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Archive for: January, 2009
January 30th, 2009
Tipping Point Reached For Cloud Computing?
Has the tipping point come for software to be widely adopted as an online service?
William S. McNee, president and CEO of Saugatuck Technology in Westport, CT, believes it has.
He says that mainstream adoption within small and medium-sized businesses is “accelerating” – and that 20 percent of enterprise IT workloads will be run “in the cloud” by 2013.
This will lower operating costs, reduce IT staffs and cut down on carbon footprints, he says.
Speaking recently at a forum sponsored by a software-as-a-service purveyor, NetSuite, held at the New York Stock Exchange, McNee said, “On-premise solutions are going to drop off the cliff.”
Basing his comments on a survey by Saugatuck of 150 chief financial officers with budget authority, he said the movement toward what increasingly is being called “cloud computing” will put not just payroll and other administrative processes on remote servers and software, but “mission-critical computing,” as well.
The chart atop this story shows, in red, the applications that Saugatuck expects to see the greatest acceleration in adoption this year and next. Whereas only 18.3 percent of companies said they would use some form of software as a service in their finance and accounting operations by the end of 2008, twice as many, or 39.3%, expect to by the end of 2010. Also rising rapidly: Compliance and risk management, procurement, and business intelligence applications.
Driving the movement is an expectation that new services can be unrolled faster, improvements made behind the scene without staff, ease of integrating services not just by application but across geographies and countries, and lower total costs, compared to in-house applications. That will help the CFOs fill in an estimated two-thirds of the gaps they face in meeting their ROI goals over this span of time, he said.
The survey was taken in summer 2008, before the Fall brought a credit crisis and global economic slowdown. So the gaps could be bigger, now.
Nonetheless, by the end of 2010, in fact, he expects 70% of companies will have deployed at least one application in the service “cloud.”
Putting computing into the cloud makes it easier to update and integrate services. McNee asserted that more than 70 percent of SAP’s installations of its R/3 set of business applications predate 1998.
January 30th, 2009
Whitehouse.gov's YouTube cookies: The wrong privacy fight
I’m the last person who would ever want the government snooping around my computer. But this controversial thing over YouTube cookies on whitehouse.gov has really become bigger than it should be and I think privacy advocates - no matter how much I agree with them on the larger scale issues - may be fighting the wrong fight here.
For those catching up, the White House has issued an exemption to the no-cookies rule on whitehouse.gov. The rule, of course, allowed visitors to freely visit the site without any identifiable information being left behind on the government’s site. But Google-owned YouTube, which hosts President Obama’s weekly video address, is being granted an third-party exemption from the policy so it can “help maintain the integrity of video statistics.”
It’s also important to note that the cookie only installs if the user clicks on the embedded video to watch. (see image below) If you don’t want a cookie installed, the you can download it to your computer and still maintain your privacy. This is the only place where the cookie issue comes into play.
Privacy advocates are holding President Obama’s administration to its promise for a more open and transparent government - as they should - by calling on the administration to provide a copy of the waiver referenced in the new policy. This stemmed from a language change in the policy a few days ago that took out references to YouTube and instead used “third-party providers.” Chris Soghoian, who writes CNET’s Surveillance State blog, writes:
…the White House has yet to actually provide a copy of the waiver (something this blogger has requested from White House officials informally, as well as via the Freedom of Information Act). The text of the original privacy policy implied that a specific waiver had been issued for the cookies forced upon end users who intentionally viewed YouTube videos embedded within the White House Web site. The text now implies a far broader waiver for multiple video-sharing Web sites. However, it remains unclear if a new waiver has been issued, or if the old waiver was broad enough to cover multiple sites.
My two cents:
- First, the White House ought to just cough up the waiver and be done with it. It’s just a policy waiver related to videos on a Web site. It shouldn’t be a big deal. Repeat after me: Open and Transparent.
- Second, the issue of the cookies exemption has already been addressed - and isn’t that the bigger issue here? There’s a go-around. Just download the video and watch it offline if that makes you feel safer.
- Third, if privacy advocates want whitehouse.gov to do more, shift the focus to calling for a redesign of the page, specifically how the “Click to Play” is displayed, compared to the “download video” link. Make sure visitors know that cookies are involved when you Click to Play and give them the option to download instead (and then be able to stop future warnings.)
It’s also important to note that the whole YouTube video thing is part of President Obama’s attempt at a more open and transparent government. Look at how many tech-savvy people were caught up in the campaign because of Web 2.0 tools like Facebook, MySpace, Twitter and YouTube. The president could have chosen to walk away from the online world after he won and gone back to the old-school radio address. But wouldn’t we rather have his weekly update accessible around the clock, on a site where millions of people already go to watch videos.
As an after-thought, I’m feeling reassured that someone in Washington knew enough about embedded video technology and the language of the privacy policy to make changes. There have been a lot of technology changes - and new issues surrounding privacy - since the original one was put in place in 2000.
Has it been updated regularly? Maybe it’s time for Privacy Policy 2.0.
January 30th, 2009
Google GDrive clues surface; Is this really a big deal?
Clues about Google’s GDrive, an online storage backup service, have surfaced and the blogosphere is going nuts. Am I missing something here? It’s an online backup service, one of many.
Brian Ussery made a nice find and now the speculation is rampant.
Sure it’s possible that GDrive changes the world. Then again it’s also possible that GDrive will just be another online storage system with a Google logo on it.
I realize that every time Eric Schmidt has gas it garners a headline. But c’mon. We’re talking online backup up here.
Apple has it. EMC via Mozy has it. Dell has it. Pick a vendor and everyone has some spin on the online storage thing.
Way back in 2007 Mashable compiled a big list of online storage services. There are probably another 80 services to add to that list today.
I understand that spotting GDrive is almost the same as trying to find Bigfoot these days, but let’s get real here.
January 30th, 2009
Mint.com offers close-to-home peek at economy's impact
There are some forms of number-crunching I hate - which reminds me that it’s time to start gathering up receipts for my tax accountant. And then there are “fun” types of number-crunching. Take, for example, the guest post on TechCrunch this morning by Mint.com’s CEO and founder Aaron Patzer.
Mint.com, the online personal finance program, is one of my favorites. (The iPhone/iPod Touch app rocks!) I have been using it faithfully since I made a money-management resolution for the new year and love how it breaks down my financial situation from so many different angles.
Clearly, Mint.com knows what’s happening in my life - how much money I bring in every month. how much credit card debt I have, how much I spend on groceries and how badly my 401(k) tanked and what’s happened to my savings account. And since Mint.com has signed up nearly 1 million subscribers (actually, 900,000 is more like it), it also has a sampling of data that’s better (and likely more reliable) than any other survey-taker out there.
So what do they know? Well, we know that somewhere around the summer months, consumer spending tanked to the tune of about $400 per month and that it took another dip just before the holidays, decreasing by about another $200.
Looking at categories, entertainment, travel and even fuel - which probably goes hand-in-hand with travel - are all down. Interestingly enough, the amount of money spent on financial advisors went up. (I guess when times are bad, we need professionals to tell us how to reinvest to recover.)
And finally, a peek at account balances paints another picture. From early August to mid-December, our investment balances tanked while our loan balances shot up. Credit card balances remained flat but our savings accounts were slashed in half.
(images from mint.com, via TechCrunch)
I don’t know if I feel better knowing that 1) I am not alone or 2) there are others worse off than me. I also don’t know how this compares to the days of the Great Depression, for example.
What I do know is that consumer spending has dropped by $600 per month since the summer and that savings accounts are half of what they used to be. And for me, that sort of data drives home the point far better than a TV news anchor using percentages to tell me about the declines on Wall Street.
January 30th, 2009
WSJ downgraded; Are layoffs next?
Is it wrong to keep believing in newspapers?
Apparently Wall Street thinks so. And this time, the target is planted straight on the back of News Corp.’s Rupert Murdoch and his Wall Street Journal.
Peter Kafka reports on his Media Memo blog, which is run by the WSJ, that Pali Research analyst Rich Greenfield is throwing in the towel on News Corp., cutting his recommendation from “Buy” to “Sell” and expressed his frustration with the way Murdoch is running the company. He writes:
While we have long viewed Rupert Murdoch as the most visionary CEO in the media sector…we are increasingly surprised/frustrated with his lack of strategic direction related to News Corp’s television station, newspaper and book publishing assets… Our fear is that News Corp. is so committed to its existing businesses that it will be willing to sustain businesses that slip into negative profitability for years.
So what can News Corp. do to put Wall Street’s fears to rest? When you can’t increase the money coming in, you quickly take control of the money going out. And what’s the most popular way of doing that these days? You know the answer, right?
Job cuts.
In his own blog post, Portfolio.com’s Jeff Bercovici cites “multiple sources within and close to the Journal” to report that the newsroom will undergo a round of personnel cuts late next week - likely after new deputy editor in chief Gerard Baker starts his new job there. There’s no hard numbers - though 50 is the one that he suggests. And, of course, there’s no confirmation of that.
It’s been a rough week for newspapers - and this is only January. The New York Times said this week that ad revenue was down almost 18 percent and the company is now seeking to sell its stake in New England Sports Ventures, which owns the Boston Red Sox and Fenway Park, among other properties. This week, employees of Media News publication in the San Francisco Bay Area, which includes Silicon Valley’s San Jose Mercury News, were told about a mandatory week-long furlough later this quarter - and were given no promises that the savings would save jobs.
January 30th, 2009
Why the password system hasn't died (yet)
Identity management is one helluva paradox. In your daily work life you don’t sweat things like smart cards, one-time password tokens and USB tokens. Once you go home as a consumer you’re straining to remember your 20th log-in and password.
Google’s Cem Paya, who serves on the search giant’s security team, highlighted the obvious at Wharton’s Information Security Best Practices conference: Passwords are useless, outdated and a security risk.
No argument here. I’ve been hearing that line for at least a decade now. Yet I’m not exactly carrying around my identity fob or national ID card that works offline and online.
Paya called said the almost immortal password system is “a puzzling divide.” “For all the known limitations of passwords they remain primary,” said Paya.
Where Paya’s talk, which was on federated identity management, differed is that it outlined why passwords persist. When you’re yapping with security vendors you always hear the opposite: Passwords stink and we have a better solution (that no prosumer uses). No one quite addresses why we’re still using passwords.
So without further ado here are Paya’s best guess on why pesky–and pretty insecure–passwords persist:
- There’s no business model for issuing IDs to consumers.
- Limiting user choice may annoy people.
- Service providers can’t rely on third parties to manage identities–if that third party screws up it’s your problem.
- Strong authentication has to be mandatory, but mandating an emerging technology risks losing customers.
- An opt-in policy can harm to customer satisfaction problems. What happens when you need a driver for your USB token?
When will the password officially be retired? I have no idea. And neither did Paya. National ID cards seem to be a non-starter in the U.S. And federated identity management systems are still nascent. Overall though, this password paradox is worth watching. At some point, passwords will die–and you can finally stop writing them on scrap paper taped to your monitor.
January 30th, 2009
Spam: You just can't win
For anyone even slightly optimistic about thwarting the never-ending crush of spam I have two words: Don’t bother.
At the Information Security Best Practices conference at Wharton at the University of Pennsylvania I’ve learned the following from the first panel.
Comcast’s Gerard Lewis, senior counsel and chief privacy officer, noted that the CAN-SPAM act of 2003 “hasn’t done anything to curb spam,” but is “a well intentioned law.” Indeed, almost all email is classified as spam.
Lewis should know since Comcast moves millions of emails a day–450 million on average to be exact. Lewis walked through the evolution of spam and how defenses have moved from generic filtering to a more sophisticated model. The rub: The fancy stuff doesn’t work too well either.
Lewis said that giving consumers more control and tools to prevent spam helps a bit. But plenty still fall for social engineering tricks.
What’s the solution?
I haven’t heard one yet. Chris Marsden, a professor at the University of Essex, said there are a bevy of regulation schemes being cooked up across the pond. But it didn’t sound like there were any spam killers coming from the UK.
Marsden said ISPs will likely see more regulation, but giving consumers more tools isn’t the answer per se.
“ISPs have made it clear that consumers will not implement filters,” said Marsden. Australia has even sent CDs to citizens to prod them to implement filters. One outcome may be required filtering for spam and content on all PCs as a regulatory requirement.
Think of these efforts as mandatory seat belt laws for Web surfing.
Update: In a followup conversation, Lewis said the biggest issue with laws like CAN-SPAM is that it doesn’t reach overseas where a huge chunk of the spam originates. Carol DiBattiste, senior vice president of privacy, security, compliance and government affairs at Lexis-Nexis, spoke about a different topic, but the solution sounds a lot like what the folks in the Talkbacks below are seeing. Lexis-Nexis as part of its security policy blocks international IP addresses.
January 30th, 2009
Should Yahoo sell search or keep it as a buffer?
Yahoo’s second quarter results yielded information that may indicate that selling its search division to Microsoft wouldn’t be such a bright idea.
After perusing Yahoo’s second quarter results and the conference call transcript one conclusion screams out for attention: Search revenue is the great buffer in this recession.
Google’s results showed search is recession resistant. Yahoo confirmed that theory. Yahoo’s second quarter search revenue was up 11 percent compared to a year ago (Google’s search revenue growth was 22 percent). Yahoo’s search revenue helped offset a 2 percent sales decline in display advertising.
Yahoo CFO Blake Jorgensen said:
We are pleased that over the last four months our US web search share has stabilized according to comScore, demonstrating that the search product investments we’ve made over the last couple of years are paying off.
New Yahoo CEO Carol Bartz was vague about a potential search deal with Microsoft. Wall Street analysts estimate that Microsoft would fork over a big upfront payment and minimum revenue guarantees in exchange to Yahoo’s search market share.
Should Bartz sell Yahoo’s search business?
On paper, the deal makes sense. Yahoo could focus its business on content and reap billions in revenue–not to mention save hundreds of millions in operating costs.
Here’s what Yahoo CEO Carol Bartz had to say about Yahoo search:
Am I planning to immediately sell the search business? I did not arrive here with preconceived notions about anything. I’m still learning about the business, and our integrated search and display model. It’s very, very easy from the outside to have a strong opinion about what Yahoo! should or shouldn’t do, not just about the search business, but I’m finding out about everything.
Like all of you, my opinions as an outsider were influenced by all the extraordinary attention we received last year. But now as an insider and CEO, it’s my job and my responsibility to do what’s best for our customers and our shareholders. After a short time on the job, it should be obvious I’m still working my way through that thought process. That said let me make a few observations about search.
Search is a very valuable part of our business, understanding the intent and goals of our users as they seek information online is extremely useful to our franchise in many ways. There’s been a lot of talk about Yahoo!’s position in the search market, but some of the most important Yahoo! search stories are being overlooked. We’ve been introducing new features and capabilities to search at a faster pace over the last year, and in late 2008 Yahoo! query share began to stabilize. Our share remains almost three times the size of the number three player.
The fact is, that the quality of our search product is improving and the share staff supports that. Providing the best quality product that we can give our users always makes sense in search or anywhere else, that kind of focus increases the value of the product, which is good for our brand and good for our shareholder, no matter what our long-term plans.
Bartz may have missed the most important part of the search equation: Yahoo will need that search buffer for the foreseeable future. If display advertising continues to be weak search will matter. Perhaps search will matter so much that a sale to Microsoft doesn’t make sense.
January 30th, 2009
iPhone satisfaction not guaranteed [video]
Faced with the difficult decision of which smartphone to buy, Senior Editor Sam Diaz explains to ZDNet correspondent Sumi Das what happened when he hopped on the iPhone bandwagon. Diaz reveals which phone he’s sporting now (and why), and also shares his cardinal rule for cell phone shopping.
Also see:
January 30th, 2009
News to know: Fannie Mae, RIAA, IBM, Storm components
Here are today’s notable headlines. You can get News To Know via email alert and RSS daily . For continuous updates see BNET’s around-the-Web tech coverage
Sam Diaz: WSJ: Dell eyeing smartphone biz
Larry Dignan: Fannie Mae IT contractor indicted for planting malware; Mortgage giant didn’t revoke server privileges
James Staten: IBM gets serious about cloud computing
Sam Diaz: More iPhone vs. Storm: Comparing component costs
Gallery: Up close and personal with iLife ‘09–photos
Christopher Dawson: Does the digital TV transition matter to ed tech?
Larry Dignan: Retail stinks, but Amazon doesn’t; E-tailer delivers strong fourth quarter
Ryan Naraine: Google plugs ‘high-risk’ holes in Chrome browser
Sam Diaz: Report: Tech layoffs skyrocket in 2008; not looking much better for ‘09
Larry Dignan: SanDisk-Toshiba tweak manufacturing joint venture
Andrew Nusca: What do you want from the next iPhone?
Christopher Dawson: Even I’d use Windows 7 if it was free!
Larry Dignan: Samsung: We have the highest density memory chip
Christopher Dawson: A day in the life of my Classmate
Adrian Kingsley-Hughes: Third-gen iPhone rumors roundup
Dana Blankenhorn: Microsoft makes a real open source move
Dennis Howlett: Honey I just blew up the ERP
Michael Krigsman: Angst in Oak Park over failed PeopleSoft project
jason D. O’Grady: Signs of iPhone v3 in latest firmware
Dana Blankenhorn: Five reforms we can do now
Jason D. O’Grady: iTunes Plus debuts a-la carte pricing (updated)
January 29th, 2009
WSJ: Dell eyeing smartphone biz
Dell is preparing to enter the increasingly crowded smartphone business, according to a Wall Street Journal report that cites anonymous sources. The report says that a team of engineers in Chicago have developed prototypes that work on Windows Mobile and Google’s Android operating system.
The report also notes that one model is a touchscreen model with no physical keyboard and another had a keyboard hidden under a sliding screen. But the report also notes that Dell hasn’t finalized its plans and still could scrap the entire project. For some time, Dell has been experimenting with new product lines as the core PC business continues to struggle. The WSJ writes:
A smartphone push would come as the company tries to remake itself following its plunge from its perch as the world’s biggest PC maker two years ago. While Mr. Dell has sought new growth through consumer PC products and tech services, the turnaround has been uneven. Dell has suffered layoffs and hiring freezes, and last month announced a management reorganization in which two top executives left the company.
Yesterday, Dell said it plans to take a $280 million charge related to layoffs and stock option expenses for the fourth quarter. It will report quarterly earnings on Feb. 26.
Previous coverage:
Cost cutting pays off for Dell; IT spending, demand ‘challenging’
Dell shuffles management deck; Focuses on global units
Dell: How bad is it?
January 29th, 2009
Juniper's revenue grows but misses estimates; EPS in-line
Silicon Valley network equipment maker Juniper Networks reported fourth quarter revenue of $923.5 million, up 14 percent from the year-ago quarter but short of Wall Street’s estimates of $936.5 million. Excluding special items, Juniper reported a profit of $169 million, or 32 cents per share, in-line with Wall Street’s estimates. (Statement)
Despite the growth, analysts have said that the network maker could be in for some tough times as the global economy continues to hammer down and companies around the globe scale back spending. Juniper has suspended growth initiatives, frozen raises and could reduce its workforce this year, according to an earnings preview on the Seeking Alpha blog.
Less than a year ago, the outlook was promising for Juniper, which was seeing “consistent success” in enterprise accounts across industries various industries, notably financial services. In a post last summer, Larry Dignan wrote about the hiring of former Microsoft executive Kevin Johnson as Juniper’s CEO. noting that he was “inheriting a company that has a good stride.”
In a statement today, Johnson said:
We continue to play offense and grow market share while at the same time taking action to responsibly manage our cost structure. The long-term growth fundamentals of high performance networking remain strong and by strengthening our product portfolio and focusing on the customer, Juniper is positioned for accelerated growth once market conditions improve.
Shares of Juniper were down more than 7 percent in regular trading, closing at $16.97. Shares continued to fall in after hours trading, down almost 9 percent more.
January 29th, 2009
Retail stinks, but Amazon doesn't; E-tailer delivers strong fourth quarter
Amazon managed to get stronger even as retailers across the U.S. struggled amid weak holiday sales.
The company reported fourth quarter earnings of $225 million, or 52 cents a share, on revenue of $6.7 billion, up 18 percent from a year ago. Those results handily topped Wall Street estimates, which called for earnings of 39 cents a share on revenue of $6.48 billion. Analysts had expected Amazon to outperform, but the magnitude is impressive.
For context, the National Retail Federation on Jan. 14 said that holiday sales (November and December) declined 2.8 percent. That tally was the first decline since the NRF began tracking retail sales in 1995. Given that prognosis, expectations for Amazon’s results were subdued even though many analysts thought the company would do better than the retail industry.
For instance, Piper Jaffray analyst Gene Munster said in his earnings preview that Amazon is “clearly the best e-commerce company in a bad consumer spending environment,” but predicted earnings of 32 cents a share on revenue of $6.44 billion.
In the same quarter a year ago, Amazon had earnings of $207 million, or 48 cents a share, on revenue of $5.67 billion.
For the year, Amazon reported earnings of $645 million, or $1.49 a share, on revenue of $19.17 billion, up 28 percent from 2007 (statement).
As for the outlook, Amazon projected first quarter operating income of $125 million and $210 million. That range indicates some serious uncertainty. Simply put, Amazon will either see a 37 percent decline in operating income or 6 percent growth. Revenue is projected to be $4.52 billion and $4.92 billion, good for growth of 9 percent to 18 percent from a year ago.
Wall Street certainly liked the results and drove shares 10 percent higher after hours.
By the numbers:
- Amazon’s “other” revenue–Amazon Web Services primarily–had revenue of $175 million for the fourth quarter, up from $131 million a year ago. For 2008, the other category had revenue of $542 million, up from $383 million. Since Amazon doesn’t break out its Web services result, the “other” category is the line to watch.
- On a conference call with analysts it was pretty clear that the “other” line was an area of focus. Amazon CEO Jeff Bezos was asked almost immediately about Amazon Web Services. “EC2 and S3 are already being used by enterprise class customers and we expect that trend to continue,” said Bezos.
- Bezos also talked about Kindle sales, adding that e-book readers buy more and add to unit sales. “The biggest surprise has been unusually strong demand in the fourth quarter,” said Bezos, who yet again didn’t outline how many Kindle units the company sold.
- Amazon generated operating cash flow of $1.7 billion for 2008.
- Amazon spent $333 million in the fourth quarter on fixed assets such as software and Web site development.
- North America fourth quarter sales were $3.63 billion, up 18 percent from a year ago. International sales were $3.07 billion, up 19 percent from a year ago. North American sales are 54 percent of Amazon’s revenue pie.
- Media sales were up 9 percent to $3.64 billion, but Amazon really gained on electronics and other categories. Electronics and other general merchandise sales were $2.89 billion, up 31 percent from a year ago.
- Amazon ended the year with 20,700 employees.
January 29th, 2009
Report: Tech layoffs skyrocket in 2008; not looking much better for '09
When the economy started to crumble for the housing, automotive and banking industries last year, there’s was some optimism that Silicon Valley and the tech industry might be able to withstand the storm.
Clearly, that was a short-lived dream.
A report released today by consulting firm Challenger, Gray & Christmas found that tech took a beating in 2008 (mostly in the second half), slashing nearly 187,000 jobs in the telecommunications, computer and electronic sectors, an increase of more than 74 percent compared to the previous year.
How bad is it? CNET’s Dawn Kawamoto notes that the unemployment rate in Santa Clara County, California - the region commonly known as Silicon Valley and one of the most expensive areas to live, outside of Manhattan - has an unemployment rate that has passed the national figure. She writes:
Within the various sectors in tech, electronics firms saw losses of 73,447 jobs, an increase of 89.7 percent over the previous year; the telecommunications industry saw an increase of 72.5 percent; and cuts in the computer industry were up 61.3 percent. And in the Silicon Valley, for just the month of December, the unemployment rate rose to 7.7 percent in Santa Clara County and 5.9 percent in San Mateo County. Nationwide, the unemployment rate reached 7.2 percent for the month of December.
The tech industry hasn’t seen unemployment levels like this since 2003, the report noted. And it seems, based on just the first month of the new year, that 2009 won’t look much better. John Challenger, CEO of Challenger, Gray & Christmas, said in statement
Through the first half of 2008, it looked as though the tech sector might be one of the few areas of the economy to remain resistant to recessionary pressures. However, the economy’s continued slide here and overseas saw consumer and corporate demand for technology products and services drop rapidly,and these firms were suddenly under pressure to make significant cost-cutting moves… Cuts could reach even higher in 2009, as there is no evidence yet that the economy has hit the bottom of this downward portion of the cycle. We almost certainly will not see a repeat of the 2008 first quarter, in which tech cuts totaled just 17,345.
In January alone (and there’s still one more day left of the business month), we’re seen layoff headlines from:
- Microsoft (5,000)
- Motorola (4,000)
- SAP (3,000)
- Seagate (2,950)
- Lenovo (2,500)
- EMC (2,400)
- Texas Instruments (1,800 + 1,600 in retirement and voluntary departures)
- AMD (1,100)
- Autodesk (750)
- AOL (700)
In all (and I know I’ve probably forgotten a couple), that makes just shy of 25,000 tech jobs announced in January alone. That doesn’t even count previously announced layoffs that will come down the pipeline this year, including Dell (8,800), Sun Microsystems (6,000) and Motorola (3,000).
January 29th, 2009
More iPhone vs. Storm: Comparing component costs
There’s some buzz today about an iSuppli report that dove deep into an analysis of component costs for the Blackberry Storm, compared to a similar breakdown of Apple’s iPhone. In the end, the electronics research firm found that the cost of components and manufacturing cost about $203, compared to Apple’s costs of less than $175.
The Storm, launched in November, was touted as being RIM and Verizon’s answer to Apple and AT&T, which grabbed headlined and attention with the revolutionary iPhone. Verizon, in its quarterly earnings call with analysts, did not cough up sales data on the Storm, though a Business Week article cites published reports that put Storm’s sales figures at about a half-million in the first month. You’ll recall that, upon launch last November, there was an immediate inventory issue that kept Verizon and RIM from putting the device in the hands of people who wanted one.
Before anyone starts multiplying the $28 or so difference between the component and manufacturing costs to figure out how much cash Apple (and RIM) are making on these devices, consider the iSuppli caveat: the estimates only look at component and assembly costs. They don’t take into account the software, patent licensing or distribution costs. I also didn’t see where it took into account the battery.
In a post yesterday, I wrote about how I ended up taking back my iPhone (blaming the poor AT&T voice service) and buying a Storm instead. One of the tidbits of information I left out was the battery issue. The iPhone couldn’t keep a charge to save its life - and the best advice I was given by other iPhone users was to turn off the 3G connection to help reduce the drain on the battery. Seriously.
I don’t know what the locked-in battery on an iPhone costs and whether that was a penny-pinching item over at Apple. iSuppli gave the exclusive advance interview about the Storm analysis report to Business Week and, as of Thursday morning, hasn’t officially released its report so I could do my own digging.
I recognize the whole bit about lowering component prices and beefing up profit margins. And I also get that, given the hype and lovefest that’s surrounding the iPhone, Apple really has no incentive to make any significant changes. AT&T appears to be happy. Apple is moving up and closing the gap on RIM, which had a decade head-start in what is now called the smartphone business. And consumers, even if they have issues with the battery, are willing to turn off the 3G connection or make other sacrifices just to keep that iPhone in-hand.
One other note about the iSuppli report and the Business Week piece. The magazine reports that the Storm uses a $35 chip from Qualcomm that allows it to work on both GSM-GPRS networks (AT&T and T-Mobile) and CDMA (Verizon and Sprint) while the iPhone only works on GSM-GPRS. That means that RIM can sell to all the major carriers while Apple cannot. Imagine the iPhone world domination (and potential app store revenue) if Apple made the iPhone compatible on all networks. I’d buy one again. (Remember, I liked the iPhone A LOT. I hated the AT&T service.)
Take that $35 out of the equation and suddenly the component cost of the Storm is less than the iPhone (at least based on the data points we know about.)
I’m glad that firms like iSuppli are doing the deep analysis of these products. But without the full picture - the costs of software, licensing and distribution - it’s misleading to draw any definitive conclusions.
The folks at iSuppli said they will send me the details of the research when they’re available - presumably, today. If there’s anything worth noting or if I’ve missed some sort of critical piece of information, I’ll definitely update this post.
January 29th, 2009
Symantec makes case for recession resistant club; Touts storage business
Symantec appears to be in a series of businesses that can weather an IT spending downturn.
As this earnings season progresses a few winners are clearly emerging. The common thread is that these winners all can deliver enterprises return on investment and help companies cut costs. IBM, VMware and Riverbed have also delivered good quarters.
Symantec’s fiscal third quarter results make the case that it should be included in the recession resistant club.
Excluding a massive writedown for goodwill, an accounting term that refers to the valuation of previous acquisitions, Symantec’s results were better than expected. The company reported third quarter net income of $350 million, or 42 cents a share, on revenue of $1.51 billion. That tally was 10 cents better than Wall Street estimates.
Based on generally accepted accounting principles Symantec lost $6.81 billion, or $8.23 a share, because it wrote down assets on its books. That’s quite a big number to overlook, but Wall Street is doing just that on Thursday.
What has Wall Street so happy? Symantec was able to do two things:
- It actually provided an outlook for the next quarter;
- And that outlook was in line with expectations.
Symantec projected fourth quarter revenue between $1.47 billion and $1.52 billion. Earnings excluding charges are expected to be 33 cents a share to 35 cents a share. Including charges, Symantec predicts fourth quarter earnings of 12 cents a share to $14 cents a share (statement).
Why is Symantec skirting the meltdown?
The company plays in three areas–storage optimization, data loss prevention and enterprise security–that aren’t easily cut.
CEO John Thompson said on a conference call:
We were able to deliver revenue above our forecast despite our customers’ continued scrutiny of their IT budgets. Customers tell us that they will allocate funds to areas of storage optimization, data loss prevention, and enterprise security. Furthermore, their attention is turned to initiatives that will drive immediate cost savings rather than longer-term investment programs.
Toss in a recurring revenue stream on the enterprise side of its business and Symantec is well positioned.
The most notable item in Symantec’s report is how it is positioning itself as a company that can cut your storage spending. Enrique Salem, chief operating officer and soon to be CEO, said:
Starting with our data center business, a key factor driving our Storage and Server Management results over the past four quarters has been our ability to enable clients to quickly reduce IT spending, particularly storage spending. In this economic climate, customers are looking for solutions that can deliver cost savings within an operating budget cycle. As such, we initiated a new selling campaign built around the theme of stop buying storage. Customers using our solutions can reduce storage costs by better utilizing existing storage and by buying lower cost storage.
Salem was also questioned on maintenance rates and customer pushback. Here’s what Salem said:
When you look at it - we haven’t talked about the maintenance rates, but what I am pleased with, even in this tougher economic environment, we continue to see customers renewing their maintenance, and they are continuing to buy new licenses alongside of those maintenance agreements.
What I do want to emphasize is that our storage products continue to perform well very specifically because customers are looking for ways to save money and with our current offerings we’re able to do that. This notion of stop buying storage absolutely works with CIOs around the world.
January 29th, 2009
Fannie Mae IT contractor indicted for planting malware; Mortgage giant didn't revoke server privileges
A former Fannie Mae IT contractor has been indicted for planting a virus that would have nuked the mortgage agency’s computers, caused millions of dollars in damages and even shut down operations. How’d this happen? The contractor was terminated, but his server privileges were not.
Rajendrasinh Makwana was indicted on Tuesday in the U.S. District Court for Maryland (press reports, complaint and indictment PDFs). From early 2006 to Oct. 24, Makwana was a contractor for Fannie Mae. According to the indictment, Makwana allegedly targeted Fannie Mae’s network after he was terminated. The goal was to “cause damage to Fannie Mae’s computer network by entering malicious code that was intended to execute on January 31, 2009.” And given Fannie Mae–along with Freddie Mac–was nationalized in an effort to stabilize the mortgate market Makwana could caused a good bit of havoc.
Makwana worked at Fannie Mae’s data center in Urbana, MD as a Unix engineer as a contractor with a firm called OmniTech. He had root access to all Fannie Mae servers.
The tale of Makwana malware bomb plot is a warning shot to all security teams and IT departments. Given the level of layoffs we’ve seen lately the ranks of disgruntled former employees is likely to grow. Is there any company NOT lopping off a big chunk of its workforce? And some of these workers may even have Makwana’s access privileges and knowledge of the corporate network.
Sophos’ Graham Cluley says:
As belts tighten and the credit crunch continues to hit around the world, more and more companies will be making the decision to make staff redundant. As we’ve written before, a disaffected employee could create havoc inside your organisation so make sure that appropriate security is in place.
Also see: Are you wary of the insider on the outside?
Indeed, Makwana had intended to do some serious damage such as “destroying and altering all of the data on all Fannie Mae servers.” That quote puts it mildly. According to the initial complaint against Makwana, the former contractor’s virus “would have caused millions of dollars of damage.” Anyone that logged into the Fannie Mae network on Jan. 31 would have seen a message “Server Graveyard.”
Details of Makwana’s alleged plot surfaced in a complaint that was initially sealed to protect the identity of Fannie Mae. In the complaint, Fannie Mae is referred to as “ABC,” but defined as an outfit that facilitates mortgages. In a sworn statement, FBI agent Jessica Nye outlined the following:
Luckily, the Fannie Mae server scripts were returned to normal before mortgage chaos ensued. But the errors listed in the complaint are clear. The biggest problem: Makwana’s access wasn’t terminated when he was. He had access to Fannie Mae servers longer than he should have.
Here’s a look at the notable excerpts of the complaint. As you can see there were warning signs and mistakes made along the way. Emphasis is mine.
So far so good right? Makwana screwed up, was terminated and had to turn in his gear and access privileges.
Well that last part didn’t go so well.
The good news is that Makwana’s access didn’t go on indefinitely. I’ve known more than a few people that could access their former employer’s network for months after they left the company.
However, catching Makwana’s script was really a function of luck.
There was also some good detective work too–the complaint details Makwana’s techniques and script set-up–by the Fannie Mae security team. However, a lot of work could have been avoided if only Makwana’s privileges were terminated when he was.
January 29th, 2009
Samsung: We have the highest density memory chip
Samsung has created the first 4 GB dynamic random access memory chip manufactured on 50 nanometers.
For Samsung, the effort–creating a 50 nm, 4GB DDR3 DDRAM chip, is part of a movement to cook up dense memory chips that reduce power.
In a statement, Samsung argues these chips could improve efficiency in data centers:
For the new generation of “green” servers, the 4Gb DDR3’s high density combined with its lower level of power consumption will not only provide a reduction in electricity bills, but also a cutback in installment fees, maintenance fees and repair fees involving power suppliers and heat-emitting equipment.
Samsung’s 4GB DDR3 DRAM chip operates at 1.35 volts, a 20 percent improvement over the previous generation. The chip maxes out at 1.6 gigabits per second. The chip can be configured in various modules to accommodate servers, desktops and laptops.
January 29th, 2009
Why RIAA, ISP cooperation may deliver returns for both sides
The Recording Industry Association of America and Internet service providers are reportedly pairing up to police illegal downloads.
CNET News’ Greg Sandoval and Maggie Reardon report:
AT&T and Comcast, two of the nation’s largest Internet service providers, are expected to be among a group of ISPs that will cooperate with the music industry in battling illegal file sharing, three sources close to the companies told CNET News.
The Recording Industry Association of America, the lobbying group representing the four largest recording companies, said last month that it had enlisted the help of ISPs as part of a new antipiracy campaign. The RIAA has declined to identify which ISPs or how many.
CNET News adds that none of the half dozen or so ISPs involved have signed agreements because of worries about bad press. ISPs will reportedly have a series of measures to deter piracy. The last response would be a service suspension or termination.
The partnership raises a bevy of questions. Why would ISPs want to get tangled up with policing downloads? What happens when someone is falsely accused and is there an appeal process? If ISPs police downloads with the RIAA does that open a Pandora’s Box of liability?
And the biggest question of all: Why are these two groups partnering?
The answer can be summed up in one word: Money.
The RIAA is looking to shut the door on illegal music downloads and revive an industry. That’s relatively easy to see.
So what’s in it for the ISPs? My hunch is that ISPs will get some sort of cut of any music partnerships. But the real payoff comes from forcing mass downloaders–the folks that eat up all the bandwidth–to go elsewhere. The ISPs want to be careful about outright booting customers, but they surely won’t mind nudging bandwidth hogs to drop service.
Here’s a scenario:
- Mr. Downloadeverymovieandsong guy is identified as someone who is swiping songs illegally.
- The RIAA is happy to stop him. But so are the ISPs. ISPs hate bandwidth hogs–that’s why some are flirting with bandwidth caps.
- The ISP and the RIAA serves notice to Mr. Downloadeverymovieandsong guy.
- Mr. Downloadeverymovieandsong guy gets angry. He blogs. He forms a Twitter coalition. And as a protest move he goes to another ISP, say Comcast to Verizon.
- Well guess what? Comcast is stoked that Mr. Downloadeverymovieandsong guy is gone. He was screwing up the broadband pipe anyway. And double bonus if this guy goes to a rival.
- The return on investment from booting Mr. Downloadeverymovieandsong guy is clear: Comcast can use that capacity on a user that provides better profit margins.
Given that scenario the ISPs partnered with the RIAA come out as winners. Sure, there may be bad press, but nudging bandwidth hogs off an ISP’s network is worth it. ISPs are making a good trade: Profit margin in exchange for a little grief from customers they don’t want anyway. That’s a pretty good deal.
January 29th, 2009
SanDisk-Toshiba tweak manufacturing joint venture
SanDisk, which is reeling amid a horrid flash memory market, has bought itself some financial wiggle room by tweaking the terms of its joint venture with Toshiba.
The news comes as both Toshiba and NEC are cutting workers and capital spending as the memory market remains rattled by too much supply and weak demand. Toshiba posted its first loss in seven years.
Under the new terms of the SanDisk-Toshiba manufacturing joint venture, 20 percent of the capacity will be transferred to Toshiba. That move (statement) gets SanDisk out of lease obligations that would ding cash flow.
The total value of the deal is $890 million and SanDisk gets a third of that sum in cash. The rest of the deal just reduces SanDisk’s leases by 28 percent.
Other joint ventures on memory manufacturing between Toshiba and SanDisk stay the same. While the news is good for SanDisk these ventures don’t get rejiggered from a position of strength.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
For daily updates, follow Larry on Twitter.
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