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Archive for: November, 2008
November 30th, 2008
How should companies approach outsourcing in this economy?
In this tough economy, it’s easy for enterprises to jump at outsourcing opportunities, simply with the goal of shedding some cost from the bottom-line - as we recently discussed here. However, many enterprises have jumped at the lowest cost option in too many situations, and now live to regret their decision.
Outsourcing clients have to think more smartly and strategically about creating an experience than can drive new growth, deliver business value to the top-line, and not just take out short-term costs from the bottom. If clients can engage outsourcing to become more competitive, it creates an entirely different paradigm than simply “shipping jobs offshore”.
Believe it or not, many of the smart businesses that survive this economic hardship are going to emerge more nimble, more competitive, and more globally-integrated. Outsourcing alone is not the answer; it simply provides a vehicle for enterprises to gain access to new talent, better process acumen, new technology and global markets, provided they venture into an outsourcing engagement with the right objectives in mind. There is a proliferation of service providers eager for business, and most of them will offer attractive short-term cost savings. However, clients must focus on forging a partnership with a provider which will work with them to add a lot more competitive bite to their business over a multi-year contract.
Key decision-points companies must take onboard when approaching outsourcing opportunities
1. Think globally. One of the core differences between the current economic recession and those of the past, is the fact that all of today’s financial markets and economies across the globe are so much more integrated than they used to be. The Internet and global communications revolution have created unprecedented access to global talent, where you can have your mainframe computers managed in Brazil, your general ledger consolidated in Hungary and your logistics analytics performed in India. The need to enter new global markets quickly has never been as pressing as it is in today markets, and the right service partners can help you grow your business globally. Having a ready support infrastructure that can support foreign payrolls, accounting procedures, local regulations etc. can save your company months of painful work to set up shop in new markets.
2. Focus on common standards. Engaging an outsourcing provider which can provide common processes around a solid ERP backbone is critical (see earlier discussion on bundling). Smart enterprises are moving ever-closer to developing commons standards to support processes that can enable them to operate and compete as global entities, and this current economic predicament is accelerating this dynamic. When you have rapid access to your global financial, HR, supply chain, customer and product information, you are in a position where you can make quicker informed decisions to enter new markets, sunset dwindling product or service lines and mobilize your resources and partners accordingly to respond to your existing and future customers. ERP platforms are far more globally-integrated now than they were a decade ago. These platforms provide a crucial backbone for supporting global business initiatives, and developing technology standards, such as XRBL and HR-XML, are helping firms re-use and optimize a lot of what they already have.
3. Add discipline to your revenue cycle. A good BPO provider can add discipline to your collections and speed up your cash-flow, eliminate bad debt and free up a more timely cash-supply. On the flip side, quality procurement processes help you keep the cash you currently have. This is critical in today’s tougher environment.
4. Approach cost-containment as an ongoing objective. A good outsourcing partner should be able to help you sustain cost-savings over a long period, not simply at the onset of an engagement, through ongoing quality and process improvements. For example, you may save $10 million in the first year or your engagement, but how about the subsequent years? Those initial costs you saved will creep back if you don’t constantly refine your processes across your global supply chain.
All-in-all, it’s really not a good time to go to your board and demand multiple millions of dollars to add a new service provider to your outsourced delivery infrastructure, or even rip up your current contract, if you rushed into an outsourcing situation without an eye on the medium-to-long term. My advice to clients is to use this economic climate as an opportunity to drive more radical changes into their business and consider the decision-points above when they start engaging outsourcing providers. I’ll leave you with a more peaceful scence from Mumbai…
November 29th, 2008
Icahn: 'I like Jerry'; Yahoo needs Microsoft search deal
Carl Icahn says he likes Jerry Yang and notes the former Yahoo CEO is a “charismatic guy,” but Yahoo needs to do a Microsoft search deal since the company can’t afford to fight Google.
Icahn’s remarks, made in an interview with Barron’s (subscription required) a few days after he added to his Yahoo stake, doesn’t reveal anything entirely new, but does indicate that full-blown Microsoft acquisition is off the table.
The Yahoo excerpts of note (most of the article focuses on the corporate debt markets primarily):
Icahn on Yahoo’s board:
I’m on the board, and I certainly like some of the board members. They really take seriously what is happening and what should be done there, but I don’t think some on the board are correct in their views. I’ve said this before: Yahoo! should make a deal with Microsoft as far as selling its search capability.
A search deal:
Microsoft has said publicly that they are not interested in buying the whole company, and I believe them. But they are interested in doing a deal on search, and we should pursue that.
The need for Yahoo search:
They would still be one of the top content companies; they are very good at that. Yahoo! would still have the search capability. So when you go to Yahoo!, you could still use the search function, but Microsoft would handle it. Microsoft can afford to fight Google better than Yahoo! can. That is, Microsoft has the resources to put in the billions of dollars on the technology for search it may take over the next decade.
On Yang:
I like Jerry. He is a charismatic guy, but let the past be the past.
November 28th, 2008
Icahn averages down on Yahoo; Searches for break even
Carl Icahn added to his stake in Yahoo just before Thanksgiving and bought more than 6.77 million shares. Naturally, folks need to find the meaning in Icahn’s move.
Kara Swisher notes that Icahn may have upped his investment because Jerry Yang’s replacement is about to be named sooner than later. Kara floats a few more names to ponder. I’d propose that Icahn is doing something much more simple: He made a bad investment. He’s averaging down in hopes of at least breaking even. And the decision to throw good money after bad probably isn’t rooted in logic. You may even recognize a little of your own investment prowess in Icahn.
Let’s recap:
- Icahn is averaging down because he has to. He’s so far underwater on his Yahoo investment–he needs roughly $23 to break even–that he could stub his toe on the wreckage of the Titanic.
- Icahn is deploying the old “hope as an investment strategy” trick.
- Icahn is on Yahoo’s board so he can’t exactly dump his stake, which is now 5.4 percent of the company or more than 75.5 million shares. He probably asks “Why didn’t I just short this pig?” every night before bedtime.
- Icahn is like the rest of us investing fools who sometimes don’t use stop losses and find ourselves in a big hole. And more often than that we toss more good money after bad in the hope of at least breaking even…someday. Icahn has been shellacked by the market too. Should Icahn stop digging this Yahoo hole? Sure. But he can’t resist. When Yahoo hits $5 he’ll probably average down again. Repeat after me: Icahn isn’t an investing Brainiac. He just has more money to lose.
Let’s go to the SEC filing Telestrator (click to enlarge):
November 26th, 2008
SMS fees impacting Twitter feature
Just this week, I was applauding Twitter for rejecting an offer from Facebook. One reason I noted was that Twitter’s SMS text feature makes alerts from twittering (tweeting?) news outlets such as ZDNet even more valuable. Now, that feature seems headed for the history books as wireless carriers impose fee hikes on sites like Twitter that send outbound SMS messages.
Today, Twitter said it was discontinuing outbound SMS service in Canada, where the company has been hit with a billing change. Users can continue to send tweets via SMS - but forget about receiving them. It can’t be long before the same thing happens in the U.S.
This is really upsetting because users already pay extra to the wireless carriers for SMS texts - either per text or a flat fee for unlimited usage. And, quite frankly, I don’t trust the “it-costs-us-too” line of garbage they’re spewing. Last month, when it was revealed that Verizon was going to impose a three-cent fee hike, effective Nov. 1, the company quickly back-pedaled and said it was just an idea that was floating around.
Something stinks here and it seems to be coming from the wireless carriers. Congress has already launched a inquiry into the doubling of the price-per-text that consumers are charged. Maybe that inquiry needs some expanding.
Previous coverage: Text message pricing: Is Sen. Kohl fighting the wrong battle?
November 26th, 2008
If networking can be hip and cool, then so can storage
In a blog post last month, I chimed in on how some tech companies - notably Dell and Cisco - were using video as a marketing tool to promote their technologies, not just their brand names. After all, if networking comes across as cool, then maybe you’ll buy a Cisco product, right?
If ever there was an industry that needed a hip-hop makeover, it’s storage. There’s nothing sexy or cool about storage - that is, until you run out of room to save those digital music, photo and video collections. But, thanks to hard drive maker Seagate, here’s a bit of hip-hop fun (a nice five-minute diversion away from work) to remind us to “Stack the Memory.”
November 26th, 2008
CIO Sessions: State of California CIO Teri Takai
Teri Takai, the State of California’s CIO, talks to CNET’s Dan Farber about overseeing an IT organization with more than 130 CIOs and 10,000 technology workers. She also discusses California’s e-government initiatives from going green to managing costs during tough economic times.
2 minute Video Shorts
Short on time? Check out our summary shorts of the interview
November 26th, 2008
SAP slapped with 'sell' rating; Pushback from customer base cited
Societe Generale analyst Richard Nguyen hit SAP with a sell rating on Wednesday citing increased odds of a fourth quarter profit warning and signs that customers are pushing back on the software company’s attempt to upsell them following a maintenance price increase.
Nguyen’s report–he downgraded SAP shares from a hold to a sell–come amid some worrisome signs for SAP. Part of that pushback Nguyen refers to can be seen in the American SAP User Group (ASUG). Dennis Howlett reports that ASUG is firing Steve Strout, the group’s full-time CEO. The problem: ASUG wants someone who will better represent their interests.
Translation: SAP’s maintenance price increase hasn’t gone over well and Strout wasn’t pushing back enough.
That customer turmoil–along with a weak economy–is likely to bite SAP in the fourth quarter, argues Nguyen. Here’s the meat of his argument:
Based on our recent channel-checks with integrators and resellers, we believe that there is a significant risk that Q4 08 license revenue will fall short of consensus expectations. SAP traditionally makes 40% on average of its annual license revenue in Q4; as such the worsening macroeconomic environment may set the stage for another profit warning in January. In order to achieve SAP’s target of c.20% growth for FY08 in constant currency product revenue, we estimate SAP needs to grow by at least 3% in Q4 08. However, we are concerned that this may not be achievable as 1) Europe (50%+ of total license revenue) may slow even more sharply than expected, with Germany, France and the UK under particular pressure — while the US (35%) remains mired in difficulty; 2) the installed base clientele continues to find ways to reduce the total cost of their SAP systems following the group’s decision to increase maintenance fees to 22% from 17%. According to the SAP User Group Executive Network survey in October, 90% of the respondents did not completely understand the benefits of this new maintenance policy despite SAP’s efforts to put the focus on the TCO (Total Cost of Ownership) instead of just the maintenance part. Pushback from the current installed base means that cross-selling and up-selling could be difficult in the current context.
The tough economic environment along with customer resistance to upselling provides interesting bookends to SAP’s talk (partial infomerical) on Friday. SAP’s message–delivered by co-CEO Leo Apotheker (right)–was that companies should invest in IT during a downturn–presumably with SAP–but it’s unclear whether customers are buying it. Underneath the surface Nguyen’s argument appears to be carrying more weight. Remember, large software vendors increasingly have to squeeze more revenue from existing customers. If they push back growth projections can crumble quickly.
Nguyen lowered his fourth quarter license revenue forecast to 1.2 billion euro from 1.4 billion euro, down 26 percent in constant currency. Nguyen lowered his total revenue estimate to 3.3 billion euro, down from 3.5 billion euro, and earnings estimate to 0.63 euro a share from 0.69 euro a share. Nguyen’s estimate cut puts him in line with Merrill Lynch’s projections.
Also see: Breaking: SAP User Group fires CEO
November 26th, 2008
IT Dojo: Investigate RAM problems with Vista's Windows Memory Diagnostic Tool [video]
Application failures, operating system faults, Stop errors: If you see any of these while running Windows Vista, you could have defective or failing RAM. In this IT Dojo video, Bill Detwiler shows you how to investigate possible RAM problems with the Windows Memory Diagnostic Tool, included in Vista.
For those of you who prefer text to video, you can go to the video player page for this IT Dojo episode and click “See Full Transcript,” or you can also read Greg Shultz’s original post, “Investigate RAM problems with Vista’s Windows Memory Diagnostic Tool”, on which this video is based.
You can also sign up to receive the latest IT Dojo lessons through one or more of the following methods:
November 26th, 2008
News to know: Macs on sale, YouTube goes wide, Twitter, Cisco
Here are today’s notable headlines. You can get News To Know via email alert and RSS daily:
Sam Diaz: A rare occurrence: Macs on sale
- Jason D. O’Grady: Apple retail stores to match prices
- Adrian Kingsley-Hughes: Apple prepares for Black Friday blow-out!
Larry Dignan: YouTube goes wide screen; Sets up for more professional content
- Garett Rogers: YouTube getting ready for full length, wide-screen movies?
Christopher Dawson: Yes, Twitter really is worth the trouble
- Sam Diaz: Twitter & Facebook: If not now, maybe later? [Video]
- Richard Koman: $873m judgment against spammer in Facebook case
Larry Dignan: Cisco plans 4 day shutdown to save dough
Jason D. O’Grady: TiVo control comes to iPhone
Techmeme: New look for Google Maps Street View
Larry Dignan: Will Apple launch a netbook? And other burning questions
Bits: E-Commerce Shrinks for First Time, Research Firm Says
Paula Rooney: No surprise: Firefox 3.1 beta 3 planned for early January
Joe McKendrick: Harvard Business Review warns against ’sloppy thinking’: does this apply to SOA?
Jason D. O’Grady: MacBooks: World’s greenest family of notebooks
Heather Clancy: IBM dominates latest green supercomputer list
Larry Dignan: The uncertainties of social media for traditional brands
Adrian Kingsley-Hughes: Has Apple finally got Safari for the iPhone right?
Mary Jo Foley: Talking about Microsoft inside Microsoft
Sean Portnoy: Blockbuster joins movie-streaming race with 2Wire MediaPoint digital media player
Jennifer Leggio: The (Government 2.0) revolution should be televised
Tom Steinert-Threlkeld: How Pathetic Can Telemarketing Get?
Larry Dignan: HP’s Hurd: IT downturn different than 2001; Ink matters
Matthew Miller: No IE Mobile 6 for you; what can Microsoft do about Windows Mobile?
- Cyber Monday deal: Six months free service on the TeleNav Shotgun
- Verizon Wireless announces Samsung OMNIA and HTC Touch Pro
Dana Blankenhorn: A great time to start an open source company
Dennis Howlett: Cloud definitions and economics
Roland Piquepaille: A fully customizable home robot
Jason Perlow: I want an iPhoneStormDroid
Harry Fuller: Bay Area: sunny upside
Adrian Kingsley-Hughes: My Thanksgiving/Holiday giveaway - Ubuntu
Dana Blankenhorn: How Daschle-care will change Health IT
Heather Clancy: When (if) you shop for electronics this holiday season, consider the latest Greenpeace environmental ranking
Matthew Miller: A look at Opera Mini 4.2 beta running on the T-Mobile G1
November 25th, 2008
Twitter & Facebook: If not now, maybe later? [Video]
In this video, Sumi Das and I talk about the broken down talks between Facebook and Twitter and where a relationship between the two might be in the future. Both need to develop solid revenue models as they grow, which means this round may have simply been a victim of bad timing. Could the two spark talks again in the future? Well, they appear to be a nice match. After all, this is the Internet - where things change quickly. Who knows what the microblogging/social network scene will look like in 6, 12 or 18 months?
November 25th, 2008
A rare occurrence: Macs on sale
If there’s one thing about Apple products that you can pretty much always bank on, it’s that they rarely go on sale.
Best Buy launched some pre-Black Friday specials that discounts a whole lineup of Macbooks, iMacs and even the Mac Mini. (Nope, iPods and the iPhone are not on the list.) Of course, these aren’t huge discounts - mostly $100 off, but up to $150 on a couple of models - but the fact that Macs are being discounted says something about what retailers are willing to do to get people to shop during this gloomy economy.
Not to be outdone, Apple itself has reportedly authorized its managers at the Apple stores to price-match competitors discounts, according to ifoAppleStore, a blog that follows information about the company’s retail stores. The details are sketchy but apparently you have to bring in the competitor’s ad to get the price-match. As far as Apple’s own specials, the company has put up a Web page advertising a one-day sale on Friday on the online store - but there are no specifics about what will be marked down.
Ah! Price wars. If there’s any silver lining to a holiday season caught in the middle of a bad economy, this is it. I suspect this isn’t the only pricing war we’ll see this season.
November 25th, 2008
How Pathetic Can Telemarketing Get?
Your faithful scribe just received this voice message when he picked up his home phone:
“Sorry to disturb you. This message was intended to be received by an answering machine.”
Then, the connection was cut.
Calling back the number (1-866-849-3243) gets you a “voice messaging center” for a marketer which does not identify itself.
It’s bad enough when the caller can’t pronounce your name or isn’t prepared to pitch whatever it is that’s being pitched, when you get on the line.
But not to even want to talk to you?
Machine to machine conversation only?
Sorry, but my phone will never be programmed to talk back.
Of course, this appears to have been going on for at least three years.
So I guess I should be happy that this is the first time a telemarketer preferred to talk to my answering service, instead of me.
Pity be the next caller who pauses to start talking (indicating the handover of a database dialer to a live human being) or who can’t pronounce my name (basic indicator that the caller does not know the person being called).
Telemarketing will die of its self-inflicted wounds. The hang-up ratio soon will near 100%.
November 25th, 2008
Cisco plans 4 day shutdown to save dough
Cisco is reportedly planning to shut down for 4 days at the end of the year for the first time in its history.
According to UBS analyst Nikos Theodosopoulos (Techmeme):
Cisco plans a 4 day shutdown of facilities for the first time ever in the company’s history. The company indicated the shutdown is part of the $1.0B savings plan for FY09 operating expenses, as the company works to achieve savings vs. its internal budget. In particular, this will help lower payroll and facility expenses.
Theodosopoulos adds that demand remains soft and Cisco is probably aiming to save more than the $1 billion it outlined on its last earnings call.
Cisco’s move echoes similar shutdowns sprinkled around Silicon Valley and elsewhere. For instance, HP extended its shutdown period from one week to two this year. In the dot-com bust many companies shut down that final week since you could save more on energy, pay and other expenses. When business got better many companies kept the shutdown in place.
November 25th, 2008
HP's Hurd: IT downturn different than 2001; Ink matters
Hewlett-Packard’s fiscal fourth quarter didn’t offer up many surprises given the company preannounced the results along with its outlook. But there were more than a few notable nuggets that indicate where tech demand is heading.
Here’s a look at the top five takeaways from HP’s earnings report (Techmeme, SeekingAlpha transcript):
1. This downturn is different than what the technology industry faced in 2001. HP CEO Mark Hurd noted some key differences between this economic downturn and the dot-com bust. Analysts were watching HP’s commentary closely since the company can tell you how business is with November mostly in the bag.
Hurd said on the company’s conference call that the economy is far from normal, but customers are thinking hard about where they spend their money. November sounds stable, but it’s not a lot better than October. Hurd’s money quote:
“We have a different environment, than we had, say, back in 2001. We don’t have the infrastructure build out that we had at that timeframe, and I think people are more cognizant that at a TCO (total cost of ownership) level, keeping stuff too long is not a great thing either from a total cost perspective.”
2. Credit is thawing. Hurd noted that mid-market customers are able to get funding for IT projects. That wasn’t the case in October. That said, Hurd cautioned analysts not to get carried away. However, the midmarket is critical to the technology industry so any positive news is welcome.
3. Ink matters–a lot. What was really telling about HP’s conference call was the amount of time spent on printer supplies. Why? Ink is recurring revenue. Ink sales–along with services contracts that provide ongoing revenue–act as a buffer in a downturn. HP gets a third of its revenue from recurring revenue sources. HP did raise its ink prices in October to fuel 9 percent growth in its supplies business.
4. The benefits of EDS will become clear in the downturn. HP said that its integration of EDS is on track and more importantly services are countercyclical to a slowing economy. Hurd said:
“I think in this environment services in many cases is countercyclical, so what you have is people trying to take cost that could be capital and outsourcing that to somebody else so that they actually take the cost for them and in some cases variablize the cost where it makes sense, so that becomes an attractive value proposition for our customers.”
5. Notebook sales are strong. Notebook revenue was up 21 percent, an impressive performance given the environment.
November 25th, 2008
YouTube goes wide screen; Sets up for more professional content
YouTube is going wide screen in advance of hosting more professional content.
We’re expanding the width of the page to 960 pixels to better reflect the quality of the videos you create and the screens that you use to watch them. This new, wider player is in a widescreen aspect ratio which we hope will provide you with a cleaner, more powerful viewing experience. And don’t worry, your 4:3 aspect ratio videos will play just fine in this new player.
Hmmm. Has anyone said ‘man I wish this Obama girl video was on a wider screen’? Didn’t think so. Amateur content may look fine on a wide screen, but
960 pixels isn’t exactly a requirement.
The bigger picture here is that YouTube is going to start cutting deals with content producers–the Hollywood types. CNET News reported that YouTube will soon start offering feature films. A widescreen player makes a lot of sense for feature films.
In the end YouTube is obviously seeing the threat from the likes of Hulu. By offering a widescreen player, YouTube can better compete and support professional content owners. I’m sure there are some amateur videos that will look swell in a widescreen player, but YouTube’s latest move is all about the pros.
Download: YouTube’s video ID system: Is 75 percent accuracy good enough? Video ID system cost benefit and revenue calculators. (15-page special report includes: Executive checklists, YouTube’s vendors and analysis.)
November 25th, 2008
Will Apple launch a netbook? And other burning questions
Apple has said “it doesn’t do cheap,” but one analyst reckons that Steve Jobs & Co. will address the netbook market at some point–either with an 11-inch MacBook Air priced between $800 and $1,000 in 2009 or a tablet Mac in 2010.
That’s one of the more notable takeaways from a research note by Piper Jaffray’s Gene Munster. He examines 12 questions surrounding Apple’s quarter. On the netbook issue, Munster notes that “Apple could find success with a product in its lineup between the iPhone and the MacBook.” He did note that the iPhone accomplishes much of what a netbook is used for–Web browsing–but could use another multi-touch device. Jason Perlow has noted the same thing and as a netbook novice I’d vote for the Mac tablet.
Among Munster’s other questions:
How’s Apple’s business? Munster says he believes that the current quarter is in line with Wall Street estimates. MacBooks and Macs appear to be selling well. He is predicting Mac units between 2.5 million and 2.7 million units. However, iPod growth is slowing and that offsets Mac momentum.
How’s Apple managing the downturn? Munster says Apple is most likely working component costs based on daily sales reports from its retail stores and channel partners. That approach means that Apple is tightly managing inventory since it has little visibility. A separate question from Munster focused on gross margins–the analyst is predicting 31 percent gross margins in fiscal 2009, up from Apple’s guidance of 30 percent.
How are MacBooks selling? Munster says:
We believe the new aluminum MacBooks ($1,299) are selling well. While we do not believe sales are exceeding Apple’s own internal estimates, as the stores have had ample supply throughout the launch, we now believe the Mac unit number for the Dec. quarter may exceed our and Street expectations of 2.6m. We note that the new product will likely lift Mac ASP’s (average selling prices); during our in-store checks we found that the new aluminum models (priced $200 higher at the entry point than the previous white plastic MacBook model) are vastly more popular than the newly priced white plastic model ($999). We caution that our in-store checks do not reflect the direct sales to the Education market where the $999 model is likely finding more success.
What’s Apple’s iPhone gross margin? Munster reckons that the average selling price of the iPhone from Apple to carriers is $630, but the company should be able to lower that price by about $150 over the next six months, but maintain margins. Bottom line: iPhone gross margins are in the high 30 percent to low 40 percent range.
And how’s the iPhone international rollout going? Munster says the iPhone international rollout is in the early stages. Munster writes:
According to our checks on the iPhone international website, availability will grow from a subscriber base of about 660m subs in 44 countries in late Aug. to about 989m subs in 73 countries by the end of the year. This represents 50% growth in addressable subscribers ahead of or during the holiday quarter.
The other wild card for the iPhone is China. Munster predicts that Apple will launch the iPhone with two China carriers in 2009–most likely China Mobile and China Unicom.
Will the iPhone be a gift this year? Munster writes:
Due to changes in the activation process (in-store instead of at home), the iPhone 3G is more difficult to purchase as a gift. AT&T offers gift cards for the iPhone 3G and voice and data plans, but a simple gift card is not as exciting as the phone itself. To solve this, it would make sense if Apple follows AT&T footsteps and offers an iPhone 3G gift cards this holiday season. If this is successful, we see it as a positive for shares of Apple given most investors are not expecting a strong holiday period for the iPhone.
Will there be a new iPhone? Most likely. Munster says it’s likely that Apple will launch a cheaper iPhone at $199 or so and then keep a premium model that tops the $299 16GB iPhone. Munster notes: “Apple could lower the price by removing features like 3G and GPS; alternatively, Apple could make a premium SKU with a sleeker design using higher-end materials, more processing power, better graphics and more storage.”
Is iPod growth over? Munster says growth in the iPod business “is clearly under pressure” and in fiscal 2009 units will decline 12 percent.
How many retail stores will Apple open? Apple opened 50 in fiscal 2008, but Munster reckons there will be 20 to 30 stores opened in fiscal 2009. Why? The economy and Apple is saturating top tier malls already.
November 25th, 2008
The uncertainties of social media for traditional brands
Guest post: Drew Bartkiewicz is a vice president of Technology and New Media Markets for The Hartford, and author of the upcoming book, Unseen Liability.
In today’s 24/7 business world, companies and their customers are consuming, sharing and storing data at an unprecedented rate. This data has in fact become one of an organization’s most valuable assets, but unfortunately it can also be its most dangerous.
Most businesses are not aware of the risks associated with this information or the best ways to protect it from harm.
In addition, the use of social media and networking initiatives has brought hidden risks to businesses they never thought possible. The ownership of Internet risk is a gray area, and customers or users of Web sites that do the wrong thing can now expose companies to unseen liability-ranging from data piracy and intellectual property infringement to reputational harm and libel/slander lawsuits.
Many companies, however, are blind to these risks. Even some insurers are finding themselves behind the curve.
What’s urgently needed is an understanding of the risks posed by Web 2.0 and the development of strategies to address those risks, including new insurance products.
One big concern is whether Web-based communities will become liability breeding grounds.
Web 2.0 encompasses the social networking and social media aspects of the Internet. There’s Facebook and YouTube, niche sites, and corporate-sponsored online discussion groups.
Companies started social networking sites to connect with customers. Individuals and businesses jumped on blogs, wikis, professional networking sites, audio and video file-sharing communities, and user groups.
For companies, the data explosion means they no longer solely control their brand and message. For individuals, it means every aspect of their online personas is fair game for marketers, criminals, hackers and others.
And in virtually every corporate or individual case, there is an entity-a corporation, an organization, data processor, application service provider, e-commerce company, or networking or file-sharing service-that has legal responsibility.
How did we get to the point where this risk grew with scant understanding and minimal risk-transfer strategies?
Over the past several years, companies have been focused on e-commerce data-breach risks, such as the inadvertent or criminal disclosure of credit card and Social Security numbers. To be sure, those risks are real and continue to grow.
But Web 2.0 liability is emerging as an equal if not greater risk.
As data grows in importance, affecting everything from stock prices to consumer confidence, it has soared in value. Information thieves, black market data buyers and data brokers have swooped in. In general, the more detailed (or salacious) the information, the more valuable it is and the greater the liability.
Currently, businesses are facing three major threats:
- Data privacy breaches
- Intellectual property violations
- Media/advertising risks
Operating under the misconception that cyberspace is controlled, secure and anonymous, many people post intensely personal information about themselves, or about their employer.
Sites and communities of all types have vast treasure troves of detailed information, including profiles, history and behavior. They are also vast e-mail and storage repositories. It’s not hard to imagine an on-rushing wave of class-action lawsuits if this information were to be exposed as a result of company negligence.
Intellectual property violations, one of the early social media battlegrounds, continue to threaten brand identity and reputation as well as valuation. MarkMonitor, which specializes in online fraud protection, determined that online sales of counterfeit and gray-market goods will cost businesses $137 billion this year. Tiffany has sued eBay, Viacom has challenged YouTube, and the list goes on.
There are also media and advertising risks, including the dissemination of false, misleading, discriminatory or harmful information, and direct attacks on competitors. In the end, emerging case law will be written to determine whether business is liable for the malicious, silly, or just plan dumb acts of their online users…employees or customers.
Unlike past risks, which have been easier to identify and less fluid, online Data Privacy and Reputation liability changes day to day. This nascent area offers the insurance industry the opportunity to step up and lead the effort to protect businesses from the unseen liability associated with social media and networking so that clients can explore these new business opportunities without falling victim to the hidden risks.
Watch out established brands. There is more uncertainty with the social web than you may realize.
Bartkiewicz can be reached at Drew.Bartkiewicz@thehartford.com
November 25th, 2008
News to know: Ubuntu; New Macbook; BlackBerry Storm; Google layoffs
Here are today’s notable headlines. You can get News To Know via email alert and RSS daily:
Christopher Dawson: Are you sure you don’t just want to use Ubuntu?
Robin Harris: Apple’s new Macbook: Flop or fiasco?
- Jason D. O’Grady: New MacBook Pro performance degrades without the battery
Will Storm delays hurt RIM’s Q3?
IBM launches cloud computing services
Video: Can Obama bring tech respect to Washington?
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November 24th, 2008
HP sees Q4 gains from EDS acquisition
Hewlett Packard reported a net profit of $2.11 billion, or 84 cents per share, on revenue of $33.6 billion for its fourth quarter. (Statement) The results and an outlook for 2009 matched the preliminary figures the company release on Nov. 18. The preliminary report had topped Wall Street expectations and drove shares of HP up by 14 percent that day.
Also see:
The company was helped by its acquisition of Electronic Data Systems. Excluding EDS, the company’s overall revenue grew just five percent. But with EDS, the services revenue was up 99 percent to $8.6 billion. In a statement, chairman and chief executive officer Mark Hurd, said:
HP capped off a strong year by delivering another solid quarter led by strength in our services segment and disciplined expense management. Our global reach, broad portfolio, numerous cost initiatives and consistent execution differentiate HP in the current economic environment.
The company reaffirmed its first quarter 2009 forecast of 93 cents to 95 cents per share, excluding items, on revenue of $32 to $32.5 billion. For fiscal 2009, the company is expecting earnings of $3.88 to $4.03 per share, excluding items, on revenue of $127.5 billion to $130 billion.
In a conference call with analysts, Hurd said it was “challenging environment” and called the guidance “conservative.”
Shares of HP were up more than 3 percent in regular trading, closing at $35.70. Shares were down about one percent in after-hours trading.
November 24th, 2008
Ho, Ho, Ho: Credit Card Fraud Not A Holiday Killer. Unless You Get Hit.
A recession is when your neighbor gets laid off. A depression is when you get terminated. With credit cards, fraud is not a big deal. Unless it’s your number that’s for sale, online.
A Symantec report says the underground economy is booming. The total value of goods and services was “more than” $276 million. The most popular stuff: Bank account credentials and credit cards that have CVV2 security codes with them.
But bank account credentials can be had for as little as $10. Credit cards with security codes? As little as 10 cents, up to $25 each.
What does the thief get?
Symantec figures the average balance per credit card at $4,000, yielding a potential spend of $5.3 billion. Average bank account? $40,000, yielding a potential spend of $1.7 billion.
All told, about $7 billion of money to spend. If you’re willing to go underground and get it.
That’s not chump change — if the sellers can get buyers to cough up the $276 million to buy $7 billion of purchasing “power.”
But it’s not a holiday killer. Online merchants are likely to pull in $32 billion of sales this Christmas, Hannukah and general gift-giving season, according to eMarketer. And Nielsen, at least as of October 9, was still predicting in-store sales this holiday season to rise 4.7% to $98 billion. Unit sales may be flat, but dollar sales will be up, the research firm said.
So even if every one of the 1.3 million credit cards and 42,500 bank accounts at risk, by interpolating Symantec’s numbers, are purchased and exploited to the full, that would only pump up the holiday season another 5%.
Until the sales got reversed by complaining card and account holders and start to wipe out merchants’ earnings.
Tom Steinert-Threlkeld is editor-in-chief of Securities Industry News, as well as a long-time media, technology and business journalist. See his full profile and disclosure of his industry affiliations.
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