I’m surprised no one is talking about a potential IM app from Facebook.  I’d bet a lot of money they’ll launch one soon - and it’s going to crush.  The buddy list is already in place.

The idea of a buddy grid that lets you access your friends’ web services via IM client is a very nice complement to the existing Facebook website.  It will do well. Just wait and see.

eBay plans to buy StumbleUpon according to Om, who asks if eBay might want to integrate StumbleUpon search-like technology into the Skype client. I think it’s the other way around. StumbleUpon is the distribution point.

A few points to consider:

- Browser toolbars are becoming an increasingly large source of search traffic for Google and for Yahoo!.

- They hold insanely good real estate from a UI perspective.

- People’s natural inclination is to search while browsing, and browse while searching. Searching from within a web browser is super fast and super gratifying. A desktop client doesn’t have a role in this tendency. Anyway you slice it, using a desktop client to launch a web page will always be a worse user experience.

- It’s a better strategy to integrate skype into the toolbar itself. This will help facilitate click-to-call while web browsing.

- eBay has grander consumer media ambitions beyond Skype, and securing toolbar real estate will be key to distributing and integrating other services (the other major portals all have mastered this, and eBay is definitely thinking big).

- Did I mention how freakin’ valuable the toolbar real estate is? The toolbar is the remote control of the web.

Sure eBay is getting an alternative search product, but I think more important than that, they’re securing a proven distribution point for all of their services.

Om Malik, Mike Arrington, and others have been harshing on Cisco’s recent acquisitions in the social networking space, and have implied that Cisco might want to be the next MySpace. They’re off the mark, for a few reasons.

First of all, Cisco’s acquiring technology assets (and software employees) on the cheap. It’s not buying consumer brands that it plans to extend. If Cisco wants to play in a new space, then it makes a large splash. So if Cisco bought Facebook, then you’d have a potential argument. But it didn’t. It spent next to nothing to buy enabling software. Compare this to its Scientific Atlanta purchase, and it’s not hard to see where the company’s priorities lie.

Second, Cisco’s Media Solutions Group is tasked with building relationships and selling all types of integrated services to media companies (both content owners and distributors). It’s not strange to think that they’d want access to an interactive feature set to drive discussions with these folks and to enable similar internal discussions…it’s certainly an improved form of dialogue.

Third, Cisco is definitely moving into the consumer space, but not to build a website (per se). Cisco has two grand ambitions in the near future: to enable internet delivery of video and to build a consumer electronics presence.

If and when internet-delivered video takes off, Cisco stands to reap massive massive rewards by selling new equipment to pretty much everyone in the distribution network chain. It will be a tremendous upgrade. Btw, this includes IPTV, movies on demand, and user-generated video. All of these will drive uptake for Cisco products. So Cisco has been making investments in folks like Akimbo to help move thing along. I expect them to get more aggressive and more acquisitive (if they don’t buy Tivo, they’ll do something similar). Anyways, to make a long story short, the core problem keeping this evolution from flourishing is the content owner’s concern regarding file-sharing (think ReplayTV, and now YouTube), and the end game for Cisco is to enable network providers (cable/telco/wireless) to build walled-garden type services that allow users to download video and share them within the confines of a defined and controllable social network. So the way I see it, Cisco should beef up its video-based social networking technology big-time, to provide network operators with an end-to-end solution for internet video delivery that can be supported by old school content companies. Why? Because even if the network operators can’t deliver on this promise, they’ll spend a ton of money trying.

Meanwhile, Cisco has not been quiet about its intentions to bulk up its CE presence, beginning (but only beginning) with Linksys. They’ve quietly networked DVD’s and other non-router devices to their product line, but Cisco knows the real money is in cracking the personal network that binds portable devices to devices in the home, like TV’s and PC’s. Remember the ballyhoo over “convergence” in the early 00’s? Working on broadband-related stuff at AOL Time Warner at the time, I certainly do (btw, don’t get me started). Well, back then there was an accepted worldview that the main batteground for the home was filled with the CE camp on one side (Sony) and the PC camp on the other (MSFT). But everyone knew Cisco wanted to play in this space somehow (it made too much sense for them not to).

So the c-word has been a dirty word ever since the bust, but the notion is emerging again, only this time things are a little different. Back then, the personal network was very much a silo concept - we assumed users wanted to access their personal or purchased stuff across their own devices. But today, the concept of personal networking has more directly embraced the concept of social networking - users demand sharing capabilities, and the user-generated craze has led to a bi-directional flow of content. So….if Cisco really wants to offer multiple devices in the home that allow for multimedia access and sharing, it will have to move up the stack and offer compelling web software and services that integrate seamlessly with its hardware systems, and those services will ultimately need to be social in scope. Apple has certainly killed any doubts that integrated hardware/software experiences are the future, and the leapfrog from today’s iPod to tomorrow’s will likely be based on social connectivity, not just personal connectivity.

Ultimately, Cisco’s social software game is just beginning. And don’t bet against them, cause they’re not dumb.

Richard MacManus has put forward a nice write-up on why startups must specialize to survive, but I have to disagree on his assessment that the long-term prospects favor specialists over generalists.

Long-term prospects favor market share incumbents, not niche providers.  Start-ups tend to specialize because they have to in order to gain any share, not because they should want to.  On nearly every measurable metric Walmart is orders of magnitude more successful than Staples, just as Google is orders of magnitude more successful than the entire set of niche vertical search plays who arguably serve their niches more effectively.  The trend is not away from those companies, it is towards them, and the challenge for us startups is how to break out and get into that camp.

So starting niche may be required, but ending there is not ideal.

GigaOM reports that Google Finance will be announcing an upgrade soon. Please tell me they’ve included a feature to automatically import Yahoo! Finance portfolios. Because if you can’t provide seamless switching costs, and a similar experience (plus more and better), then you ain’t getting the Yahooligans over. Because this demo ain’t about ajax.

OM also intimates that if Google Finance doesn’t turn things around quickly, it may get shuttered. Hmm, probably only after they’ve bought another large audience in Finance. Finance and Email are THE two core portal properties (excluding search of course). They absolutely can’t afford to give up on Finance as a vertical.

Update: Google did in fact announce an import feature.  Nice.  Gotta say, though, that Yahoo! Finance is still the leader.  Google should offer free real-time streaming quotes.  They need a bold offering to move customers, similar to what they did with Gmail (basically unlimited storage).

Yahoo! is getting torn up in the sphere this week, as Fred Wilson calls for a strategy of de-portalization (or whatever it should be called), and Richard Koman uses the *M* word (Media!) to describe the company.

The reports of Yahoo!’s demise are greatly exaggerated. The company’s model is not inherently flawed. And it’s not the like the company is in financial distress. Yahoo!’s just not executing quickly enough to match Google’s pace. Google has developed the most efficient advertising system on the planet, and Yahoo! is simply not able to catch up because it’s trying to ignite a system that it bought, not that it nurtured from birth.

This is not an identity crisis - this is operational underperformance. But cut Yahoo! some slack. It was not born a search company, and yet it’s making a decent run at it. The Overture acquisition was an brilliant strategic maneuver. We wouldn’t even be discussing Yahoo!’s future today if they didn’t identify and embrace the revolution of search. The problem is, you buy a big asset, all the smart people take off, and you’re ultimately left with a big boat that’s hard to move. The fact that Yahoo! hasn’t been able to unleash a meaningful response to AdSense is just so profoundly telling to me. There isn’t a debate as to whether Yahoo! should improve its ad matching. This isn’t a strategic dilemma. This is just disappointing execution.

Just to put things in context, though, I’d say Yahoo! has been far, far more nimble (and self-aware) than its counterparts at MSN and AOL.

And btw, GOOGLE IS A *MEDIA* COMPANY. AND A *PORTAL*. They will be buying up more audience like crazy. And why shouldn’t they? They can monetize us more efficiently than anyone.