Negative Approach

I wrote previously about China's attempt to tax virtual goods and currency, and now the BBC reports that Sweden and South Korea have also moved to clarify the tax rules for virtual money.

In April 2008 Sweden's tax office published a clarification to its tax laws which said that in-game transactions are taxable--in theory. I am sure Ben Franklin was referring to Linden dollars when he wrote, "In this world nothing can be said to be certain, except death and taxes."

The taxation subject seems to be more a case of what happens when virtual money turns into real money than it does a question about virtual transactions. Second Life markets itself as a place to make actual money, whereas World of Warcraft bans trades for real money.

I'm inclined to side with WoW that keeping real and virtual money separate is the right thing to do. And it's a bit hard to fathom that a digital asset does anything but diminish or have a relative value to that specific game.

Besides, what happens if the game company goes out of business? It's not like you get to take your special sword to the Sponge Bob game if WoW suddely disappears.

The transaction volume of digital "assets" reached 9.36 billion yuan ($1.37 billion) in 2007 and is expected to hit 11.12 billion yuan in 2008, according to 5173.com, one of China's major virtual-asset transaction platforms

Here's a fantastic 1966 video of the Remo Four playing the Peter Gunn (aka Spy Hunter) theme to take your mind off of all of the depressing news these days.

Continuing this week's interest in enterprise topics, I spoke with Carl Lehmann, Senior Vice President, Strategy, Advanced Data Exchange about what's going on in ERP (enterprise resource planning) and MDM (master data management.

Companies have invested millions with ERP vendors to bind unique software modules to enable business process flows from across financial, customer relationship and supply chain functions. Even when SOA principles of loose coupling and services come into play there can be serious data integrity issues.

Inaccurate and/or erroneous data entry prohibits the benefits from cross-functional processes flows sought in environments like build-to-order manufacturing for example. Master Data Management (MDM) is the technology approach to solving this pain.

It's hard to believe that doing this stupid podcast could be so incredibly annoying. Between Skype crapping out, Zack Urlocker's lack of experience using a computer and the fact that I had to go from MP3 to WAV to MP3 again the magic just never stopped.

Listen now: Download today's podcast

Meanwhile, please to enjoy the latest episode (#3) of Open Sources the ongoing podcast series in which Matt Asay and I attempt to shed light on various topics.

* We mock Zack Urlocker for not being able to use Skype
* We lament commenters and open source's desire to kill itself
* Blog traffic is driven by Google, Apple and Microsoft
* We discuss whether or not Sun can sink open source if they fail
* Matt further realizes that open source companies need more value beyond just a license
* Dave demands that James Governor stop filling up everyone's Twitter box

You can follow Dave and Matt on Twitter if you are really bored.

As information proliferates, so does the need to understand what it means. Business intelligence has long played a role in discerning customer behavior and defining how businesses define metrics.

But, BI is typically pretty boring (if not an oxymoron)--that is until you start applying the techniques and software to information that's interesting.

JasperSoft CEO Brian Gentile provided some insight into the opportunities available for upstart vendors to take advantage of consolidation as well as the "consumerization of information" -- where users expect to have their business info available just as they would any other internet-based data.

The consolidation of the largest BI vendors will continue to have a ripple effect on the market. Since Business Objects, Cognos, and Hyperion were acquired by SAP, IBM, and Oracle respectively, "we've seen meaningful opportunities open up for smaller, faster, and more modern BI software providers who fill specific niches of functionality, particularly where the largest players have been weak."

Key technology shifts have been in play for about the last two years and have begun to influence BI. Examples include SOA/web services (and overall componentized design), in-memory analytics, integrated search, and the use of rich media services to provide more compelling (web-based) user experiences. For BI tools and software, the question is "which vendors will be able to deliver a more modern, dynamic experience using these new technologies?"

With all this change, the "besieged CIO" is under increasing pressure and scrutiny. So, what's a CIO to do? Answer: "find capable, lower-cost alternatives in all technology categories."

This is where new development and delivery models will become even more popular, which benefits open source and software-as-a-service vendors because, in most cases, the up-front and on-going costs are just lower (especially in the case of open source).

But potentially the most important force to impact BI in the year ahead is what Gentile calls the "consumerization of information". This concept is based on the evolving workforce and its expectations for software, which will drastically transform software development and usage, including the enterprise software market.

The consumerization of information is based on the very real workforce demographic shift under way: as the aging workforce in the largest economies continues to retire (in the U.S., it's the baby boomer generation aka "The Olds") and more young workers (aka "The Youngs") enter and climb higher, we'll see a widening gap between the expected behavior of enterprise applications and their actual behavior.

Younger workers have grown up with computers and, by and large, the internet. Therefore, their expectations for how software systems should behave are vastly different from an older worker who has grown into computers and software during the course of his career.

I read an interesting post on the Elastic Vapor blog about a cloud interoperability effort, designed to make interop and portability between clouds a reality.

Portability between clouds is clearly a problem, especially if you need to replicate an environment or application within your enterprise. You are effectively stuck, if not actually locked-in to the cloud provider you sign on with.

According to the post, the "unified cloud interface" (aka cloud broker) will serve as a common interface for the interaction with remote platforms, systems, networks, data, identity, applications, and services.

A common set of cloud definitions will enable vendors to exchange management information between remote cloud providers.

The unified cloud interface (UCI) or cloud broker will be composed of a specification and a schema. The schema provides the actual model descriptions, while the specification defines the details for integration with other management models. UCI will be implemented as an extension to the Extensible Messaging and Presence Protocol (XMPP) specifically as an XMPP Extension Protocol or XEP.

For cloud adoption to continue, users have to feel comfortable with the fact that they can move their data. The unified cloud interface is an important step in the process.

Symantec is out with their annual report on the Underground economy and it's clear that crime pays. Apparently we all would have been better off investing in phishing scams and botnets instead of stocks and the US housing market.

Symantec estimates the value of total advertised goods on observed underground economy servers at over $276 million for the reporting period, with credit card information accounting for 59 percent of that total.

Using a median value for credit card fraud and an average bulk purchase size for credit cards, the potential worth of all credit cards advertised during this reporting period would be $5.3 billion.

A few highlights from the report:

• Bank account credentials were the most commonly advertised item for sale on underground economy servers known to Symantec, accounting for 18 percent of all items; prices for bank account credentials ranged from $10 to $1,000, depending on the balance and location of the account.
• Desktop games were the most pirated software, accounting for 49 percent of all file instances observed.
• Symantec observed 69,130 distinct active advertisers and over 44 million total messages posted on underground economy servers during this reporting period.
• The United States hosted 41 percent of the total observed underground economy servers worldwide, while romania had the second highest percentage at 13 percent of the total.
• Phishing scam hosting services were offered for an average price of $10 with prices ranging from $2 to $80.

After Chrome exits beta in January, Google is planning to begin an aggressive push to boost the browser's market share.

Sundar Pichai, a Google vice president, told The Times Online that the company will explore ways to make Chrome more ubiquitous and "probably do distribution deals" with OEMs (original equipment manufacturers) to get the browser onto new PCs.

Currently, Internet Explorer commands more than 70 percent of browser market share. Open source Firefox captures roughly 20 percent, with the rest going to others such as Safari, Chrome, and Opera.

OEM relationships will certainly help Chrome adoption, but it's hard to see how IE gets completely displaced due to the fact that it's is embedded in Windows.

Looking back, it was clear that IE would displace Netscape simply because it came pre-installed with Windows.

It's not clear how Google can make Chrome ubiquitous (at least not yet). There are certainly use cases--Netbooks, etc., where you are using far less Microsoft software (and often Linux instead) where the interaction of the OS and the browser are more clearly delineated.

Pichai added that versions of Chrome should also be available to computers using Macintosh or Linux software in the first half of next year, allowing the browser to be used on almost 99 percent of computers worldwide.

Via Ars Technica.

When I read today that Europeana, a digital library of Europe's cultural heritage "crashed just hours after it went online and will be out of operation for several weeks" I was pretty shocked.

How a website could crash and be offline for weeks in this age of flexible-scale Cloud offerings and caching technology is a bit mind-boggling--especially considering that a properly architected website should be easily portable to larger hardware or a scaled-out system.

There are a great many ways to deal with traffic bursts, from using Amazon S3 for storage, or EC2 for more machines, to Akamai for edge-caching to Memcached to alleviate database load.

Just by offloading the images from the repository, I bet Europeana would have fared just fine. If searching the database brought the site down then those guys are in for some very tough times.

It's one thing to be a victim of your own success (as the site says they are) and quite another to be hamstrung by not following best practices.

While deflation hits the United States, inflation is hitting the world of digital assets in Chinese video games and virtual worlds.

Thanks to a new attempt at taxing virtual assets, in-game goods and currencies are experiencing the first signs of inflation.

After individuals gain income through virtual-currency transactions, they should go to the tax department to pay personal income tax within seven days of the day after the transactions. For those who can provide proof of the original value of the property, they will be charged 20 percent of their profits, and for those who cannot, they will be charged at 3 percent of the total value of the transaction.

You have to admire the tax authorities who think that this concept will work. Supporting the idea are game providers that want users to keep their purchases in-game.

"In principle, we don't encourage players to buy items offline," said Tao Junfeng of The9, the operator of World of Warcraft in China.

I have no idea how U.S. tax laws apply to virtual goods on sites like Facebook. Does Facebook have to pay taxes on the transactions? (If anyone knows, I would be interested.) But taxation gets complicated with point schemes, in which users buy credits instead of assets, and with resellers such as Chinese gold farmers.