Users are fleeing pioneering media social readers on Facebook. Here’s why — and what publishers can do to save themselves.

By Alex Konrad, reporter

The Washington Post’s social reader.

FORTUNE — So-called social readers — Facebook apps that facilitate, well, reading — are based on a simple premise: blending news and social media boosts readership. Like a twenty-first century version of the loud-mouthed newsy on the corner, readers from the likes of The Guardian and The Washington Post allow users to peruse articles while sharing their literary habits with friends and contacts on Facebook. That’s all well and good when you’re reading a sober, in-depth analysis of super-PAC financing, for instance. But broadcasting that diversionary gallery of Lindsay Lohan’s evolving locks? Not so much.

There lies the difficulty. As a category, social readers hit a rough patch last week. On Monday, Forbes pointed readers to a chart from AppData.com that suggested a startling drop-off in The Washington Post Social Reader’s users. BuzzFeed‘s John Herrman went further, pointing to soft numbers for two other popular apps. Herrman’s article set off a flurry of reader comments predicting doom for short-lived social readers.

Such apps, most of which are less than a year old, face serious problems. For one, many have skewed from hard news to tabloid fare. That is a step backward for media sharing, says Buzzfeed founder and CEO Jonah Peretti. “These aren’t the things people wanted to share in their lives, but what they couldn’t resist clicking,” says Peretti, who was also one of the founders of The Huffington Post. What’s more, some social readers employ questionable methods to garner more clicks, tantalizing users with suggestive headlines but forcing them to broadcast what they’re reading to friends before they can actually see the story. Patrick Salyer, chief executive of Gigya, a firm that provides businesses with social networking tools, notes that such tactics are a major turn-off.

MORE: Google romances the app developer

In that light, The Washington Post‘s loss of almost half its daily users and over 5 million monthly users in the last week, according to tracking by AppData.com, isn’t quite so surprising. The Post did not respond to requests for comment, but tweeted this explanation. Facebook, meanwhile, argued that changes to its newsfeed feature had created a temporary dip in traffic. Still, it’s too early to send social readers to the graveyard. Here are two ways they might yet save themselves:

1. Clearer controls
Gigya’s Salyer says that social readers must appeal to enthusiastic users who will share most or all of their content alongside more private individuals who would prefer to curate what they share. Salyer points to The Onion which makes it clear what users are opting into on Facebook. Spotify, a streaming music service with deep Facebook ties, is another standout example.

Rob Grady, COO of social media company Wetpaint, believes social readers can match up better with users’ tastes by specializing more — news for the Yankees or Red Sox, say, instead of all baseball — with controls allowing users to share articles one at a time. The Wall Street Journal‘s reader, for example, has yet to acquire a major following but allows users to “unread” articles so they remain private.

2. Better context
Even though Buzzfeed gets much of its traffic from high-frequency social media users, Peretti hasn’t been impressed with social readers. Peretti’s vision of the social reader represents more of a hybrid of the individual “share” and “recommend” features. He prefers new “reaction” buttons. Click one of the site’s headlines and you can “share” the article on Facebook or provide a contextual reaction: the article “Kris Humphries Knows He’s A Douchebag,” for example, might be deemed “Trashy” or a “Fail,” sharing the story on Facebook — but priming friends with a reaction to the story.

Gigya is also working to improve the “like” button for its clients. With NCAA March Madness, for example, Gigya provided social buttons for each game page on the NCAA’s official website. “Users could categorize an event on a scale from boring to instant classic and also predict a winner, then see how their votes compared to others. Clicking the “classic” button prompted one to shared the story on social media, only with something a user actually cared about, says Gigya senior marketing manager Victor White. “As a business, you want to share as much as possible,” Salyer explains. “It’s Facebook’s job to make sure you get the best experience in your Newsfeed, so let them handle that curation.”

MORE: Baseball’s new price tag

There is likely still time for social readers to pull out of their downward spiral. Operating on a social platform with its own periodic redesigns, it seems the worst thing readers can do is failing to adapt at all.

Filed under: Contributors

The latest “confirmation” that Apple is building a TV set turns out to be another soufflé

Via Techmeme

FORTUNE — It is perhaps a measure of how badly broken today’s commercial TV viewing experience is — the cookie-cutter sitcoms, the ridiculous reality shows, the ever-shifting channel line-ups, the relentless, merciless commercial breaks — that the tech press is so desperate to believe even the slimmest rumor that Apple (AAPL) is getting ready to solve all that by building its own television set.

Take, for example, last week’s report that Hon Hai chairman Terry Gou announced at a press conference in Shanghai that his Foxconn subsidiary was “making preparations for iTV.”

By Friday the report had spawned dozens of headlines. A sample:

• Gizmodo: Apple television set confirmed by Foxconn boss
• The Mac Observer: Hon Hai exec says Apple television coming
• Forbes: Foxconn gears up for Apple’s iTV
• MacNewsWorld: iTV: Not if but what

What none of these reporters mentioned (or apparently bothered to consider) is that Gou — whose factories assemble 40% of the world’s electronic devices — is one of the industry’s most secretive executives. He is privy to the future product plans of the most valuable electronics brands — not just Apple, but also Sony (SNE), Microsoft (MSFT), Hewlett-Packard (HPQ) and the rest. He is trusted by his business partners because he never leaks their secrets.

Terry Gou. Photo via M.I.C. Gadget

Given how jealously Apple guards its own secrets, and how relentlessly it pursues those who spill them, what are the chances that Gou would say anything — ever — about an unannounced Apple product, real or imagined?

I’d say, nil.

So what was the source for this latest iTV story?

It was single item in China Daily — an English-language newspaper based in Beijing. The dateline is Shanghai. The byline is Gao Changxin. The headline reads: “Foxconn plans renewed shift into distribution.”

After 15 paragraphs about Gou’s remarks at the groundbreaking for Hon Hai’s new Shanghai headquarters and his company’s plans to expand distribution in mainland China, the China Daily story tosses in — almost as an afterthought — this sentence:

“Gou said Foxconn is making preparations for iTV, Apple Inc’s rumored upcoming high-definition television, although development or manufacturing has yet to begin.”

Talk about burying the lead!

If Gou really said this, it would be — for all the reasons stated above — very big news.

So how is it that none of the other reporters covering the event heard it? Not Reuters‘ John Ruwitch. Not Bloomberg‘s Tim Culpin. Not the AP‘s Elaine Kurtenbach.

It is possible that the China Daily reporter misheard or misunderstood Gou’s remarks? Or that his report was mistranslated? Or that a desk editor or rewrite person mangled it?

We’ve asked Gao Changxin to review his notes and tell us exactly what Gou said. He has yet to respond to our several requests.

For now, the Terry Gou iTV story remains what one of my editors at Time Magazine used to call “a soufflé.” Kick it a few times and it collapses.

Meanwhile the tech press has moved on to the latest “confirmation” that Apple is getting into the TV-set business: A rumor that the company is about to buy Loewe, a German distributor of slim HDTVs and integrated, Apple-friendly audio equipment. A Loewe spokesperson told a German blog Sunday that there was “absolutely nothing to” the rumor, but that didn’t stop the tech press from piling onto the story, or Loewe’s stock from jumping 30% Monday morning on the Frankfurt exchange.

For our take on the whole iTV phenomenon, see Tell me again: Why do we think Apple will build a TV set?

Update: A Foxconn spokesperson contacted The Next Web with the following statement:

In remarks at a media briefing during the groundbreaking of Foxconn’s new China headquarters in Shanghai on May 10, Terry Gou, Foxconn’s Chief Executive Officer, made it very clear that he would neither confirm nor speculate about Foxconn’s involvement in the production of any product for any customer because Foxconn’s policy is not to comment on any customers or their products.

At no time did he confirm that Foxconn was in development or manufacturing stages for any product for any of its customers.  He did say that  Foxconn is always prepared to meet the manufacturing needs of customers should they determine that they wish to work with Foxconn in the production of any of their products.   Any reports that Foxconn confirmed that it is preparing to produce a specific product for any customer are not accurate.

Filed under: Apple 2.0

After 5 years with Google’s maps, Apple is reportedly set to unveil its own

Lower Manhattan via C3 Technologies. Click to see video.

FORTUNE — Big news in iOS mapping this week.

Mark Gurman, 9to5Mac’s teen blogging phenom, reported Friday that Apple (AAPL) is prepared to replace the iPhone and iPad’s Map app — built on Google’s (GOOG) back-end mapping data — with something entirely its own.

Its unveiling, according to AllThingsD‘s John Paczkowski, will be one of the highlights of the WWDC keynote on June 11.

“Here’s the thing,” Daring Fireball‘s John Gruber weighed in. “Apple’s homegrown mapping data has to be great. Mapping is an essential phone feature. It’s one of those handful of features that almost everyone with an iPhone uses, and often relies upon.”

So what will the new maps look like?

The assumption is that Apple will be using the talent and technology it acquired when it snapped up three mapping companies in the space of three years: Placebase in 2009, Poly9 in 2010, and C3 Technologies in 2011.

That last acquisition — a spinoff of Swedish jet- and automobile-maker SAAB — is particularly intriguing, given what its military-derived technology can do. There are several demonstrations of C3′s 3D-flythroughs on YouTube. We’ve linked to one in the image above (click it to view the video), and copied several more below the fold.

As Gruber points out, this is a high-pressure switch for Apple:

“Regressions will not be acceptable. The purported whiz-bang 3D view stuff might be great, but users are going to have pitchforks and torches in hand if practical stuff like driving and walking directions are less accurate than they were with Google’s data.”

Those whiz-bang 3D demos:

Hoover Dam:

Oslo:

London:

Filed under: Apple 2.0

Apple accuses Samsung of taking a slash-and-burn approach to evidence preservation

Image: trancessive.com

FORTUNE — Samsung’s failure to produce evidence in a timely manner is emerging as a pivotal issue in the California federal court where Apple (AAPL) has sued the Korean smartphone manufacturer for allegedly infringing Apple’s iPhone patents.

Last week, FOSS Patents‘ Florian Mueller reported that the judge in the case had ordered harsh “preclusive sanctions” against Samsung for what Mueller described as “a particularly inexcusable violation” of a court order to deliver source code.

As Mueller noted, “This is not the first time that Samsung is found guilty of non-compliance with a discovery order.”

Now NetworkWorld‘s Yoni Heisler has taken a deeper look at Samsung’s record of non-compliance. As he reported Friday:

“I pored over Apple’s motion along with Samsung’s subsequent motion in opposition and suffice it to say, Samsung likes to play fast and loose with its legal obligations. Specifically, Samsung has a policy whereby custodian emails are automatically deleted every two weeks, even in instances where the company is required by law to preserve any and all emails that might reasonably be pertinent to a foreseeable or ongoing lawsuit.”

In its motion, Apple accused Samsung of destroying “vast quantities of relevant evidence in blatant disregard of its duty to preserve all such evidence,” something it charges Samsung did in a similar case before the International Trade Commission.

It also cited other instances of wholesale document destruction:

• In a lawsuit involving Samsung and Mosaid Tecnologies it was discovered that Samsung had an ongoing policy of automatically deleting emails from custodian computers every two weeks, even when they were required to keep e-mail evidence relevant to an ongoing legal dispute.
• While being investigated by Korea’s Fair Trade Commission (KFTC), Samsung allegedly obstructed justice by purposefully destroying a large amount of data during the course of a price fixing investigation.
• According to a recent KFTC press release, the commission found that high level Samsung executives instructed company security personnel to physically block KFTC officials from entering the facility while “Samsung employees from the department subject to the investigation destroyed relevant data and replaced the computers of those employees who were subject to investigation.”

Apple has asked the judge to instruct the jury:

1. Samsung had a duty to preserve relevant evidence, failed to do so, and acted in bad faith in failing to meet its legal duty.

2. The jury may infer that documents Samsung failed to produce would have been advantageous to Apple’s position.

3. If the jury finds Samsung liable for infringement, they may presume that the infringement was ”intentional, willful, without regard to Apple’s rights.”

The case is scheduled to go to trial on July 30.

Filed under: Apple 2.0

After a tough end of 2011, the streaming media company is seeing positive signs — however modest.

FORTUNE — If there is good news for Netflix (NFLX) in a new survey measuring consumer satisfaction, it’s that people aren’t more annoyed with the company than they were last year. In fact, according to the annual Top 100 E-Tail Satisfaction Index put together by the analytics outfit Forsee, customers are actually slightly happier with Netflix than they were at the end of last year.

Of course, Netflix back then seemed to be doing all it could to alienate its customers, as CEO Reed Hastings a few months earlier clumsily dealt with a price increase and a decision — soon reversed in the face of customer outrage — to split the company’s DVD rental business off from its streaming service. A year ago, Netflix received a score of 85 — pretty high. By December, it had sunk to 79. Now it has ticked back up to 81.

MORE: Report: Americans still glued to their TVs

“Despite the increase, Netflix is still obviously paying the price of its PR fiasco last year and it is nowhere near ts all-time high score of 87 two years ago,” writes Larry Freed, Forsee’s president and CEO.” Once the darling of the e-commerce world in terms of customer
satisfaction, Netflix clearly has a lot more ground to make up. What remains to be seen is whether this small increase of two points is the result of successful efforts to satisfy customers, or whether so many customers have jumped ship that only the most satisfied remain. Only time will tell.”

Topping the list was Amazon (AMZN), with a score of 89. Apple’s (AAPL) 85 was a big improvement over the 80 it scored last year. The list of online retailers that have improved the most since they were first scored (this is the eighth annual survey) was dominated by traditional bricks-and-mortar chains such as Home Depot (HD), Costco (COST), and Kohl’s (KSS).

Filed under: Fastest-Growing Companies

How does a hotel chain make itself cool to consumers? DoubleTree figured that pairing a Twitter hashtag with warm cookies and an outdoor tent would help. Did it?

By Daniel Roberts, reporter

Photo courtesy of Ketchum.

FORTUNE — “Freeeee cookie!” squeals a pedestrian, to no one in particular, after receiving one from a woman in a green DoubleTree t-shirt. The yelp-inducing giveaways in New York City’s Flatiron Plaza were part of the hotel chain’s so-called “little things project,” an outdoor marketing event this week involving a large tent, iPads, magnetic speech bubbles, and, of course, the cookies.

Hilton acquired DoubleTree — Marriott and Sheraton are among its main competitors — in 1999. But just a year ago the chain underwent a rebranding process, including a new logo and longer name: DoubleTree by Hilton. John Greenleaf, vice president of global brand marketing, claims that awareness of DoubleTree has doubled since the rebranding took place. DoubleTree opened 40 new hotels globally in 2011 and plans to open over 50 in 2012. (Hilton is owned by private equity giant Blackstone.)

The cookies, meanwhile, have been a staple of checking into a DoubleTree since the 1980s. The company is pushing to remind travelers that its staff gives out a warm cookie at check-in. “The cookies are just part of what we’re doing, bringing the return of the human touch to travel,” Greenleaf says.

A year ago, DoubleTree drove a food truck around the country, delivering free treats to celebrate the 25-year anniversary of its chocolate chip cookie. This time, an outdoor tent event kicked off in Manhattan but will continue across the country until November. The new campaign is centered around technology and social media, though it still has wheels. A Mini Cooper “swarm car” will deliver the “little thing” fans tweet to them. “We’re trying to take it more from just a street event to an integrated marketing effort,” Greenleaf explains.

MORE: The hip-hop economy goes free trade

It was with some trepidation I approached the tent. Under the forest-like canvas bubble was: a check-in desk where you receive your cookie and $25 gift card toward a DoubleTree stay, lounge area, counter with iPads on which people can enter a contest, and in the middle of it all, something the company is calling the “tell-me tree.” Suspended in the tree, a small TV displays tweets using the #littlethings hashtag. There was also free wi-fi inside the tent.

A greeter explained, “We’re asking people to share with us the little things they like when they’re traveling!” I pointed out, “Well, you mean when I’m staying at a hotel.” She said, “No, anything relating to travel.” I played devil’s advocate: “But what if my little thing involves flying? You can’t help with that.” “Well,” she said, a bit aggrieved, “We can, uhm, do our best.”

I wrote down “I’d like less turbulence on flights.” She encouraged me to stick the magnetic speech bubble onto the side of the counter, which indeed was covered in responses: iPhone charger in the room, greet me with a smile, cold water bottle waiting. Carlisle Campbell, from PR-firm Ketchum, exclaimed: “People are loving this, and the answers have been everything from a softer pillow to free wi-fi to a hot flight attendant.”

Of course, your hotel can’t offer you a “hot flight attendant” because, well, it’s not an airline. What it can offer you is free wi-fi, but DoubleTree, for now, does not: it’s free in the lobby, in public spaces, and to its Honors club members, but not in rooms. After this whirlwind tour, with the vast majority of answers (both in-person and on Twitter) being requests for wi-fi, is it likely DoubleTree will begin offering it free in all rooms? Campbell would only say, “After the tour, we will definitely be assessing what people want and, perhaps, making changes.”

MORE: Turning a profit on the “toughest event on the planet”

To be fair, the point of a bonanza like this isn’t really to improve the hotels, but to announce to people that they exist. That part worked on Jakob Skjold-Jorgensen, 26, a tourist visiting New York from Denmark with his girlfriend. “Titte!” he yelled to her after ducking inside the tent, “Chocolate chip cookie!” Jakob guessed, “They’re probably trying to fetch new customers. The cookie is good.”

A cookie is indeed good, but it’s no guarantee it will lead someone to think, when they next book a trip, ‘Ah, I should stay at a DoubleTree, they have those nice cookies.” But maybe. And the $25 gift card is a more concrete enticement. 10,000 cookies prepared for the day were almost all gone by quitting time at 5 p.m. (Some 200 more were baked for delivery to the local Ronald McDonald House last night, which was the nearest DoubleTree hotel’s local charity of choice.)

In Who Cares Wins, a book about social media and corporate responsibility, Havas CEO David Jones posits that in the new marketing world of “radical transparency,” companies should remember that, “attention can no longer be bought. It must be earned.” Certainly on Wednesday DoubleTree earned the attention of pedestrians in the crowded Flatiron district. Michael Hu, visiting from Chicago, said, “This thing looked so weird I had to come check it out.”

But did it gamer attention on Twitter, the engine fueling this entire effort? Throughout the day, there were very few organic tweets about the #littlethings campaign that did not come from DoubleTree’s account or from PR people associated with the effort. In addition, #littlethings is a rather common hashtag across Twitter, used by people to express anything from how their day went to petty aggravations.

MORE: Leigh Steinberg: They showed him the money

And the “swarm car” didn’t have many deliveries to make, because it didn’t get many requests; it visited only three places. One was Twitter’s New York offices, another a woman from B&H Photo who requested banana bread pudding, and the third was the company FlightPath, where Denise de Castro’s tweet request was a big hit with hungry coworkers. “I didn’t know they were going to come in with a camera crew, though,” she says. “I don’t think it would make me more likely to stay at DoubleTree, because I usually go to higher-end hotels with four or five-star ratings.”

Ketchum’s Lauren Butler suggested the lack of demand for the swarm car was simply because the tour has just begun. And there was no lack of demand, in-person, for the cookies. Lee Gallagher, marketing director at Ricoh, former IBM consultant, and co-author of Precision Marketing, concludes that, “The social and viral aspect may be slick, but in my opinion, not relevant to moving the top line in gaining and attracting more business travelers to their brand.”

It’s hard for consumers not to like an event that hands them free food and a gift card, no matter how obvious and comprehensive the marketing effort behind it. Perhaps most compelling in the entire campaign is the centrality of Twitter. Greenleaf said, “I feel like a lot of our peer businesses use it because it’s a curiosity, but we use it to very seriously build a better experience.” And yet, he reveals, “It’s important to find a way to use Twitter well without making it look like you’re using it for such technical purposes.” There’s nothing less technical than a free cookie.

Filed under: Contributors

Apple’s roll-out reaches deeper into Asia, Africa, Latin America and the Middle East

The queue in Taiwan. Source: CTS TV

FORTUNE — The fastest roll-out yet of an iOS device picked up pace this week as Apple (AAPL) prepared to launch the new iPad in 23 countries Friday and seven more on Saturday.

The longest lines are likely to be in Brazil, where Apple and Foxconn have set up local assembly plants to avoid that country’s steep import taxes. Saturday will take the new iPad into the oil-rich Middle East.

The full list of countries getting the new iPad this week, via MacRumors:

• Friday: Argentina, Aruba, Bolivia, Botswana, Brazil, Cambodia, Chile, Costa Rica, Curacao, Ecuador, French Guiana, Guadeloupe, Jamaica, Kenya, Madagascar, Malta, Martinique, Mauritius, Morocco, Peru, Taiwan, Tunisia and Vietnam
• Saturday: Bahrain, Egypt, Jordan, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates.

Conspicuously absent: Mainland China, where the device has been approved for sale but control of the iPad trademark is still being litigated.

The first video comes from Taiwan, where balloons seem to have outnumbered customers:

Vietnam (single sale):

Chile:

Press unveiling in Argentina:

More as they come in.

Filed under: Apple 2.0

The online marketplace for handmade and vintage goods just scored another $40 million in venture funding. Here’s why it’s surging.

By Doreen Lorenzo, contributor

FORTUNE — It’s easy to see that many consumers are increasingly seeing themselves as creators, too. Companies that will launch successful products and services in coming years will not only understand this phenomenon, but also embrace and enable it.

The reasons why are all around us. On the most basic level, consumers are interested in personalizing their gadgets, an attempt at making off-the-shelf technology their own. In the realm of social media, especially, examples of the consumer as creator abound. On Facebook, for instance, the average user creates 90 pieces of content each month, in terms of original photos and posts, according to the company. And on a larger, commercial stage, there’s Etsy, the online marketplace that connects makers of handmade goods — usually individuals or small businesses — with potential buyers around the globe. Etsy’s sales statistics reflect the growing wave of consumer/creators, and the company just raised $40 million in venture financing (from Accel Partners, Union Square Ventures, and others) for international expansion. The site sold $62.8 million worth goods (after refunds and cancellations) in March 2012, up 41.5% from the same time last year. The number of items sold was up 34% from March 2011. Any business leader would be pleased with those growth figures, no matter what the industry.

And then, there is a strong interest brewing worldwide in terms of the Maker’s Movement, even among large, multinational corporations. If you’re not aware of this trend, it’s about the do-it-yourself engineering that happens in garages and bedrooms, on weekends and during lunch breaks and other moments of free time. Once considered an “alternative” culture in the realm of tech geeks and even hackers, the Maker’s Movement is now being mentioned in PowerPoint presentations at Autodesk (ADSK), the software company that caters to professional architects and designers, and even in the halls of General Electric (GE). GE, for instance, has been hosting GE Garages, a lab-like resource that helps everyday people tinker with technologies and invent products. In other words, GE is embracing the “indie” spirit of the Maker’s Movement rather than competing with it. And it’s a movement that’s gaining steam worldwide. In China, the first Maker’s Faire — essentially a conference for DIY robotics fans and other engineers — took place in April in Shenzen, and in Rome, Italy, a similar event took place this spring.

These examples also illustrate a concept that I call the Cult of Me. While at first glance, this term might sound rather ego-centric, it’s really about two key themes that business leaders need to pay attention to: consumers wanting to create, and consumers wanting to be part of communities — or cultures — that create. These cultures are often built around strong, even near-fanatical passions for hands-on, far-from-the mainstream approaches to engineering and design, and that’s why I think the term “cult” might be more appropriate than “culture.”

MORE: Time to redefine “innovation”

At the center of Cult of Me thinking is the reality that many consumers today aren’t just hoping that corporations will invent and market products and services to them; instead, they want to participate directly in the innovation process as individuals, too. But it’s not just about simple crowd-sourcing for ideas by asking people to suggesting how to improve or create products via online brainstorming sites, as was the rage in the mid-2000s. Today, consumers want to participate in forming and promoting their concepts in a very personal way, with themselves in the spotlight. They want to nurture and develop their own individual creative visions. And share them on a world stage via social media.

Whether their creative activities are limited to crafting posts and photos for their Facebook profiles to inventing homemade robots or designing decorative pillows to sell on Etsy in their spare time, consumers are becoming product developers and brand strategists themselves.

First, some context. It is too simplistic to say that understanding the Cult of Me is best applied to keeping tabs on what Millennials, or the youthful generation of people born in the 1980s that defines itself via social media and DIY culture, desire as products and services. Instead, it’s important to realize that people of all ages are engaging more with social media than ever before, using online tools to create content and craft their own personal brands. McKinsey, for instance, found in a 2010 survey that adults older than 35 are increasingly using social networks at a rate that’s rising higher than that of young people aged 25 to 34. There was a 7% annual increase in the use of social networks among 25 t0 34 year olds compared to 21% to 22% increase among 35 to 54 year olds, and a whopping 52% increase in social networking among 55 to 64 year olds.

But beyond merely understanding just how influential social media is for Cult of Me participants across generations,it’s even more key to recognize effective ways to tap into the Cult of Me using social media as a conduit. And this can be done without allocating large resources of capital and time. Here are a few:

MORE: Are we living in a post-CEO world?

- Use social networks for market research. PepsiCo (PEP), for instance, created new sub-brands of its Mountain Dew soda based on consumer insights it gathered via its online “DEWmocracy” promotional campaign. Fans of the soda helped design flavors and packaging for these brand extensions, and even uploaded videos of themselves reacting to the winners. Since the consumer-designed flavors were released in 2008, PepsiCo has sold more than 36 million cases of the new products. But in addition to launching focused efforts to prompt consumers to create for your company, as PepsiCo did with Mountain Dew, it’s also worth remembering that consumers love to offer up their personal likes and dislikes—for free–on social media sites. Wise companies will constantly pay attention to trending topics on Facebook, Tumblr, Pinterest, and other popular networks to discover clues on new product ideas, even if they don’t have the resources to create their own campaign or Web site using social media, as PepciCo did.

- Use consumer data to anticipate consumers’ future needs, rather than merely address what they want now. Market researcher Gartner named “contextual and social user experience” as one of 2012′s biggest tech trends. If you think that’s a jargony term, it is. But consider how Gartner defines it, and it makes sense, especially in the Cult of Me era. “Contextual and social user experiences” refers to software systems that use data on individuals to “anticipate the user’s needs and proactively serve up the most appropriate and customized content, product, or service,” according to Gartner. Rather than note that consumers are buying, say, more wireless keyboards than ever before, perhaps your company can use these systems to predict they’ll want certain types of additional features for their next keyboard purchase. This could range from new colors to more ergonomic shapes. Gartner predicts that through 2013, such predictive systems will thrive. Businesses that use these systems will, too.

- Encourage all employees to create and share for internal research. Remember, your staff is made up of consumers-as-creators. Learning about their extracurricular habits and personal interests can garner proprietary and quick insights that can be used for product development. This can be as simple as having employees from all departments and levels contribute their own, original ideas to internal or external blogs, or even the company’s Facebook page—all formats that encourage the sharing of ideas along with an employee’s direct ownership of these ideas. At frog, we’ve launched a “passion” initiative, where employees are welcome to create and share videos, online posts, and other materials about subjects they are interested in personally. We often gauge how popular and feasible some of these personal creative initiatives are—such as a beautiful, real-time data-visualization on how, where, and what people post on Twitter, created in an employee’s spare time. Then, if it makes sense to, we help support such original new work with our company’s marketing and other resources. It’s a fascinating and motivating way for us to seek out potential new products that’s also rewarding for employees.

MORE: Why conviction drives innovation more than creativity

In conclusion, it’s key to pay attention to how and what everyday people are interested in creating to get a better understanding of the Cult of Me. It’s one thing to simply observe and note the current trendiness of DIY ingenuity. But the smartest executives will also learn to channel Cult of Me thinking to guide their companies in bringing to market new products and services based on keen observations of what consumers create as they fashion their own, individual Cults of Me.

Doreen Lorenzo (@doreenl) is the president of global innovation firm frog and an executive vice president and general manager of the Aricent Group, frog’s parent company. Doreen drives frog’s company strategy and oversees its worldwide operations. During her 14 years with the company, she has been instrumental in re-structuring the company, taking it from a traditional design boutique to becoming one of the world’s foremost global innovation firms, securing broad-based arrangements with an array of Fortune 500 clients. She serves as a member of the World Economic Forum’s Global Agenda Council on Emerging Technologies, 2011-2012.

Filed under: Contributors

The social networking giant is leading a consortium aiming to make data centers cheaper and more efficient.

FORTUNE — Facebook is known for creating the most popular social networking tool, not designing hardware. But the company has taken a do-it-yourself approach to building out its data centers and the servers and racks that fill them. The result? Data centers that are 38% more efficient and 24% cheaper than average, according to Frank Frankovsky, director of hardware design and supply chain at Facebook.

In the hopes of driving the cost down further, Facebook has even “open sourced” its designs — making it possible for anyone to contribute to (and replicate) what its engineers have built. Last week, as most of the business world speculated on the social networking site’s upcoming IPO, Facebook held a conference for its Open Compute Project, a consortium that now includes the likes of Hewlett-Packard (HPQ), Dell (DELL) and AMD (AMD). We caught up with Frankovsky to find out more about Facebook’s open source strategy and what’s next for the Open Compute Project.

FORTUNE: Why did you start the Open Compute Project?

Frankovsky: When we designed and built our first data center, we exceeded even some of our own internal goals. And we immediately thought it would be unnatural not to share this because we’ve all benefited so much from open source software – like the infrastructure software we’ve built our business on. This is why our software engineers can focus on innovation every day, on making the world more connected. We don’t need to go and reinvent an operating system. So we thought, let’s go and open source the hardware space so that we can give back too. Also, no single company is ever going to have all of the best brainpower in the entire industry under one roof. By open sourcing, you can get the industry’s best brainpower focused together. You get a bunch of great ideas, and it accelerates the pace of innovation.

A lot of companies fight standardization and commoditization. How have traditional suppliers reacted to Open Compute?

While the initial reaction might have been resistance, these are great innovation companies and they know that at some point in order to remain competitive and successful you have to reinvent yourself.

Are there any other efforts out there to open source data center hardware?

We have partnerships with a whole bunch of other projects , but we are specifically focused on the hardware design in the data center, and to my knowledge there are no other projects specifically around this. The old method is to keep all your cards close to your chest without sharing. The biggest project that inspired me and all of us at Facebook to get involved is the open source operating system Linux and the impact it had on the market. We want to have a similar impact on hardware.

Are there technologies that you won’t “open source” and share with others?

We think really, really carefully about what we open source. We’ve shared how we pick data center sites. But when we open sourced our data center blueprints we didn’t include the main point of entry for fiber runs—we felt it was a security issue. So there are some things like that that we don’t put out in the open. But that’s really because we need to defend ourselves and our end users. The thing we won’t open source are the key innovations we have in the application space. Those are the unique things that differentiate Facebook and the reason more than 900 million people come to Facebook. Intel is one of the founding members of the Open Compute Project. It also happens to have one of the richest IP portfolios in the industry. Intel’s engineers have made significant contributions [to Open Compute] but we wouldn’t expect them to share how they design CPUs.

A lot of people would be surprised to know that some of what you’ve done with your designs is actually simplifying and taking away capabilities. Can you explain?

I don’t think anyone would argue that putting a bunch of plastic logos in front of a server is a good idea. But sometimes simple is actually really hard. People sometimes overcomplicate things. When you look at a design it might look really elegant because it’s got all kinds of whiz-bang features. But when you step back and ask how you can do this with minimum components, sometimes making it simple is really the hard part. Some of the most successful mobile devices don’t look like they do anything when you pull them out of the box; it’s a flat screen with just one button. But when you turn it on and it does exactly what you ask it to do, then you really understand the beauty and simplicity of the design. You don’t see the engineering efforts that went into making it simple.

So what’s next for the Open Compute Project?

We’re getting a lot of traction. Most of it is in data center and server design, and we’ve extended it to [server] racks. The storage space is something you’ll see heat up, and there’s also a lot of interest in networking. But a lot of the activity in the coming six months is going to be around storage—how open source storage really changes the market. Hopefully it will let companies choose the best of breed from both hardware and software. In the future there will be a smaller number of larger data center operators because of the trend towards cloud computing. We’ve reached an inflection point where things can get a little more standardized. What’s exciting about the future is that we can now apply the brain power to new and unique requirements in computing.

Filed under: Uncategorized

The notion that the Apple has a “carrier subsidy problem” just won’t die

FORTUNE — In the summer of 2009 a Danish mobile phone analyst named John Strand issued a 105-page report entitled  ”The moment of truth: a portrait of the iPhone,” that listed the “10 largest myths” about Apple’s (AAPL) smartphone:

1) The iPhone drives data traffic into mobile operators networks
2) The iPhone helps operators attract new customers
3) The iPhone is good business for mobile operators
4) The iPhone is dominating the mobile services market
5) App store is a huge success that has revolutionised the services market
6) There is money to be made by developing applications for the iPhone
7) It is iPhone customers that are generating the majority of online mobile surfing traffic
The iPhone has a large market share
9) The iPhone was the first mobile phone with a touchscreen
10) The iPhone is a technologically advanced mobile phone

Many of Strand’s ideas seem so laughably wrong today that it’s hard to believe that they were ever taken seriously. But they were happily picked up by headline writers on both sides of the Atlantic, in part because Strand was always willing to dress up his heresies with eye-catching quotes. In his favorite, repeated at every opportunity, he called the iPhone “the Paris Hilton of mobile phones,” as if it were a sexy but empty-headed flash-in-the-pan.

Fast forward to 2012, and Strand’s Myth No. 3 — the (mistaken) idea that carrying the iPhone is good business for mobile operators — has been making a comeback.

It started in early April, when Walter Piecyk, an analyst at BTIG, downgraded Apple from buy to neutral and told Bloomberg TV “Operators are trying to fight back against the impact that Apple is having on their business.” Soon the iPhone’s subsidy was being blamed for everything from a CEO’s multimillion dollar pay cut to the drop in Apple’s share price that preceded the the company’s Q2 2012 blow-out earnings.

Now that Apple’s share price has retreated to pre-earnings levels, the idea is back in the headlines.

“Okay, This Carrier Subsidy Problem May Be A Real Concern For Apple’s Stock” wrote Business Insider’s Henry Blodget Tuesday, picking up on a theme explored in the Wall Street Journal the day before.

I just don’t get it. If the iPhone is so bad for the phone companies, why are they falling over themselves trying to get Apple to let them carry it?

We put the question to Horace Dediu, who spent several years doing market analysis for Nokia (NOK) before launching his Asymco blog and conference business.

“An iPhone subsidy costs about $400,” Dediu replied. “An iPhone customer will spend about $2,400 for service over the life of that phone. Every dollar of subsidy is worth six dollars of revenue. In addition, iPhone customers are more loyal, spend more and tend to stick with the carrier. What’s the question again?”

John Strand, by the way, is still around, trash-talking the iPhone at every opportunity. Here he is (below the fold) at Mobile World Congress in Barcelona a few years ago using the Paris Hilton line again and making his oft-repeated claim that in all the years he’s been covering the mobile business, he’s never made a mistake:

Filed under: Apple 2.0