Bye bye. (Photo: Microsoft)

If you were hoping to get rich off of being one of the first to build apps for Google Glass, think again: Google has prohibited developers from using ads or charging for apps. We're betting Google wants to keep  that potential ad revenue all to itself. [The Verge]

Sources tell Bloomberg Twitter is seeking a deal with Viacom and Comcast that would allow it to host clips (as well as ads alongside those clips) on the site. Can't you at least verify @Jack's parents first? [Bloomberg]

Binge-watching shows is about to get a whole lot easier: Netflix is finally ditching Microsoft Silverlight in favor of HTML5 video. [The Verge]

IBM execs are headed to Washington to try to convince politicians to pass CISPA. Paging Alexis Ohanian! [Hillicon Valley]

Cory Booker's Waywire startup has finally launched in beta. [PandoDaily]

Only models look this good in Glass. (Photo: Google)

Speaking at TED, Sergey Brin called the smartphone user experience "emasculating," on the basis that "You're standing around and just rubbing this featureless piece of glass." Maybe Google that word when you get home, Sergey. [CNET]

Could perennial concerns about cancer keep Google Glass from realizing its full potential as a wearable communication device? [Quartz]

Groupon didn't do so hot in Q4, causing a big drop in the company's stock in after-hours trading. "The forecast is underwhelming," said one analyst. No kidding. [Reuters]

Time Warner Cable is pretty sure you don't even want gigabit Internet. Because when you think "attentive to customer desires," you think Time Warner Cable.  [Verge]

I.B.M. is still figuring out money-making uses for the supercomputer Watson. Besides all the big data applications, he apparently makes a mean croissant. [New York Times]

IBM is making a push into mobile, and plans to provide customers with software, data and security services on mobile devices. [NYT]

Calling all youth correspondents: the social network Pheed is said to be gaining in popularity, especially with teens. [Forbes]

Facebook isn't the only tech company to catch heat for using stock option deductions to avoid paying corporate taxes. The Center for Tax Justice says LinkedIn has used the deduction to avoid paying federal taxes for the last three years. [New York Post]

Eduardo Saverin talked about life after the Facebook, the challenges faces the social media company he helped found, and his decision to move to Singapore. "No, I did not rescind my citizenship for tax purposes," is what he says. [WSJ]

Bon voyage and happy trails. (Photo: Screencap)

Today Mayor Michael Bloomberg delivered his final State of the City address. Amid wisecracks about the Knowles-Carter family (you might know Barclays Center part owner Shawn Carter "by what he's been called since the Super Bowl: Beyoncé's husband"), Hizzoner had plenty to say about the city's tech sector. Hey, he can't let President Obama totally blow up his spot.

Below, a few of the big shout-outs:

King of Numbers, Defender of the Data

It's finally happened: New York City has merged wholly with Startupland. The evidence? In his speech, Mayor Bloomberg announced that our fair metropolis (which already has a Chief Digital Officer, Ms. Rachel Haot) will now have a Chief Analytics Officer, as well:

Using data to tackle problems has helped us to improve services across city government. This year, the data analytics team we created at City Hall will launch a new platform that will improve the way all agencies share information. To lead this effort, I'll appoint the city's first ever Chief Analytics Officer, Michael Flowers. And he'll make as much of this data as possible public, so that the tech community can hold us accountable.

Please, please tell us we're all getting real-time, MTA-wide countdown clocks on our phones sometime before the 2nd Avenue Subway opens.

E-National Guard 

All that community spirit that flowered in the wake of Hurricane Sandy finally has an outlet:

We'll also ask the tech community to join us in tackling data projects that can improve public services, by creating something we call Code Corps.

More details here; founding partners include familiar names like 10Gen, Etsy, General Assembly, New York Tech Meetup, Seamless and...Rent the Runway?

FREE WI-FI! 

There's no date you can put on your calendar just yet, but there's at least some signs of life:

"And to further expand New York's role as a global tech hub, we'll launch a competition to install Wi-Fi in more of our Business Improvement Districts.

Until then, we'll always have Chelsea.

School Days, Fool Days

It won't solve anyone's immediate tech talent supply problems, but it ought to make parents worrying about high schools feel a little better: The city will be opening a second Academy for Software Engineering, and "with private support" 20 more schools will be getting comp sci classes, as well.

Mayor Bloomberg also highlighted the idea of private-public partnerships in education that got love in the President's SOTU earlier this week:

To prepare our students for success, we'll also create new schools that connect students directly to college and work. In his State of the Union address, President Obama highlighted our partnership with IBM and CUNY to create a high school that includes two years of college which we call grades 13 and 14. When students graduate, they receive an associate's degree — and an interview at IBM.

Don't give up hope if your senior prom is long behind you, either:

Today, I've directed Deputy Mayor Bob Steel and Small Business Services Commissioner Rob Walsh to work with the tech industry, universities, and the nonprofit sector to develop an intensive computer science training program for our adults who want to learn IT skills. And why not do it right here in Downtown Brooklyn? There are now 500 tech companies just between here and the NAVY Yard. We'll work to connect more New Yorkers to the jobs they're creating.

More Converted Industrial Space

Tired of searching in vain for new office space? We hear Brooklyn's nice:

We'll move forward with a plan to turn the old Domino Sugar Plant into new housing and we'll create the commercial space that Brooklyn's growing tech community needs.

At the Brooklyn Navy Yard, we'll work with the State to help Steiner Studios begin creating a 50-acre new media campus. The campus will eventually provide 2,500 good jobs in film, television and tech — two of the fastest-growing industries in our city.

Here Come the Electric Cars

Hey, technology isn’t just consumer Internet and 3-D printing:

We'll make New York City a national leader in another new technology: electric vehicles. This year we'll pilot curbside vehicle chargers that will allow drivers to fill up their battery in as little as 30 minutes as opposed to the normal 8 hours.

"We'll work with the City Council to amend the Building Code so that up to 20 percent of all new public parking spaces in private developments will be wired and ready for electric vehicles, creating up to 10,000 parking spots for electric vehicles over the next seven years.

Good news for New York's ailing media industry. Think of all the pageviews when the fights break out over mileage and how long it takes to really charge these cars!

And God only knows what else. (Photo: flickr.com/merfam)

Did IBM learn nothing from the Urban Dictionary fiasco? The AP reports that the company is now sending Watson to college--specifically, Rensselaer Polytechnic Institute, where the supercomputer will be studying up on both English and mathematics.

God knows what kinds of terrible habits and filthy language he'll pick up there!

RPI gets to run Watson’s software for three years at its own supercomputing facilities. Researchers' goals include finding ways to "improve Watson's mathematical ability and help it quickly figure out the meaning of new or made-up words." A university sounds like a good place for that, all right.

"We consider it absolutely strategic technology for IBM in the future. And we want to evolve it, of course, thoughtfully, but also in collaboration with the best and brightest in academia," Michael Henesey, IBM's vice president of business development, told the AP.

That's what parents always say, until the first Christmas break when it's all, "actually my professor says" this and "but Marxist historians would argue" that.

(Photo: The Morton Report)

In order to pass the Turing Test, a computer must display both emotional and intellectual behavior that's almost indistinguishable from that of humans. IBM's most famous supercomputer, Watson, is close, but first he must emulate one of humanity's finer inventions: crazy Internet slang. YOLO!

According to Fortune, researchers at IBM attempted to indoctrinate Watson into the wonderful world of LOL and OMG, but in the process they accidentally caused the supercomputer to develop a bit of a filthy mouth. As it turned out, Watson "couldn't distinguish between polite language and profanity," and curse words lifted from Urban Dictionary and Wikipedia began sneaking into his lexicon. He even began responding to some researcher queries with the retort "Bullshit!" (Though, to be fair, it has to be so annoying to work with mere human mortals when you're a supercomputer.)

In the end, the IBM researchers had to create a filter that would stop Watson from cursing, as well as wipe his memory of all Urban Dictionary information.

If only we could do the same.

(Photo: fanpop.com)

The FTC reportedly won't announce its decision regarding its antitrust investigation until 2013, rather than this week as was originally planned. Hey, might as well not ruin anyone's holiday over this. [Bloomberg]

If you read this, you'll never rent a computer for anything ever again. [Ars Technica]

Prominent techies like Fred Wilson are backing Bloomberg's demand for a gun safety plan. [A VC]

The U.K. now has a special crime unit focused wholly on copyright violators, which means this classic IT Crowd episode is actually coming true. [The Verge]

IBM is pretty sure computers will have "touch, taste, sight, sound and smell" within five years. In related news, IBM is about to learn you can't teach good taste. [Washington Post]

Bharara.

Sometimes it just feels so right to be wrong. Sometimes, the lure of easy money is too much for a good man to resist, and the thrill alone of carrying off an illicit scheme is reward enough for the risks involved.

Or something along those lines.

Take the case of David J. Weishaus and Thomas C. Conradt, former stockbrokers charged with insider trading by U.S. Attorney Preet Bharara today. According to the indictment, in 2009 Mssrs. Weishaus and Conradt got wind—from a friend of a friend who was working on the deal—that IBM was getting ready to buy a maker of data modeling software called SPSS Inc. at a substantial premium.

Well, that little tidbit was worth something, and the pair—along with three unnamed co-conspirators—began eying the stock price of the smaller company.

While the indictment doesn't name the company that employed the two schemers, they appear to have worked for Euro Pacific Capital at the time of the alleged insider trading, per Finra's BrokerCheck (They also appear to have been partners in a Baltimore bar called The Den.)

And you know, as licensed financial professionals, they probably ought to have known that it's illegal to trade on nonpublic information.  At any rate, they knew the potential consequences: In an instant message chat reproduced in the charging documents, Mr. Weishaus cautioned his buddy about the potential consequences of trading on the inside dope—only to fall victim to the lure of oh, so easy money:

And so the pair allegedly accumulated shares and options in SPSS, cleverly referring to the company as "horse" just in case any government types came across their written communications. (On or about July 23,  according to the indictment, Mr. Weishaus wrote to Mr. Conradt, "dude, horsey is moving ... horsey can run! ... come horsey, come on horsey!!! RUUUUUNNN!!!!!" Sharp as a tack, Mr. Conradt responded, "what's going on with the horse? going up?")

When IBM announced its deal for SPSS on July 28, the stock surged 41 percent in a single day, and the conspirators cashed out their positions: Mr. Weishaus netted more than $129,000, enough to buy a Lexus, though there's nothing in the documents to indicated he consummated his desire for luxury Japanese automobiles.

Even if he had, it's unlikely that he'd have enjoyed a new car for long. By October 2010, the Securities and Exchange Commission was investigating the group's SPSS transaction, leading eventually to his arrest today. Mr. Conradt, who along with his partner, faces up to seven years in prison, didn't even get to enjoy a brief joy ride: His alleged profits from the scheme were just more than $2,500.

Google's Chelsea office (via Wikimedia Commons, user Beyond_My_Ken)

Tech companies are, once again, scouting for space. The New York Post reports that Facebook, IBM, and Amazon are all on the prowl in Flatiron, Chelsea and Meatpacking. Perhaps Facebook has decided that, access to advertisers notwithstanding, Midtown just isn’t hip enough?

But the most interesting tidbit lies tucked into the middle of the story. Brokers told the Post:

"West Coast-based tech companies, in particular, are more likely to be in parts of the city that are not in Google’s West Chelsea shadow."

Was it something Sergey said? Or maybe it's just that doozy of a property tax bill.

Mr. Webb.

Rick Webb co-founded The Barbarian Group, a digital ad agency, and is now a writer and angel investor in the tech industry.

I meet all sorts of people starting new companies. A ton of them are starting hot new tech startups and are out there looking for funding and often succeeding. Many more are starting much-needed service firms in high tech—providing much-needed services along the lines of iOS app development, web development, marketing, PR, content creation, and backend development. There are massively talented people in both types of companies. They do the same work. They hang out together, they have the same skills. They need each other.

Yet one segment of them have the potential to earn millions, and the other doesn't.

It makes no sense.

Red Hat doesn't really sell anything at all other than the consulting and support services around their open source Linux products. And I remember back when they IPO'd, everyone hailed it as a stroke of genius, the way of the future, the dawn of a new era, etc., etc. That struck me as really strange—most service companies are saddled with low revenue multiples, but for some reason Red Hat bypassed that. Removing all traditional revenue streams was part of the dot-com zeitgeist, and in 1999, Red Hat rode their service company to an IPO.

Of course, in 1999, service companies could still go public with decent multiples, with Agency.com and Razorfish mooting successful IPOs in 1999 as well. Of course, Razorfish and Agency.com took a dive in the dot com crash, and with them the dreams of any service company of ever having a major tech IPO again. And while they both survived, it was in different forms, neither being an independent, publicly traded company again.

Red Hat, however, survived. Today, Red Hat's PE ratio is a staggering 67. For a service company.

I was reading yesterday that Dell is going to become an IT company now. HP was thinking about this a few months ago, too, right? They bought a company called Autonomy and were going to turn into some sort of consulting company. Reason prevailed on that one.

I can see why both companies would consider this, because the strategy proved golden for IBM some years back. IBM became more of a consulting services company, and in doing so shed their image of a loser in the operating system wars and became more of a bad ass, high tech McKinsey. Their stock commensurately rebounded. IBM has a price to earnings ratio of 13 (a price to earnings ratio is essentially the market cap, or value, divided by its annual revenue).

But start a services business today, in the tech industry, and you'll be lucky to get a value-to-earnings ratio of 2 from investors and VCs, or private buyers. The public market seems to be far more generous with revenue multiples for service firms than tech VCs.

So, now, why is that? What does the tech industry have against services companies?

The traditional answer has been that services companies are heavily reliant on specialists, and if those specialists left, the company wasn't worth as much. But it's not clear to me how this is any more true for, say, McKinsey or IBM than it is for Google, Groupon or Facebook. The other argument in the old days used to be that non-services companies were selling concrete goods, and had factories and the like, and even if a key person left, they could keep on selling. That makes sense, of course, though the transition of IBM and the hoped-for transitions of HP and Dell make me wonder if that logic hasn't been turned on its head. They still own factories, but their PE ratio goes up when they focus on consulting? And I suppose Facebook and Google have some physical property in the way of expensive data centers, but I hardly think that's what their value is based on.

Then, of course, there's the mythical algorithm—the belief that tech companies are somehow doing things in a more automated way, and make money with fewer people.  Never mind Google has some 20,000 people (with a PE ratio of around 20) and Groupon has over 10,000 and no profit.

Okay, okay, I keep harping on this, I know. What's the big deal? Tech companies are just awesome and doing cool shit and worth a lot of money and if they're overvalued, then what's the harm, right?

But these things have consequences. I love tech, I love the ability for it to disrupt so many industries. But the fact is that the valuations of tech companies, and the commensurate stock options that they can offer, divert employees from other industries. Because you can't offer really sweet stock options if there's no real chance your company's ever gonna break a revenue multiplier of 2. Believe me, I tried. This creates an economic incentive for talented employees to flock to the tech industry over other industries. What industries? Banking! Okay, that's probably for the better. Advertising! Oh no! Quelle horreur! Ha. Okay, but, what about health care? Green tech? Education? It can make a difference. Sure, if you have a high tech, dot com education, green tech or health care company, you can have a high multiple. But, then, I have yet to see education, green tech or health care be very disrupted by dot-com companies (though we are all, of course, keeping our fingers crossed.) But that is a topic for another day. Fact is, tech siphons good people away from lower-paying, important industries every bit as much as banking does.

Concretely, think about this the next time you need a kid to build your new iPhone app, and can't find one, because they are all working at tech startups. Why wouldn't they? If they choose the right one, they can make a payout ten times what they'd ever make building your app freelance. And if they choose the wrong one, they'll still make just as much as you'd pay them. I see this all the time. And it's directly tied to the tech industry's inexplicable, misplaced fetish for product companies over service companies.