Daily Tech Snippet: Wednesday March 11

• Facebook to give away designs of servers and networking at its Data Centers, Cisco and Dell are feeling the heat: Facebook’s plan to change big computing is moving fast and is attracting more companies to its plans. The company announced on Tuesday that it would give away designs of two crucial elements of its enormous computing centers, both computer servers and networking. These designs and others like them will be offered as products from several other manufacturers, along with a significant amount of supporting software from other companies. Facebook also noted that its designs had saved the company $2 billion in the last three years, compared with using conventional computing equipment. If the new designs become popular, it could mean new pain for the large incumbent computer-hardware makers, like Cisco and Dell, which for several years have faced inroads from open-source software. The Facebook products involve both hardware and software. A Facebook executive said much of the difference in the way Facebook designs computing systems comes from its huge data flows, both internally and from users on desktop computers and mobile phones. While few companies now handle Facebook-heft computation, expectations are for huge loads to become commonplace at many companies. “It’s hardware that better fits the workloads and software,” said Jason Taylor, vice president of computer infrastructure at Facebook. “There are thousands of companies with these needs.” He said the new designs could be interesting to any company spending more than $10 million a year on computing — a not exceptional amount for a large company. The two designs are being open-sourced through the Open Compute Project, which Mark Zuckerberg helped start to lower his costs and catch up with giants like Google and Amazon Web Services in building global computing infrastructures. Open-source projects can help a company like Facebook in a couple of ways. In the design phase of a project, having outsiders examine work can mean unexpected improvements and bug fixes. If the product becomes successful, Facebook gets the benefits of lower prices from higher production. “Supply chains get healthier if there is more demand,” Mr. Taylor said. “It’s an advantage” for Facebook. One of the products Facebook is donating to the Open Compute Project is a recently developed networking switch with a modular design that enables smaller switches to create larger ones. Switches are the way data moves between computer servers in a rack, and between the racks inside a data center. Accton, a Taiwanese maker of networking gear, is expected to sell a version of the switch later this year. In addition, two other companies making switching software, Cumulus Networks and Big Switch Networks, are donating software to the project. Facebook is donating switch management software that it has developed. The other Facebook donation is a new version of a low-power server that uses a special semiconductor from Intel. Up to 192 of the chips can be fit into a single rack of servers at relatively low power consumption but high performance.

• Why does a company with hundreds of billions in cash raise debt? Because it can - Apple has timed the bond market superbly, calling market tops, but at the expense of its bond buyers: Apple Inc., as it turns out, knows the bond market too. The company has an uncanny ability to raise money in debt markets right before interest rates go up. That means buyers are often left with losses. Take the iPhone maker’s $6.5 billion debt sale on Feb. 2. Those notes have already lost more than $230 million of value through Monday. And remember the company’s record-breaking $17 billion bond sale in April 2013, sold just three days before Treasury yields began the biggest two-month surge in a decade? “When they decide to go to market, they’re watching for whenever there’s a potential inflection point forming,” said Jody Lurie, a corporate credit analyst at Janney Montgomery Scott LLC in Philadelphia. “They have a feeling that something’s going to happen.” The reason for the decline in Apple’s bonds isn’t a repudiation of the Apple Watch’s success or the company’s ability to come up with new products. Instead, it underscores the risks investors are taking in a market that’s become about the most sensitive ever to moves in U.S. government debt yields. U.S. Treasuries have declined 2.7 percent since the end of January, with notes maturing in more than 15 years falling 8.8 percent, according to Bank of America Merrill Lynch index data. The $2 billion of 30-year notes that Apple sold last month have fallen to 92.2 cents on the dollar from 99.1 cents at issuance. More generally, Apple’s dollar-denominated bonds have lost more than 3 percent since the end of January, compared with 1.8 percent of losses on Bank of America’s index of U.S. investment-grade corporates. With plenty of cash on its balance sheet, Apple certainly doesn’t need to borrow extra money to support its business. Instead, it has the luxury of waiting until yields get so low that the top-rated company would practically be financially irresponsible not to borrow money The company doesn’t even have to use the proceeds to invest in new products or pay back existing debt; Apple can simply funnel the cash raised from bond buyers to boost returns for its stock holders, namely by repurchasing shares. Indeed, as bondholders suffered losses since January, the company’s stock soared more than 8 percent. As yields go lower on all corporate debt, investors are taking a bigger gamble that benchmark rates will stay low for a longer period of time. “Rates are so low that ultimately, what are investors going to get out of it at the end of the day?” Lurie said. On $6 billion of new Apple bonds, nothing but losses so far.

• Google's CFO retires to spend time with family: Patrick Pichette, Google’s chief financial officer, is retiring to spend more time with his family. Seriously. On Tuesday Mr. Pichette announced the news of his retirement on Google’s social network, Google Plus. Then, in what Google’s chief executive, Larry Page, described as “a most unconventional leaving notice” he tried to convince the cynics that he is, indeed, retiring to spend more time with his family. “We give a lot to our jobs,” he wrote, adding: “And while I am not looking for sympathy, I want to share my thought process because so many people struggle to strike the right balance between work and personal life.” For the last seven years, Mr. Pichette, 52, has been the primary liaison between Google and Wall Street, serving as the search giant’s chief defender against analysts who have been needling the company to do things like spend less money on “moonshots” or give shareholders some of their cash back. In the company’s latest conference call, for instance, he repeatedly defended Google’s speculative investment spending – which range from biotech to self-driving cars – as “disciplined.” He said the company did not have any immediate plans to issue a dividend to shareholders, but also didn’t rule it out. And, for analysts who needed the reassurance, he noted that Google’s stock price “does matter” to its managers. Mr. Pichette’s goodbye letter was touching, adventurous and completely outside the experience of 99 percent of the world’s population. On Google Plus, he wrote that the process that led to his decision to retire began in September. He was watching the sunrise from the top of Mount Kilimanjaro when his wife suggested they continue traveling the world. He replied that it wasn’t time yet – he had too much to accomplish at Google and elsewhere, he wrote. She asked when it would be time. Apparently that time is in a few months, during which Google will search for Mr. Pichette’s replacement, according to a spokesman. “The questions just hung there in the cold morning African air,” Mr. Pichette wrote of his thoughts about retirement from atop Kilimanjaro. There ensued a long mediation on life, children and work (Mr. Pichette said he belonged to the “Fraternity of Worldwide Insecure Overachievers”). “Allow me to spare you the rest of the truths,” he wrote. “But the short answer is simply that I could not find a good argument to tell Tamar we should wait any longer for us to grab our backpacks and hit the road — celebrate our last 25 years together by turning the page and enjoy a perfectly fine midlife crisis full of bliss and beauty, and leave the door open to serendipity for our next leadership opportunities, once our long list of travels and adventures is exhausted.”

• Facebook Finally Lets Its Firehose Be Tapped For Marketing Insights: Twitter’s firehose of tweets has long been offered as a goldmine for businesses trying to understand how to improve or market their products, and now Facebook will allow privacy-safe peeks at its treasure trove, too. Today Facebook launched a new insights product called “Topic Data” in the U.S. and U.K. with the help of brand analytics leader DataSift. Facebook explains that “Topic data shows marketers what audiences are saying on Facebook about events, brands, subjects and activities.” For example, “A business selling a hair de-frizzing product can see demographics on the people talking about humidity’s effects on their hair.” On days when everyone’s posting status updates about how frizzy their hair is, a brand could step up its ad spend knowing it’s the perfect time to reach potential customers. Sentiment, location, volume of mentions and words often mentioned alongside a brand can be pulled, too. Because much of Facebook’s data is private, unlike Twitter, offering Topic Data in a privacy-safe way is a top concern and might explain why Facebook waited so long to offer this functionality that brands have been begging for. To ensure personal info isn’t divulged, Topic Data is aggregated and anonymized, so brands can’t know or piece together exactly who said what. Queries that might pull up personally identifiable data like home addresses will be banned. At least 100 different users have to match a query for it to be allowed. Still, the idea that their private status messages to friends will fuel better ad targeting may irk some Facebook users. There’s no opt-out, and the only way to keep data totally private is to either set posts to be visible to “only me” or not post at all. To be clear, this isn’t a brand monitoring tool. It’s not designed to let companies see every mention of their business and try to respond. That wouldn’t work since data is anonymized any way. Brands issue the forward-looking queries through a third-party analytics provider that submits them to DataSift, which can run them against Facebook’s data. DataSift hands the analytics tool back anonymized statistical data about posts that match the query since it was issued that can be formed into charts and insights, or bundled with social analytics from other networks. More examples Facebook gives for how to use Topic Data include: “A fashion retailer could see the clothing items its target audience is talking about to decide which products to stock.” “A brand can see how people are talking about their brand or industry to measure brand sentiment.” When Twitter opened its firehose to this kind of analysis a few years back, it spawned an entire ecosystem of data interpreters, including Adobe Social, Brandwatch, Crimson Hexagon, Socialmetrix and DataSift itself, which was one of only a few companies allowed to sell the full Twitter firehose at one point. Facebook will authorize a limited, undisclosed list of tools it’s already working with to access its firehose through DataSift.

• Alibaba investee Weibo 2014 revenue: $334M, +77%; loss widens to $63.4M; 176 MAU in Dec, +36% Y/Y Weibo, China’s Twitter-like social network, continues to grow – albeit slowly. Weibo ended 2014 with 175.7 million monthly active users (MAUs), which is up 36 percent year-on-year, and up 5.2 percent from Q3 to Q4. Although many have talked about WeChat making Weibo irrelevant, it seems that Weibo is standing its ground against the hugely popular messaging app (WeChat is close to 500 million MAUs) despite a number of areas of overlap between the two social networks. Weibo’s newest data, released overnight as part of the company’s Q4 2014 earnings report, also shows that daily active users (DAUs) are moving upwards slowly. Weibo now has 80.6 million DAUs. As always with Weibo, there are concerns about how many of those users are humans or spambots. So is Weibo, which started in 2009 and received US$586 million in investment from Alibaba in 2013, making any money after five years of operations? Nope. Throughout the whole of 2014, Weibo made $334.2 million in revenue (up 77 percent from 2013’s tally), but that translated into a net loss of US$63.4 million, which is greater than its losses in 2013.