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“We do not comment on market rumor or speculation,” Google said in a statement. Valve didn’t immediately respond to a request for comment.

Google is on the brink of buying noted video game maker Valve Software, according to a report in The Inquirer that cites “well-placed sources.”

See update below that dashes some cold water on the report.

(Credit:
Valve Software)

While a lot of that is specific to games today, I see no reason why it might not apply more broadly. Google, of course, likes to be the clearinghouse for online activity, and this could add some expertise.

That rationale makes some sense to me as well, in part because getting into the video game business in and of itself doesn’t sound terribly well aligned with Google’s mission “to organize the world’s information and make it universally accessible and useful.” Steam is an online foundation for selling and distributing games, updating patches, enabling multiplayer online chat, and using digital rights management to control who has permission to use elements like game versions or game terrain.

Steam Powered shows 448 games available now, and in February, Valve said Steam had 15 million account holders. But this is the more telling statistic: During peak hours, online activity crests at about 1.2 million users every day. That’s clearly a lot of activity.

Activity on Valve's Steam Powered service currently crests with about 1.2 million users. (Click to enlarge.)

Bellevue, Wash.-based Valve rose to prominence through games such as its Half Life series, but The Inquirer’s Charlie Demerjian speculates the reason Google would be most interested in the company is its Steam Powered technology, a multipurpose online hub with throngs of users.

Update 9:40 a.m. PDT: Gaming site Kotaku threw some cold water on the report after speaking to Doug Lombardi, Valve’s director of marketing. The site said Lombardi called the Google acquisition report “purely a rumor, a bit of fiction.” Though that wasn’t a direct quote, and there’s some wiggle room in the wording, Kotaku also concluded that Google is “out of the picture.”

“What we’re testing this year are the synergies,” Donahoe told the Financial Times. “If the synergies are strong, we’ll keep it in our portfolio. If not, we’ll reassess it.”

But the question about Skype, which eBay acquired for $2.5 billion in 2005, has never been whether it’s a decent business, it’s whether it’s a good fit for eBay. By the end of the year, the company will finally be closer to that answer.

Has eBay about had it with Skype?

New eBay CEO John Donahoe told the Financial Times the online auctioneer will consider selling Skype if it can’t find a way to make the service better help eBay’s e-commerce business.

Donahoe did say Skype is doing well. It generated $126 million in the first quarter, up 61 percent from a year ago. This year, it’s expected to generate $500 million in revenue and be profitable. Overall, first-quarter eBay revenues reported Wednesday were up 24 percent from a year ago to $2.19 billion. Profit was $460 million, up 22 percent from the same quarter a year ago.

On Monday, eBay won a court victory against Tiffany. The jeweler accused eBay of profiting from sales of counterfeit Tiffany goods, but the judge in the case found that it’s up to brand owners to police for phony products.

Analysts had expected earnings of 41 cents on revenue of $2.17 billion.

The Web’s largest online auctioneer said after the close of trading Wednesday that second-quarter net earnings grew to $460.3 million, or 35 cents a share, up from $375.8 million a year ago. The boost came from an increase in item listings and sales growth at the company’s PayPal division.

It’s not a bad week for eBay.

The company’s share price closed up 4.5 percent to $28.10, but surrendered the gains following the earnings report. The stock fell more than 7 percent to $26.10 in in after-hours trading.

First the company defended itself successfully against a trademark lawsuit filed by jeweler Tiffany, and now the company has said that profits jumped 22 percent from last year. None of this impressed Wall Street much.

Apparently, investors were less than enthused with eBay’s third-quarter outlook. Excluding some costs, eBay predicted that it will report a profit between 39 cents and 41 cents a share, on sales of about $2.15 billion.

(Credit:
Apple)

System-on-chips, or SOCs, are pretty much what they sound like: complete computer systems on a single chip, including the processor, memory, graphics, networking, and all the regulator chips needed to manage things like power consumption. ARM’s licensees, such as Texas Instruments, Samsung, and Nvidia build SOCs around ARM’s processor cores for smartphones such as the
iPhone, and Intel wants to head down this path with its Atom processor family.

Apple may have taken a look at the future of mobile chip development and decided to forge its own path.

The companies that license ARM’s instruction set are increasingly butting heads with Intel as the ARM community tries to move up from smartphones into more powerful mobile computers, and Intel tries to shoehorn its PC processing know-how into a mobile environment. There has been much speculation over the past year or so that Apple will one day add processors for mobile devices to the invoices orders it sends Intel every quarter for
Mac processors, but the PA Semi acquisition apparently means Apple is prepared to go it alone.

Future successors to the iPhone 3G might use a chip completely designed by Apple.

In an interview with Nvidia CEO Jen-Hsun Huang last week, we got to talking about mobile processors and the evolution of that market, and he insisted that Samsung, widely thought to be the processor supplier inside the iPhone, merely “fabbed” the chip. In his view, Apple was the chief designer of the ARM-based processor that’s used to run the iPhone–and presumably the iPhone 3G unveiled Monday–with Samsung just providing the factory. The PA Semi engineers would allow Apple to draw up a complete design in-house and take it to a chip foundry without having to let any other mobile processor companies in on its plans, Huang said.

It’s well known that Apple has played an active role in the design of chips that go into its system for years, but the acquisition of Dan Dobberpuhl’s PA Semi team means it will apparently play an even more active role in the future. Jobs has previously said that Apple acquired PA Semi for its talent and patents–not its products–but had not shared many details about its plans for that talent.

The New York Times scored an interview with Apple CEO Steve Jobs following Monday’s Worldwide Developers Conference keynote, and buried inside a rambling exchange about parallel processing and Mac OS X Snow Leopard was this little nugget about PA Semi, the chip company Apple acquired in April. “PA Semi is going to do system-on-chips for iPhones and iPods,” Jobs told the Times.

The merger is not a done deal yet, but both groups say that there needs to be further consolidation in tech lobbying. The industry has several other trade groups as well: including the Consumer Electronics Association, the Computer & Communications Industry Association, the Computing Technology Industry Association, the Business Software Alliance, and the Information Technology Industry Council.

The two groups together would represent more than 2,000 companies–right now AEA has 2,500 member companies, the Information Technology Association of America about 350, with some overlap. The two say becoming one would increase their size and clout.

Two tech trade and lobby groups say they are exploring a merger.

ITAA and AEA (formerly known as the American Electronics Association) would complement each other, according to AEA President Christopher Hansen. AEA lobbies mainly at the state level, while ITAA works with at the federal and international level.

Greenfield’s Internet survey solutions (ISS) business collects, organizes, and sells consumer and business survey data to market research firms as well as offers real-time survey sampling. But the service does not fit in Microsoft’s game plan for its Live Search.

Microsoft announced Wednesday that it’s planning a quick hand-off in its pending acquisition of Greenfield Online, selling Greenfield’s online Internet survey business to ZM Capital.

“It was very important to Microsoft to find the right partner to champion the continued growth of the Greenfield Online ISS business, which is not a fit within Microsoft’s strategy for our Live Search platform,” Tami Reller, chief financial officer of Windows and Online Services at Microsoft, said in a statement.

Microsoft is acquiring Greenfield for $486 million. Financial terms of the ZM Capital deal were not disclosed.

She added that the ISS sale will allow Redmond to focus on the part of Greenfield it plans to keep, as well as its Ciao comparison shopping business, in a move to aid its European commercial search strategy.

Microsoft’s acquisition of Greenfield, a consumer shopping sites operator, and the hand-off of Greenfield’s survey business to ZM Capital’s ZM Surveys are expected to happen simultaneously in the fourth quarter. But the software giant noted its Greenfield deal is not contingent upon the side deal with ZM Surveys.

The funding comes from the National Science Foundation, and it’s in the form of a three-year grant that will span about $4 million per year. More specifically, it’s for GENI’s “design and risk-reduction prototyping,” and will involve contracting 29 university research teams. The Internet has been around for quite some time, GENI’s team argues, and new developments in technology could be carried out more smoothly with a whole new infrastructure.

Two organizations, Internet2 and National LambdaRail, will contribute bandwidth to GENI as well.

Starting late this year or early next year, GENI plans to seek out an additional $3.5 million annually for more research.

It might sound very Noah’s Ark, but this is not a joke: $12 million in government funding, as well as bandwidth from two research hubs, has been awarded to the Global Environment for Network Innovations (GENI), a project from BBN Technologies that literally wants to rebuild the whole Internet.

There’s a good piece by Saul Hansell over on The New York Times’ “Bits” blog.

Verizon’s Fios service has most of the necessary characteristics, but even Fios carries video in pretty much the same way copper-based cable systems do, except using an optical carrier over fiber. (Wikipedia has a decent explanation here.)

Hansell goes on to give a reasonable explanation of the basic issues involved, and mentions the likely future of cable TV: digital video distributed over Internet-like network switches. Instead of always sending every TV channel to every house, a switched system sends only the data for the channels that are being watched. (While it’s fair to say that the capacity of such a system has no arbitrary limits, it isn’t “infinite” as Hansell said.)

But there is a big practical difference between a system with hundreds of channels and one with, at least potentially, millions. With switched video, every channel is “on demand”–and anything that customers demand can be made available. Imagine YouTube in true HD, for example. That’s impossible today, but with switched video, it’s merely expensive.

Well, there’s no hurry. We’ll get there eventually.

I wrote about switched-video technology back in 2001 in my column for Electronic Business magazine, and honestly I thought this technology would be in use by now, at least in test markets.

Hansell describes how Comcast is being criticized for low picture quality on certain broadcasts. That’s interesting, especially in light of the contention between Comcast and DirecTV on this very issue, but it isn’t the most important point in Hansell’s post.

The Z1U is a half step from being a consumer product, but managers found that the camera fit with their guerrilla-journalism style.

Harvey Levin, TMZ's managing editor, was among those at the company who recognized that the Web and digital technology could give it an advantage over rivals.

“It’s the same sort of hardware that a financial institution or anybody else using a large 32-terabyte SAN might use,” Stephens said. “More traditionally, we would have gone out and chosen something specifically designed for this marketplace, but because this is a relatively small market it would have cost more to get it up and running.”

For help, they went to Warner Bros. and its emerging-technology unit. The group focused on designing a low-cost system geared for speed and simplicity.

Other newsrooms have migrated from videotape to digital, but TMZ, perhaps best-known for its reporting on Seinfeld star Michael Richards’ racist tirade, was designed for the Digital Age. Not only does this enable TMZ cameramen to shoot using lighter, less expensive cameras, but editors don’t have to rip up entire TV shows each time they make changes, says Jim Paratore, TMZ’s executive producer.

Translation: TMZ had less money to spend and that forced it to be more resourceful.

“You can’t go around with big cameras, a sound guy, and a multiple-person crew,” Paratore said. “You need a smaller footprint. It’s all about being a fly on the wall.”

Alec Baldwin, Lindsay Lohan, and Kramer from Seinfeld may despise TMZ.com, but that hasn’t stopped the celebrity news site from bagging more blockbuster scoops the past two years than any competitor.

We’ve all seen those scenes of reporters, photographers and cameramen swarming around stars outside courtrooms or nightclubs. The Z1U is much easier to handle in these situations than a larger camera.

(Credit:
Craig Mathews/Warner Bros.)

The system Warner Bros. came up with enables producers to see raw footage, make rough cuts from their desktop, and then assemble timelines for the show as they write their scripts. The system gives producers precious extra minutes to complete work on a story segment.

Technology, in a way, gave birth to TMZ.

(Credit:
TMZ.com)

This kind of flexibility is handy when your top news subjects can get busted for a DUI day or night.

The founders recognized distributing news over the Web meant they could post stories, photos, and videos of drunken starlets or brawling actors almost as soon as they obtained them.

Yet, the clip of a catty Hilton was viewed more than 2.5 million times and marked TMZ as a player in the Hollywood-gossip industry. Producing video for the Web taught TMZ managers an important lesson: People want unfiltered information about celebrities. Pretty images and clever editing are less important.

After learning that, Paratore and Harvey Levin, TMZ’s managing editor, made plans for their tapeless newsroom.

TV shows like Entertainment Tonight and Access Hollywood, on the other hand, had to wait until their shows aired. People magazine had to wait until the next issue hit newsstands.

Sony HVR-Z1U

TMZ’s growing reputation as Hollywood’s in-the-know and in-your-face news agency was built by working the phones, developing sources and basically out hustling rivals, say executives. What isn’t well-known, however, is that the company may also possess a technology edge.

“What has changed because of the Web is the whole expectation of what TV is,” Paratore said. “People just want to see raw video. They don’t want it all beautified and packaged, particularly entertainment news because they think it’s all B.S.”

(Credit:
CNET Networks)

TMZ sees about 10 million monthly unique visitors to its Web site.

Traditionally, the segments of a TV news show were combined and assembled onto a tape, Stephens said. The show had to be completely finished by the time it started broadcasting. It wasn’t possible to change anything once the show started being aired, he said.

For these reasons, TMZ often has stories up before rivals and operates more efficiently, executives say. As chilling as this may sound to some, TMZ could be the prototype of a 21st century news agency.

“The business has changed, and the business model of these shows has to change,” Paratore said. “You have to figure out how to do these shows more efficiently…We had the opportunity to marry technology with the way we produced the show and create a model that fit the revenue available today.”

TMZ, which launched as a Web site in 2005 and moved into TV last September, is among the first to build a tapeless, high-definition TV newsroom from the ground up, according to managers.

Going digital also streamlined editing and content management, which is vital for breaking-news stories.

Engineers opted for off-the-shelf hardware–such as a 32-terabyte storage area network (SAN) from Hewlett-Packard and a bunch of 8-core
Mac Pros for editing–rather than spending money on expensive production tools designed for the broadcast industry, said Spencer Stephens, vice president of product technology for the Warner Bros. group.

“Now, we’re editing individual stories and plugging segments into a video server,” Stephens said. “It’s very similar if you got an iTunes playlist. You can start the music, but you can also push new pieces into the playlist on the fly. Rather than having to have my story finished a half hour before the whole show airs, now I actually need to finish a couple of minutes before my particular segment of the show airs.”

Sure, TMZ’s clips weren’t as slick looking as those broadcast by some of its rivals. But managers discovered that the audience liked it better that way, Paratore said. For example, the now-famous clip of Paris Hilton and friend Brandon Davis disparaging part of Lindsay Lohan’s anatomy while leaving a nightclub, isn’t great photography. The footage is grainy and dark.

Perfect. The company regularly competes against deeper-pocketed network shows, and loves to see itself as a giant killer, Paratore said. If less money meant TMZ had to squeeze more traffic and TV ratings out of fewer resources, so be it. Instead of buying the bulky $30,000 shoulder-held cameras favored by many broadcasters, TMZ settled on the $5,000 Sony Z1U, an HD handheld cam.

Another benefit of a smaller camera is it allows TMZ’s shooters to be less intimidating when approaching celebrities.

And that advantage is only growing as more applications are being written for the
iPhone and, thus, the iPod Touch. For example, Apple demonstrated games such as Spore running on the new iPod Touch. The new Zunes do come with two games, but they sound more like the kinds of games Apple had for the Nano line some time ago.

Update 11:10 a.m. PDT: Well, Apple’s event has ended. As CNET News reported earlier, a rumored subscription service was not part of the mix. That leaves Zune with a key difference to tout. Subscription music is more than just a feature in the Zune world. It’s what makes its music discovery features make sense. For example, new to the Zune are channels, such as Billboard’s top hits. Getting those channels, either the preprogrammed ones or the custom ones based on a user’s own collection, make the most sense with a subscription in which a user can add those tracks without having to purchase them one by one.

With Apple’s iPod announcements largely out there, I thought it made sense to see how Microsoft’s new
Zune lineup stacks up.

And of course there is the iPod Touch. Microsoft has decided to ignore the Web browsing feature even though all its models have Wi-Fi. That means that at the lower end of the market Microsoft has an advantage, as all its models can now download songs over Wi-Fi. But at the high-end, Apple has a player that makes far more extensive use of the wireless connection.

The new Nano has the accelerometer that's also in the iPod Touch and the iPhone.

(Credit:
James Martin/CNET Networks)

The bad news is that once again, Apple has made life harder for Microsoft–adding features like voice recording and “shake to shuffle” to the Nano. Apple’s “Genius” feature, while not as expansive as the Channels feature of the Zune, also gets Apple in on the auto-recommendation game.

Here's how the new Zunes stacked up to Apple's now-replaced third-generation iPod Nano (middle).

Apple is also moving ahead on the video front, whereas the Zune didn’t make any meaningful advance. The new iTunes features TV shows in HD and Apple is bringing back NBC, erasing the only real video advantage the Zune had.

Plus, the iPod Touch’s Wi-Fi-based iTunes store will work in more places than the Zune Marketplace store built into the Zune. The Zune can only download music over Wi-Fi connections that are open and don’t feature any kind of browser hijack–an increasing rarity at public Wi-Fi spots that, even if they don’t require payment, want users to agree to their terms of service.

The good news for Microsoft is that its Zunes are priced right in line with Apple’s new
iPod Nano and iPod Classic line. From either company, a 120GB hard drive player fetches $249, a 16GB flash model sells for $199, and an 8GB flash model will sell for $149.

(Credit:
Ina Fried/CNET News)

Click here for full coverage of Apple’s “Let’s Rock” event.