eBay and Yahoo! face remarkably similar problems - which should make eBay’s positive earnings news today mildly encouraging for Yahoo shareholders, who just got hammered (only "mildly encouraging", because Yahoo has shown a dependable ability in the past to shoot itself in the foot.)

You could think of it under these three headings:

1. Improvements in monetisation. At eBay they call it RPL (revenue per listing), at Yahoo it’s RPS (revenue per search.) eBay didn’t focus enough on the constant, incremental enhancements needed to keep improving the rate at which listings turn into actual sales, then compounded the error by flooding its site with low-value store listings. Reversing that core mistake has been the work of the last 12 months: better monetisation, in the former of higher RPL, is behind its rebound last quarter.

Yahoo, by contrast, did nothing in the two years after it bought Overture to enhance its search marketing product, then spent two years belatedly overhauling the system. The results of that may come later this year. Now, though, another monetisation brushfire has broken out: advertisers pay less for display ads connected to booming user-generated content sites, since they aren’t as convinced of the value. Yahoo claims to have the tools and the expertise to enhance the value of this advertising - and hence the rates - but it has a lot to prove.

2. Better user experiences. Monetisation is one thing, but attracting the audience in the first place also needs more work. This is the one dark spot in eBay’s latest figures. Listings in its mature US and German markets are hardly growing at all. The solution, according to Meg Whitman: better products. That means more innovation to make it easier to search on eBay’s sites, defeat fraudsters, and so on.

Something similar is underway at Yahoo. After the sclerosis of recent years, which saw little improvement in some of the core services, Yahoo is trying to ramp up the innovation again. That’s encouraging, but it  would be nice if the company had more successes to point to than Flickr and Answers.

3. Changes at the top. eBay’s improved execution follows a quiet shake-up in its top ranks. It brought in outsiders as head of its core marketplace business and chief financial officer.

Yahoo, coincidentally, is looking for outsiders to fill exactly the same core jobs: head of the new "audiences" division, and CFO. Terry Semel’s credibility, and that of his senior management team, has been badly dented. The quality of the new hires will provide one clue as to whether Yahoo can follow eBay in starting to raise its game again.

Life is tough for the medium-sized UK IT consultancy. Last week another one of them – Impact Plus – sought shelter in the arms of a bigger Japanese suitor, Hitachi of Japan.

Impact is one of a long line of independent consultancies that have been acquired by foreign companies. The Indian IT consultancies Tata, Wipro and Infosys have been making small deals to consolidate their foothold in the market.

David Bailey, the co-founder of Impact Plus, who now becomes head of Hitachi’s UK operations, told the FT that before the deal, he had struggled for four years to move the consultancy beyond the £10m turnover bracket.

The company lacked the brand power and financial clout to go after really big deals, found it too expensive to make its own acquisitions, and failed to find attractive-enough offers from venture capital backers. It was either stagnation or a deal with the Japanese.

There is already a big line-up of foreigners in European IT consulting. The Indians are the newer arrivals, while the Americans such as EDS, CSC, Accenture and IBM have been in the market for years. Hitachi’s compatriot Fujitsu has been active in Europe since 1990, when it took majority control of UK’s ICL. 

Europe is an attractive market for foreign IT consultancies as there is still a lot of scope for businesses to improve IT efficiency. Using IT to increase competitiveness is a key theme for the European Commission. The UK in particular has seen huge public sector IT projects such as the £12bn NHS IT revamp. Local government is also generating a huge amount of work as local councils try to meet government savings targets by combining their back office systems.

Mr Bailey said there would be several more acquisitions, with an aim to making Hitachi’s European operations a 500 person, $100m turnover business in the next two and a half years. That is going to mean a lot of growth from 120 employees today.

The next deals are likely to be in France and Germany where there is little or no business yet. The small toe-hold the company has in Spain and Portugal will also be expanded.

Of all the social networking sites, Facebook emerged as the place where Virginia Tech students and family members turned to reconnect and console each other over Monday’s campus shootings.

Our man inside Facebook says an eight-fold surge in traffic following Monday’s shooting spree "pretty much fried" the server dedicated to the site’s Virginia Tech network. Facebook engineers have been working long days all week to manage the influx.

In the days following the tragedy, the focus has turned to remembrance. More than 500 Virginia Tech-related groups have popped up to honor the victims. One group, "A tribute to those who passed at the Virginia Tech shooting," has attracted more than 200,000 members. A number of hate groups have also made an appearance, and Facebook has been working to take them down.

The gunman, Cho Seung-hui, has been described as a loner by those who knew him, and that would seem to apply to his online life as well. Facebook employees have spent hours scouring the site in search of any profiles Mr Cho might have created. So far, their search has turned up nothing.

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The Japanese search service established by Baidu.com earlier this year has been hailed as a pioneering effort by a Chinese internet company to establish a global presence. So why do Beijing’s shadowy internet censors appear to be blocking access to the new website?

Baidu is declining to comment on why baidu.jp cannot be accessed from within China in recent days, but industry observers are sure  the Japanese service’s tolerant approach to porn is the reason behind the block. As noted by bloggers writing in Chinese and English, baidu.jp’s main appeal so far appears to be Chinese internet users who find its image search function a better way to get hold of pornographic pictures than the main baidu.com service. (Take a look at the rather revealing user data on alexa.com here)

The block, even if maintained, will not upset Baidu’s business plan: Chinese vicarious thrill seekers are hardly the market the Japanese service is aimed at. And the block should make it easier for Baidu to avoid coming under Chinese government pressure to itself censor its Japanese service. After all, strict self-censorship of political or other suspect content has done the Baidu no harm at home (where it has benefited from blocking and disruption of uncensored Google.com), but it is unlikely to go down as well in international markets.

Microsoft’s Origami Project was all about folding the computer into a smaller Ultra Mobile PC (UMPC) shape. Now Intel is folding it once more into the even smaller Mobile Internet Device (Mid) format.
Intel has been talking about its products for this new Mids market segment for the first time at its Developer Forum in Beijing.
Unhappily for Microsoft, it sees a Lintel as well as a Wintel solution in this size of device. Anand Chandrasekher, head of Intel’s Ultra Mobility Group, said he saw Linux as an operating system alternative for Mids and announced the support of Red Flag and Canonical, a provider of the Ubuntu version of Linux, as the first OS vendors.
Microsoft and Intel have never been in lockstep over development of the UMPC category and Samsung, the other member of the triumvirate, diverged with a VIA processor rather than an Intel one six months after the launch of its Q1 in May last year created the initial UMPC fanfare.
Sales have also been far from stellar for the devices and Intel, with 1,000 engineers and a whole division now dedicated to Ultra Mobile, seems keen to exploit a further sub-category.
The Mids are one step above the mobile phone, where Intel made little headway and eventually abandoned its efforts to penetrate the market with its processors.
That does not inspire confidence that it can succeed in this unproven segment, which also bumps up against Palm-style personal digital assistants. But Mr Chandrasekher introduced a new Ultra Mobile platform of processors and chipsets and announced he was bringing forward its next-generation platform (codenamed Menlow) for UMPCs and Mids from late 2008 to the first half of next year.
He also announced the formation of the Mid Innovation Alliance, a collection of second-tier manufacturers including Asus and BenQ who would bring out Menlow-based devices next year.
Mids will be about the size of a paperback novel and will feature Intel wireless chipsets, including regular wi-fi standards and the wider area Wimax. Their smaller size will mean better battery life than the UMPCs, but that is about the only longevity for these devices we can safely predict.

The exclusive Web 2.0 conference, where the term first gained currency in October 2004, has spawned a larger Web 2.0 Expo making its debut this week in San Francisco.

The standard conference format and IBM, Nokia, Microsoft and Intel booths at the Moscone West exhibition centre seem a world away from the image of Web 2.0 one-man businesses being run out of San Francisco coffee shops.

But there are still traces of that maverick spirit in the formalised proceedings, with sessions such as Ten Ways To Run A Startup Like Genghis Khan and What I Learned From Syphilis: Epidemiology and Viral Marketing.

An “Ignite” session, where presenters had to talk for five minutes over 20 slides changing every 15 seconds, produced a number of interesting concepts:

- Instructables – a site promoting open-source hardware gave a demonstration on making crossbows out of K’nex bricks.

- Justin.TV – the guy with a camera fixed permanently to his head spoke about how to get a lot of free press.

- Octopart – a search engine for electronic parts from a company founded at the South Pole.

- WebFS – a new file-exchange protocol that would allow users to store all their web-based content in one place.

None of the above seems particularly Web 2.0 in terms of the original sense of social software and the innovative use of browser scripts. This suggests the name has become a catch-all term for any Web-related innovation. And yet the packed keynote sessions show Web 2.0 still has a certain cachet.

When Bill Gross talks about internet search, people tend to listen. You can put that down to his invention of the keyword-driven advertising business that is the foundation of Google’s fortunes (GoTo.com, the company founded by Gross’s Idealab to develop the idea, was later renamed Overture and sold to Yahoo.)

Gross’s latest Big Idea? Getting rid of what he calls "the crapshoot" of clicking on hyperlinks in web pages. Take the link in that sentence: you don’t know till you click on it where it will lead and how useful you will find it (it links to a description of the idea on Snap.com, Gross’s search engine.)

Gross stopped by earlier today to show off his alternative. It takes the form of a small window, powered by Ajax, that pops open automatically when you move your cursor over a hyperlink. The window can display a small preview of the page the link would take you to, so you can make a better assessment about whether to bother clicking through.

But why stop there? The window could also deliver a related news headline, open a link to a product for sale on Amazon.com, or play a video on YouTube. Thanks to Web services technology, any developer could theoretically create a mini-application and make it available through Gross’s system (imagine you are reading the TV listings and a window pops open that lets you automatically TiVo a show by clicking on the link.)

The commercial argument for this sounds much like the original one behind GoTo.com. Clicking the blue links on Web pages may or may not take you where you want to go. But by giving you more information first, Gross reckons he can make each "click" you make more valuable. That translates into better qualified leads for advertisers and online merchants (and thus higher advertising rates.)

Won’t this lead to the sort of kerfuffle that broke out last week, when MySpace blocked its users from embedding videos and photo slideshows from Photobucket on their MySpace pages? (MySpace objected to Photobucket making money from the advertising included in some of the slideshows.) Gross draws one big distinction: he promises to share any revenue he generates through the pop-up windows with website owners who carry the service (though at the moment that offer is opn only to big sites capable of negotiating a deal.)

It’s impossible to tell at this stage whether this is a proposition that will appeal to online publishers. But experience suggests that Gross should be taken seriously. It wasn’t long ago that the sponsored search links created by GoTo.com seemed an arcane and unlikely basis for a new advertising business.

Talk about a clash of cultures. Google (buyer) and Hellman & Friedman (seller) each had a very different take on today’s $3.1bn DoubleClick deal.

Eric Schmidt of Google was in Argentina this afternoon, but I got the chance to ask him over the phone how he could justify paying so much for a company which, according to one person knowledgeable about it, had revenues last year of only $300-400m. He acknowledged that "the criticism will be, how do we get the money back?", but added that Google had run its sliderule over the business. His assurance:

This is a math problem. We’re good at math problems.

When I spoke to Philip Hammarskjold at Hellman & Friedman, on the other hand, he was marvelling over the very unscientific nature of valuations in the financial markest. The 2005 leveraged buy-out that took DoubleClick private looks like a steal. Hammarskjold:

It’s amazing to look at it now, but there really was little interest in this company.

Fair enough. Hellman & Friedman is a buyer and seller of companies: it’s all about the timing. Google is a strategic buyer: it’s all about the synergies. But there’s a lot more to making a deal of this size work than crunching the numbers. The jury’s still out on last year’s purchase of dMarc for up to $1.1bn and the $1.65bn acquistion of YouTube. Google is surely right to use the gusher of cash from its core business to place some big bets in adjacent markets, but it has yet to prove it can make them work.

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Talk about a clash of cultures. Google (buyer) and Hellman & Friedman (seller) each had a very different take on today’s $3.1bn DoubleClick deal.

Eric Schmidt of Google was in Argentina this afternoon, but I got the chance to ask him over the phone how he could justify paying so much for a company which, according to one person knowledgeable about it, had revenues last year of only $300-400m. He acknowledged that "the criticism will be, how do we get the money back?", but added that Google had run its sliderule over the business. His assurance:

This is a math problem. We’re good at math problems.

When I spoke to Philip Hammarskjold at Hellman & Friedman, on the other hand, he was marvelling over the very unscientific nature of valuations in the financial markest. The 2005 leveraged buy-out that took DoubleClick private looks like a steal. Hammarskjold:

It’s amazing to look at it now, but there really was little interest in this company.

Fair enough. Hellman & Friedman is a buyer and seller of companies: it’s all about the timing. Google is a strategic buyer: it’s all about the synergies. But there’s a lot more to making a deal of this size work than crunching the numbers. The jury’s still out on last year’s purchase of dMarc for up to $1.1bn and the $1.65bn acquistion of YouTube. Google is surely right to use the gusher of cash from its core business to place some big bets in adjacent markets, but it has yet to prove it can make them work.

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The veiled threat against Google last week by newspaper newbie Sam Zell has had the blogosphere buzzing all week.

Following the NBC/Fox joint agreement to place their video on a range of big internet portals, maybe this was a sign that newspaper owners would also start to extract favourable deals from internet companies, suggested ValleyWag. Yahoo, which has positioned itself as Old Media’s friend, might be a good place to start. Venture capitalist Fred Wilson’s response: you must be kidding.

Lending some weight to the ValleyWag position is this story from the LA Times today, which says that last year’s advertising partnership between Yahoo and a group of US newspapers is about to be expanded. According to the LA Times:

The Internet portal has agreed to place prominent links - including on section fronts for Yahoo Sports and Yahoo Finance - that will drive readers back to local newspaper websites, one of the newspaper executives said.

This is still a far cry from the sort of deal the TV companies have managed to extract. They will get an estimated 90 per cent of the ad revenue when they place their video on Yahoo, MSN and other portals. But at least it’s a step in the right direction.