IBM is launching a token based service for its Rational software that could be the basis for a currency that is used to exchange credits for using cloud-based applications. The service is being tested first with Rational and then could be rolled out to other IBM software. The “token,” based service is a type of cloud currency that is defined by the usage and the value of the product that the customer is using on the IBM Cloud. Sponsor A customer may buy tokens for any aspect of the product development process. For example, a customer may purchase tokens to use for testing in the cloud or for security. The software products in the Rational product line get assigned a token value, depending on the cost of the product according to traditional licensing terms. The tokens may be passed to different users, thus avoiding the cost of licensing the product. The tokens can be purchased and reused for use with different Rational products. Currency can be traded. It is used to purchase every day items. Cloud computing is increasingly becoming an every day purchase. IBM could eventually assign tokens to any application. The applications could even be broken down by features and assigned a cost based on its value. You can see where this may be going. IBM is using a cloud-based currency to get more usage for its products. This model could be applied to any number of products that are part of an exchange. Cloud computing is creating new economic models that are based on usage of the raw computing capabilities from service providers. Applications are shared in the cloud but the terms are as of yet not defined to the extent that they possess a form of currency for exchange. Will this evolve into a market trend and the development of a new application exchange? What do you think? Discuss

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This week at the 2nd annual Internet of Things 2010 conference in Brussels, British service Pachube announced a partnership with Current Cost – a producer of real-time energy monitors. Current Cost is using Pachube’s Internet of Things platform for the Bridge , an ethernet device which connects Current Cost electricity monitors to the Internet. Pachube Founder & CEO Usman Haque called this “a major step in making the ‘internet of things for consumers’ a reality.” Sponsor We’ve long been a fan of Pachube (pronounced Patch-Bay) and named it one of our Top 10 Internet of Things Products of 2009 . Pachube is an open platform for sensor data. We first reviewed it in May last year and since our last update in October , Pachube has followed through on Haque’s promise to develop a viable business model . The Current Cost partnership is a part of that evolution. The Move From Experimental to Commercial One of the most exciting things about covering the Internet of Things, is watching the slow but gradual move from experimental apps to commercial ones. I watched – and blogged – this same evolution in the years before Web 2.0 existed (2002-2004) and it’s happening again in 2010 with the Internet of Things. Startups like Pachube are literally inventing the business models as they go. As we’ve noted in previous posts, up till now Pachube has been mostly used for experimental applications . However, Current Cost may be its first important commercial case study. The Current Cost ‘Bridge’ enables users to analyze their energy use via a website dashboard, on iPhones and other smart phones, and via Google’s energy service, Google PowerMeter . Pachube is being used for data management on the Bridge, enabling the device to deliver tracking, notifications, comparison tools, and more. The Bridge also has “enterprise level features” such as privacy groups, statistics API, user management and a device provisioning server. Pachube’s New Revenue Models Pachube now has what it terms a “corporate” service – essentially a third party service for companies that want to connect devices to the Internet. For example Pachube provides bulk accounts to “web-enable thousands or millions of devices,” such as electricity meters. Other services include delivering ‘out-of-the-box’ tools for consumer-facing companies, building communities around products, and developing branded web portals for manufacturers. In addition, Pachube has added premium accounts to its consumer service offering. These include “value-added features” such as privacy options, statistics/aggregation, greater bandwidth, history and search. It’s great to see Pachube develop its business and we’ll continue to track its efforts! Discuss

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For many years, I have been famously (or notoriously) anti-Silicon Valley . There’s nothing wrong with the place in iteself; what I detested was the snobbish notion that the Valley is the de facto or “best” place to run a startup or be involved with the tech world. I’m now forced to eat my words as my hetero life mate and I prepare to move into a Burlingame apartment conveniently located a few blocks away from the startup he’s now working at; I have to admit, living in the Bay Area has been amazing so far, in professional and personal terms. Still, if I were starting a company, would I move from Omaha or Nashville or Boulder to come to the Valley? Would you? Sponsor UPDATE: It seems the Chatroulette creator is having the same dilemma . How’s that for unwitting timeliness? Back when I started the Never Mind the Valley series , I was fascinated by communities such as Boulder and Los Angeles. The tech scenes are smaller and more easily navigable, and most people are willing and excited to collaborate. When contrasting these areas with the SF Bay Area, NorCal seemed vast, cold, inflated and self-important by comparison. For months, I railed, “You don’t have to be in the Valley to have a successful startup!” Examples of this abound, from Austin’s Gowalla to L.A.’s Mahalo to the dozens of incubated and accelerated teams in cities all over the country. However, on moving to San Francisco, I quickly learned a few of the benefits of being a startup in the Valley. Everything loves much faster. You have more access to more capital. The depth, breadth and strength of the developer pool is unparalleled. Everyone has a fairly public track record. Yes, it can be an insular and self-aggrandizing little echo chamber of Mutual Admiration Society nitwits at times, but I’m no longer saying that the benefits don’t outweigh the cost. Ah, yes – the cost. Living in the Bay Area is, to employ a common NorCalism, hella expensive. Salaries are higher, real estate is more scarce and more spendy, the overall cost of living borders on obscene unless you’re used to, say, Tokyo. But again, perhaps for many startups situated here, the benefits outweigh the financial costs, as well. So, I’m left wondering exactly what alchemy makes the benefits worth all the costs for a startup. I’ve been asked by a few companies about transitioning from other states and even other countries to the Valley, and my advice has tended to be a mixed bag lately. I’m interested to hear from startups living in and outside of Silicon Valley: When do you think being in SF is worth it, and when is it wiser to stay put? Let me know your thoughts in the comments. Discuss

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