Why Spiceworks' Social Marketing Works

isn't known for having a vibrant trade show floor, but that is where I found Spiceworks, the Austin-based developer of a free network administration tool.

There are lots of free admin tools online, but Spiceworks distinguishes itself by making a product that is very easy to use, and creating a community of more than 350,000 engaged business users that advertisers are desperate to reach. I asked Spiceworks co-founder and VP of marketing, Jay Hallberg, for the secrets of the company's social marketing success.

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Why are you guys at SXSW? It isn't a very business focused show, after all.

Hallberg: There are a few reasons for us to be at SXSW. A lot of our advertisers—Dell, HP, Microsoft, Rackspace, etc—and agencies we work with have people at the show and it's good for us to connect with them. We are also one of the fastest growing Austin-based companies so it's great to be at a big local event like SXSW to show our support... and connect with other folks around town. We've figured out a lot on the social media front but we're always looking for new ideas. And our developers are here to sharpen their skills.

You guys give Spiceworks away for free so how do you make money?

It's essentially a media business model where we build a large, valuable audience and charge advertisers to reach them. We have a lot of options for these advertisers ranging from impression-based branding ads, to cost-per-lead offers for direct marketers, to surveys and polls for the market researchers, and events to meet the SMB IT pros in person. Over the past several months we have rolled out a number of community engagement packages that lets marketers interact with the community using social media—placing clearly marked avatars in the community, asking questions, providing content, etc. LinkedIn is an example of a successful company that has built multiple revenue streams like this.

How important the Spiceworks community of users to your business plan?

The community is incredibly important to our business, and business plan. We've been able to crowdsource much of what we do to the community from product management, to support, to IT best practices, to marketing. This helps us keep our costs low but more importantly, the community helps one another, so every person that we add increases the value of the network to each other—it's the network effect, brought to life across an IT community.

SMB vendors like Freshbooks and BatchBlue are sharing APIs, are you planning to do anything similar?

We haven't announced anything formal yet but if you go to our site you'll see you are spot on. This is public in the sense that it has been out there for a couple of months but it has been very quiet... we're emailing our users next week to tell them about the plugins and APIs. We already have 47 plugins and widgets written by Spiceworks employees and users who are using our initial set of published APIs. We have a lot more planned on this front.

Bits & Bytes (v22n16)

Ignoring the Tide
Even as the Recording Industry Association of America (RIAA) faces off with online music-swapping sites, two-thirds of the 2,515 Americans surveyed who trade music online say they don't care whether the music is copyrighted, according to a study by the Pew Internet & American Life Project. Through July, according to the study, the RIAA had issued almost 1,000 subpoenas requesting information from ISPs to identify music swappers.

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Lost and Found

Apple Computer cofounder Steve Wozniak and his company Wheels of Zeus have developed wireless location-monitoring technology for tracking children, pets, and objects. The electronic tags use GPS and radio technology and should come to market next year. They will be able to issue alerts by phone or e-mail when, for example, a child arrives at school or a dog wanders beyond a gated area.

The Next Napster?

The Motion Picture Association of America, which represents seven major movie studios, has unveiled a series of antipiracy spots for release on television and as previews in movie theaters. The spots ask Internet users not to download copyrighted movies that they may find online. The spots include celebrities (such as Ben Affleck), studio security guards, and theater workers.

Is Microsoft Behind Google's Italy Woes?

Microsoft is up to its old tricks again. Google is under all sorts of attacks right now—all somehow related to Microsoft. There are a slew of stories about how Microsoft managed to get Google into anti-trust trouble with the EU. This proxy fight may also have had something to do with the situation in Italy, in which Google executives were indicted for allowing some dopey video to be uploaded in that country.

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I see Microsoft lurking around the Google/EU situation in much the same way Sun and others did while Microsoft was being beat down by that same body. The situation not only makes Google miserable, it also gets at Eric Schmidt, Sun's former CTO. The irony here is that, while Microsoft was employing unfair business practices, the only thing unfair about Google is the fact that it offers superior search results. The company isn't forcing people to use it. But Microsoft knows that the EU is against anything made in America, and the company keeps pointing to Google as a big American company.

Thanks to the EU, Microsoft must offer consumers a checklist of alternatives to Internet Explorer on new machines. Personally, I side with Microsoft on this. Why should a company be forced to do this sort of thing? If users are not complaining about Microsoft's defaults, then so what?

Microsoft also seems to have buddied up to Rupert Murdoch, confirming his belief that Google's search needs to be destroyed, because there is some underlying illegality lurking about. This curious copyright battle has been going on since the first Web crawler hit the Internet.

In the strictest sense, there is a case to be made that some sort of copyright violation occurs when you use a search engine. A lot of material is typically lifted and presented to the user for the purposes of identification. But I call this fair use. It's a one-time snapshot used for the purposes of discovery. Once discovered, the user proceeds to the site where said information can be found. Who or what is this process actually violating? How is this really bad?

The way Murdoch sees it, the whole thing is a violation of copyright law, and that's that. Besides the fact that this sort of absolutist thinking is a menace to society, I'm absolutely stunned that the company would side with Murdoch on this. It's seriously sickening. If Microsoft was a stand up company, it would be straightening Murdoch out. But no.

It's as if Microsoft has pushed Google out a plane and is jumping out after it, without a parachute—just to make sure. In that scenario, both companies plummet to their death. Oh, and in the process, the public be damned.

Passware Warns of Microsoft Risk

Password-recovery experts at Passware warned Friday that the security of Microsoft's Bitlocker whole-disk encryption is seriously compromised on a computer configured to use sleep mode. The same is true of the open-source TrueCrypt whole-disk encryption tool.

The company's Passware Kit Forensic 1.03 can "decrypt hard disks encrypted with BitLocker or TrueCrypt in a matter of minutes if the target computer is running". If the computer is powered off decryption can still be accomplished by analyzing the file hiberfil.sys, which is created by Windows when the system enters sleep mode. According to the company, any computer that has hibernated even once with a mounted TrueCrypt or BitLocker hard drive is vulnerable, as their product can "instantly decrypt the hard disk even if the computer is no longer running".

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It's worth noting that BitLocker Drive Encryption is only present in Windows 7 and Windows Vista, not in any earlier edition. And only the Enterprise and Ultimate editions of those platforms include BitLocker support. ZoneAlarm DataLock, a third-party whole-disk encryption product, supports all current versions of Windows including Windows XP. During the initial encryption stage DataLock disables hibernation. Afterward it interacts with the hibernation feature so that the encryption password is required on waking from hibernation.

If you do use BitLocker or TrueCrypt, you need to configure the encrypted system so it doesn't accidentally go into sleep mode. Using the Power Options applet in control panel, set "Put the computer to sleep" to "Never". If the computer has a sleep button, set "When I press the sleep button" to "Do nothing". And be very sure you never choose "Sleep" from the options menu for the shutdown button.

Microsoft Reports Record Revenue

Microsoft reported record fiscal first-quarter revenues on Thursday, with strong demand for Office, Windows 7, and the Xbox driving a 51 percent increase in profits.

Microsoft reported net income of $5.41 billion on revenue of $16.20 billion for the quarter ended Sept. 30. That represented a 51 percent increase in profits, and a 25 percent jump in revenue from the same period a year ago. Microsoft said its year-ago results included the deferral of $1.47 billion of revenue due to its Windows 7 upgrade option.

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Sales to small- and medium-business customers were up over 30 percent, partially aided by a 15 percent boost in the number of customers selling Microsoft products.

"We see customers of all sizes leveraging cloud services from Microsoft," chief financial officer Peter Klein said on the call, reiterating the cloud focus that Microsoft had emphasized at its Professional Developers' Conference.

The company said that Office 2010 revenue was up 15 percent over previous Office revenue in its first full quarter of sales. Xbox sales grew by 38 percent to 2.8 million units, and Bing also continued its market-share expansion.

More importantly, the company said that it "continues to see a healthy and sustaining business PC refresh cycle," a contrast to a gloomy outlook for the PC microprocessor market, which could have a negative impact on PC sales.

Microsoft saw PC sales grow at between 9 and 11 percent, with business PC growth in the mid-teens. PC growth in emerging markets, unsurprisingly, was stronger than in mature markets.

"This was an exceptional quarter, combining solid enterprise growth and continued strong consumer demand for Office 2010, Windows 7, and Xbox 360 consoles and games," said Peter Klein, chief financial officer at Microsoft, in a statement. "Our ability to grow revenue while continuing to control costs allowed us to deliver another quarter of year-over-year margin expansion."

Microsoft reported revenue of $4.79 billion for the Windows and Windows Live division, versus $4.35 billion for the same period a year ago, with the Windows 7 deferral revenue factored in. Without it, Microsoft reported $2.88 billion for the period. The business reported $3.3 billion in operating income, more than double that of a year ago.

Microsoft said it sold over 240 million Windows 7 licenses to date.

Microsoft's Server and Tools business reported $1.63 billion in operating income on $3.96 billion in revenue.

Microsoft's Business Division reported $3.9 billion in operating income versus $5.13 billion in revenue, a 14 percent jump in revenue, with double-digit growth for SharePoint, Lync, Dynamics CRM, and Exchange. And Microsoft's Online Services Division reported $530 million in revenue, an 8 percent increase. However, Online Services reported an operating loss of $560 million, versus an operating loss of $477 million a year ago.

Microsoft's Entertainment and Devices Division, the home of the Xbox, reported $1.80 billion in revenue, up 27 percent from a year ago. The division reported $382 million in operating income, and "Halo:Reach generated $350 million in revenue.

Microsoft's outlook for its Windows business is to be in line with PC market growth excluding the Windows 7 launch spike of about $600 million, the company said; for its business division, Microsoft expects non-annuity revenue in line with PC market growth, and multi-year license revenue to grow in the mid- to high single digits.

Microsoft OneNote 2003

Microsoft isn't known for getting its products right on the first release. But Microsoft OneNote 2003, the company's new note-taking program, is one of the best Microsoft debuts we've seen. This handy application provides a single interface for taking notes, which can include formatted text, outlines, graphics, snippets of Web pages, and even drawings. OneNote is very simple to use for entering information and—most important—finding it later on.

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Notes are organized into Pages and Subpages. Subpages appear as tabs down the right side of the screen, and Pages appear as tabs at the top of the screen. For one more level of structure, you can store multiple Sections in Folders.

OneNote is a good solution for creating rich-text outlines. Simply place the cursor anywhere on a page and you can start a new outline. If you have multiple outlines on a page, you can easily drag and drop items among them. You may have to play with the width of each outline section, however, to make things fit properly.

You can easily add pictures to your notes. And if you have a Tablet PC, you can also add handwritten notes, which OneNote can either convert to typed text or simply recognize for searching. Additionally, you can paste pieces of Web pages into OneNote, and the program will automatically generate links to the source.

OneNote includes an interesting if not yet perfected audio-recording feature. You can record meetings to an audio file, and the application automatically synchronizes the sound with your notes. You can then click the audio icon next to any part of your notes to play back what was recorded at that time. Unfortunately, when we simultaneously recorded a meeting and took notes on our laptop, the recording consisted mostly of the sound of typing on our keyboard.

Searching is generally very easy. Enter a search word and the program looks through all your notes and lists results, showing the pages in which the item was found.

Double-clicking on the OneNote icon in the system tray lets you add a Side Note, which looks like a sticky note on a piece of paper but is really a miniaturized version of the complete program. If you enlarge the Side Note window beyond a certain point, the whole application appears.

OneNote is not included in the Office 2003 suite. Like Microsoft FrontPage, Microsoft Visio, and some other Office-related programs, it is sold separately. The program is available for $99 direct, after a $100 rebate.

We'd like to see some security options in OneNote—such as password protection and encryption—as well as true integration with Outlook. While OneNote makes sharing notes via e-mail or SharePoint posting easy, it would be useful if OneNote were used as Outlook's native note format. Similarly, although you can easily create to-do lists within OneNote or turn bits of notes into Outlook Tasks, Microsoft needs to integrate these two concepts.