Earlier today Sun Microsystems announced that it would be cutting 3,000 members of its workforce, less than a year after the company announced plans to lay off up to 6,000 of its employees. Sun blamed the latest wave of layoffs on delays involved in Oracle’s acquisition of the company, which was annouced last April but is currently being held up by European regulators.

Sun says that it will be eliminating the jobs over the course of the next year in locations worldwide, and that the cuts have already begun. There are reports that there may be even more cuts once the acquisition is complete.

We’ve updated the Layoff Tracker with the news.

A new realtime search engine called Wowd is launching publicly today at the Web 2.0 Summit in San Francisco. Founder and CTO Boris Agapiev gave the first public demonstration of Wowd at our Realtime Stream Crunchup last July (see video below).

Wowd takes a very ambitious approach to search in that it is a peer-to-peer search engine. Users download a peer-to-per client and the index exists not on any central cluster of servers, but across all the user’s machines. Agapiev, who formerly founded the vertical search engine Vast, set out to conquer scaling issues in a new way and settled on a P2P approach.

What makes Wowd a realtime search engine is that ranks sites based on how often and recently the Wowd community has visited that site. On Wowd, you vote with your mouse, so to speak.

The search engine uses other more traditional ranking algorithms as well, but its main point of differentiation is the realtime clickstream data it gets from the peer-to-peer clients which it wants users to download. In theory, this will provide Wowd with your complete attention history if you allow it—every site you go to, not just the ones you click to from the search engine (in this regard, it is similar to what the Google toolbar records if you have the Web History feature enabled).

As with any attention recorder, Wowd offers a full range of privacy settings so that you can share only what you wish, and it is all anonymized and Wowd doesn’t even know your IP address anyway. You can always see and search your entire Web history, which is helpful when you are trying to remember that obscure furniture site you saw last month. Nevertheless, this will be a big barrier for many consumers who might not feel comfortable sharing their surfing habits with an unknown startup. Simply asking people to download a client will be a barrier to adoption.

But for those who do, they will be presented with a slightly different search experience. Results are ranked based on which sites are most popular with the Wowd community. Sites that have been visited recently get a stronger weighting. You can also switch to see the freshest results. The quality of the results depend on the Wowd community’s finding and visiting the best sites, but it is all based on passive activity.

Wowd’s results supposedly won’t be as susceptible to SEO spam as other search engines. But if it becomes popular enough I’m sure spammers will try to game it by simply getting lots of people to download Wowd and visit their own sites continuously. Wowd obviously tries to monitor this type of behavior and weeds those clicks out from results.

I’ve been testing Wowd for a coupel months, and the results are decent already with only a few thousand beta users. Now that Wowd is open to the public, the real test will begin. Realtime search is hot right now, with tons of startups (Collecta, OneRiot, Topsy) and as well as bigger companies like Twitter, Facebook, and Google going after it.

Below is a video of CTO Boris Agapiev’s demo at our Crunchup in July. It starts at the fourth dot along the timeline at around 29 minutes.

The big, obvious take away from Apple’s Q4 earnings report earlier today was that it once again crushed the estimates. And not just its own forward-looking estimates, which are always laughably low, but even the estimates of the most optimistic analysts — by a lot. But some of the other numbers from today were just as impressive, and some of the information, even more interesting.

Apple now has $34 billion in cash in the bank. Apple watchers will also know that they have no debt. So what are they going to do with all this money? That’s $10 billion more than they had a year ago, and this past quarter alone, they added about $3 billion to the pile. Apple keeps saying that it will use the cash for “preservation of capital,” which is a fancy way of saying that they’ll be take little risk and keep it close.

That’s more cash than Microsoft has, and for some comparison, $34 billion is $10 billion more than the overall market cap of Yahoo. It’s also about $1.5 billion more than the market cap of eBay, and $4 billion more than the market cap of Dell. It’s almost exactly the same as the market cap of News Corp.

Apple’s stock could open tomorrow at or near its all-time high. Let me repeat that, all-time high. You probably haven’t heard that too often over the past year, but it’s true. Apple’s all-time high is $202.96 a share, which it reached on Dec. 27, 2007, nearly 2 years ago. Today, after earnings were released, the stock shot up over 7%, pushing it past $203 a share. It has since settled a bit lower, but it’s not out of the question that the stock could hit the mark again tomorrow during regular trading hours. Apple’s stock price has more than doubled over the past 7 months alone.

Sales of the iPod touch were up 100% year over year. This is especially impressive considering two things. First, overall iPod sales were down, once again. Second, despite indications that they would, Apple did not add a camera to the iPod touch during that line’s refresh a few months ago. Instead, the iPod nano got the camera, but it would seem that the iPod touch is still the hot sibling in the family.

OS X Snow Leopard came out of the gates twice as fast as OS X Leopard. This really shouldn’t be all that surprising, considering the upgrade costs just $30. Still, impressive.

Half billion apps downloaded in the last quarter alone. We already knew the big 2 billion app download milestone was hit, but Apple clearly stated that a full half billion of those came just in the past three months. That’s huge.

Portable sales were up 35% year over year. Apple didn’t want to seem to talk about its desktops at all when it came to the Mac business (which had its best quarter ever). Instead, it’s very clear that notebook sales are the driving force (nearly 3/4th of Mac sales now). Of course, some new iMacs, which may launch as soon as tomorrow, could help balance the sales a bit more.

China is getting the iPhone on October 30, but Korea should get it this quarter as well. Obviously China is a huge key to the Apple’s plan for international success, but getting the iPhone in Korea won’t hurt either. Apple COO Tim Cook made a quick reference to the unlocked iPhone issue in Asia, and noted that the company is excited to finally be able to meet a demand that is clearly there.

Apple has some new products coming that have relatively low margins and cost a lot on to ship in. The obvious guess here would be Apple’s tablet. But the latest rumors had the thing being announced in January, but not shipping until closer to mid 2010 — neither of which are fiscal year Q1 (which ends December 31). Instead, the lower margins could well be related to new iMacs and MacBooks that have been rumored to be cheaper.

But the more interesting bit comes from Cook’s wording about why Apple spending more on shipping: “In general, we spend more in freight in Q1, but this increase is larger than usual. I’m sorry, I can’t be specific on the product, but it’s an abnormal sequential increase.” That would seem to suggest a new type of product outside the ones it already offers, like the iMac and MacBook, which it has, of course, shipped in the past. Could the tablet come early? It seems unlikely, but something is causing Apple to worry about out-of-the-ordinary shipping costs.

Apple has until Q1 2011 to use the new accounting rules. The changes allow Apple to count money made of off its so-called “subscription” devices, the iPhone and the Apple TV, immediately, rather than spreading the money over a 2-year period. While they were approved in September, Apple is still debating on when to start using them, and will not for Q1 2010. Cook noted that Apple was “pleased” with this new rule.

[photo: flickr/stu_spivak]

BEIJING, CHINA– Kai-Fu Lee may have left his post as president of Google China, but he didn’t go very far. While still president he learned that Google was going to give up some of its space at Beijing’s Tsinghua Science Park.

He called the landlord and told him he’d take as much as he’d give him. And now he’s in the next office on the same floor, hoping a Chinese version of Larry or Sergey walks through his door.

As we reported a few weeks ago, Lee is also taking a few Google China staff members and indirectly some of that Google cash in the form of an investment from YouTube founder Steve Chen, among others.

His new venture is called Innovation Works, and it’s a sort of angel fund/incubator to help encourage Chinese entrepreneurs to eschew staid-but-prestigious corporate tech life and start a company instead. I met with Lee this week at his new digs in Beijing and so far, they’re pretty empty. There are a few analysts and engineers huddled by the door, near a table overflowing with different kinds of tea that people have given Lee as a good luck gesture in starting this new venture. (There’s so much tea, in fact, he insisted on my taking a tin.)

That elbow room won’t last: Lee got 7,000 resumes on his first day of business and has gotten some 40,000 total. It’s taking a while to plow through them, but he expects to hire at least 100 more people in the coming months. In fact, between our meeting Monday morning and sharing some Peking Duck later that night, he made four hires. (I shot a quick video with Lee talking more about Innovation Works. Unfortunately, my Flip has died for good, and it’s gone. So text will have to suffice.)

Lee is that rare unicorn-of-a-specimen that Silicon Valley companies and investors salivate over: He’s held key product and management roles at Apple, SGI, Microsoft and Google building a deep bench of respect and contacts in the inner circle of the U.S. tech business, but he’s also a hero to many young techies in China.

Want an example of the former? Back in the late 1990s, the product line he’d developed for SGI was struggling and being sold off to a company that would later be bought by Computer Associates.

That ultimately meant Lee was looking for a new job. His father—a Taiwanese diplomat—had asked Lee on his deathbed to return to China one day, and a job with Microsoft was making that promise a reality.

Lee had decided to take it, but few people knew yet. He went home one day and his wife said, “Steve from Apple wants you to call.” Lee mentally paged through the Steves he’d worked for at Apple—never thinking of the obvious one. Lee had worked at Apple during the bleak years before CEO Steve Jobs returned to the company, or as Lee likes to say, “I was at Apple between Jobs.”

“I think it was Steve Jobs,” his wife said of the caller. Lee insisted it couldn’t be true, since he’d never even met him, but called the number back all the same. It was Jobs and he personally asked Lee to come back to Apple. Lee demurred.

“I know you’re going to work for Microsoft in China,” Jobs said. Lee was stunned. Almost no one knew. For a moment he must have thought his-iPhone-ness really was as all-powerful as the fanbois say. Then Jobs added, “Your wife told me.” When Lee asked why she divulged the closely-held secret she shrugged and said Jobs was so nice on the phone, she assumed he was one of Lee’s close friends.

Lee resisted Jobs, and you could argue missed out on the golden era of Apple as a result. But the Microsoft job meant that Lee was also an early multinational tech manager in China. Since then, between Microsoft and Google he’s given fat incomes and prestige to hundreds of Chinese entrepreneurs, building quite a following in China. (At dinner a young woman shyly came over and asked for his autograph.)

To be fair, Lee has his detractors in China too. Critics question whether the longtime corporate executive has the chops to pick and fund truly innovative ideas. After all, Lee himself said in our interview a few weeks ago that executives at multinationals typically don’t have the hunger to be great entrepreneurs. Others say he’s one of those bridge-builders between East and West that benefits by talking up business in China as being more complex than it really is.

After one meeting and one dinner, I can’t say whether either of those complaints are fair. But after spending several weeks in China in the last few months I will say this: If his well-cultivated reputation convinces more Chinese entrepreneurs to start businesses, that’s good for China and the tech world globally.

(Image of Lee courtesy of Abondance)

I’m going to try writing longer form stuff for the weekends, sort of to stretch the old mental legs a bit and share a bit of the stuff that is floating through my transom, man, about tech and especially mobile and portable electronics.

Come back with me to 2001. A young man got up on stage one afternoon in November to announce something new and amazing: an operating system dedicated to tablet computing. That young man was Microsoft’s Bill Gates and that operating system was Windows XP Tablet PC edition.

Chances are that is the first and last time you saw a working tablet computer. Laptops, then, were monsters. They were heavy – 10 pounds or more – had small, bad batteries, and WiFi was just a dream for most people. It seemed, in those dark years, that laptop manufacturers could shave off pounds and complexity by removing the keyboard and offer a pen-based OS. After all, this was a post-PalmOS era when handwriting recognition was an input option we all knew and understood.

The thinking was this: if you can streamline appellations – data entry applications being the target here – you could sell smaller, more expensive computers to medical and business clients. It didn’t work and Windows Tablet PC has been little more than a clever solution to a nonexistent problem.

So what’s with all the tablet talk lately?

We have entered an era of the thin and light computer and, rather than worrying about power we’ve become obsessed with the concept of thinness. This is why Apple, in their wisdom, created the MacBook Air and the iPod Touch. This is the same reason we are all salivating over the thought of tablets thinner than an issue of BusinessWeek and this is why laptop manufacturers – and Michael Arrington – are rushing to make them.

The Apple Tablet (or iPad or Tapplet) is real. It will have a capacitive touch screen and manufacturing difficulties are slowing down the tablet’s release to a crawl, thereby preventing us all from having one. It will be thin and, like the abhorrent HP DreamScreen, will focus on media. The extant tablet verticals – mostly in the medical industry – will still exist.

Note this new focus. Rather than trying to create a business machine, manufacturers understand people want bigger screens on which to consume web and media content.

So what can we expect in the next year? Well, first we have the CrunchPad. When all the bugs are worked out, it will be an amazing device – I’ve seen it. And I’m not just saying that because I’ve been intimately involved in the design process, because I wasn’t – that gives me a bit of perspective. Expect the CrunchPad to be a excellent device for blogging – that’s what Mike made it for – and for web apps. Don’t expect much in the way of media.

Then there’s the iPad. This will eclipse the industry and for the rest of the year that’s all you’ll hear about. Trust me. Apple could require you to give this device three drops of blood every morning in order to satisfy the demonic hell-beast soul trapped inside it and we would, gladly. The release will be on par with the iPhone release and they’ll sell a million of them.

Then you have Microsoft’s Courier. It’s impressive, but it’s Microsoft; don’t expect that thing to take shape for two years and don’t expect it to take off until the second generation. Like the Zune, Microsoft will make a product but they won’t make it good until they have a little time to mull it over. I don’t think the Courier will be a player in 2010.

As for the rest of the devices, expect slow uptake by price conscious consumers and folks who don’t think it’s “cool” to own “name brand” technology and are real “hackers” (read: teenagers and European students). Archos, for example, is doing a lot of good work in the tablet space but they’re an also-ran. They are going the Tablet OS route, which is no good. Creative has some devices planned and it’s also clear that ChromeOS could power a nice device – provided HTC makes it.

As for connectivity most of these will have a 3G option – although I doubt the iPad will have 3G built-in. WiFi is an obvious second-best.

As for size, tablets, at least with capacitive screens, are weighed down by a huge hunk of metal that shields the electronics from the screen. This hunk of metal – and the glass – prevents us from getting a bigger iPod Touch and is what is keeping the iPad from coming out sooner. Once the world’s (i.e. China’s) scientists solve this problem we’ll get what we want. Until then it’s resistive all the way.

So prepare yourselves for the coming tablet wars and sock away a little cash because things are going to get interesting in 2010.

The end of the phone as we know it

Do venture investors with the biggest and best networks end up producing the best returns? An academic paper from a few years ago by Yael Hochberg, Alexander Ljungqvist, and Yang Lu titled “Whom You Know Matters: Venture Capital Networks and Investment Performance” (embedded at the bottom of this post) suggests that is the case. They looked at historic venture returns and found that “better-networked VC firms experience significantly better fund performance,” as measured by how many of the companies in their portfolios exited via an IPO or acquisition.

A venture firm’s network in the study was defined as being made up of all the other venture firms who co-invested with it in funding rounds. The more co-investors a venture firm has, the better its network. The better its network, the better its overall returns. The correlation between the size of a venture firm’s network and its returns may have something to do with better access to deal flow, talent, advisers, potential customers, and potential exits.

If this is true, then who are the most connected venture firms and angel investors today? Vijay Dondeti, a graduate student in bioinformatics, applied the analysis in the Hochberg paper to about 2,700 investors in CrunchBase who participated in over 3,300 startup funding rounds between 2006 and 2008. He scored each investor based on how well connected they are to other investors as well as how well-connected their co-investors are to other investors. “In summary,” says Dondeti, “to get a high score, you need to co-invest often with others that also co-invest often.”

So which venture investors have the best networks? Here are the top 10:

1. Draper Fisher Jurvetson
2. Sequoia Capital
3. Accel Partners
4. Intel Capital
5. First Round Capital
6. Dag Ventures
7. New Enterprise Associates
8. Kleiner Perkins Caufield & Byers
9. Benchmark Capital
10. Ron Conway

Draper Fisher Jurvetson takes the top spot. Will its returns beat everyone else’s, or is it just that its spray-and-pray investing strategy gives it an advantage in this type of ranking system? Top-tier firms such as Sequoia, Accel, Kleiner Perkins, and Benchmark also score highly, as does First Round Capital and angel investor Ron Conway.  Other individual investors a little further down the list include Reid Hoffman (No. 18) and Marc Andreessen (no. 31).

Below is a ranking of the Top 100, or you can review the entire data set for all 2,700 investors here.

(Image: Flickr/Steve Jurveston)

Whom You Know Matters: Venture Capital Networks and Investment Performance –