Startups and disruptors (yes, Google) seek to rethink voice calling.

Andy Jagoe is zigging while the rest of the mobile world zags. Let everyone else chase the next hot iPhone app. He’s betting the next big thing is a twist on the same old thing: making calls.

He may be right. Jagoe, CEO and co-founder of startup 3jam, is one of several Silicon Valley dreamers who thinks he can reinvent the phone call. And really, let’s admit it’s in need of some Internet-style innovation. We’re in 2009, for crying out loud. Why isn’t call forwarding as easy as e-mail forwarding? Why don’t your voicemails live in a nifty little online inbox?

Remember web 2.0? It’s time for phone 2.0.

And it’s arriving. The most prominent example is Google's (GOOG) Google Voice, an invitation-only service that offers a free Internet telephone number that forwards calls wherever its owner chooses and delivers features like visual voicemail, call screening and transcription.

Mountain View-based Ditech Networks (DITC) has a similar invitation-only offering called toktok. San Francisco-based 3jam, which is open to the public and starts at $5 per month, adds tricks like convenient group text messaging.

Voice apps are coming

Not everyone is a fan. Apple (AAPL) caused a stir last month when it barred Google Voice software from the iPhone App Store, saying it duplicates features the handset already provides. But Jagoe thinks the services will prevail eventually. “It's going to be hard,” he says, “to prevent this kind of functionality from appearing on a phone.”

Indeed, people who use these services swear by them, and in Silicon Valley these days it’s a growing cohort. (At a mobile technology panel this month at Microsoft’s (MSFT) Mountain View campus, Google Voice users outnumbered Amazon (AMZN) Kindle users five to one.) The reason is simple: phone 2.0 is liberating phone calls the same way webmail liberated e-mail a decade ago. Now you can keep your phone number, your call history and your voicemails no matter how many times you move, change jobs or switch carriers.

Over a burger at a San Francisco lunch spot, Jagoe explains why this revolution in phone calls is happening now. First, it recently became more affordable for startups like 3jam to forward calls to landlines. Second, Neustar (NSR), a company that enables text messaging, this year gave Internet-based phone numbers a boost by allowing them to send and receive text messages. And third, mobile consumers increasingly crave better options for managing their conversations and staying productive.

Of course, even if the masses are ready for a phone call revolution, there’s no guarantee they’ll buy it from 3jam. If Google Voice opens up its free service to the general public soon, it will get a lot tougher for Jagoe to sell monthly plans. And then there’s the threat from the phone giants: Glenn Lurie, president of Emerging Devices at AT&T (T), tells Fortune that he’s keeping an eye on Internet-based voice services. Clearly carriers would prefer to be the ones selling those kinds of features.

Regardless, Jagoe has a couple of things going for him. 3jam recently finalized a deal with Peek, maker of the eponymous e-mail device, where 3jam will offer phone numbers to Peek users. With those numbers, users soon will be able to more reliably send texts as well as e-mails, and even get voicemail transcripts.

Perhaps more important, Jagoe is running a lean operation, having recently cut 3jam’s full-time payroll from 25 people to 5. He says the company is on track to be cash flow positive by the end of the year, which should help him to avoid the fate of VoIP peers like Yoomba and Jangl that burned through cash before they could figure out a long-term business model.

In the end, the business part has to work. Even in the phone 2.0 world, if you can’t pay the bills, you get disconnected.

Box.net CEO Aaron Levie. Photo: Box.net.

Cost-conscious businesses are looking online for IT

By Aaron Levie, CEO and co-founder, Box.net

Something is clearly happening in the cloud. Two major juggernauts – the government and Microsoft – have both recently made cloud-related announcements. The government (hardly ever considered an early adopter) is planning to launch a cloud computing ‘Storefront’ to ease the federal deployment of these online services, with the ultimate goal of streamlining operations and saving money. Microsoft has finally detailed its plans to launch a web-based version of Office, albeit not until next year.

Check the press, and article after article mentions this trend: IT departments are increasingly relying on web-based shared computing and storage, rather than owning and managing the hardware and software themselves. What is pushing this forward? Let's take a look.

It starts with the bottom line. In a recession, every business wants to reduce its cost of operations. A quick review of the total cost of ownership for traditional technology includes IT personnel, data centers, servers, support licenses, and professional services – and that’s before you add in the actual cost of the software. The current economic crisis is causing businesses of all sizes and competencies to rethink where they want to invest their human and financial capital, and in most cases it's not in managing a costly IT infrastructure.

The key advantage of web-based solution providers is that they tap into true economies of scale by shouldering the infrastructure burden themselves, running technology efficiently, and passing the savings to their customers. For example, Salesforce.com manages thousands of companies' backend sales systems and requires far fewer resources than if all its customers were to host the solution themselves.

Another driver of the cloud trend is an increasingly mobile, global workforce. The culture of business has changed as laptops, wifi and web-connected cell phones have introduced more opportunities for unique work-life balance. As teams become increasingly distributed, technology must continue to empower efficiency even while spread across multiple time zones and languages.

Cloud-based services are in the best position to enable workers to stay connected at all times on day one. Whether it's through messaging, conferencing, collaboration or customer relations, businesses on varying networks can now seamlessly interact as if they were in the same building.

Of course, there are problems that threaten to slow the adoption of cloud services. At the top of the list are security and data portability.

As we saw with the Twitter-hacking fiasco, cloud solutions are only as strong as your password, and combining this with the weaker data management policies of consumer-focused web services can cause a nightmare scenario. Unlike the on-premise model of virtual private networks and tighter application privileges and permissions, users can generally register and access cloud services with a single password and email address (which is often considered a big benefit as it's easy to get started). However, these flexibilities create problems of unwieldy proportions for an IT person tasked with making sure users' data are safe and secure. To solve this, we need more centrally managed authentication systems (think LDAP for the web), application providers to provide highly-secure authentication practices on their own, and deep visibility and control into who and when information is accessed.

In addition, cloud services often lack complete data portability. Yes, there are many useful APIs that allow us to mash up various services together, but there's a clear absence of simple and obvious ways for applications to communicate uniformly and move data back and forth. When companies can securely and seamlessly move their cloud file system from one provider to another, or between email applications, or even just share data between two online word processors, we'll start to see full enterprise cloud adoption.

The good news is that fixes for these (and other) issues aren’t far off. Businesses have been building their own solutions, startups are popping up to offer better security, and many cloud companies are building this additional layer of protection themselves. The timer has been set, and it won’t be long until the whole concept of the ‘cloud’ will become dated as people will wonder how they ever did without it.

Aaron Levie is the CEO and co-founder of Box.net, a Palo Alto, CA-based provider of online collaboration tools.

Yahoo CEO Carol Bartz said two months ago that Microsoft would have to cough up “boatloads of money” to get Yahoo’s search business. In the end, it took nothing of the sort.

Apparently, all Microsoft (MSFT) CEO Steve Ballmer had to do was let Yahoo (YHOO) take the lead in selling search to premium advertisers, and promise to supply Microsoft’s Bing search technology on the cheap. Under the terms of a 10-year deal announced Wednesday, the software giant will take a slim 12% cut of the search revenue Yahoo makes from its huge network of sites.

The modest pact marks the end of a Silicon Valley soap opera that began early last year when Microsoft CEO Steve Ballmer launched an unsolicited $45 billion bid for all of Yahoo in an effort to challenge Google's (GOOG) search dominance. Yahoo’s board criticized the offer as too low, then watched the company’s value tumble to less than half what Microsoft put on the table. And now, Microsoft has what it wanted all along – the scale to take on Google – and at a fraction of the price.

Any way you slice it, Ballmer walks away with the better end of this deal. For no money down, he triples his market share, eliminates a search competitor, and scores Yahoo’s endorsement for Microsoft’s long-suffering efforts online. What does Yahoo get? It gets to preserve its revenue, bow out of an expensive search war, and free up time and cash to hunt for the next big thing. Or, if you subscribe to the harsher view that Web entrepreneur Jason Calacanis blogged on Wednesday: “The once-proud warrior of the Internet space laid down its sword, knelt at the feet of Microsoft and gutted itself today.” Ouch.

Wall Street wasn’t impressed with Yahoo’s dealmaking chops, either. Some analysts, including SG Cowen’s Sandeep Aggarwal, expected an upfront payment as high as $2 billion. Others wanted to see savings flow to the bottom line more quickly than the 24-month timeframe Yahoo offered. Investors voiced their disappointment Wednesday by sending the stock skidding 12%, down to $15.14. The punishment continued early Thursday, with the stock starting the day off more than 4%.  (That’s still well above the year’s lows, near $11 in January.)

Bartz and Ballmer are making no apologies. In an interview with Fortune shortly after they announced the deal, the two CEOs seemed surprised at the Street’s ho-hum response. “What we’ve got here is virtually all of our revenue at no cost,” Bartz said of the outsourcing arrangement. Ballmer chimed in: “I’ve gotta say, I’m surprised. If you said to a man from Mars who just arrived: Somebody gets 88% of their revenue, close to 100% of gross margin, and they’re going to get rid of R&D operating expense – it sounds like a lot of money to Yahoo and to Microsoft. So, the man from Mars would think this is a pretty good deal.”

While a Martian would love this deal because it’s about Yahoo saving money, Yahoo’s Earthling investors are justifiably more interested in how the company will make more money. Those investors will be happy to know that dealmakers in the advertising community expect that more search cash will eventually flow to Yahoo and Microsoft, so long as they can quickly put out a good product after getting regulators to bless the deal. (The companies hope to close the deal in early 2010.) Rob Norman, CEO of WPP’s ad buying giant GroupM, said the scale of a combined Microsoft and Yahoo could lure more advertiser dollars away from Google. And David Kenny, managing partner of Publicis Groupe’s VivaKi, said Bartz is “really focused, and she’s making the right calls about which battles can they fight alone, and which ones they’ll need to leave to others.”

Perhaps. But unless Yahoo starts serving up some mind-blowing new products, it risks becoming a dowdy media company that outsources all the most interesting battles to bigger players. That’s honest work, but it's tough to make boatloads of money doing it.

Jon Fortt of Fortune, Jon Swartz of USA Today and Scott McGrew of NBC chat with Mozilla CEO John Lilly about the future of Firefox. (AAPL) (GOOG) (MSFT)

The last version of Office didn't include a free online version. The next one will. Image: Microsoft

It’s too early to say Microsoft has checkmated Google in online documents – the latest version of Office hasn’t shipped yet. But the sleeping giant in Redmond has clearly woken up to the Internet threat.

Get this: Microsoft – the king of paid software – will announce today that it is going to give a version of Office away for free online. Both the online and desktop versions are scheduled to arrive in the first half of next year. Yes, you read that right. The latest version of its ubiquitous productivity software, dubbed Office 2010, will come as both a piece of software you can buy for your computer, and as a service you can access in your browser. [UPDATE: Microsoft says it will support the Firefox and Safari browsers as well as IE.]

For free. From Microsoft.

One could argue that the software giant is late to the giveaway party. Folks like Google, Zoho and SlideShare have been offering free equivalents to Word, Excel and PowerPoint for years. Unlike those companies however, Microsoft already has a very profitable $20 billion business selling desktop versions of its Office software. It would have been foolish to jump into the free game too hastily and watch that business evaporate overnight.

And that’s what makes this bold move to the web either the dumbest thing the company has ever done, or a stroke of genius. If Microsoft gets this wrong, it will cannibalize its own Office business, and investors will howl. If it gets this right, Microsoft will crush Google, Zoho, and all the other rivals who are nibbling away at Office’s dominance.My hunch is that this is a stroke of genius from Microsoft. Why? Earlier this year when I talked to Chris Capossela, the executive who manages Office, he had clearly thought hard about how to do this right.

Capossela told me that Microsoft has studied it closely, and Office Web Applications, the free, ad-supported version of Word, Excel and PowerPoint, will probably appeal to tightwads who weren’t going to buy a copy of Office anyway. This way, rather than force those folks into Google’s arms, Microsoft can hook them into its online world and tempt them with its latest technology.

And Microsoft can also tempt them to upgrade. Office Web Applications will work better if you actually purchase Office 2010. Users with the latest Office software will be able to more easily share documents and keep each other’s changes in sync. Add in the fact that the paid version of Office will come with a brilliant feature that lets Office buyers broadcast their PowerPoint presentations over the web (like Cisco’s WebEx), and the Microsoft’s online giveaway looks less like an oops, and more like an upsell.

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Yahoo CEO Carol Bartz says she'll sell, but there's more to it than that. Photo: Yahoo

Yahoo CEO Carol Bartz, not one for mincing words, took the stage at the D7 conference in Carlsbad, Calif. on Wednesday and said yes, she is willing to sell Yahoo's (YHOO) search business or all of Yahoo – for "boatloads" or "big boatloads" of money, respectively.

As always, the tech press ate this up.  TechCrunch's Erick Schonfeld, a smart guy and a former colleague, called it "a softening of her public stance," since when she arrived in January she said Yahoo was not for sale. While he's technically right – she even said she had softened her position – I see something different in her comments.

I say Bartz still doesn't plan on selling Yahoo, or even the search business. Why? In reporting on Bartz for a recent feature in Fortune, I got a sense of how pragmatic she is. When Bartz arrived in January, she knew she had to announce that she was there to run the company, not to break it up and sell it, as a way of defining Wall Street's expectations. But Bartz is also a veteran executive who knows how this game is played. The truth is that in a well-managed public company, shareholders expect that everything will be for sale at a price. So her statement is probably more a statement of her philosophy than a shift in perspective.

Then there's the matter of how she phrased this. "Boatloads" of money? Come on. That's not the language of someone who's looking to make a deal during a global economic bust.

Even though Microsoft (MSFT), the only likely buyer of anything Yahoo's selling, is a very wealthy company by any standard, it's in no position to blithely spend boatloads of money on anything these days. When Microsoft CEO Steve Ballmer first offered a $45 billion boatload of money for Yahoo many moons ago, he planned to take on debt and mortgage his future profits to finance the deal. Today, with Windows and Office sales struggling in a recession, Microsoft is slashing jobs to boost a sagging stock price and praying that its upcoming Windows 7 operating system gives the company a boost. He's looking to do a search deal with Yahoo that makes him look thrifty, not generous.

If you have any lingering doubts left about Bartz's intentions, look at the conditions she set on any sale of Yahoo's search business. Not only would she require boatloads of money, but also continuing access to all search-related data and the right technology. In other words she wants to "sell" it, but maintain access to the most valuable parts.

This is a great idea for more than just search, actually. It works just as well for real estate. In fact, I would like to sell my home for boatloads of money, so long as the buyer does some renovations and lets me continue to live in it. Any takers? (GOOG)

A sign of things to come? In its Atlanta stores, AT&T is selling the Acer Aspire One for $49 with a 2-year wireless data plan and DSL signup. Image: Acer

PC retail is in rough shape again, and it's about to get rougher.

Evidence of hardship is everywhere. Hewett-Packard (HPQ), the world's largest computer maker, says it's selling about the same number of computers as a year ago, but getting a lot less money for them – sales dropped 19% in the most recent quarter. When Apple (AAPL) reports earnings in July, analysts expect Mac sales to be off as well. And while Intel (INTC) says it's hopeful that its chip sales are bottoming out, chip revenues are lower than they have been in years.

Why are things so bad? The easy answer is that PCs cost hundreds of dollars, and consumers don't have a lot of extra cash floating around these days. Unless your computer has been struck by lightning and given up the ghost, chances are you're holding off on purchasing a new one. One tech industry executive recently confided to me that it's not just U.S. consumers thinking this way – the entire global PC market headed off a cliff at roughly the same time late last year, forcing computer makers to cut workers and rethink their strategies.

In the midst of all that, wireless carriers are poised to shake up PC retail. AT&T (T) announced this week that beginning this summer, it will begin selling small, low-cost Windows XP netbooks from Acer, Dell (DELL), LG and Lenovo in all 2,200 of its U.S. stores. (In case you're counting, that's about twice as many locations as Best Buy (BBY) has.) Rival Verizon (VZ) has already begun selling an HP netbook.

Why buy a computer from a phone company? Price, of course. Sign a two-year wireless data contract with AT&T, for example, and you get $50 knocked off the price of a netbook. Get home DSL service too and save $100. In Atlanta, where AT&T has been testing the deals, the cheapest Acer netbook sells for $49 after rebates.

Sales there have been brisk enough that AT&T execs are confident that cheap laptops will lure customers nationwide the same way cheap phones have in the past. And the deals will only get better: It's easy to imagine that in a year or two, customers who sign up for two years of voice and data service (at a cost north of $100 per month) will leave a store with both a "free" phone and a "free" computer. Exciting, huh?

While this is great news for netbook-loving consumers, it's a downright scary prospect for PC makers. If the phone business is any guide, carriers will fuel demand for the cheapest and least profitable computers out there, and put pressure on traditional PC stores to sell low-price PCs. And that will force tech companies to work harder to lure shoppers toward more powerful (and more expensive) hardware.

That's not an impossible upsell, as the iPhone and BlackBerry (RIMM) have proven in the phone business. But it's yet another challenge the PC gang doesn't exactly need right now.

Cisco CEO John Chambers doesn't just talk a good game about telepresence, the videoconferencing technology that creates the illusion you're in a room with someone who's actually thousands of miles away. He's planning to install his company's high-end system in his Silicon Valley home, provided he and his wife can agree on a spot for it. "I figured we could convert one of the kids' old bedrooms," since they've grown up and left the house," he says. "She told me, 'You do that and you'll be sleeping in there.'"

Though he's not done negotiating the location, one thing that Chambers doesn't have to worry about is cost. ­As longtime chief at the networking giant, he can surely afford the installation, which can easily run north of $150,000 per room.

But can his customers? Even as Chambers and rivals such as Hewlett-Packard (HPQ, Fortune 500), Polycom (PLCM) and Tandberg tout telepresence as the perfect tech tool to reduce travel costs and boost productivity, observers have their doubts. Sure, telepresence enables meetings on three or more huge screens, in high definition with pristine audio quality. (CSCO) (HPQ) (PLCM) (T)

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