devices, opening it up to developers, making it enterprise-friendly and, last but not least, coming up with a business model to pay for things.

“Today it’s just Microsoft,” he said. “We’re not going to talk about future plans but there is a lot of opportunity at that layer.”

There wasn’t a whole lot new on the device front–Macs and Windows Mobile are next up, but no firm timetable. There should be a software development kit in time for this year’s Professional Developers Conference.

To offer an analogy, Treadwell suggested that the utility computing piece is akin to the hardware and Windows kernel on the desktop, while the platform services piece is similar to the Win32 application programming interfaces. Finished services are similar to applications.

At the deepest level are a set of basic utility computing services–things like computation and storage. Today, only Microsoft uses its data centers in this way, but Treadwell suggested that will change.

And yet, Live Mesh is just the tip of the iceberg. It’s only one of the projects that 400 or so people are working on in Microsoft’s Live Platform group.

Below that is the area Treadwell focuses on–platform services. That includes things like Live Mesh as well as the core contacts and messaging engine as well as Live ID authentication. About 100 of the 400 or so people working in Treadwell’s group are devoted to Live Mesh.

(Credit:
Microsoft)

“We should have a pretty solid set of stuff directly useful to developers,” he said.

How did we find the idea? We knew that online worlds were going to be a big deal and so we got about 50 of our smartest people together from different divisions and of different job types–marketing people, technology people, designers, even finance people and lawyers–and we had a big brainstorm. We have a great process for brainstorms that’s led by our head of creative Len Mazzocco. He’s like the Michael Jordan of brainstorming. We came up with probably a few hundred ideas but narrowed it down to 75 really good ones from the two days. Then we narrowed it down to our top 10 and top 5 and in there was the nugget of the Clickables concept. Then we decided that this was such an important area that we would create a dedicated team around it, called our Toymorrow team that would be a little SWAT team focused on technology in the toy space. We moved really aggressively to find partners who shared our vision and had applicable technology. Speed is of the essence in these things. Len always says that “God gives everyone the same ideas at the same time.” If you don’t move fast, someone else will have your idea and do it before you can get it to market.

To be a creative company, you have to have a creative core, whatever that means for your company. For Disney, that’s people like storytellers, animators, and Imagineers. For a company like Apple, it’s designers and engineers. The people at the core of what you do have to be the heart that pumps innovation through the vessels of the organization. You can’t live without your heart. But the other parts of the organization have just as important a role in innovation. Take technology, for example. Pixar is very clear that it is about telling stories and that everyone who is there is there for that purpose. Technology plays a really important role for them. They like to say that “art challenges technology and technology inspires art.” They don’t look at technology as being a second-class citizen to their artists. It’s a respected peer. There are lots of other parts of the organization that have to be part of an innovative mission.

But I haven’t answered your question. I think innovation is understanding people and what they need and giving them the most perfect solution you can to their problem even if they might not know they have it yet. It’s giving people something new that they haven’t seen before or making them re-experience something familiar in a totally new and better way. Everyone talks about Apple. The reason we all worship Apple is that there is no detail too small for them to sweat out. They don’t stop at trying to make a great product. Look at the packaging. They work to reduce materials, to improve communications, to reduce shipping costs, to have better environmentally friendly materials, to create a great out-of-box experience, and on and on. Once you live and breathe these principles, you can’t compartmentalize. You have to make everything as great as it can be. It becomes a way of life.

What innovation are you still waiting for?
I think the single most important innovation we all need is low-cost green energy. Energy is the United States’ #1 trade issue, #1 security, #1 economic issue, and #1 environmental issue. Green energy will have a more transformative effect on the world than the Internet, it’s that big. Outside of this, I am working a lot with robotics these days and I’m very excited about all this smart technology that will make its way into lots of products. I live in LA and we are (in)famous for our traffic. I would love us all to have robotic
cars that could figure out traffic flow, so I never have to sit through a traffic jam again.

Beyond your organization, who do you admire for risk-taking innovation, and what do you think makes them successful?
Apple is too obvious, so I’ll say Target. At a time when everyone was trying to follow Wal-Mart into the bargain bin, Target had a vision that everyone deserved nicely designed products. A lot of people thought they were talking over their audiences’ heads or they were full of themselves. In fact, everyone else was underestimating the intelligence and taste of their guests, and Target saw something no one else did. But Target innovated in a lot less obvious ways too. Take queue lines. At a lot of big-box stores, you could spend 20 minutes waiting to check out. At Target, you will wait less than 5 minutes most of the time. If the register is stacked up more than 3 people deep, they will open another one. That’s customer service. Today, Target is beating all of their competitors’ comps and doing more business per door than anyone else. Not everything has worked for Target. Remember the short-lived Philippe Starck line? But they keep trying and more often than not, they succeed.

We asked Chris Heatherly, vice president of technology and innovation, Disney Consumer Products, The Walt Disney Co., to answer a set of questions–and he took the time to dive a little deeper.

How do you define “innovation”?
My favorite quote about innovation is one where Steve Jobs was asked how they systematize innovation at Apple and he said “We don’t. We hire good people.” I think a lot of talk about innovation amounts to a lot of dancing about architecture. People get caught up in trying to have an innovative “process” instead of having their values where they should be–making great product. To borrow from James Carville, “It’s the product, stupid!” Who cares what your process is? It’s what you put out there that matters.

If you want to make great products, you have to have high standards and absolutely insist on those standards. There’s a great story about Pixar and the making of Toy Story 2. They completed most of the movie and then decided they didn’t like how it was coming out. So they scraped it and started from scratch. How many companies have the guts to do that? Not many.

But one of the keys to innovation is having management that expects and drives innovation. You can have the best designers in the world and the worst management and nothing good will come of it. You have to have leaders who believe and have guts and support innovative work. You have to have leaders who hire the best talent and weed out the people who have the wrong values and intentions, but who at the same time are extremely tolerant of good people making mistakes or failing sometimes. If you manage quarter by quarter or have no tolerance for failure, you won’t ever have innovation, no matter how creative your people are. You have to be willing to lose.

(Credit: Walt Disney Co.)

(Credit: Gearlog)

In your opinion, what are the biggest barriers and challenges that stand in the way of organizations becoming more innovative?
The organizations are their own biggest barriers. A lot of things that big companies do that they think are conservative and prudent are actually very foolhardy and dangerous. It’s said that cynicism is ignorance masquerading as wisdom. Business is very simple. You have to offer a product that is better than your competition and you have to keep your customers happy. A lot of big companies get caught up in other things. Managing a P&L is important, and money keeps the lights on. But if people don’t like the product or service you are putting out there, it doesn’t really matter how clever you were about saving costs here and there. When you’re dead, it doesn’t really matter why. You can’t cut your way to glory. Look at Apple. In the last recession, everyone else laid people off and cut back on R&D. Apple said “We are going to innovate our way out of this.” And look what happened for them. You can’t stop innovating.

What would you consider your most successful innovation? How did you “find” it?
I’m very critical and I always think we can do better than we have done in the past. My favorite stuff–no matter when you ask me–is in the future and stuff I normally can’t talk about it publicly.

My other favorite recent product is a digital camera we made for preschoolers called Disney Pix Jr. I love it because it is so simple and so rugged and just does what it says it will do. I threw one myself down a flight of concrete stairs 20 times and couldn’t break it. And the interface is so simple. We even got rid of the on button! And we have a fun feature on it called PhotoFriends that lets you pose with a Disney character in your picture. Kids are having a lot of fun with that. But for me, that is a great product because it meets the need and does what it says it’s going to do. It doesn’t read your mind or have Wi-Fi or cure cancer or any of that. It’s just a great camera for kids. It is what it’s supposed to be. Not a lot of products, especially technology products, can say that.

What are the most important areas of innovation in your organization (product, process, IP, marketing, etc.)?

Yesterday, I saw a company that makes bubbles that you can’t spill. Brilliant! I bet a lot of people have looked at bubbles and said “How can you innovate bubbles? There’s nothing you can do. They’re just bubbles.” But this guy did and now he has a huge business because it turns out that parents don’t buy as many bubbles for their kids as they might because they are afraid they will spill them and make a mess. To me, that’s real innovation. A simple, clever idea well executed that makes things better for people.

If we had kept with our original idea, we would have had the OLPC four years before Negroponte. That was the hardest project of my life, and I can’t say I didn’t fight hard. But our partner didn’t share our vision. They thought it was imperative that it have all the slots and expansion and all the stuff parents probably don’t really care about when they buy a kid a PC but that geeks care about a great deal. I thought we could change them, that we would convince them. But I felt compelled to launch, and I wound up compromising in some areas I didn’t want to. I learned from that. Your partners need to share your vision or you will never get the result you want. I believe it’s Louis Armstrong that said “There’s some people, if they don’t listen, you can’t tell them.” You have to stick to principles. If the people you work with don’t want to do the project right, it’s not worth doing.

I think too many people confuse innovation and technology. I have seen a lot of designers try to make a mediocre concept innovative by putting Bluetooth or some other whiz-bang technology du jour in it. That’s not innovation. It’s cheating. Innovation is about solving problems for people. As I write this, I am at the New York Toy Fair. I am always so impressed and humbled by the incredible cleverness and simple innovation in small things that toy designers and inventors do every day. I think the technology business could learn a lot from these guys. The toy business has to work with very cheap stuff so they can’t fall back on expensive technology. They really have to make the magic trick out of Popsicle sticks and rubber bands, if you take my meaning.

My recent favorite innovation is a new technology called Clickables that we are launching in connection to our new Disney Fairies virtual world. It’s a way for kids to take their online world experience into the real world. The core of it is a magical bracelet. By simply clicking their bracelets together, girls become friends in the online environment. And it’s safer too because if you had to physically click with your friend that means they were in physical proximity to you, you saw them, and you know who they are. They aren’t some random person online. Also, it allows kids to download virtual objects from their inventory and trade with their friends, which is another complicated thing we made simple. Most online worlds don’t let you trade because it’s hard to authenticate. We made that simple and seamless.

Which innovation “failure” did you learn the most from, and why?
That’s easy. The Disney Dream Desk PC. We had all the right ideas in the beginning. We wanted to make an inexpensive computer without all the doodads in a small form factor about twice the size of the
Mac Mini (you couldn’t make it smaller back then because the processor was so hot) with a creative software suite a la iLife but for kids and with robust parental controls. I am proud of the way the software and Internet filtering came out. But the PC grew from this small inexpensive thing to this almost full-sized PC that was not as kid-like as we wanted and was much more expensive than we originally planned.

Here’s one people don’t put in a sentence with innovation very often–legal. Look at Google. They are constantly doing things with search and indexing and now with YouTube that challenge the legal status quo. If they had a legal team whose only role was to keep the company from getting sued, they would never do those things. If you want to be innovative, everyone has to be on board for the mission. Everyone has a role to play.

This year’s Stevenote liveblog fiasco reminded me of the 2004 DARPA Grand Challenge, in which the majority of the robot
car contenders drove into walls or otherwise failed. Of course, in the second competition, in 2005, several cars finished, some spectacularly. Liveblogging is like that. The idea is great, the world wants it, but most of the platforms need more tuning.

Sad Engadget

I had to eat a little crow this morning. Yesterday I recommended that CNET One More Thing Apple blogger Tom Krazit use CoverItLive to liveblog the Steve Job Macworld keynote (see review: Ultimate Liveblogging Tool: CoverItLive). He declined. And good thing, too, since CoverItLive choked during the keynote. The failure was because of a minor programming slip-up, not the platform’s inability to scale to hundreds of thousands of users, CEO Keith McSpurren told me. But it doesn’t matter. In the liveblogging Superbowl, CoverItLive “tripped over its own laces,” McSpurren admitted. Bloggers burned by the outage included CrunchGear, Fake Steve Jobs, MacDailyNews, and about 25 other blogs. Some sites posted messages sending their readers elsewhere, including to Twitter.

With CoverItLive and Twitter out of action, traffic continued to pour into other, more traditional blogging platforms, many of which were already reeling under the load of having, basically, all of their regular readers hitting refresh every 5 seconds looking for updates. CNET’s own blogging platform, which hosts the One More Thing blog as well as Webware, struggled and collapsed, generating error pages 23 percent of the time. Engadget failed, too.

To its credit, Gizmodo stayed up, although it did get slow, according to reports I got. I did not get any reports of TUAW failing, and people I know say that MacRumors’ special liveblog site, MacRumorsLive, which has its own home-grown AJAX-based liveblog platform, did great.