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Editor’s note: With the growth of local commerce on the Web, the links between online and physical commerce are becoming stronger. In this guest post, Alex Rampell, the CEO and founder of TrialPay, explores the forces behind what he calls “online2offline” commerce.

What do Groupon, OpenTable, Restaurant.com, and SpaFinder all have in common? They grease the wheels of online-to-offline commerce.

Groupon’s growth has been nothing short of extraordinary, but it’s merely a small subset of an even larger category which I’d like to call online-to-offline commerce, or On2Off (O2O) commerce, in the vein of other commerce terms like B2C, B2B, and C2C.

Bear with me. The key to O2O is that it finds consumers online and brings them into real-world stores. It is a combination of payment model and foot traffic generator for merchants (as well as a “discovery” mechanism for consumers) that creates offline purchases. It is inherently measurable, since every transaction (or reservation, for things like OpenTable) happens online. This is distinctively different from the directory model (think: Yelp, CitySearch, etc) in that the addition of payment helps quantify performance and close the loop—more on that later.

In retrospect, the fact that this is “big,” or that Groupon has been able to grow high-margin revenues faster than almost any other company in the history of the Internet, seems pretty obvious. Your average ecommerce shopper spends about $1,000 per year. Let’s say your average American earns about $40,000 per year. What happens to the other $39,000? (The delta is higher when you consider that ecommerce shoppers are higher-income Americans than most, but the point is the same).

Answer: most of it (disposable income after taxes) is spent locally. You spend money at coffee shops, bars, gyms, restaurants, gas stations, plumbers, dry-cleaners, and hair salons. Excluding travel, online B2C commerce is largely stuff that you order online and gets shipped to you in a box. It’s boring, although the ecommerce industry has figured out an increasing number of items to sell online (witness Zappos’s success with shoes: $0->$1B in 10 years, or BlueNile’s with jewelry).

FedEx can’t deliver social experiences like restaurants, bars, Yoga, sailing, tennis lessons, or pole dancing, but Groupon does. Moreover, for your locally owned and operated Yoga studio, there is little marginal cost to add customers to a partially filled class, meaning that the business model of reselling “local” is often more lucrative than the traditional ecommerce model of buying commodity inventory low, selling it higher, and keeping the difference while managing perishable or depreciating inventory.

The important thing about companies like O2O commerce companies is that performance is readily quantifiable, which is one of the tenets of O2O commerce. Traditional ecommerce tracks conversion using things like cookies and pixels. Zappos can determine their ROI for online marketing because every completed order has “tracking code” on the confirmation page. Offline commerce doesn’t have this luxury; the bouncer at the bar isn’t examining your iPhone’s browsing history. But O2O makes this easy; because the transaction happens online, the same tools are now available to the offline world, and the whole thing is brokered via intermediaries like OpenTable or SpaFinder. This has proven to be a far more profitable and scalable model than selling advertising to local establishments; it’s entirely due to the collection of payment by the online intermediary.

Does Groupon deserve a billion-dollar valuation? It’s easy to see a world where O2O commerce dwarfs traditional (stuff in a box) e-commerce—simply because offline commerce itself dwarfs online commerce, and O2O is simply shifting the discovery and payment online. If Groupon can grow its leadership position, I predict a multi-billion dollar valuation based on discounted cash flow alone. Groupon is not a gimmick or a game, but a successful example of offline commerce being driven by an online storefront and transaction engine.

Venture capitalists and entrepreneurs would be wise to think beyond cloning the “deal of the day” concept—and instead think about how the discovery, payment, and performance measurement of offline commerce can move online. This will have ripple effects across the whole Internet industry — advertising, payments, and commerce — as trillions of dollars in local consumer spending increasingly begin online.

Photo credit: Flickr/Jeremy Brooks

Making predictions about the end of this or that technology or institution must be a fun hobby — so many seem to have taken it up. It’s probably because you can’t lose: not only do such predictions promote discussion and visibility of the issue, but they are rarely proven wrong. After all, predicting something happening five years in the future allows for enough change to happen along the way that one can say “well, it was a reasonable hypothesis at the time.” Negroponte’s recent remarks at Techonomy concerning the death of printed books have the usual amount of wiggle room in them — which is not to say that they’re false, only that they’re an example of the usual futurist prestidigitation.

The death of printed books (and, by extension, magazines and such) is, of course, merely an ongoing process — a given. What is in the air is the timing. Negroponte says not ten years, but five. Either he has more faith than I do in consumers’ plasticity, or he’s talking about something completely different.

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During my tech days, I co-authored four software patents. Each cost my startup about $15,000—which seemed like a fortune in those days. I didn’t really expect these to give me any advantage; after all if my competitors had half a brain, they would simply learn all they could from my patent filing and do things better. But I needed to raise financing, and VCs wouldn’t give me the time of day unless I could tell a convincing story about how we, alone, owned the intellectual property for our secret sauce.   We got the financing, and the plaques of the patents looked great in our reception area, so the expense was worth it. But there was definitely no competitive advantage.

Patents make a lot of sense in many industries; they are needed to protect the designs of industrial equipment, pharmaceutical formulations, biotechnology products and methods, biomedical devices, consumer products (toothpaste, shampoo, contact lenses, etc.), advanced materials & composites, and of course, widgets (lighting fixtures & elements, batteries, toys, tools, etc.). But in software these are just nuclear weapons in an arms race. They don’t foster innovation, they inhibit it. That’s because things change rapidly in this industry. Speed and technological obsolescence are the only protections that matter. Fledgling startups have to worry more about some big player or patent troll pulling out a big gun and bankrupting them with a frivolous lawsuit than they do about someone stealing their ideas.

New research by Berkeley professors Stuart J.H. Graham, Robert P. Merges, Pam Samuelson, and Ted Sichelman highlights the extent of this problem. They surveyed 1332 early-stage technology companies founded since 1998, of which 700 were in the software/internet space. Here is what they found:

• In software, only 24% of startups even bothered to file a patent. In medical devices, this proportion was 76%; and in biotech, 75%.  Far more venture-backed companies file patents:  in software, 67%; in medical devices, 94%; and in biotech, 97%.
• Venture-backed companies also file more patents than others that file patents. They file, on average, 5.9 patents as against the all-company average of 1.7. In medical devices and biotech, this is 25.2 vs. 15.0 and 34.6 vs. 9.7, respectively.
• Software executives consider patents to be the least important factor for competitiveness. They perceive gaining first-mover advantage to be the most important factor, followed by acquisition of complementary assets; copyrights; trademarks; secrecy; and making software difficult to reverse-engineer.
• Companies file patents to prevent competitors from copying their products, to improve their chances of securing an investment or liquidity event (IPO, acquisition, etc.), improving the company’s reputation, and to gain bargaining power against others. Surprisingly, companies that held patents—even venture backed—didn’t believe that patents made them more likely to innovate. Even more surprising, a quarter of companies that licensed technology from others said they did this to avoid lawsuits—not to gain technology or knowledge. In other words, the patent constituted a weapon or a trophy rather than a way to obtain revenues from others’ commercial adoption of their technology.

Pam Samuelson, one of the co-authors of the report, says that her conclusion from the research is that the world may be better off without software patents; that the biggest beneficiaries of software patents are patent lawyers and patent trolls, not entrepreneurs.

Meanwhile, the U.S. patent system is clogged and dysfunctional. John Schmid, of the Milwaukee Journal Sentinel, analyzed U.S. Patent and Trademark Office data and found that as of 2009, there were more than 1.2 million patents awaiting approval—nearly triple the number a decade earlier.  In 2009, the patent agency took an average 3.5 years to deal with a patent request—more than twice the 18-month target. What is most alarming is that the patent office automatically publishes applications on line after the 18 months—outlining each innovation in detail regardless of whether an examiner has begun considering the application. Competitors anywhere in the world can steal ideas. This effectively undermines the entire purpose of the patent system: the patent office is charging applicants serious money for giving it the privilege of giving away their commercial secrets.

To make matters worse, the patent office is rejecting applications at an unprecedented pace—with fewer than 50% being approved, compared to 70% a decade ago. One estimate is that this costs entrepreneurs at least $6.4?billion each year in “forgone innovation”: legitimate technologies that cannot get licensed and start-ups that cannot get funded. So the agency charged with protecting U.S. intellectual property and aiding innovation is often doing the exact opposite.

Brad Feld, managing director at Foundry Group, says that we should simply abolish software patents.  He believes that the system has spun completely out of control, with the vast majority of filings not passing the fundamental tests of a patent (that it be non-obvious, novel, and unique innovation).  Copyright and trade secrets have historically been the primary protection mechanisms for software intellectual property, and they are still the best solutions.  Feld notes that technology companies are now forced to divert huge resources to defend themselves from patent trolls rather than advance their innovations.

The founders of the United States considered intellectual property worthy of a special place in the Constitution—“To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” They had the concept right, but they surely never conceived of Amazon.com patenting clicks in an online shopping cart and methods for having an online discussion, or Microsoft patenting methods for activating double click applications with a single click. It’s time to do as Brad Feld suggests: simply abolish these abominations.

Editor’s note: Guest writer Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at the School of Information at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. You can follow him on Twitter at @vwadhwa and find his research at www.wadhwa.com.

The sharing and tracking of torrents through Twitter just got a little easier with today’s release of BitTorrent’s Torrent Tweet, an app that you can add to torrent client uTorrent in order to organize the discussions surrounding individual torrents on Twitter. Through Torrent Tweet, tweets are published with an automatically generated hashtag unique to each torrent file, like this one.

From BitTorrent VP Simon Morris:

“The point of Torrent Tweet is to adapt the powerful referencing system built into BitTorrent to the incredible social interaction engine that Twitter has built such that people can have conversations about things they are downloading, and they can be sure that they are talking about the same thing.”

Morris also hopes that other torrent sites will follow suit and adopt the shortened #bt hashtag convention. However his ambition to centralize all torrenting discussion through Twitter is counter-intuitive. Because it is currently illegal to duplicate and share copyrighted content, file sharers doing so risk becoming the targets of Hurt Locker-esque lawsuits. The savvier ones usually cloak their activities in at least some semblance of anonymity which Twitter lacks, as users are tied to an account.

Despite this risk, torrenting activity on Twitter shows no signs of ceasing. Twitter search “Mad + Men + torrent+ S4 + Ep3″ shortly after 7pm PDT on Sunday and be amazed at how quickly people post torrent files. Or just search for “Arcade+Fire+the+ Suburbs + torrent” right now. The launch of a Twitter-specific torrent indexing system only further reinforces the fact that Twitter has now become a powerful locus for file-sharing.

Let me start off by saying that I don’t think this is going to happen. And a number of people I’ve spoken with today don’t think this is going to happen. But it’s something interesting to think about and discuss nonetheless. Following HP CEO Mark Hurd’s resignation today, what if the Board were to appoint former Palm CEO Jon Rubinstein to be their new leader?

Again, it seems a bit far-fetched simply because there are a range of other candidates out there who are probably more qualified to run the company as it is currently constituted. But that’s the thing. From what we’ve been hearing, HP is very interested in reinventing itself. From what we’re hearing, they’d like to be more like Apple. Only a bigger Apple. One with webOS at its core. And you know the funny thing? They may have acquired the perfect guy to do that when they bought Palm this past April: Rubinstein.

As a refresher, prior to Palm, Rubinstein was a long-time Apple executive who was in charge of the iPod division. When he left the company in 2006, the iPod was Apple’s most successful product (the iPhone didn’t exist yet — let alone the iPad). This guy knows Apple (or knew it).

Of course the main argument against Rubinstein may be that he was unable to turn Palm into Apple. As Executive Chairman and later CEO of Palm, he was clearly attempting to do that with the launch of the Palm Pre smartphone — a device which some initially viewed as the first real “iPhone killer.” Of course, it did not kill the iPhone. Nor did it even hurt the iPhone. But nevertheless, the phone was very impressive — particularly the webOS software. In fact, I would argue that it was really only the lackluster hardware that was holding it back. At the time of its launch, webOS was much better than other rivals (not named the iPhone) including the still-young Android platform.

But Palm was a relatively small company, and despite repeated cash infusions from Elevation Partners, they were unable to compete with Apple and the Google-backed Android platform in the smartphone market. But with HP’s billions and emphasis on hardware, Rubinstein would be getting dealt a pretty nice hand this time around. If he still couldn’t win the pot, it would be on him, obviously. But is HP willing to take that chance?

For the third time, probably not. Especially with people like Todd Bradley, the HP executive believed to be responsible for the Palm deal, on the bench. Interestingly enough, Bradly used to be the CEO of Palm as well back in the day (2001-2005). And his track record of growing HP’s core PC business speaks for itself.

But again, going forward, this may not be about the PC business. This is about a shift towards mobile (which Bradley also runs) and a complete ecosystem built around webOS. Does HP’s board (Board Director Marc Andreessen is leading the search) have the cojones to appoint Rubinstein? Or will they go with the safe bet: Bradley, perhaps with Rubinstein as his new right-hand man?

SEC filings say the darndest things. In a Friday 10-Q filing, AT&T assured investors that the termination of any handset exclusivity agreement (especially that itsy bitsy deal with Apple) will not have a “material negative impact” on earnings. I heartily welcome the injection of comedy in typically drab SEC filings, but if AT&T is being sincere, they’re in for a rude awakening when the sands run out.

As the WSJ points out, this is the first time AT&T has addressed this issue at length in a filing and it comes amid rumors that Apple is preparing to end its exclusivity agreement with AT&T  as early as next year. In recent months, speculation has intensified on reports that both Verizon and T-Mobile could get in on the action in 2011.

How does AT&T justify its claim? The wireless provider argues in the filing that 80% of its contract subscribers are on family or business plans. Thus, under their logic, the majority of subscribers will not switch because it will be too difficult to transfer an entire group and these “group” subscribers will be hesitant to relinquish certain AT&T perks like the rollover minutes they’ve accumulated.

Further, via its explanation, AT&T also points out that the iPhone was specifically designed to work with AT&T’s network and technology, and thus a different version may lose some of the functionality. See an excerpt of the filing below.

These are fairly strong arguments, I highly doubt that consumers on business plans will be able to switch. In May, Ron Spears, CEO of AT&T Business Solutions,  announced that four out of ten iphones sold were being sold to businesses. A sizable portion of the pie but what about the six out of ten sold?

The majority of that group will be, as AT&T pointed out,  users on family plans— but their hold on this demographic is less convincing. It’s far easier for a family to change carriers versus a business and it’s even easier for a few fed-up family members to just go rogue. In addition, there is that 20% chunk of individual users, who are highly mobile. If Verizon or T-Mobile, or whoever the next iPhone carrier is, attracts a large number of defectors from this slice, guess what AT&T, you have a material impact on earnings.

Furthermore, if recent surveys are to be believed, AT&T should not overestimate its hold on the market. According to a recent Changewave Research survey, among hundreds of iPhone 4 users surveyed, the top two complaints centered on AT&T. Twenty-seven percent complained about the exclusivity requirement and 24% complained about the quality of the network. Recently, Davenport & Co. analyst F. Drake Johnstone predicted that as many as 40%, or 6 million iPhone users, would ditch AT&T when Verizon enters the picture.

Typically, I don’t bet the ranch on analyst recommendations, but he brought up at least solid point: AT&T recently rose its early termination fee to $325 from $175. Thus while it’s all sunshine and puppies in AT&T’s SEC filings, the proof is in the termination fee. AT&T is worried, and it should be.

Full disclosure: I have been a loyal AT&T user since 2007, when the iPhone first debuted—- and I can’t wait to switch to Verizon (2011 please).

Pertinent excerpt from the filing:

We offer a large variety of handsets, including at least 18 smartphones (including Apple iPhones, our most popular models) with advanced operating systems from at least 7 manufacturers. As technology evolves, rapid changes are occurring in the handset and device industry, with the continual introduction of new models or significant revisions of existing models. We believe offering a wide variety of handsets reduces dependence on any single handset as these products evolve. In addition, offering a number of attractive handsets on an exclusive basis distinguishes us from our competitors. As these exclusivity arrangements end, we expect to continue to offer such handsets (based on historical industry practice), and we believe our service plan offerings will help to retain our customers by providing incentives not to move to a new carrier. As noted above, more than 80 percent of our postpaid subscribers are on Family Talk® Plans and business plans that would involve moving the whole group to a new carrier. Moreover, the vast majority of our postpaid subscribers (including Family Talk® Plan users) are allowed to accumulate unused minutes (known as rollover minutes), a feature that is currently not offered by other major post-paid carriers in the United States, and users would lose these minutes if they switched carriers. As is common in the industry, most of our phones are designed to work only with our wireless technology, requiring customers who desire to move to a new carrier with a different technology to purchase a new device. In addition, many of our handsets would not work or would lose some functionality if they were used on another carrier’s network (even a carrier using GSM technology), requiring the customer to acquire another handset. Although exclusivity arrangements are important to us, such arrangements may not provide a competitive advantage over time, as the industry continues to introduce new devices and services. Also, while the expiration of any of our current exclusivity arrangements could increase churn and reduce postpaid customer additions, we do not expect any such terminations to have a material negative impact on our Wireless segment income, consolidated operating margin or our cash from operations.

First came reports of how many more deals Ron Conway was doing in New York than he’s done in the past. Then, there was a report that showed the number of venture firms were predicted to decline in traditional markets, and grow in emerging markets like China, India and Brazil. Now, the latest Pepperdine Capital Markets Survey finds that Silicon Valley based VCs have wanderlust too.

According to the survey the number one location where VCs said they expected to invest in the next year was Southern California. Specifically, 17.4% named Southern California, 12% said they planned to invest in the Southwest and 10.5% said they planned to invest in the Southeast. Only 7.9% of VCs surveyed—most of whom live in Silicon Valley—said they intended to invest in Silicon Valley.

Wait.

What?

Look, we’ve been as big a proponent of the idea that VCs are expanding their scope as there is at TechCrunch, but last we checked Southern California wasn’t an emerging market. We couldn’t believe these results could be true, so we invited the study’s author John Paglia on to this week’s episode of Too Long; Didn’t Watch to explain.

His survey can be found here and has a few other interesting take aways. 56% of investors said “gut feel” was the largest reason they do a deal, outranked only by “market analysis.” Gut feel always ranks high, so Paglia decided to ask this time what “gut feel” means. Investors said it was based most on “nonanalytical impression” and “past experience and knowledge.” Again, we would have thought that would favor Valley investors backing the networks they already have and know in the Valley, but maybe they have a good gut feel about oranges and beachballs. (We’re kidding So. Cal., we know you have MySpace, biotech and clean tech innovation going on. And Disneyland!)

The survey also noted that 42.8% of venture firms said they were currently raising money or would be in the next six-to-twelve months. This will be the key period to watch to see what our venture capital ecosystem is going to look like in for the next decade or more. A lot of people are expecting a shake out in terms of who can raise money, as returns are generally horrible for the last ten years. But then again, we heard about a shakeout among venture funds in 2000 that never happened.

On the heels of the as of yet unprofitable Demand Media IPO filing, it looks like email software purveyor Xobni (that’s Inbox spelled backwards) has decided to spend money on a mural. And an elaborate one at that. While the rest of the country gears up for a second recession, the tech sector seems blissfully exempt with inflated billion dollar valuations being flung left and right. Will startup burn rates follow suit?

In accordance with the “Go big or go home” model, Xobni’s description of the mural project, which was undertaken in Twitter’s old office, is extremely detailed. If the Dr. Seuss references don’t set off the bubble alert I don’t know what will:

1) We were looking for a Seuss-ian feel to bring the sense of wonderment to our office (growing up in the 60?s/70?s/80?s leaves us all with a soft spot for Dr. Seuss).

2) We wanted to have a little fun with some popular Internet clichés and sensations over the years – i.e. “series of tubes” (Thank you former Senator Ted Stevens, formerly head of committee to regulate the Internet).

Xobni, which just raised $16.2 million in series C funding (32.1 million total), has been looking for ways to make money over the past year, most notably going retro and serving up their email management software Xobni Plus in boxed form a la Microsoft Office. Perhaps they’ve never heard of the well worn aphorism “spend less than you earn”?

I’ve contacted Xobni for details on how much exactly the mural (by San Francisco-based artist Jim Winters) cost, and will post updates when I hear back.

Update: Xobni’s Terra Carmichael responds, “Can’t say how much it cost, but will say it’s nice to have creative friends.”

“The Making Of” video, below:

Photo: Xobni

Anybody want to buy a content farm? Demand Media filed its IPO registration today.  It describes its business this way:

While traditional media companies create content based on anticipated consumer interest, we create content that responds to actual consumer demand. Our approach is driven by consumers’ desire to search for and discover increasingly specific information across the Internet.

It is also filled with all sorts of detailed financial data.

It turns out that Demand Media is not yet a very profitable business. Last year it reported $22 million in losses on $198 million in revenues. In the first six months of this year, however, it brought its net loss down to $6 million, on revenues of $108 million.

And while Demand Media has been pursuing a content and media strategy of creating search-friendly articles and videos for its network of sites including eHow and many niche sites, a full 44 percent of its revenues in the first half of 2010 ($47.7 million) still came from its domain registration business, eNom.

Some other juicy details from the prospectus (unless otherwise stated, stats are for the first half of 2010):

• 45 percent of revenues are from advertising
• 26 percent of revenues came from Google ads
• 21 percent of revenues come from eHow
• 60 percent of eHow’s page views come from Google searches
• In the third quarter of 2008, 100 percent of the articles an d other content Demand Media’s creates itself was published on eHow. That was down to 60 percent in the second quarter of 2010.

That is just from a quick scan. There is lots more in there.  Above and below are a couple of tables showing consolidated financial data and a breakdown of revenues along business lines. Click to enlarge

Today at the Techonomy conference in Lake Tahoe, CA host David Kirkpatrick sat down with Reid Hoffman and Sean Parker to talk about what comes after the social revolution. Both Parker and Hoffman made it clear that they don’t think social is going anywhere anytime soon. So Kirkpatrick asked what the most interesting social opportunity is that Facebook isn’t directly involved in?

Hoffman said that his answer was gaming, and that’s why he invested in Zynga. But going forward, he wasn’t sure yet. But Parker gave a more foward-looking answer. “I think the move to live is pretty interesting. No one has nailed live,” he said.

Specifically, Parker is thinking about live video. He notes that while Skype and some others are playing in this field, he thinks long-term there will be something along the lines the Internet hasn’t seen yet.

It shouldn’t be a huge surprise that Parker feels this way, he has recently been helping out the live-video startup Chatroulette along with his former Napster partner Shawn Fanning. Parker won’t say what his specific role is with the company, but it’s likely as an advisor like Fanning.

Parker said he sees the Chatroulette idea moving from a one-to-one to a one-to-many idea. He notes that the way to move it on from its dubious distinction as a penis showcase is to use algorithms, perhaps based around “nexting” — the mechanism you use in Chatroulette to go to the next video stream.

Later, he reiterated that live video is what he’s spending most of his time thinking about these days.

Watch Hoffman and Parker during their panel in the video below compliments of David Spark.

MSKYNET, a startup that provides an API that allows other companies to generate and perform analytics on 2D barcodes called SPARQCodes, has raised a $550,000 seed round led by Andy Liu (Buddy TV), with other participants including Chris DeVore (Founders Coop), and John Keister (Marchex).

Founder Jesse Chor says that SPARQCodes are similar to standard QR codes, but with a few key differences. For one, he says that most QR codes try to embed all of their payload data into the 2D barcode itself, which can result in barcodes that are visually complex and harder for phone cameras (which are generally low quality) to scan. SPARQCodes help solve this issue by storing the payload data on its servers — the code you scan is actually for a shortened URL rather than the data itself. This, Chor says, makes the codes easier to scan for phones with low-end cameras. Users can scan SPARQCodes using most standard QR reader apps.

SPARQCode’s shortened URls also come with a few other benefits. First, they allow the barcode’s creator to track analytics, the same way you would with a link shortening service like bit.ly. They also allow the publisher to detect what kind of phone the user has and serve up content that’s been tailored for that device’s capabilities accordingly. For example, if you wanted your SPARQCode to send the user a map, you could link iPhone users directly to the phone’s built-in mapping application, while sending less powerful phones a basic image of the map.

Chor also says that SPARQCodes are visually designed to grab the viewer’s attention better than standard QR codes, and claims that they get 300-1000% higher conversation rates than traditional QR codes for app downloads.

The startup’s customers have used SPARQCode’s APIs in a variety of ways. FlightStats presents users with a unique SPARQCode for every flight they want to track; other customers include the barcodes in magazine ads. SPARQCode’s monetization model varies depending on how its customers are using it — FlightStats pays based on how many codes it creates (a lot), while a customer running the codes in a magazine will likely pay based on how many people take a snapshot of the code.

I’ve never been a big fan of 2D barcodes, and while they’re huge in Asia I’m still skeptical about their acceptance in the US. To that point, Chor says that SPARQCode is definitely seeing traffic in the States pick up.

MSKYNET isn’t the only player in this space — competitors include Scanbuy and JagTag.

Update: The company is actually called MSKYNET, but their product is SPARQCode.

Well, this is unexpected, HP has just announced that CEO Mark Hurd is stepping down. CFO Cathie Lesjak has been appointed as interim CEO.

According to a press release, Hurd, 53, is resigning on the heels of sexual harassment charges by a former HP contractor. The company’s investigation concluded that there was no sexual harassment violation, however it did find that Hurd violated HP’s “Standards of Business Conduct.” On a conference call, HP’s General Counsel, Mike Holston elaborated further, explaining that the case centered around expense reports that were used to hide the true nature of Hurd’s close relationship with the contractor.

“Mark demonstrated a profound lack of judgment that seriously undermined his credibility and damaged his effectiveness in leading HP – and Mark agreed,” Holston said in a statement.

According to the details available, it seems like Hurd, who is married (at least for now), was entangled in a personal relationship with a hired contractor— an affair he tried to obfuscate with some fudged expense reports.

In a somewhat dejected tone, Hurd said stepping down was a “painful decision” and vaguely acknowledged that he displayed a lack of character.

“As the investigation progressed, I realized there were instances in which I did not live up to the standards and principles of trust, respect and integrity that I have espoused at HP and which have guided me throughout my career. After a number of discussions with members of the board, I will move aside and the board will search for new leadership,” Hurd said in the release. “This is a painful decision for me to make after five years at HP, but I believe it would be difficult for me to continue as an effective leader at HP and I believe this is the only decision the board and I could make at this time. I want to stress that this in no way reflects on the operating performance or financial integrity of HP.”

In the wake of Hurd’s abrupt departure, HP is on the hunt for a new CEO. The board of directors has already cobbled together a search committee, led by Marc Andreessen, Lawrence Babbio, Jr., John Hammergren and Joel Hyatt, to find a proper replacement.

In a word, HP’s official press release (see below) was awkward. It was a jumble of half-disclosures and odd statements that raised more questions than answers. Meanwhile, intertwined among comments on ethics are adamant assertions of HP’s financial health. Investors can take comfort in the fact that HP is raising its full-year outlook for revenues, but I’m sure the vast majority are appropriately wondering, “What exactly is going on here and what will happen next?” The stock fell several points in after hours trading.

Holston’s comments certainly shed important light on the circumstances, but investors are no doubt feeling a little unsettled with the CEO search still in progress.

Thus, amid controversy and a whirl of questions, Mark Hurd abruptly wraps up his five year tenure at HP, a highly profitable time for the company. Over the last five years, the stock price has more than doubled with Hurd at the helm, aggressively pursuing profits. For his part Hurd has been paid handsomely. Last year, for instance, Hurd pulled in $24.2 million, which was actually a step down from 2008, when he made a whopping $42.5 million.

Press release below:

PALO ALTO, Calif.–(BUSINESS WIRE)–HP (NYSE: HPQ) today announced that Chairman, Chief Executive Officer and President Mark Hurd has decided with the Board of Directors to resign his positions effective immediately.

The Board has appointed CFO Cathie Lesjak, 51, as CEO on an interim basis. Lesjak is a 24-year veteran of the company who has served as HP’s CFO and as a member of the company’s Executive Council since January 2007. She oversees all company financial matters and will retain her CFO responsibilities during the interim period.

Hurd’s decision was made following an investigation by outside legal counsel and the General Counsel’s Office, overseen by the Board, of the facts and circumstances surrounding a claim of sexual harassment against Hurd and HP by a former contractor to HP. The investigation determined there was no violation of HP’s sexual harassment policy, but did find violations of HP’s Standards of Business Conduct.

A Search Committee of the Board of Directors has been created, consisting of Marc L. Andreessen, Lawrence T. Babbio, Jr., John H. Hammergren, and Joel Z. Hyatt, which will oversee the process for the identification and selection of a new CEO and Board Chair. HP’s lead independent director, Robert Ryan, will continue in that position.

Hurd said: “As the investigation progressed, I realized there were instances in which I did not live up to the standards and principles of trust, respect and integrity that I have espoused at HP and which have guided me throughout my career. After a number of discussions with members of the board, I will move aside and the board will search for new leadership. This is a painful decision for me to make after five years at HP, but I believe it would be difficult for me to continue as an effective leader at HP and I believe this is the only decision the board and I could make at this time. I want to stress that this in no way reflects on the operating performance or financial integrity of HP.”

“The corporation is exceptionally well positioned strategically,” Hurd continued. “HP has an extremely talented executive team supported by a dedicated and customer focused work force. I expect that the company will continue to be successful in the future.”

Robert Ryan, lead independent director of the Board, said: “The board deliberated extensively on this matter. It recognizes the considerable value that Mark has contributed to HP over the past five years in establishing us as a leader in the industry. He has worked tirelessly to improve the value of HP, and we greatly appreciate his efforts. He is leaving this company in the hands of a very talented team of executives. This departure was not related in any way to the company’s operational performance or financial condition, both of which remain strong. The board recognizes that this change in leadership is unexpected news for everyone associated with HP, but we have strong leaders driving our businesses, and strong teams of employees driving performance.”

“The scale, global reach, broad portfolio, financial strength and, very importantly, the depth and talent of the HP team are sustainable advantages that uniquely position the company for the future,” said Lesjak. “I accept the position of interim CEO with the clear goal to move the company forward in executing HP’s strategy for profitable growth. We have strong market momentum and our ability to execute is irrefutable as demonstrated by our Q3 preliminary results.”

Lesjak has taken herself out of consideration as the permanent CEO but will serve as interim CEO until the selection process is complete. Candidates from both inside and outside the company will be considered. The selection of a new chairman will occur in conjunction with the CEO decision.

The company does not expect to make any additional structural changes or executive leadership changes in the near future.

HP announces preliminary third quarter results; raises full-year outlook for revenue and non-GAAP EPS

HP is announcing preliminary results for the third fiscal quarter 2010, with revenue of approximately $30.7 billion up 11% compared with the prior-year period.

In the third quarter, preliminary GAAP diluted earnings per share (EPS) were approximately $0.75 and non-GAAP diluted EPS were approximately $1.08. GAAP and non-GAAP EPS were negatively impacted by $0.02 pertaining to one-time charges relating to the previously announced U.S. Department of Justice settlement. Non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.33 per share, related primarily to restructuring, amortization of purchased intangible assets and acquisition-related charges.

For the fourth fiscal quarter of 2010, HP estimates revenue of approximately $32.5 billion to $32.7 billion, GAAP diluted EPS in the range of $1.03 to $1.05 and non-GAAP diluted EPS in the range of $1.25 to $1.27. Non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.22 per share, related primarily to restructuring, amortization of purchased intangible assets and acquisition-related charges.

For the full year, HP now expects revenue in the range of $125.3 billion to $125.5 billion. FY10 GAAP diluted EPS is expected to be in the range of $3.62 to $3.64 and non-GAAP diluted EPS in the ranged of $4.49 to $4.51. FY10 non-GAAP diluted EPS estimates exclude after-tax costs of approximately $0.87 per share, related primarily to restructuring, amortization of purchased intangibles and acquisition-related charges.

HP plans to release its final results for the third fiscal quarter on Thursday, Aug. 19, 2010, with a conference call at 6 p.m. ET/3 p.m. PT to provide additional details.

Bill Gates thinks something is going to die too.

No, it’s not physical books like Nicholas Negroponte — instead, Gates thinks the idea of young adults having to go to universities in order to get an education is going to go away relatively soon. Well, provided they’re self-motivated learners.

“Five years from now on the web for free you’ll be able to find the best lectures in the world,” Gates said at the Techonomy conference in Lake Tahoe, CA today. “It will be better than any single university,” he continued.

He believes that no matter how you came about your knowledge, you should get credit for it. Whether it’s an MIT degree or if you got everything you know from lectures on the web, there needs to be a way to highlight that.

He made sure to say that educational institutions are still vital for children, K-12. He spoke glowingly about charter schools, where kids can spend up to 80% of their time deeply engaged with learning.

But college needs to be less “place-based,” according to Gates. Well, except for the parties, he joked.

But his overall point is that it’s just too expensive and too hard to get these upper-level educations. And soon place-based college educations will be five times less important than they are today.

One particular problem with the education system according to Gates is text books. Even in grade schools, they can be 300 pages for a book about math. “They’re giant, intimidating books,” he said. “I look at them and think: what on Earth is in there?“

According to Gates, our text books are three times longer than the equivalents in Asia. And yet they’re beating us in many ways with education. The problem is that these things are built by committee, and more things are simply added on top of what’s already in there.

Gates said that technology is the only way to bring education back under control and expand it.

See also: Bill Gates’ Mind Is In The Gutter. Literally.